Aired on January 14th 2020
Chris Deferio 1:27
All right, well, today we are honored to be able to speak with Peter Giuliano about consumer preferences about consumer trends and the research in what it means for your shop and how to respond to the research and Peter Giuliano has been in the coffee business for over 30 years. Starting as a barista in San Diego, he worked in a variety of different jobs roasting, copying, training, managing, I mean you name it. He’s done those jobs and shortly became involved with working at the what was then the specialty coffee Association of America becoming deeply involved in the training programs as serving as a training committee chair. He has been a volunteer for the coffee core in other coffee quality Institute programs, teaching cupping, roasting and marketing programs. He was the founder of the Executive Council for the roasters guild and also served as its chair Peter Guiliano was also the director of coffee and co owner of counter culture coffee in a 2012 stepped away from that and directed the specialty coffee Association symposium, which is a fantastic series of lectures addressing global issues in specialty coffee that you should definitely check out if you’re going to the STI Expo in Portland’s coming up in April. Right now Peter Not only does that but he is the chief research officer for the specialty coffee Association, as well as the director of the coffee Science Foundation. And today we get to hear from Peter, about what the research has shown over the years. It’s been about 10 years now, since they’ve been collecting research on retailers and consumer trends and heavily in those two areas specifically, they collect a lot more data, as you can imagine at the SCA. But the focus of our conversation today is to draw out some points from the research into consumer preferences and trends, as well as some of what he has seen from research into the state of retail specialty coffee, and talk about what it means for your shop and how you should respond to what is found out about what kind of coffees customers prefer. What how They’re categorized in terms of those preferences, and why it matters to your shop. So, Peter is a longtime friend and specialty coffee. I’ve known him for quite a long time. And it’s just such a pleasure to get to talk to him on the show. I hope you get a lot out of this. And certainly there’s a lot to chew on here. So without further ado, here now is my conversation with Peter Giuliano. Well, Peter, it is such an honor to welcome you to keys to the shop. How are you today?
Peter Guiliano 6:29
Great. It’s nice talking to you, Chris. Thanks for having me.
Chris Deferio 6:32
Yeah, absolutely. It’s been a long time since we’ve chat. I’ve known you for so long. And I’m so excited to see just how consistent I think you’ve been in your pursuit of just knowledge and coffee, not just knowledge just like this. You’ve had a science bent ever since I’ve known you and you’ve always been great at presenting those things that you’re so curious about and learning and teaching people about this. So you’re rolling just seems like the perfect place for you. Thank you.
Peter Guiliano 7:04
Yeah, yeah, no, I feel that way. I’ve been since a funny little kid story, but when I was in fifth grade, I decided I would, I loved science and, and, and, you know, I used to do these crazy things because because that was my passion and you know, who knew that I ever would be involved in, in coffee science of all things.
I feel so fortunate to be able to, to work in with these two things that I love, which is science and knowledge building and then also coffee and coffee shops, and that whole culture, so it’s a feel thank you for saying what you said but i i to feel like I somehow landed in a place that just feels great. Perfect.
Chris Deferio 7:55
will tell us a little bit more about this. Tell it tell us a little bit about your role. As the you’re the executive director for the coffee Science Foundation, and you’re the chief research officer. So tell us a little bit about that and what that part of the SCA does also.
Peter Guiliano 8:12
So the specialty coffee association which emerged from the histories of the specialty coffee Association of America and the specialty coffee association of Europe, both of whom had research traditions as part of what they did. And that is for a trade association, like especially coffee Association, that it is it is part of what many trade associations do is do research that helps make helps benefit the industry. And the specialty coffee Association has aspired to do this for a long time, and has done little bits of research, but especially Mostly, I would say market research, you know, estimating the size of the coffee market or the trying to characterize what the specialty coffee market looks like. However, about five years ago, it became clear that there was much more academic interest in coffee than there had been previously. And that’s mostly because of the success of the industry. And, and I and people like your listeners, you know, you know, especially coffee, you know, during our careers, Chris, we’ve seen a radical transformation in the ubiquity and, and, and, you know, availability of specialty coffee, and that has influenced the academic research world to they noticed and started drive a lot more coffee research.
Universities research institutions, academic environments. So what we did was about five years ago, we I started to work on building a bridge between the academic coffee research community at mostly universities and the industry. People like you, your listeners, me, the coffee community. And so one of the things the tools that we used to, to help build that bridge is this thing called the coffee Science Foundation, which is a it’s a, it’s a charity. It’s a nonprofit 501 c three nonprofit, established by the specialty coffee Association, to do expressly this to use coffee research coffee knowledge, to build a bridge between the academic community and then also to make Specially coffee better to improve livelihoods in specially coffee and to improve quality and fundamentally to use this kind of knowledge to make coffee better. So So we started this initiative about four years ago, last year, and in 2019, we formally launched the coffee Science Foundation and we’re now running a number of research projects, at universities all over the world designed to research some of the questions that we have as a as a community, especially coffee so my job is to help build those bridges help connect the coffee community with with coffee science. help connect coffee researchers, scientists, economists, sociologists etc. With the coffee community so that they’re structuring their investigations in a way that’s meaningful so I feel like a matchmaker most of the time like just making connections and and and and then I get to be an advocate for this this work
Chris Deferio 12:15
when your matchmaking as it were your trying to give people direction about what to study. I imagine there’s this such a broad spectrum of things that you could study and we’re going to be diving into some consumer study in this conversation but of course this is it’s more than that. It’s the like you said science of the like the plant itself is huge. the sustainability of coffee agriculturally. It’s a lot of what you’re, you’re in charge of as well. And that direction seems like it without somebody in that position. Everyone will be working on their own projects of their own curiosity, which is great, but not necessarily building momentum toward an end. So yeah, it does is that sound about right?
Peter Guiliano 13:00
Yeah, and one thing that I’ve noticed over the years and and it’s because you know, so I, as you know, I come from the coffee trade I began as a barista 30 years ago and, and, and, you know, came up as a shop manager and I’m roasting company, owner and manager and stuff. So I come from the trade. And one thing I know about the especially coffee trade is we are made up of entrepreneurs and, and innovators and people that figure things out, you know, and that’s one of the beautiful things about specialty coffee. We’re dreamers we’re the kind of people that you know, just want to build a company based on excellent quality coffee and community. And that’s it. We find a way to do that in our town or whatever and Oftentimes, a lot of people in our community get interested in trying to prove stuff. And so we’ll start to do little experiments to try to understand things about flavor and what leads to flavor and sort of build these little experiments in our backyard, so to speak, or kitchens or coffee shops. The thing is, though, and I say this for myself, I was one of these people who set up these experiments. And and they don’t work very well. And the reason is, is because we’re not we’re generally not trained in how to do this kind of work. And it’s hard to set up an experiment and understand what you learn from that experience that experiment in a meaningful way. And that’s why they have you know, becoming a scientist through the system takes so long because you have to learn about what bias how bias can affect what you’re trying to learn and How to Understand statistics and, you know, false positives and, and all of these things that can interfere with your understanding of kind of scientific investigation. So, that’s on the, that’s on the community side on the, on the academic side, these people are trained as scientists or economists or whatever, but they, they lack practical knowledge about how to, and often they don’t know how to get to a hypothesis. And by that, I mean, you know, a food scientist studying at a university may never know that it’s, it’s really important to us, you know, how long how coffee changes flavor when you’re holding it in a in a in a thermally insulated carafe after you brewed it, you know, that’s a really critical question for a shop owner to know. But that may never occur to a to a food scientist. So They, the scientists have the skills. The coffee community has the hypothesis building in the in the in the practical knowledge. And bringing those two things together is when you get really powerful activity and really good insight. And so that’s what we’re doing now that hasn’t happened so much in the past is is really emphasizing that work. And what that looks like practically is, is companies coming from the coffee community, committing some resources that is money and helping that get to the research institutions supporting grad students, professors to do research in their labs. It’s really relevant to what our community needs, and then taking that information and disseminating it back to the coffee. That’s huge in Yeah,
Chris Deferio 16:54
I remember I remember and it still goes on. There’s a lot of crack scientists In the in any industry, I suppose just trying things out, but to, you know, bring in professionals who are trained in recognizing those biases and everything else is really, it’s great because so much of the market depends on accurate information. If you’re going to steer the market one way, they better be backed by something that’s not just your hunch. Now, in a wild, wild trends in especially the way we’re connected now, and 2020, you know, things can take off inadvertently, and either do a lot of good or you don’t do some damage. And so we’re taking it seriously is critical,
Peter Guiliano 17:37
particularly when there’s livelihoods at stake. Yeah, you know, um, so, you know, as everyone knows, you know, the many, many coffee producers live on a knife’s edge, you know, and I was one of those coffee buyers who would go down and give advice to a coffee producer about how they might improve their coffee so that it could be sold at a higher price. Something it’s really critical that if if a coffee buyer is giving that sort of advice, it better be built on something solid and not a hunch, or, or a intuition or a bias study or something like that. At the same time, another livelihood that’s at stake is that the small business owner, you know, they’re having to make this they better be making decisions that are based on on good information because if they’re not, they could be putting their business at risk. So, so I’ve become over the years much more. I don’t know committed to to, to the idea that we better be able to prove what we claim because as I say, these lives, our livelihoods are at risk.
Chris Deferio 18:50
Yeah, sustainability and all all parts of the value stream is so critical and you know for for us the keys to the shop, you know, obviously shop, we focus on that, primarily and we do have that influence over what happens upstream from us. We were successful and we have demands that we put on roasters and then put that importers etc. And we base a lot of our decisions on either trends or what we see the market doing in any information that we can get our hands on, which is actually not that much when you’re an owner, your head is buried in a ton of different you know, pieces of minutia that just to keep the shop open. And so being able to poke your head above water and, you know, he was a periscope and figure out where you are, if you want to know that that one effort that you’re going to undertake is going to be worth it to your business. And so, when we’re talking about the research that you do for consumers, you know, learning about the the trends in the industry and what consumers preferences are etc. I wonder how that data is collected and And then I guess the second part of that question is, once that data is collected, how has it? What is it shown over the years? And what has been the most surprising and the most recent results of it?Sure.
Peter Guiliano 20:15
Okay, so we’ve got one of the most sort of robust areas of research that we do is exactly what you’re talking about, which is in the consumer space, but then also, you know, you mentioned the keys to the shop and the shopping important. We also collect, do research and collect information on what the businesses especially coffee look like, you know, and I’ll sort of start by saying So, a couple of years ago, we did a we call a benchmarking study, which is we we asked a lot of everybody in our community, all the all the businesses in our community to essentially share their pnls with us, anonymously and through a web site and they could share all of their financial information with us and we could collect that, anonymize it. And, and then, and sort of, you know, crunch the numbers and show what the norms are for especially coffee businesses, and what we saw is probably something that’s very obvious to you and your listeners, which is, you know, many of these coffee especially coffee companies are very small, you know, two or three employees and are, you know, dependent on their, their shop there, you know, often one shop is very normal kind of business. And they’re faced with challenges of staying solvent as a business and I, I can look at these numbers and see as a former business owner myself, I can see, wow, this is a this is a challenging business to run and operate and make sustainable. So so a lot of what we do is aimed at trying Get good information to that sort of person who’s running that kind of business. One of the things that we’ve done is what you’re asking about, which is consumer research. We started doing. Let’s see, almost 10 years ago now we started to do consumer research. A lot of that was led by a person named Tracy gang who was working for the specialty coffee Association at the time, and had a real interest in, in understanding, understanding consumer behavior and consumer perceptions when it came to specialty coffee. And so ever since then, we’ve had this evolving consumer research. I’ll share with you a couple of the interesting things. And then a couple of surprises, reasons prizes to the one of the first insights that we have had is that is that the specialty coffee consumers fit into two kind of psychographics and we could very clearly categorize The consumers that we were talking to and we talked to them through focus groups and also these kind of blogging projects that we asked them to do where they talked about their coffee behavior and what they cared about and coffee all over the country. And these two categories we call specialty adopters and super specialty and the specialty adopters are the people who are have have come to specialty coffee in their life. They see specialty coffee as a as a way to treat themselves to something good. They often drink specially coffee every day, but they see it as a treat and as an indulgence.And theirtheir goal is to is to satisfy some thing that they need warm drink, boost caffeine boost. A treat during the day. That’s what an adopter. Does. adopters tend to like chain kind of coffee stores, or kind of comfortable coffee shops in their community. Okay, so that’s the adopter. The Super specialty is the person who wants to know more about coffee wants to be is on the journey to becoming a content connoisseur. They’re the people that are curious about, you know, different preparations or different roasts or more information about coffee, or learning more about coffee. So there for them. It’s a connoisseurship journey, rather than a self self caring thing. So that’s, that’s the super specialty mindset or psychographic. Now, the same person can be can be a, you know, an often is a an adopter, in the morning, you know, their first cup, they want to be comforting and soothing, and maybe later in the day, they’re more interested in learning about coffee. But once you start to understand that these are two distinct sort of consumer categories, you can you can see that okay different things that we do appeal to these different consumers in different ways. The adopter does not want it to be lectured about an information about the origin of coffee or what altitude it was grown add or, you know, what differentiates, you know, washed process from honey process or anything like that. However, that message those exact things might appeal a lot to a to an to a super specialty person. So just understanding that distinction, developing some tools to recognize these consumers where they’re at building your business, to either focus on one consumer category or the other, or finding ways to appeal to both is really actually So we’ve got a few reports and kind of lectures online that, that, that explore these, these types and, and then we’ve also my colleague Kevin award, the award is a, she’s our Director of market research. She, she’s got an MBA and a long term love of coffee and she, she’s really applied her a lot of her intellect to, to understanding these consumer dynamics and then putting them into helping people put them into practice. So that’s one of the key insights that we’ve taken away from our, our, our consumer research. Here’s another little detail, which is the super specialty consumer has a higher price tolerance than the adopter does. unsurprising
Chris Deferio 26:49
figures, um,
Peter Guiliano 26:50
yeah, little details that we’ve we’ve learned that that, that that can help people you know, but the Super specialty. People only represent about 20% of the specialty coffee consumers. Hmm. So so there’s a smaller number they pay more money. But you should know that if you’re going to build a business based on on appealing to a super specialty,
Chris Deferio 27:16
it might be a little early because I know that that particular piece of research was something I, if I’m not mistaken, I think you said it was just kind of emerged as a trend in what you found in your studies. But I wonder about mobility within those categories like are the 20% going to be growing? It didn’t grow from a lot of smaller portion? It wasn’t 10%. And then, you know, people who were the on the average, you know, the ones who are not super specialty, did they move into that super specialty category? How much mobility would there be potentially within those categories?
Peter Guiliano 27:54
It’s a good question we have seen over the time period that since we’ve sort of Come up with that construct, there’s been some, some changes, particularly the emergence of the millennial kind of demographic is as, as a powerful consumer group. And what’s interesting is, I think those proportions, that sort of 8020 proportion, I think is pretty, pretty solid, but the characterizations are, are different or the specific behaviors are different. So now an adopter whereas, you know, they might have been 10 years ago, really focused on say a flavored latte or something like that. Now are drinking cold drinks, often in the afternoon. And so moving from a sweet milk based drink in the morning, our sweet hot milk based drink in the morning to a cold sweet melt base drink in the afternoon. And seeing those kinds of shifts rather than then then shifts in the market composition, when when we’ve started to see the relationship, look into the relationship between the adopters and the Supers. What we see is more that individual people go back and forth between these categories, often, depending on their psychological space, you know, there are very few people who are just dyed in the wool supers or, or, you know, or adopters that never want to be a super so that that flexibility exists. But I think that those proportions seem to be pretty, pretty stable.
Chris Deferio 29:40
That’s a that’s kind of a revelation in that the mobility or that having that dual personality. The dualism of the coffee consumer, I guess, is something that we almost don’t think is true, because when I hear that when we hear that I think we want to thank people dyed in the wool adopters or Super specialty like you either get it or you don’t get it. And from what you’re saying, it just sounds like no, you know, the the people who sign up for a pour over class at your coffee bar might also just want a cold brew with vanilla at some point during the same week in you’d be wrong to think that they were uninformed about coffee. But in that moment, they don’t want to be informed necessarily.
Peter Guiliano 30:23
Right. And I think, you know, I agree with you that that’s not intuitive sort of thing in our community, you know, that we think is true, but it’s true even for people that work in coffee. You know, I mean, I was a traveling coffee buyer for a long time. And so I’d be sitting around, you know, a breakfast table with, you know, people who would work 1020 years as coffee connoisseurs This is their life there. You know, and oftentimes for the first cup of coffee in the morning, people do not care about it at all other than it’s warm, satisfied. They’re need at the moment. You know what I mean? Yeah. And, and that’s true for me, you know, I don’t want to be lectured about my first cup of coffee in the morning. I consume it at home, usually by myself before my kids are awake. And it’s just, it’s pure enjoyment. It’s not an intellectual exercise at all. Whereas later in the day, when I’m here in the office, surrounded by coffee, people, I’m interested more and much more interested in experimentation, trying something I’ve never tried before, you know, trying that, you know, coffee that somebody brought from Taiwan, that’s interesting, you know, which is more of that super kind of kind of thing. So,
Chris Deferio 31:39
here’s a question that’s a little maybe tangential , but you know, I want to hear what the surprising results are to hear. But I was just thinking as we’re talking about this, that when we’re talking about sustainability, of coffee and we’re talking about demand that is generated from a consumer to Coffee shopping up the stream of value. I wonder if it’s, you know, something that we should embrace more. And I see we are we are embracing it more that 80% the adopter mentality seems to be driving a lot of are adopting, adopting more developed coffees more coffees that don’t necessarily have to be 90 plus two, right, you know, open up the gates to let more people in. Seems like it’s a more sustainable framework, instead of trying to get people to constantly be in that super category.
Peter Guiliano 32:37
Yep. I think that that’s definitely true. And I think that’s true. Okay. There’s very few, if any coffee farms that only produce, you know, super high, you know, coffees that will get a 90 Plus, you know, every farm produces a diversity of coffees from their farm, depending on the time of year that they’re harvested various altitudes on the farm, whatever. So, so we need these, this diversity of culture of consumers as it as an industry. It would be I don’t think it would be a healthy industry if we only had supers you know, we we need this variety of coffee consumers because we’ve got a variety of coffee producers and we’ve got a variety of coffees to come from those coffee users. So diversity is good. And and that includes people that are not interested to at this moment, in a 90 Plus, you know, libros to pour over and are interested in a sweet hot milk based drink.
Chris Deferio 33:46
You sell more of those and that, you know, roast more coffee to provide for that category. So the light roasted, the more fuzzy coffees so to speak. You hear that super category You’re not, this might be wrong, but maybe I mean, you tell me, you’re buying less coffee in that category? He’s not.
Peter Guiliano 34:06
Yeah, potentially. Yeah, absolutely. And so I think I think what’s clear to me is that both need each other, both. Both these groups need each other and deserve respect for what their, what their needs are. And it’s our job as an industry to find ways, good ways to, to meet their desires and their needs, while building sustainable businesses for ourselves and our partners. So, yeah, so what we’ve been doing recently more so all the the basic research that we started almost a decade ago now was based on talking to consumers about their coffee choices. What we’ve been more doing recently is, especially with our partnership at UC Davis is doing more consumer work, more consumer sensory work. So actually tasting coffee He’s describing them from a sensory descriptive a sensory science perspective, and then presenting those same coffees to consumers and seeing how they, how they react to them. And that’s where some of the surprises to me have come in. And I said the word before but I’ll say it again because it’s it’s so important is how diverse consumers are. Consumers really do like different things, and they’re consistent in in liking different things. So I think most of your your listeners might be familiar with the golden ratio or the or the brain control chart that we use
Chris Deferio 35:42
Sure. Probably but it’s there like cursory overview just
Peter Guiliano 35:48
yeah, this is a this is the idea that there is a sort of a goldenplace where you know, coffee have a certain strength and a certain degree extraction percentage that is how much how much extracted how much you’ve extracted the coffee, there’s sort of a golden mean that if you get within that box most people like that coffee, we call that the golden cup. And actually it was called the golden cup when this concept was first invented in the 1950s. And it was based on the assumption that, you know, if you if you make coffee, a certain strength, and a certain way that that that will appeal to the most people. So we we started to test that with consumers, preparing coffee of multiple, multiple different ways, multiple different rows, levels, different grinds, different extraction levels, etc. Just hundreds and hundreds of different treatments and showing those to consumers and then doing it in a systematic way where we’re giving them the same coffee in, you know, over over a weekend we’ll give the same coffee to a consumer multiple times. So we know we’re getting good data and and So if you from the consumer, one of the consumer studies that we did, which which was 118 consumers, and these are daily coffee drinkers who drink who drink black coffee, because we were doing this with black coffee, so these had to be daily coffee drinkers who drink black coffee, drip filter coffee. So if you put them all together, you sure enough, their preferences clustered around that, that golden cup place, just as we predicted. Okay. So that’s interesting. But you can take another step, which is start to cluster the people, in other words, to take the people who liked what they each liked, and develop clusters. And what we discovered was you could break the people down into three clusters. There was one cluster that really liked strong coffee, like their preferences. We’re way out of the box to the strong side. Right there, they like coffee stronger than we thought they that people liked it. There was another group of this of consumers that liked coffee significantly weaker than we thought they liked it. Right? They were outside of the box to the, to the, to the weaker side. There was a third group of consumers that liked coffee also weaker, but also they seem to not like coffee that much they their their, their enjoyment scores were never very high. Now when you average the preferences of all those people together, you get the box. But then you realize that that box that’s in the center of our preference, right? The preference that we assume that people like, is actually an average of many very diverse people. Whereas you would actually satisfy Pete people a lot more in a coffee shop where you might have, you know, a really strong intense coffee for the strong intense coffee lovers and a light week or coffee for the week coffee lovers rather than having one coffee that appeal that we think is going to satisfy both of those people. It really is sort of the middle ground that doesn’t potentially middle ground that doesn’t satisfy those. Those two, you see what I mean?
Chris Deferio 39:23
Yeah, yeah, so people’s preferences, they have very strong taste preferences within the category that we might just apply to broadly to what we serve.
Peter Guiliano 39:34
Right. Right. And, and, and consumers are diverse and heterogeneous and what they like, and they’re very consistent in their preferences. And that’s what we’ve seen when when we’re doing that and it’s just super consistent, that people like what they like, and they consistently like what they like, but everybody’s different. You can collect people into into their preferences. It’s not that every individual is Unique, special snowflake, or there isn’t going to be a single kind of coffee or a strength, a single strength of coffee, or single roast of coffee, or a single, whatever, that’s going to appeal to everybody. People are different, because of course they are. No coffee, we would be surprised. It would be surprising if we found some food that everybody liked, you know, exactly equal, I guess McDonald’s french fries are sort of like that. But, but, but, but everywhere else. There’s people have a variety of preferences. And, and so what our research shows is, those preferences exist and we can understand them.
Chris Deferio 40:43
All of this, I think is something that coffee shops are responding to in the way that they offer drip coffee in how we’ve seen like in ancient days, it was the clover when it first came out the customizable coffee for the preference of your customer and then, you know, most coffee shops, eventually get around to having two types of coffees on bar, you know, the other batch brew, have, you know, a variety to offer to their customers is sustainable is that may or not may or may not be I don’t know, but in terms of coffee waste, but I do see that the market is responding to these kinds of preferences that you’re talking about being proved out through your research. When you say people like what they like. Yeah, I agree. I think people have these complex preferences based on all their experiences. The question I think is, how much of their experience is informed by what they’re told they should like subconsciously, I don’t know. I can’t really test that necessarily, but have Was that something that factored in at all to this where you think well, how how have we created these preferences over the years so that now when we’re getting this person why In the door to our study, one of the hundred and 18 people
we know that they have been ingesting marketing from specialty coffee for X number of years. And maybe if you had got them 10 years earlier, they would have had a different preference. Like how much of that is that play here?
Peter Guiliano 42:16
Yeah, that’s a great question. That’s something that we’re actually talking about really currently. There’s been some work about in coffee and what are called in the psychological literature, mindfulness exercises. So these are, you know, where people are encouraged to drink coffee in this case or eat food. You know, where they’re thoughtful about what it is and how it tastes and rather than doing it sort of distractedly, while you’re driving to work or something, being conscious about it, and that does change their preferences and change their, their their behavior. I mentioned one other thing which is that in our consumer research One thing that we’ve noticed is that the number one way that consumers, particularly those adopters that we’re talking about, get their coffee preferences from his friends. So not from anything from the coffee shop, but from somebody they know and trust who’s making recommendations. So I think I think we, it is possible. My intuition, we haven’t done a lot of research on this exact thing, but, but my intuition says that it is possible to influence consumer preference. But you have to build trust first. And, and you build trust by by satisfying what they sort of want in the original from the original place, you know, and I had a friend who ran a restaurant in San Diego and I really liked the way that he thought Thought about engaging with consumers, which he always thought of it as a negotiation. You know, he, he gave them what they wanted. But then occasionally he’d asked for them to try something a little bit different as a favor in almost. And then that’s how he wanted he tried to work with changing consumer preference. I think I think the consumers are what they’re not is super subject to like whimsical variations in their consistent and liking what they like that can change over time, but but they can be respected for their consistency of preference.
Chris Deferio 44:38
Well I’m thankful for their consistency. That really helps secure a market so that we can build momentum around that consistency that when we’re talking about retailers reacting to this studies, we would purchase the study or read the study and have a decision to make as an owner What to do about these adopters and supers what to do about this spread of preferences within the golden, you know, cup area of the chart, you know, how do we respond to the research in a way that’s not just jumping to a conclusion just because the the data says something, we’re going to change the way our business is structured to accommodate that, I guess maybe a good way to ask this would be when is it evident that we should we should heed the data from research? And when we do so that it would be sort of a sustainable move for us? How do we take action on this information?
Peter Guiliano 45:47
Yeah, I think probably the best and I think when we talk about the way we hope that people use this information that we get out there, I don’t I don’t think anybody should take it and say, Oh, yeah, I’ve got to change my business because It says, this says, you know, it says people like, you know that, you know, 30% of people like dark roast, so that means I’ve got a, I’ve got to make sure that I’m selling 30% dark roast something, you know, but when I think it can do is it can presentopportunities for engagement, you know it with your with your customer base. So you can say maybe you never thought of it, you know, in terms of the adopters, what I like so on this adopters supers thing. I think if I were a shop owner, I might start to look and see if I could see those categories within my within my consumer base. And if I could, I might sort of experiment with the way that I talked to one group or control my marketing. So I guess what I’m saying is you could use it as a basis for experimentation and then going With what works in your own environment, rather than trying to have it be prescriptive. And because, you know, everybody’s, you know, situation is unique. And, you know, running a shop in a, in a, in a university town where your, your customers are mostly, you know millennials or younger, it’s going to be different than if you’re running a, a shop in a, you know, the first floor of a Financial Services Building in an urban area, you know, right. So, so it’s always going to be situational. But we hope that our information at least causes people to maybe think a different way about their business.
Chris Deferio 47:44
Well, I love that you’re emphasizing the idea of, you know, just paying attention to your local surroundings. That was one of the questions I had is that I think we have a tendency maybe we do this with cafe design, and where we see other people doing something we think well That’s what we should do, because it’s being done in a broad, broad sense. So if the data shows that there’s a global trend of people wanting this, then I, for the sake of the success of my business, I should do it. If if you do too much of that you’re not going to be sensitive to the needs of your local community. In some of this seems like it’s a coffee personality test, like an enneagram. Almost like we’re, we’re creating a category to think of your customers in which is helpful, but some part of me thinks, you know, you can take those things and say, yes, this helps us work together well, but it’s not a substitute for a relationship.
Peter Guiliano 48:44
Exactly. Exactly. And the other thing I think is really, really important and this has come up for us over and over. is and then this is also my experience before when I was selling wholesale coffee. is is you know, paying it attention to your, what you hear your customers saying to you, and then also paying attention to what they’re doing and maybe not saying, you know, so you know that what we’ve noticed, and what I’ve noticed is that is that a shop owner who pours over their, their reports at the end of the day, you know, drink trends, you know, with coffee drinks are being purchased, at what time of day, you know, those sorts of geeky sort of quantitative things. You can learn a lot from those things, you know, yeah. And, and sometimes I’ve noticed that the shop owners might think well wait, I need to I need to organize my business around what I see is the trends in the marketplace and ignore what’s the trend in their store, you know, and we live in this amazing era, we’ve worked a lot with, with square who is provide a lot of information from their, from their terminals, you know, they, they, we get all that information and sort of gather together create some averages and so we can see how prices for coffee vary around the country for example, national level, what or the state level, what drinks are more popular, what time of day, etc, etc We can see those macro things. But I know what I know about that, that piece of equipment is that’s available on the micro scale as well, that information inside that you know, and there’s all these tools that we have now, it didn’t exist when you and I started. And people can get really valuable powerful insights into into their, what their consumers want that shop to be like. And that’s the kind of information that’s good as gold I think and in adapting your your coffee shop to to the environment that it’s in.
Chris Deferio 50:58
You may relate to this. Have it. I certainly feel this way. When you know your coffee really well, you can sense when there’s not enough in the portafilter. And you can sense when the shots done and all those things, if you’re using the same coffee over and over again, it’s just a intuition that you have. And if you’ve been in coffee long enough, I think, you know, you can develop that skill. You know, technology helps reinforce the consistency of these things. But you also can develop a sense of that coffees personality, so to speak, and seems similar to what you’re saying that we’ve got these tools that we’ve never had before. We can use that in concert with being mindful of our own businesses.
Peter Guiliano 51:42
Yeah, exactly. That’s a great way to put it.
Chris Deferio 51:45
So in the studies, I know we’re talking about trends that we see consumers, you know, have certain preferences and yeah, some of its very neutral. And I wonder from your perspective, personally, When you look at the data, what kind of things are you really encouraged by? When you look at this, the results of your research? And what kind of things are you a little bit worried about? specifically when it comes to coffee shops and consumer research?
Peter Guiliano 52:22
Yeah, so I’mmostly, mostly I’m extremely positive about about things. I mean, so from the macro perspective, coffee, especially coffee consumption, higher quality, coffee consumption continues to grow. It’s been, you know, gaining market share for the last 20 years, at least. People know the language of, of, of specialty coffee more and more, and are increasingly interested in it. So that’s all we really apparent in our sort of market research. The other thing that I’ve noticed that this is not this is more just observing the the market place more and we don’t have any quantitative information on this but i think i think you’ll agree and and I think it’s pretty well established that we’re also much more diverse in in the way especially coffee looks to people and is presented to people so I’m here in in Southern California, where in the Los Angeles area where there’s there’s this whole kind of Latin American specially coffee movement that’s happening, you know, entire chains of coffee that just really serve the Latin American coffee community coffee drinking community horchata lattes on the menu, you know, you know, Mexican chocolate mocha is on the menu. You know, this is Very unique and characteristic kind of coffee. At the same time, you know, Asian style coffee shops, Korean coffee shops are also thriving. So there is much more diversity in in what specialty coffee is it’s not just the classic Italian, espresso cappuccino cafe latte menu anymore is much more diverse than that. And that’s so healthy, it means that that coffee is alive when that’s happening, you know, when it’s being changed and, and adapted for specific communities. That’s just a really healthy thing. And then at the global level to this is happening, you know, so, you know, we were the way that coffee is exploding in places like Indonesia, Mexico City and, and, you know, Rwanda. These are places that have vibrant, consuming, especially coffee consuming cultures now. That didn’t used to exist. And that’s also very healthy for our industry as a whole. So those are the that’s the good news. I think on the consuming side, you know, it’s all kind of good news that basically coffee continues to grow. The Health News is very good. Younger demographics seem to love coffee, even more than their parents generations. So, um, so lots of good good stuff there. That the worrying stuff is that it will we’re challenged on the particularly on the specialty coffee side with a coffee production system that doesn’t work for a lot of coffee farmers. And it can only not work for so long. And then you start you’ll start to see you know, it being much more difficult to Get Panamanian coffee, or Costa Rican coffee or, or, you know, really cool, black currant kind of coffee from from Kenya or something like that. So that’s those are the, the, I think the the good news is on really on the consumption size and the challenges are on the production side Plus, you know, the reality of climate change and and what that’s doing for coffee and the diseases that are out there. Now, we’re very fortunate that that our industry is is taking steps to address those things. But that’s where that’s where the challenges are.
Chris Deferio 56:41
I really am encouraged to hear the the positive news about coffees growth and its diversity. And, you know, talking about the challenges on the farm level in the production of coffee just makes me feel like yeah, this is all More reason why we as retailers have such a high amount of responsibility. There’s a lot on the shoulders of retailers to represent and be successful as businesses and pay attention and be mindful. And in mind this data as well,
Peter Guiliano 57:18
yeah, that’s it, I will say, and this isn’t a caveat, but it’s, it’s something and I kind of alluded to it earlier, you know, when I look at the, the, the research that we’ve done with, with coffee companies and how they’re structured financially and stuff, I can see that it can be really, really challenging to run a coffee business, you know, real estate is really expensive. You know, oftentimes, you know, I would look it up, you know, I, it’s challenging to be able to pay the kind of leases that are being expected nowadays, and build a sustainable business on top of that. And also, what we saw is how many We know that this is true, how many very small coffee businesses there are out there. And when you’ve got a company that’s being run by two or three people, it’s really hard to take a break. You know, you know, how do you take a vacation when you’ve got two or three people running the entire business? Yeah, and, and those, those challenges are hard. I know that those are really hard for people. How do I grow my business? Do I even want to grow my business? Um, some, you know, we’re hearing from a lot of people that they want, you know, they want to start a coffee business, but they only they want to, you know, sort of cap it at one shop. Well, that’s pretty challenging to do to make a to make a living off of one shot given the numbers that I’m seeing, so that’s, I think that’s a real challenge to that that sort of independence. That the independent shop thing it’s it’s hard to earn that kind of shop in the in the economy that we have right now. So there are some obviously they’re really successful out there doing that. But there’s some that are challenged. And I’m concerned about the number of of shops that I see that are in that sort of situation.
Chris Deferio 59:15
Well, that said, you know, the kind of research that you are doing to help address a lot of these issues, retail and consumer research and the agricultural side of coffee. Just talking about this now makes me more thankful than ever for the work that you all are doing. And I’m especially thankful that I was able to talk with you today on the show and learn a little bit more about you know, what’s going on out there. And this has been really informative as I’ve really appreciate your time. Where can people go to find more information about the research, purchase some studies and watch some videos and get even more in in depth and geeky with this kind of stuff,
Peter Guiliano 1:00:02
yeah, great. Um, a lot of our publications wind up on the CA news site. So if you look at I think it’s FCA dot coffee slash news you can see a lot of articles and stuff that our research outputs we have we maintain on the SCA coffee website, a research portal that we make some of our research free to everybody some of our research is is is is free to members only. And you could get in there that way and, and there’s a lot of things there. We do webinars and and things on our YouTube channel. So the SCA has a YouTube channel then there’s also another thing called Rico symposium that we do that covers a lot of this territory as well. So lots of resources. I’m always talking about this stuff on Twitter and stuff if anyone ever wants to me on Twitter. So those are all good places to go.
Chris Deferio 1:01:02
Thank you so much. Peter will link to those in the show notes. And, again, thank you for being here on the show and for what you do.
Peter Guiliano 1:01:11
Anytime, thank you for for doing this show. I think it’s a real asset to the coffee community. So, and you’ve always been yourself a real advocate for the coffee community and coffee people. So thank you to Chris.
Chris Deferio 1:01:25
Well, there’s so much to think about in the last part of this conversation and throughout the whole thing, just figuring out how to respond to this information. And I love the idea. Two things. I love the idea of First, we are casting a wider net when it comes to our consumers and making coffee more approachable. And that’s it seems to be what customers want. As the same person can be in that specialty adopter and super specialty category. It’s evident that creating a menu And an atmosphere and a business that can welcome both is a pretty wise thing to do. On top of that, the admonition to go out and understand your local market and not necessarily react super quickly to large scale researcher on on, you know, even national research on coffee preferences, but always trying to narrow it down to what your customers want is prudent as well, so much to think about, from this conversation with Peter. And I just want to say, again, thank you to Peter Giuliano for being a guest on the show is sharing his wisdom and the research and really helping us gain some insights to make our businesses better. You know, like Peter said, it’s, you know, not easy running a coffee business, especially now, and work like what is being done at the SCA, currently, under Peter’s leadership is so, so critical. So thank you very much, Peter. Now if you want more information about what was discussed here in this conversation, you can go to SCA coffee. That’s the CIA’s website and you can go under the research tab to find out more information. You can also go to news and sign up for their newsletters, 25 magazine, and things like that. There’s a lot of resources here so SCA coffee a perfect place to go and get dive deeper into this content.
