After years of drinking coffee, Stan Constantine made the switch.
“I used to drink 10 cups a day, but about five years ago, I started drinking tea,” Constantine, president of Baltimore Coffee & Tea Co., said as he sipped Brassica Red Bush tea with broccoli extract at the company’s production and retail location in Timonium.
“As a group, tea drinkers are totally different than coffee drinkers,” Constantine said. “Tea drinkers are far more selective. The coffee drinker, if he has to, will drink anything.”
It’s that fact — that caffeine-craving coffee fans will incessantly fork over a few bucks for their daily mocha-flavored jolt — that keeps local roasters optimistic during shaky economic times.
Shaky enough that even coffee’s king has stumbled.
Starbucks in the last month said it would close more than 600 company-operated stores in the United States — including four in the Baltimore region and 12 total in Maryland — and cut about 1,000 open and filled management positions. The company also is closing one store in Washington, D.C., and five in Virginia.
The news worsened for Seattle-based Starbucks, which on July 30 announced the company posted its first quarterly net loss since it went public in 1992.
The company reported a net loss of $6.7 million in the third quarter, compared with a profit of $158.3 million in the same period a year ago.
“While [the store closures and job cuts] impact the lives of our partners, customers and communities we serve, these were necessary actions,” Starbucks Chairman, President and Chief Executive Officer Howard Schultz said when earnings were announced.
Constantine and other area roasters credit Starbucks for introducing consumers to gourmet coffee and promoting the coffeehouse experience. They’re also noticing and learning from the company’s mistakes.
“People are looking for a new variety,” Constantine said. “It isn’t recession-proof, but the coffee business is recession-resistant. Coffee is one thing people aren’t willing to give up.”
The coffee-preneur
Baltimore Coffee & Tea operates out of a 15,000-square-foot production facility in Timonium, producing 30,000 pounds of coffee and 2,000 pounds of tea per week.
The Baltimore County-based company sells about 120 types of coffee and about 1,000 types of tea, doing wholesale, retail and online business.
Constantine “grew up” in the business — the Constantine family has been roasting coffee with locations in Baltimore and Philadelphia since 1895.
He and a business partner started Baltimore Coffee in 1990, roasting and selling the product from its Timonium business park location for about eight years. After fielding numerous requests from customers to open its own coffeehouse, the company turned a portion of its production facility into a storefront in 1998.
“When we opened, people said, ‘You guys are nuts, nobody’s going to come here,’ ” said Constantine, referring to the outlet’s out-of-the-way location. “We serve about 1,000 customers a day, and during the holidays, it’s like we’re under attack.”
The company’s retail business grew “by word of mouth,” Constantine said, and today, Baltimore Coffee has a year-old retail location in Annapolis and is scheduled to open another store in Frederick in September. The company, with about 100 employees, is also considering opening retail locations in downtown Baltimore, Columbia and Rockville.
And while Starbucks is closing stores and laying off thousands of employees, Baltimore Coffee’s sales are up about 8 percent this year, Constantine said.
“We were always asked, ‘How are you going to compete with Starbucks?’ ” Constantine said. “And we said, ‘All we can do is tell you about our product.’ ”
Starbucks’ success might have caught up with the company, Constantine said, opening too many stores too close to each other.
“In the ’90s, Starbucks raised people’s awareness about good coffee,” he said. “They might have gotten too far away from their business, trying too many things like CDs, chocolates and liquor.”
The focus for Baltimore Coffee has been, and will be, good coffee, Constantine said. “You’re only as good as your last sale.”
The back-room roaster
Brett Bixler has made a second home in coffeehouses on both coasts for more than 15 years.
“I predate the expansion of specialty coffee,” said Bixler, the roaster at High Grounds coffee shop near Patterson Park, as he filled a bag with freshly roasted coffee beans.
Bixler, a Southern California native, remembers drinking coffee while reading the comics page with his mother at a diner when he was as young as 5 years old. He started working in coffee in 1991 with Diedrich Coffee Roasters, a company that eventually went public and was sold to — who else — Starbucks.
“It was the best education in coffee you could ever imagine or hope for,” Bixler said.
After the sale to Starbucks, Bixler actually worked in a Starbucks store in Trabuco Hills in Mission Viejo, Calif. Bixler’s old coffeehouse is one of the 600 stores Starbucks plans to close.
“Starbucks accelerated the rate of coffee education, which created a larger market base,” Bixler said. “But when you do something that big and fast, it’s easy to make mistakes.”
Bixler himself runs a small operation in the back room of High Grounds, which doubles as a used book store. He imports about 8,000 pounds of coffee each year from a Costa Rican farmer, roasts the beans in his own roaster and packages and sends the product to customers like Whole Foods and several Baltimore coffee shops — like Water for Chocolate, Village Coffee in Dundalk and Markets at Highlandtown.
He’s been in Baltimore for about six years, and there’s no other way he’d rather spend his days, Bixler said while applying a label to a full bag of coffee.
“You’re roasting good coffee and making friends in the process,” he said. “There’s a social aspect to it. You’re making a difference in people’s lives in a small way.”
Coffeehouses gained popularity on the West Coast, and Bixler said Baltimore’s coffeehouse scene has greatly improved in the last five or six years.
“There’s no reason for there not to be more coffeehouses in Baltimore,” Bixler said. “Coffeehouses are the center of successful communities.”
The one-man grinder
It’s about 10 a.m. on a sticky summer morning, and the sweat is forming on Erik Rudolph’s forehead.
Rudolph is the one-man coffee-roasting show that is Bluebird Artisanal Coffee in Baltimore. His office is a 1,200-square-foot, third-floor space in a Greektown warehouse. The sun is beating down through the large windows.
“You don’t burn the coffee, and you make sure it’s fresh,” Rudolph said while standing next to his roaster. “If you roast it too much, you roast all of the flavor out of it.”
Rudolph imports about 1,000 pounds of coffee a month and roasts about 12 varieties for customers like Whole Foods, Blue Moon Cafe and Rosina Gourmet. He started the business about two years ago after working for years at coffeehouses like the Daily Grind and Key Coffee in Baltimore.
He does everything, including driving the product, to keep Bluebird Coffee running.
“I like providing a product that people like,” Rudolph said. “But it’s a pretty labor-intensive process.”
While Rudolph said coffee prices have increased about 75 cents to $1 per pound in the past year, he said business has stayed brisk in the summer.
“People still want their coffee and newspaper in the morning,” he said. “They’re still going to have their coffee, one way or another.”
As far as Starbucks goes, Rudolph said he thought the company’s store-closing, job-reduction plans were “inevitable.”
“They saturated the market,” Rudolph said. “Starbucks did a good job in getting people away from the 8 a.m. coffee, but people are starting to realize that their coffee isn’t that great.
“It’s all about producing quality coffee,” he said.
The big winners
There was a time in the early to mid-1990s when coffee roasters were worried teenagers were being brought up on Coca-Cola and Pepsi as their primary caffeine source, Constantine said.
“They’ve come to realize, a cup of coffee is a lot better than a Coke or a Pepsi,” Constantine said with a smile. “We partly have Starbucks to thank for that.”
So where did the coffee giant go wrong? A combination of overly aggressive expansion, increased competition and an economic slowdown, said Stephen Walters, an economics professor at Loyola College.
“This is what happens to a lot of innovative companies,” Walters said. “Innovation breeds innovation and competition. Starbucks developed a winning formula, and when you do that, people are going to follow you.”
The big winner in the game?
“There’s a fairly long list of competitors out there,” Walters said
“We coffee addicts are fine.”
