Coffee Bean International, Portland, Ore., hopes to make its name in independent coffee shops, and through mass merchandisers, foodservice operators and any other distribution channel not already cornered by bigger coffee and tea marketers.
"There are very few things we could ever sell to Starbucks, so we've targeted everyone else," said Jim Myers, president of CBI. "We want to be the supplier for all the independent coffee shops that don't roast their own. If Starbucks has strong packaging and products, then to compete, these independents have to have the same thing."
Since joining CBI two years ago from Hunt Wesson, where he managed the Swiss Miss and Orville Redenbacher brands, Mr. Myers has overhauled CBI's packaging and rolled out an impressive array of new products. His goal: to transform the 23-year-old coffee wholesaler into a branded beverage company.
Toward this end, Mr. Myers' staff first tackled CBI's longtime roasted coffee blend, renaming it Panache and creating a point system to reward retailers who are frequent buyers. Earning one Panache Point for every pound of coffee purchased, retailers can cash in the points for coffee grinders, brewers, or Panache cups, aprons and T-shirts.
The coffee roaster stays in touch with loyal retailers through a quarterly newsletter, and holds coffee tastings and seminars.
"Panache is a banner under which independents can compete," Mr. Myers said.
CBI reports the Panache brand is sold in 2,000 U.S. retail outlets, making it one of the most widely available specialty coffees in the country, according to the Specialty Coffee Association of America, Long Beach, Calif.
The privately held company doesn't report sales, but its output in tons has grown 40% a year in the two previous years. The coffee roaster hopes to boost sales further with its new Panache Gourmet Cocoa and Xanadu Exotic Tea.
"They're bringing a new level of sophistication to marketing," said Ted Lingle, executive director of the coffee association. "They recognize segments as new distribution channels and are developing programs for those channels-not just products."
CBI may encounter some hurdles as a national roaster targeting regional retailers, Mr. Lingle added. Independent coffeehouses often prefer to serve local brands, making their shops more relevant to the community, he said.
Another industry observer disagreed, saying customers appreciate the quality control from a national brand.
"A local mom-and-pop coffee unit may have a lot of charm and there may be a strong personal touch, but you don't know about the quality of the coffee," said John Rohs, an analyst who follows Starbucks for Wertheim Schroder & Co., New York.
CBI faces another challenge in the foodservice industry, already crowded with prominent coffee competitors. Starbucks can be found in restaurants, Barnes & Noble bookstores, Sheraton hotels and on Delta Airlines flights.
And several national hotel chains are developing their own coffee blends; Marriott International now operates 30 Gourmet Bean kiosks in its hotel lobbies and will add another 70 this year.
Mr. Myers says CBI is taking a different approach, targeting chains like Best Western International and True Value Hardware, which sell their franchises to independent owners.
Recognizing the limits of the independent retailer and foodservice channels, CBI is developing products for more mainstream distributors. Among these is the new Blue Parrot Aussie-Style ice tea line, created for sale in mass merchandisers.
Packaged in 5-liter cases, the honey-sweetened, ready-to-drink brewed tea begins shipping to discount and club stores next month.
Mr. Myers declined to specify which discount chains will carry Blue Parrot, stating only the product soon will be tested at retailers in Portland and in the South.
A concentrated Blue Parrot syrup also will be packaged in 5-gallon containers for restaurants and foodservice operators.
"There's no way we're going to come out with glass bottle beverages and expect to get distribution in convenience stores" because there are already so many competitors there, he said.
Like it or not, CBI soon will go head-to-head with the green and white logo it has worked hard to avoid. Using its Sunday Best brand-a budget coffee packed in handled jug containers-CBI will follow Starbucks into mass merchandisers.
Starbucks in 1991 introduced its budget Meridian brand to CostCo discount stores. The whole bean coffee, packaged in 2-pound containers, is now available in most of the chain's 213 stores.