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|Wednesday, July 22, 2009|
The beans that fuel Portland’s high-octane coffee scene connect Oregon with the globe. Is this growing industry a cup half empty or half full?
By LUCY BURNINGHAM
Wife-and-husband team Arianna and Rik Hartstrom (bottom) in their Costa Oro warehouse (top) in Portland. The warehouse is the only dedicated green coffee bean warehouse in Oregon.
For wife-and-husband team Arianna and Rik Hartstrom, running the only dedicated green coffee bean warehouse in Oregon means ensuring these types of “specialty” coffees, a broad term for the high-grade coffees that constitute just 5% of global production, stay dry, cool and protected from light.
Handling coffee correctly is just one part of a business many in the industry doubted the city needed seven years ago, when Arianna Hartstrom founded Costa Oro.
“People told me Portland wasn’t large enough to support a green bean warehouse,” she says. “But in talking to coffee roasters, we knew the city was lacking a point of distribution.”
For roasters paying higher prices for fair trade and organic coffee beans, entrusting non-specialized handlers with their coffee was an unwanted, albeit necessary, risk.
In Costa Oro’s first few years, the Hartstroms would meet roasters in convenience store parking lots and personally transfer bags of beans to their cars and vans. Back then the warehouse handled a total of 500,000 pounds of beans in one year, the equivalent of 12 shipping containers.
These days the Hartstroms no longer have time to meet local roasters under a streetlight at a Plaid Pantry. In 2008, the company moved 10 million pounds of beans and opened a transportation division, which offers freight transportation discounts on bean shipments. Even so, many local roasters still personally pick up the essential, single ingredient from the warehouse. They lug the green coffee into their trucks and vans, one sack at a time, which ultimately saves them money on shipping costs.
While Costa Oro’s warehouse represents just a fraction of the beans coming through Portland, its clients reveal the mechanics of the local bean trade, and its continued growth reveals even more potential for the bean business.
Top: Nick Bjonskas at CBI monitors coffee as it is transferred from the roaster to the cooling tray. Middle: Bjonskas pulls a sample mid-roast to check color. Bottom: coffee beans in the post-roast cooling process.
Moving thousands of pounds of green coffee has become increasingly common in Portland, a city where established large roasters and newer micro roasters rely on the availability of beans, which are as important to operations as cattle are to beef ranchers or hops to breweries. Without a steady supply of green beans, expensive roasting drums would sit idle, diminishing the supply of high-quality coffee not only in Oregon but nationwide.
It’s the hidden supply side of Portland’s famous coffee scene, which is defined by a high density of cafes serving coffee made from locally roasted specialty beans. The explosion of coffeehouses is driven by a thirst for quality, socially and ecologically sound coffee, says Ric Rhinehart, executive director of the Specialty Coffee Association of America. Micro roasters are the most obvious signs of the trend.
“Consumers of specialty coffee are the kinds of people who live in Portland for the green environment, access to technology and involved community focus,” Rhinehart says. “They define the specialty coffee demographic.”
But despite the increasing local demand for green coffee beans, receiving beans in Portland is neither easy nor affordable — one of the few, but costly, speed bumps for the growing roasting industry.
For the most part, the problem affects micro roasters, who work with small batches of beans. Most of them never order enough green coffee to fill a whole container, although full containers drive much of the global shipping industry. Small shipments usually mean bypassing lower-cost steam line shipping for rail or road, which adds to the cost of receiving raw beans.
Larger Portland roasters deal with a different set of problems. For steamships, reaching Portland requires a 100-mile journey up the Columbia River, a costly journey for shipping companies accustomed to visiting ports like Los Angeles and New Orleans. And even when beans arrive from relatively nearby ports, most often Tacoma or Oakland, roasters pay more to move freight from the West Coast than the East Coast.
In 2008, the Port of Portland cleared $32 million worth of coffee beans, just 1% to 2% of all coffee imported into the United States last year, which made Portland the 18th-largest coffee port in the country. (Newark, New Orleans and Los Angeles held the top three spots.)
Andrew Hetzel, a coffee consultant based in Kona, Hawaii, says the added cost of shipping to Portland is offset by the low cost of doing business here.
“If I were a trading company looking for a warehouse location in the Pacific Northwest, I wouldn’t be surprised if I picked Portland,” says Hetzel. “There’s a low cost to do business in Portland and there’s the advantage of being convenient to major industry players.”
Without importers, the lubricant in the green coffee supply machine, raw beans would slog from farm to cup. Instead, they chug.
Beaverton-based importer Bruno Souza, president of Brazilian Estates Cafe Corporation (Beccor), works a cell phone like a stockbroker on the trading floor, hungry for deals and anxious for information. Bouncing between Portuguese and English as he flits between calls, Souza tracks fluctuations in the price of coffees around the globe, which includes analysis of the dollar and weather patterns in South America.
In 2002, Brazilian-born Souza moved to Portland from Texas and brought Beccor, which imports mostly Brazilian coffees from dozens of farmers, one of whom is Souza’s father. At age 89, the patriarch still runs the family’s coffee farm, which grows and harvests some of the beans that end up in the Costa Oro warehouse.
At times, Bruno Souza visits Costa Oro to pick up samples of the beans he’s peddling around the country. The warehouse currently handles beans for 15 importers and 75 roasters. About three-quarters of those roasters are based in Oregon, but Beccor is the only local importer.
In terms of importing, it’s a fairly unique setup. A majority of importers never see the large jute bags of coffee they own and sell, but coordinate shipment and, most importantly, retain financial responsibility for the beans until they arrive at their final destination from a remote location. As another local exception to the rule, Hillsboro-based Karnataka Plantation Coffee imports beans from India and stores them in a private warehouse.
For a bean importer, coffee looks much like any other global commodity, especially oil. Selling at the right moment yields maximum profit, and supply and demand dictate the market. It’s a job that could be done anywhere in the world, but Souza says he chose Portland because he considers the city “the bean town” in the United States, which helps his reputation elsewhere.
Jute bags of green coffee wait for one of the two large roasters in the Coffee Bean International facility.
“In Portland you have a coffee culture,” he says. “People drink coffee here even in the summer, and the cafes are small and friendly.”
Consultant Andrew Hetzel argues that the four importers who currently operate in Oregon chose the location more for lifestyle and potential profit margins than any coffee reputation. One of Portland’s highest profile importers — Sustainable Harvest Coffee Importers — has become one of the world’s largest importers of sustainable, specialty coffee — but doesn’t bring large amounts of beans through Portland. But the company still profits by being based locally even though it supplies beans to mostly non-Oregon companies, says owner David Griswold, who relocated the company to Portland’s Ecotrust Building from the Bay Area in 2000. “Stepping into Portland allowed us to join a community of like-minded people who are interested in food systems,” he says. The company had $21.8 million in sales in 2008, and Griswold says business has grown 30% since moving to town.
For about 25 local micro roasters, who also experience financial benefits from operating in Portland, working with Beccor (which supplies beans to about 100 roasters around the country) and Costa Oro makes a difference.
“It’s nice having that first-hand, personal contact with someone locally, and it creates easier access to coffee,” says Din Johnson, owner of Ristretto Roasters in Portland. Johnson also says that by ordering beans stored locally, he’s increasing chances the warehouse will have better bean selection in the future.
“It would be beneficial to have more coffee here for small roasters,” he says. “There’s no way we have local access to the variety you’d have if you lived in the Bay Area.”
Portland’s largest roasters work with such high volumes of coffee, they never worry about small-batch shipping costs and local bean storage.
For example, Portland-based Coffee Bean International (CBI), a specialty wholesale roaster that sells beans to large corporate retailers, including Nordstrom and Noah’s Bagels, as well as 1,000 independent coffee houses around the country, roasts 15 million pounds of green specialty coffee beans annually. At any given time, the company is processing 2 to 3 million pounds of beans in its 130,000-square-foot, silver LEED-certified facility close to the airport. But despite CBI’s numbers (its 2008 revenue exceeded $60 million) and a 37-year history in Portland, the company doesn’t have much name recognition with local consumers, says president and CEO Patrick Criteser.
Top: Mark Stell of Portland Roasting inspects roasting beans. Bottom: Andrew Davis of Portland Roasting checks green coffee beans for defects before loading them into the roaster.
“Most people haven’t heard of us because we private label roast,” he says. “We work to promote our clients’ names, not our own.”
But within the green bean industry, CBI holds plenty of sway. “CBI has greater potential influence on coffee trends as a result of its large volume of operations,” says Andrew Hetzel. “Therefore buying decisions made by roast master Paul Thornton have a greater impact on the industry than smaller specialty roasters.”
Boyd Coffee holds similar clout. While the company won’t disclose how many pounds of beans it buys annually, $100 million in sales equates to large-scale bean buying.
Headquartered in Oregon since 1900, Boyd’s roasts all its beans in Portland. Randy Layton, Boyd’s vice president of coffee operations, estimates the company receives 80% of its beans through the Port of Portland, a rarity in the local marketplace resulting from high volume. The company imports mostly full containers of coffee beans at a rate of at least one container each day.
Oregon’s smaller “macro” roasters (Roast magazine created the term to define a roaster that handles more than 100,000 pounds of beans a year) hope to grow their businesses, but never expect to become as large as Boyd’s or CBI.
At the Portland Coffee Roasting facilities in the city’s eastside warehouse district, where simple hinged doors separate a roaring roasting room from sacks of green coffee and carpeted offices, managing partner Mark Stell wears a button-up khaki shirt and matching pants, making him look more like a safari leader than a coffee roaster. The getup seems appropriate, though, for a man who frequently travels to remote coffee farms around the globe.
Coffee Bean International CEO Patrick Criteser tastes a variety of samples from new growers in a state-of-the-art cupping lab.
Direct bean buying has become a popular practice with most roasters in Portland, where consumers have a heightened awareness of food sourcing and fair trade issues. “We try to mimic our city’s reputation for sustainability in how we order coffee, and we market ourselves accordingly,” Stell says. “If people were looking for coffee from Portland and it wasn’t sustainable, it wouldn’t do well.”
Currently, Portland Roasting divides its nearly 1 million pounds of annually roasted beans between a variety of local and national clients: grocery stores, universities, cafes, office coffee distributors and food service companies. Stell hopes to expand into even more grocery stores and national outlets during the coming years.
Every local roaster shares Stell’s aspirations of growth to varying degrees. Some hope to open new cafes or sell more whole beans, while others dream of becoming the single coffee supplier to major hotel chains. But no matter what the scale, roasters have the power to shape Oregon’s green coffee trade.
For Costa Oro, the success of new and expanding roasteries means the difference between an empty warehouse and one packed with sacks of beans.
“The roasters are driving the boat,” says Arianna Hartstrom. “If they want to have beans come to a certain outlet, they’ll tell their importer, and if that importer doesn’t want to do it, they’ll find someone else.”
More beans also means more business for local importers, baristas and others supported by the trade who all work to meet the demands of a reliably thirsty public. Because giving Oregonians steaming mugs and tiny espresso cups filled with coffee today isn’t enough. Tomorrow, they’ll want more.
Tuesday, August 19, 2014
BY TOM COX | OB BLOGGER
Tom Cox interviews Steve Balzac, author of "Organizational Psychology for Managers."
Wednesday, August 20, 2014
By Kim Moore | OB Editor
The 2015 survey launched this week. It is open to for-profit private and public companies that have at least 15 full- or part-time employees in Oregon.
Tuesday, July 08, 2014
BY LINDA BAKER | OB EDITOR
The New Yorker recently published a sharply worded critique of “disruptive innovation,” one of the most widely cited theories in the business world today. The article raises questions about the descriptive value of disruption and innovation — whether the terms are mere buzzwords or actually explain today's extraordinarily complex and fast changing business environment.
Update: We caught up with Portland's Thomas Thurston, who shared his data driven take on the disruption controversy.
Thursday, July 31, 2014
BY MARY SPILDE | OB GUEST CONTRIBUTOR
Faced with the aftermath of the “great recession,” increasing concern about the environment and dwindling family wage jobs, we have some very important choices to make about our future.
Wednesday, August 06, 2014
BY LINDA BAKER | OB EDITOR
Portland startup Green Endeavor strikes gold, inking a partnership with Underwriters Laboratories, an Illinois-based consulting and certification company with offices in 46 countries.
Tuesday, July 01, 2014
BY HANNAH WALLACE | OB BLOGGER
Demand for organic food continues to soar: Last year, sales of organic food rose to $32.3 billion — up 10% from 2012. In Oregon, organic produce wholesaler Organically Grown Co. has been championing organic growing methods for four decades.
Thursday, July 03, 2014
BY TED AUSTIN & MIKE BAELE | GUEST CONTRIBUTORS
The Office of Economic Analysis announced that Oregon is currently enjoying the strongest job growth since 2006. While this resurgence has been welcome, the lingering effects of the 2008 “Great Recession” continues to affect Oregon businesses, especially with regard to estate planning and business succession.
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