Monday, May 21, 2018
Business

Slow-coffee wave spreads fast

SAN JOSE, Calif. — It's the start of the morning rush at Philz Coffee, and things are slowing down.

Suits, students and hipsters all scurry into the cafe, only to then wait as baristas carefully prepare each cup of Tantalizing Turkish or Silken Splendor with the precision of bartenders mixing martinis.

Though the lines can be Starbucks long, Philz is decidedly the un-Starbucks. Its coffee drinks start at $3 a cup, and the service is meticulous. Baristas blend different types of beans in grinders, dropping grinds into filters and then pouring water over them. They stir in rich warm cream — or 2 percent milk, if you choose. The preparation for each drink can take five minutes.

"The taste is worth the wait," said Dale Anderson, a Cisco Systems employee.

Philz is part of the so-called "third wave" in the coffee industry, following the canned coffee trend decades ago and the birth of Peet's Coffee & Tea, Starbucks and other barista coffeehouses in the 1980s. While third wave prices might seem steep to some, those whose tongues have been tantalized by the perfected brews have no complaints.

Even money-strapped college students queue up for their daily fill of Philz, whose San Jose cafe feels like a comfortable college hangout. This alternative coffee shop is being watched warily by mainstream powerhouses Starbucks and Peet's, which are experimenting with similar handcrafted drinks to not lose out on the trend sweeping Northern California and other select regions of the nation, said Alexander Slagle, an analyst with Jefferies & Co.

A Starbucks spokesman said a number of its cafes are now offering coffee brewed using the "pour-over method."

"It's an affordable luxury," said Slagle. "If you appreciate specialty coffee, high-quality beans and how they make single-pour, handcrafted drinks, then you'll like it. It's like drinking Russian River beer instead of Budweiser. There is an element of being hip. It's a neat little segment."

Actually, it's quickly becoming not so little. The slow-coffee trend is catching on with the tech scene. Launched in 2003 with a single shop in San Francisco's Mission district, Philz has 11 cafes that ring San Francisco Bay, and a Cupertino, Calif., opening is in the works.

Peter Giuliano, an executive at the Specialty Coffee Association of America, believes the slow-coffee movement is a return to the drink's pre-20th-century roots, when coffee was a luxury to be consumed with others. It was during early 20th century America that the notion of coffee being a drink of the masses — an inexpensive way to make workers more productive — took hold, he said.

"Coffee has a long history of not being something that is cheap fuel for you on your way to work," Giuliano said.

Blue Bottle Coffee, started in 2002 by professional clarinet player turned entrepreneur James Freeman, initially sold its coffee at an Oakland farmers market. After annual revenue increases of 30 to 40 percent, it took in between $15 million to $20 million in 2011, according to Freeman, who now has cafes in San Francisco, Oakland and New York City.

Freeman credits Starbucks and Peet's with creating a coffee culture that is now open to his artisan coffee.

"One out of 1,000 people, or whatever the percentage is, wants something different, something a little more intricately constructed," Freeman said. "It's a palpably more interesting experience than a lot of faster options."

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