Specialty coffee is improving standards for quality more widely – but what does that mean?

The term “specialty” implies higher quality. Coffees that score 80 points or more are classified as specialty-grade, and then marketed as “superior” products to sell for a higher price.

As the global specialty coffee market has grown, it has shaped trends in the wider industry, too. Rising interest in single origins, exclusive varieties, and different brewing methods has raised consumer expectations of quality to new levels.

Its impact is certainly notable, but the market for specialty coffee remains comparatively small. Moreover, as the industry grapples with high coffee prices and inflationary pressures, both businesses and consumers are prioritising other equally important factors to manage costs.

To learn more, I spoke to Miranda Caldwell, founder of The Coffee MBA, Howard Barwick, European Business Development Manager at Covoya Coffee, Chris Deferio, founder of Keys to the Shop, and Spencer Mahoney, Vice President of Operations at Atomic Coffee Roasters.

You may also like our article on why specialty coffee needs to find new ways to assess quality.

Specialty’s influence over the wider market

As Alex Romano states in a recent SCA 25 article, specialty is a “subculture” of the wider coffee industry. After European colonialists started to establish global trade networks in the 16th century, coffee was a luxury reserved only for the most wealthy. 

In the 100 years or so that followed, coffee then became one of the first commodities to be marketed as an everyday necessity. People across various social classes had access to coffee, which spurred rapid growth in the market.

But there was still demand for differentiated and higher-quality products, especially in more mature markets like the US and Scandinavia. To stand out from competitors, a small number of roasters and traders in the 1980s and 90s started to brand their coffees as “gourmet” and supplied them to emerging specialty coffee shops.

Simply put, specialty coffee has to thank the wider industry for its explosive growth and popularity. But the relationship between the two markets is mutually beneficial. The coffee industry at large is also shaped by trends in the specialty sector.

Miranda Caldwell is the founder of The Coffee MBA, a coffee business consultant with over 20 years of experience. 

“Specialty set solid precedents for supply chain transparency, forcing the big players to be more clear and accountable,” she says. “It’s no surprise that large companies like Nespresso are now B-Corps. Smaller specialty coffee companies have taught consumers to be more conscious of the supply chain, so people demand more transparent sourcing practices and fairer prices.”

According to research from Mintel, nearly half of all new coffee product launches in 2020 carried an ethical or environmental claim. This number had almost doubled from a decade prior – indicating a huge shift in consumer purchasing priorities.

Scaling quality

Specialty coffee has always set itself apart from larger chains by focusing heavily on artisanry and craft. Baristas dedicate more time to each customer rather than prioritising speed and convenience, which adds more value to the “experience” of specialty coffee. In recent years, bigger companies have started to adopt a similar approach.

Chris Deferio is the founder of Keys to the Shop – a podcast and consultancy service for coffee business owners. 

“Specialty has influenced the wider industry because it showed that a focus on quality and craft vs. mass convenience and mediocrity is a viable business model,” he says. “Look at the Starbucks Reserve stores, for example. If it wasn’t for specialty’s obsessive focus on quality and craft, these wouldn’t exist. The concept needed to be proved by small players before bigger companies decided it was worth the risk.”

Consolidation in the coffee industry also reinforces this influence on the wider market. A wave of acquisitions over the past decade shows how larger brands want to capitalise on innovation and establish their own presence in higher-quality coffee segments:

• Nestlé purchased a majority stake in Blue Bottle in 2017
• In 2012, JAB Holding Company acquired San Francisco’s Peet’s Coffee
  • Three years later, Peet’s purchased Stumptown Coffee Roasters
• In July 2023, Keurig Dr Pepper purchased a US $300 million minority stake in La Colombe
  • Just six months later, US Greek yoghurt brand Chobani bought La Colombe for US $900 million
• De’Longhi SpA purchased a 41.2% stake in the cult coffee equipment brand La Marzocco

“We are now more agile in how we innovate, and the wider industry pays attention to these emerging trends so they can adopt them at scale,” Chris says. “When these concepts work more widely, the standards of specialty coffee are passed onto the mass market.”

But who influences who first? 

It’s easy to point to specialty coffee as the trendsetter, but the commercial coffee industry often doesn’t receive enough credit for the standards it created. Although specialty set the precedent for higher quality and more sustainable buying practices, the relationship between the two markets is symbiotic. 

Howard Barwick is the European Business Development Manager at Covoya Coffee – a specialty green coffee trader that imports to the UK, EU, and US markets.

“We often underestimate how larger chains have helped to improve consistency in terms of supply chain investment and sustainability across multiple origins,” he says. “Specialty coffee is also a significant driver of this growth, but on a much smaller scale that compliments the investment of key industry players.

“The conversation about sustainability in coffee has increased due to the number of specialty roasters entering the market, but it’s a nuanced and complex topic that is difficult to unpack,” he adds.

Specialty coffee also leverages the vast market reach of the wider industry to its advantage. As consumers become more informed about coffee quality and the supply chain as a whole, entry into the specialty market becomes more accessible.

Spencer Mahoney is the Vice President of Operations at Atomic Coffee Roasters in Boston, Massachusetts in the US.

“I think a lot of trends start in specialty coffee, and then we piggyback off the big chains as they use their marketing to educate mass consumer audiences,” he tells me. “I would argue that if larger companies didn’t do this, some of the trends in specialty coffee wouldn’t take off. 

“The beauty of this is there will always be a part of that audience that learns about specialty coffee for the first time,” he adds. “A Starbucks or Dunkin customer can seek out local or higher-quality versions of the coffees they like.”

Specialty coffee is about more than quality now

Quality has always been a cornerstone of specialty coffee. Across the supply chain, industry professionals invest in maintaining and improving standards to fetch higher prices and meet evolving consumer preferences. 

As coffee drinkers have become more knowledgeable, they have placed more value on quality in terms of flavour, freshness, and social and environmental impact. In turn, they are willing to pay premium prices for coffee they consider to be high quality.

But in recent years, market demand has shifted. Convenience is now more important than ever for both businesses and consumers, with products like capsules, instant, and ready-to-drink (RTD) coffee becoming more popular.

“We have seen an increase in coffee companies who embrace convenience in an effort to expand their customer base and create varied streams of income, especially following the pandemic,” Chris says. 

Convenience is king

The RTD market is one of the most obvious examples of how convenience is a bigger priority for specialty coffee consumers. Projected to be valued at US $43.8 billion by 2028, growth is outpacing that of the global coffee market, which is expected to grow by 4.37% in the same period. As roasters face rising operating costs, as well as a volatile C price, developing RTD products has helped many keep margins low and stay competitive.

In a similar bid to improve operational efficiency, specialty coffee has also embraced automation. Investing in technology such as automated pour over brewers, AI-powered roasting software, and super-automatic espresso machines has allowed coffee business owners to prioritise consistency and customer service while cutting down costs.

“I have never been fully persuaded by the ‘theatre’ of making coffee in a café,” Howard says. “Automated solutions have existed for some time, and specialty coffee has only recently adopted them to yield great results and scale good service.”

Specialty coffee will continue to influence trends

The global specialty coffee market is expected to grow at pace in the coming years. The rise in consumption is driven by many factors, including the growing influence of larger multinational chains, a general push for higher-quality products, and increasing interest in at-home brewing. In turn, we can expect standards for quality to keep rising.

“Less established markets are maturing and will start to look like the US and Australia in time,” Miranda says. “More importantly, we’ll see a market shift as producing countries start to consume more specialty coffee.”

One example is Colombia, where specialty coffee accounts for between 3% and 5% of the country’s total coffee consumption, according to data from an SCA report. The increasing representation of Latin American coffee professionals at competitions like the World Coffee Championships is also helping to raise awareness about higher quality coffee.

But its reach is limited

As a result of effective marketing strategies, however, we often overestimate the size of the specialty coffee market. Specialty-grade coffee only represents a small percentage of the total global volume produced, and many smallholder farmers don’t have the resources or infrastructure to raise quality above 80 points. In effect, there’s a limit to how much the market can influence the wider industry.

Additionally, while innovation is key to the growth of the specialty sector, it adds to the elite and exclusionary culture of the industry. Some consumers, especially those who just want a cup of coffee, may feel ostracised or overwhelmed.

“Specialty coffee certainly creates trends and pushes them out into the wider market, but it can quickly become too esoteric,” Miranda says. “If we follow trends from the World Barista Championship, many are impractical for the real world. Who is willing to freeze their milk every day?

“I believe it’s time that outside trends start influencing the specialty coffee industry,” she adds. “If we want a values-driven impact to grow, we need to cater to the needs of new generations, while keeping quality a strong differentiating factor.”

Thanks to specialty coffee, quality standards have improved across the wider industry. As the market continues to grow, consumer expectations are likely to keep getting higher, but there are many factors to consider.

Price-conscious customers want the most value for their money, and are increasingly prioritising convenience over everything else. Roasters and coffee shops need to keep this in mind without compromising quality and service if specialty coffee is to continue shaping the wider market.

Enjoyed this? Then read our article on how changing quality assessment can help both producers and roasters.

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