Thursday, August 2, 2012

Will Peet's be Starbucked?

It's pretty trivial in the scale of things, but Tuesday's SF Chronicle carried a story I found ... disappointing. In Rival bid for Peet's may be brewing at Starbucks, Bloomberg reporter Alex Barinka wrote:
Peet's Coffee and Tea Inc. has investors wagering rival bidders will attempt to top a $1 billion takeover offer that's already the most expensive U.S. beverage deal.


The most likely candidate for a counteroffer is Starbucks, the world’s largest coffee-shop chain, said Keith Moore, an event-driven strategist at MKM Partners LLC in Stamford, Connecticut.

Peet's is named for Alfred Peet, who founded the company in Berkeley, California, in 1966. Peet mentored Starbucks' co-founder Gerald Baldwin, who later bought Peet's and sold the Starbucks chain. Baldwin was Peet’s chief executive officer for about 23 years and still serves as a board member after more than four decades.

Starbucks, which has a market value of $36 billion, may now be interested in owning Peet’s coffee as a higher-priced option to sell to supermarkets, said Wedbush’s Setyan. Peet’s "is perceived actually as a more premium offering than Starbucks on the grocery shelf, and they have consistently been able to charge $1 more per 12-ounce bag on the grocery shelf," said Setyan. "That is something that Starbucks covets."

The original Peet's is on the corner of Walnut and Vine Streets in Berkeley, around the corner from Chez Panisse. It's a 6 or 8 minute walk from where I work, and I have colleagues who prefer it to the independent coffee shops nearer to our office. I'm not quite sure why. The espresso is far better at Yali's, IMHO. The walk is longer to Peet's, so I suppose there's the stretch-your-legs factor.

Peet's is a point of pride for our fair city. The liturgy goes something like this: Berkeley spawned Peet's spawned Starbucks spawned a remaking of national coffee culture.

Nowadays Starbucks might as well be any other fast food chain. It's ... product. And, in my experience, a lot of the Peet's cafés that aren't the original on Walnut and Vine have a similar, sterile, extruded feel to them. While that may be what some folks want in a coffee shop -- that I know just what I'm going to get experience -- it turns me off. Cafés with character and community, even history, are my cup of ... java.

Yeah, I'll go to a Starbucks when there aren't any decent local cafés to choose from, but if I have any other choice? Nah. Not so interested.

If Starbucks buys Peet's? I suppose even the original Peet's café will sink to that only-if-there's-no-other-choice spot in my rankings.

That'll be a shame.

Related posts on One Finger Typing:
Newsflash! Coffee drinkers pay more better attention!!
Watching food terroir go national
Starbucks' vacuum-packed greenwashing

Thanks to Stanislaw Szydlo via Dziemal and Wikimedia Commons, for the image of coffee berries included in this post; and to Andreas Praefcke, also via Wikimedia Commons, for the image of the interior of Café Central in Vienna, arguably my favorite café (so far) in the whole wide world.


  1. Thank you for posting the wonderful photo of Cafe Central in Wien. It brought back great memories. Too bad we cannot find any cafe as nice as those you easily stumble upon in Europe. Never liked the settings of Starbucks or Peet's, so Peet's coffee tastes much better than the watery Starbucks. Love my local Cafe Roma or Cafe Milano much better.

  2. As you may have seen, Steve, Peets was bought by a German conglomerate, which may leave it relatively independent - we'll see.

    Kathleen Pender, a business/personal finance columnist for the San Francisco Chronicle, gave her as-usual perceptive insights about that purchase, and about Peet's business model, here:

  3. But now I do see, per your post, that what I'd thought was a completed acquisition was simply a purchase offer, and that Peet's may still be in play:

    Some of the early connections between Peet's and Starbucks:

  4. @Aron -- thanks for the links! Yes, it's just an offer on the table at this point. Pender's discussion of the value of Peet's is referenced in the Bloomberg article I cited as well -- that in grocery stores Peet's coffee brings $1 more for a 12 oz package than Starbuck's.

    @Matthew -- Let's have coffee at Milano or Espresso Roma sometime soon, eh?