Food & Beverage

Craft coffee is brewing up market share

Coffee break

Americans spend about $32 billion dollars annually on coffee. While fluctuations in the global price of coffee on the commodity markets led industry behemoth Starbucks to boost its per-cup price tag last month, a growing share of consumer dollars are going to higher-cost specialty or craft coffee.

"It's definitely a growing part of the beverage world," said Brett Smith, who co-founded Durham, N.C.-based specialty coffee wholesaler Counter Culture in 1995. "People are switching from the traditional coffee that we know from the 1950s and 60s," in favor or artisanal or smaller-batch brands, Smith said. His company markets several coffees featuring flavors like citrus, chocolate and molasses.

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Specialty coffee has grabbed a 37 percent volume share of all cups consumed in the U.S., but with a 50 percent value share, according to 2012 figures from the Specialty Coffee Association.

Counter Culture roasts around two million pounds of coffee each year and provides the beans and barista training to hundreds of independently-owned cafes and restaurants. Fine-dining restaurants serving Counter Culture include Maialino in New York and Chicago's Alinea. The company, which is privately-owned and has no outside investors, operates training centers in nine U.S. cities.

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Coffee prices are up more than 40 percent in 2014, and Smith said those numbers affect coffee drinkers across the taste spectrum.

"Generally the consumers will see a higher price," he said. "The prices we've been paying for coffee have been substantially higher than the commodities market for years," since craft wholesalers typically source coffee directly from farmers and co-operatives.

"That means that our coffee will be more expensive, but ultimately we think it's a great value because of the quality of the cup," said Smith, who sources coffee from 15 countries globally.

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"There are great opportunities out there for consumers to seek out coffees that provide a great value in terms of the variety of the experience they can have."

More than 60 percent of Americans drink coffee daily, more than any other beverage besides water.

-- By Katie Kramer, special to CNBC