Coffee battle brewing in Portland
As Freaky Bean circles the wagons, CBD outflanks them in Freeport
By Annie Reiner
One morning earlier this summer, I had an experience that illuminated the complex, passionate politics that shape the market for coffee around here. I was walking down Congress Street, late enough to be in a hurry, but not so late as to forgo my caffeine fix. Popping into the Starbucks in the Hay Building, the first thing I saw was a Portland Buy Local t-shirt worn by a young woman standing in line.
The sight filled me with guilt. Late or not, I chided myself, I should have gone a block or two out of my way and given my business to Coffee By Design, or Arabica, or Zarra’s — a locally owned and independently operated coffeehouse, not another link in one of the corporate chains squeezing the local economy dry.
The barista also noticed the girl’s t-shirt, and laughed. “Should you really be wearing that in here?” he asked her.
“I’m not working today!” she protested hotly.
I drew a startled intake of breath. “You work here?” I interrupted.
“Yeah, yeah, I know,” she said. “But I’m not technically at work now. Plus, my boyfriend works at Coffee By Design.” The barista and I looked at each other and raised our eyebrows, dumbstruck by the irony of it all.
In retrospect, the scene wasn’t as ironic as it seemed then.
Since Starbucks entered the downtown Portland market 10 years ago — and quickly swallowed a small indie shop down the street — locavore coffee connoisseurs have considered the company an evil empire. But Starbucks’ impact helped pave the way for the success of small, locally owned coffee businesses, including two that now compete with each other, and Starbucks, for a share of the black-bean pie: Coffee By Design and The Freaky Bean Coffee Company.
You won’t run into CBD co-owner Mary Allen Lindemann in line at Starbucks, but the founder of the Portland Buy Local campaign said Starbucks’ marketing did a lot to create demand for high-quality brews here and elsewhere. Starbucks “raised customers’ expectation of: ‘This is what great coffee should taste like,’” said Lindemann, who founded and runs the company with her husband, Alan Spear. The couple returned to Portland (Spear’s hometown) in the early 1990s after several years in Seattle, where Starbucks, born there two decades before, was then perfecting the business model that would make them the biggest coffee retailer in the world.
Starbucks is directly responsible for the rise of Freaky Bean. Founders Andrew Kessler, originally from Rochester, NY, and Jonathan Stratton, of Millinocket, met while working as baristas at the Hay Building Starbucks in 2001. They left the company the next year, but reconnected one night in 2005 and were inspired to start their own coffee empire. “We realized we have to give it a go, see if we can do this, and see if we can do it better than Starbucks,” said Kessler, who credits his former employer with teaching him about good coffee, good service, and, perhaps equally important, good marketing.
And there’s another lesson Kessler and Stratton picked up from Starbucks: start small, expand quickly and aggressively, and focus on maintaining a high level of quality and consistency as you grow. “The whole thing with Freaky Bean, like any successful brand of business, is that the culture is matched store to store, the experience is the same experience all over,” said Chris Kast, Freaky Bean’s marketing manager. “That’s important to the brand. It’s also important to the customer.”
In some ways, Freaky Bean’s entrance into the Portland market has mirrored CBD’s. Both highlight their involvement in community causes. For example, Freaky Bean sells a blend that benefits the non-profit Portland Music Foundation; a portion of the proceeds from sales of CBD’s Rebel Blend go into a fund for local artists and arts organizations. And both companies chose to make early investments in locations on the depressed main drag of a downtown emptied by suburban sprawl. For CBD, it was Congress Street in 1994. For Freaky Bean, it was Main Street in Westbrook, where their second location opened last summer.
But whereas it took a dozen years for CBD to add a third location on the Portland peninsula (the Washington Avenue “coffee bar and micro roastery,” just a few blocks from CBD’s India Street coffeehouse), Freaky Bean already has two coffeehouses in Scarborough (on Route 1 and in the Gateway at Scarborough complex anchored by Cabela’s), and another on Broadway in South Portland, which opened this summer. Last December, Freaky Bean acquired the Maine Roasters Coffee Company, taking over the MRC shops in Falmouth and Yarmouth.
With coffee shops in every town surrounding Portland, one figures it won’t be long before Freaky Bean enters the city limits, challenging CBD on its home turf. Before they entered the greater Portland market, “We knew CBD had been here for a long time, doing a great job, and we wanted to give ’em some competition,” Kessler said with a smile.
So, does Freaky Bean plan to open a location in the Forest City?
“We see ourselves beginning to build,” said Kessler. “What happens down the line? Who knows? I’m not going to make any promises, because every day brings something different around here.”
Lindemann and Spear aren’t resting on their laurels. Last year, they beat out Freaky Bean and several other competitors to win the coveted right to operate a coffee shop inside L.L. Bean’s flagship Freeport store. The deal has the potential to skyrocket CBD’s brand recognition nationwide — not to mention the potential to sell an ocean’s worth of coffee — but Lindemann doesn’t talk like someone who just won a jackpot.
“We view it as just another location,” she said. “You’re not going to get all the bells and whistles with us.”
CBD’s foray into Freeport is not the beginning of a major expansion, said Lindemann. “We’ve grown in a way that we feel we can support,” she said. “We have not taken venture capital money, which is [why] a lot of businesses we’ve seen have grown and gone away very quickly. Everyone here will tell you that if there’s a nickel missing, I want to know where it is.
“We’re a small business,” she continued. “The perception that has been interesting to us is that people think we’re bigger than we are, and that there’s more money than there is.”
Freaky Bean has relied, in part, on outside investors to support its rapid growth, but it’s showing no signs of being in danger of going away anytime soon. To the contrary, the company is beginning to challenge CBD in another big segment of the market: wholesale contracts with supermarkets, shops and restaurants.
This competition is becoming increasingly apparent around town. On Deering Avenue, the relatively new StarEast Cafe declares it proudly serves Coffee By Design’s blends. Next door, at the well-established Bayou Kitchen, Freaky Bean’s sign is in the window. In Monument Square, the recently opened Mousse Cafe and Bakeshop boasts of serving Freaky Bean coffee. Steps away, people exit Zarra’s Monumental Coffeehouse holding cups of Coffee By Design’s brew that advertise CBD’s name and logo.
The wholesale side of CBD’s business began in earnest when what Lindemann called their “dream client,” the celebrated Old Port restaurant Fore Street, approached them in 1998. She said she and Spear hardly felt prepared to handle this type of account at the time, but they’ve since landed upwards of 200 wholesale deals — mostly in Maine, but also in cities like Charlotte and San Francisco.
The wholesale contract CBD has with The Gorham Grind allow CBD to have a presence in the town without actually operating a coffeehouse there. The Gorham Grind buys CBD coffee, syrups and cups, but remains independent.
Lindemann said she and Spear are cautious not to let the temptation to expand their wholesale business water-down their brand. “We don’t want to be everywhere,” she said. “We want to make sure [all our clients] are representing us well.”
Kessler said Freaky Bean has not put a lot of energy into the wholesale side of the business to this point, preferring to focus on their coffeehouses. But again, it seems only a matter of time before more Freaky Bean signs pop up in restaurants and coffee shops around town, and the company already has accounts in other areas of the U.S. and Canada. (The acquisition of Maine Roasters Coffee also included MRC’s wholesale accounts.)
CBD is content, for the time being, with their 26- and 55-pound, small-batch roasters. Freaky Bean has been roasting on a similar scale in Westbrook, but hopes to upgrade to a 154-pound roaster in the near future.
As the competition between the two companies heats up, it gets easier to imagine a future Portland where Starbucks won’t be the guilty choice of time-pressed pedestrians, assuming it’s a choice at all. Instead, you’ll walk into a Freaky Bean in the Hay Building and feel guilty for wearing your CBD t-shirt, even though you’re not on the clock.