BUSINESS
10/30/2015 05:55 pm ET Updated Oct 31, 2015

Hip Coffee Chains Are Selling Out, And That's OK

Coffee snobs are worried, but they shouldn't be.
Andrew Bret Wallis via Getty Images

The hot beverage chain Peet's Coffee and Tea announced Friday it will acquire a majority stake in the Chicago coffee roaster Intelligentsia. This is the second acquisition for Peet's this month. On Oct. 6 the California-based company announced its purchase of Portland's Stumptown Coffee Roasters. 

For coffee lovers (or, er, snobs), this is a big deal: It's about whether their favorite local, artisanal roasters will become the next Starbucks now that they've sold out. 

Both Intelligentsia and Stumptown have cult followings. They have very few shops around the U.S. and are concentrated in the hip neighborhoods of urban areas. They are the darling brands of the third-wave coffee movement -- the kinds of places where baristas are knowledgable craftspeople rather than teenagers pushing buttons to make a little extra money. 

Some people are upset that these small, handcrafted-latte-kind-of-places are getting bought by bigger companies. "Please don't lose your soul," one Intelligentsia fan tweeted Friday.

The fact is, though, coffee is a business, and the demand for quality is growing beyond the urban core. (As a self-proclaimed coffee snob, there's nothing worse than traveling outside a major metro area and finding out the only coffee options are Dunkin Donuts and Starbucks.)

Just a few days ago, New York City-based reporter Ben Casselman tweeted that he was surprised to find Intelligentsia in a relatively small Iowa city.

There is a real question if great coffee like this can scale without sacrificing quality. People are starting to bet that it can. Back in June, before the two Peet's acquisitions, another big third-wave coffee favorite, San Francisco's Blue Bottle, announced it raised $70 million in venture funding.

On the other side of the coffee divide, Starbucks is trying to go high-end. It opened its first upscale cafe and roastery in Seattle last year.

The Peet's money will help both Stumptown and Intelligentsia compete with the venture-backed Blue Bottle, and try to stave off Starbucks.

Obviously, things go wrong at big corporations, and plenty could get diluted now that good coffee companies are selling out. But that is not the stated intention. In an interview with coffee culture site Sprudge on Friday, Intelligentsia co-founder Doug Zell said Peet's has promised to let the smaller company keep doing what it's doing:

Nothing about what we do in terms of sourcing direct trade is going to change. As we grow we’re going to continue to buy great coffees from the best producers in the world. We’ll be able to cast a wider net with the muscle and resources of Peet’s.

Let's hope that muscle is used as a force for good (coffee).

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