Recession Proof Roast
Despite the downturn, Le Center-based European Roasterie, Inc. remains the nation’s largest independent coffee roaster.
BY ANDREA LAHOUZE
The current recession has many nine-to-fivers swearing off coffee shops in favor of more economic alternatives. In the media’s constant stream of money-saving tips, the cash saved from morning mochas and macchiatos seems to be a favorite. And why not? At $3 a pop, that daily coffee will cost you $1,095 a year—more if you go for the larger, more exotic options.
With more people brewing coffee at home, or avoiding it altogether, many coffee businesses have been struggling. In July 2008, 600 Starbucks Coffee Company franchises were forced to close their doors—an event surely indicative of a trend affecting many more cafés around the country.
But business is booming for a Minnesota based coffee roaster.
An Unknown Roaster
Coffee manufacturer European Roasterie, Inc. is located in Le Center, Minn., a small community with a population of nearly 3,000. The company’s building sits next to an open county road that turns into dirt less than a mile away. Despite its rural locale, European Roasterie is the largest independent coffee roaster in the United States, offering blends from 35 different origins worldwide and selling about 5 million pounds of coffee every year.
You’ve probably never heard of European Roasterie, but you might have tasted its coffee. That’s because the company buys and roasts specialty coffee and then sells it to companies looking to build their own private-label brands. Lunds & Byerly’s carries a private-label line from European Roasterie, as do Deli Express, Berry Coffee Company and about 2,000 other organizations across the country. One of European Roasterie’s larger customers, an online brand called The Coffee Fool, has a following that is eight times larger than Starbucks, according to Timothy Tulloch.
Tulloch—who was born in Scotland and educated in England—is the founder, owner and roast master of European Roasterie. He planned to start his coffee career with a retail brand but ultimately decided to skip the difficult process of marketing his own brand. Instead, he chose to roast and sell wholesale specialty coffees.
“[I realized building] my own brand would be so hard,” Tulloch says. “[For] a brand like Starbucks, [people will pay] three times the price for the same coffee. But to get to that level, you’ve got to foot the bucks. By going private label, other people are building their brands, and I’m just ... the unknown roaster.”
The Coffee Connoisseur
There is a sign that sits in the entry hallway of European Roasterie that reads, “Welcome to European Roasterie. There is No Life Before Coffee.” Tulloch may be an unknown roaster to most, but in the coffee industry, his expertise— and his passion for the product—is first rate.
Tulloch’s coffee education began in his college years during a visit to East Africa. In preparation for writing his university thesis on the cash crops of rice and coffee, he traveled to Kenya to conduct research. During the long flight, he struck up a conversation with the man seated next to him. By chance or by fate, the man was the owner of a Kenyan exporting company. By the time they landed in Nairobi, Tulloch had landed a job.
“They said, ‘We’ll teach you to speak French in a month, and you have to learn to fly in three weeks,’ ” Tulloch says. “I had to fly around to the [coffee] farms and move export documents around in Zaire—which is now Congo. It was a wild time. Every week they cupped about 200 coffees, and I learned from them how to cup coffee, and that was the beginning.”
“Cupping” is the practice of sampling coffees from different coffee beans, evaluating different elements of quality and taste, and naming a price for each crop. Now, after decades of cupping, Tulloch’s descriptions of a coffee’s taste sound similar to those of a fine wine connoisseur.
“Every origin is a different quality of coffee,” Tulloch says, pointing out origin names on the thousands of coffee-filled burlap sacks that fill his warehouse. Colombia, Peru, Mexico, Indonesia, Tanzania, Ethiopia and Rwanda are just a few. “[Coffee] tastes different in terms of acidity, body and flavor. Those things change with every origin and with every farm. Every farm is different,” he says. While many commercial roasters offer two or three origins of coffee, European Roasterie offers 35 to cater to a variety of tastes and preferences.
After meeting and marrying his wife, Therese, who was a Peace Corps volunteer during his time in Kenya, Tulloch returned to Minnesota to start a family—and a coffee revolution.
The World’s Best Beans
Tulloch’s niche is “the 1 percent of the market that wants good coffee.” To that end, he takes three annual trips to find the world’s best coffees, and he purchases specialty coffee beans. Specialty coffee is the top 2 percent of a coffee crop in terms of quality, and it is sorted by hand from the rest of the beans. It is produced from the Arabica coffee plant, as opposed to the more commercially popular Robusta plant. Specialty coffee also contains 60 percent less caffeine than regular Robusta coffee, so it appeals to people who want to enjoy an evening cup without sacrificing a good night’s sleep.
At European Roasterie, beans are roasted in the European style, which entails a longer roast time of 16 to 18 minutes at a lower temperature. The coffee is then smoked in its own roasting air for added flavor, and air-cooled before being packaged and shipped. In comparison, commercial roasters roast their coffee for an average of three to four minutes and cool it with water instead of air.
Tulloch believes the continued success of his business, even in the current recession, can be largely attributed to the quality and comforting nature of his product. “As people cut down on conspicuous consumption, they go more for things that make them feel good, such as having a cup of coffee that wakes them up,” Tulloch says. “People get depressed because they’ve lost so much money in the stock market. What do they do? They drink coffee. So our sales are perfect. They’re recession-proof, because it’s a comfort food.”
Building a Coffee Culture
The specialty coffee movement in the United States is relatively new. In 1986, when Tulloch first began his business as a retail store in Minneapolis, consumers were skeptical. “When I opened my first store, people said, ‘No way! It’s a 25-cent market; no one is going to buy coffee for a dollar!’ ” he says. “Now, you go to a coffee shop, and you spend $4 for a cup of coffee.”
Tulloch has been part of more than one defining moment in the American specialty coffee craze. He wanted his customers to have the freshest coffee available, so he searched for a way to roast, package and ship his coffee in one day. Packaging was tricky, however, because freshly roasted coffee continues to expand, oxidize and give off volatile acids and oils for four days. Without enough air for the acids and oils to escape, the coffee will burst. Tulloch learned this the hard way when his very first shipment from UPS exploded in the delivery van for lack of air.
The solution came in the form of a one-way valve, allowing air out of the package but preventing it from coming in. Tulloch and European Roasterie were instrumental in convincing KEY-PAK, a major coffee packaging manufacturer, to produce a stand-up plastic bag with a one-way valve. Now, these bags are the industry norm for packaging, and all of European Roasterie’s coffee is packaged and shipped within 24 hours of roasting.
Popularizing some elements of the modern coffee shop, Tulloch admits, was simply a matter of luck. “We brought Torani syrups [to the U.S.] in 1987, and at that time there was no connection [between coffee shops and flavored syrups],” Tulloch says. “We brought in a pallet as a joke. [We thought], people like flavored ice cream and flavored water, [and] maybe they’d like flavored coffee. So we convinced a few coffee shops to take these flavored syrups to add to their cappuccino drinks.” In today’s world of vanilla lattes and hazelnut cappuccinos, it would be a challenge to find a coffee shop without flavored syrups.
Tulloch also helped launch the popularity of chai tea, another American coffee shop staple. Tulloch fell in love with the flavor of chai tea when he traveled to India as a student. Shortly after starting his business, he called a tea supplier and suggested that it add cardamom, cinnamon and ginger to its tea to make chai. After the supplier agreed, he started buying its chai tea to sell to his customers, and it gradually gained a nationwide following.
Perhaps Tulloch’s most prominent stamp on the coffee culture has been the rise of organic fair trade coffee. He first introduced certified organic coffee from a Costa Rican plantation to the co-op market, and later to larger grocery stores—beginning with Lunds & Byerly’s. “Lunds & Byerly’s had organic vegetables and fruits, so they thought that if those worked, maybe [organic] would work for coffee,” Tulloch says.
After creating a demand for organic coffee, European Roasterie attempted to introduce the concept of fair trade coffee to customers. Coffee is “fair trade” if it is purchased from farming families for a fair price. It was an uphill battle. “We tried to push fair trade [coffee], and no one would bite,” Tulloch says. “It was just a dead horse.” Tulloch devised a plan. Since organic coffee had grown in popularity, his strategy was to make all of his organic coffees fair trade as well. “Without people asking for it, all of our organic coffee had the fair trade symbol,” he says. “That created recognition of what fair trade was … and then demand rose.” Today, European Roasterie sells 1.5 million pounds of fair trade organic coffee annually.
Greener Beans
Ever the trendsetter, Tulloch hopes to create a niche market for carbon-conscious coffee as the world looks to control carbon footprints. “What we’re trying to do now is get coffee with carbon credits,” Tulloch says. “I think all manufacturers are saying, ‘It’s so complicated.’ But if we can identify the green coffee, that’s at least a start.”
Coffee can earn carbon credits if 40 percent or more of the farm it came from contains indigenous forests. The World Bank, which administers carbon credits, is currently evaluating carbon footprints of multiple farms and cooperatives from which European Roasterie purchases coffee.
European Roasterie will wait for the economy to recover before introducing carbon credit coffee. However, Tulloch hopes to create the market for it in much the same way that he popularized fair trade coffee.
“That’s part of [my business] model: putting something out to the existing customers and creating a demand,” Tulloch says. “You’ve got to be innovative, and when [the economy] turns around, I think there will be a market for it.”