Last month, Starbucks (NASDAQ:SBUX) began offering premium coffee blends for as much as $7 per cup. Why? The company isn't happy that small, specialty producers are leveraging the wide-open market opportunity and are starting to encroach on the chain's powerful market position.
While the specialty coffees won't bring in sizable chunks of business, it will help Starbucks cater to curious customers and those with a little more disposable income. Of course, the novelty of filling its shelves with premium coffees will lose its luster over time and could actually fan the flames of competition. But Starbucks could also find unique blends that pique the interest of its customers and build customer loyalty, which could open the door, if ever so slightly, for premium biotech coffees.
While that may freak you out, take comfort in knowing that, initially, biotech brews will be taking aim at specialty blends produced from animal feces (yes, that's correct). But will Starbucks turn to biotech to distinguish itself from the growing crowd of competitors and reel-in animal cruelty practices?
Cut the crap... really?!
The idea behind biotech coffee boils down to the biological process of fermentation, which is used to produce everything from alcoholic beverages to laundry detergent enzymes, and vitamins to drilling fluid additives. Chances are you're already drinking coffee that has been touched by fermentation -- including those from Starbucks -- because fermentation is widely used today to process raw coffee beans before drying and packaging.
So, where do the animal feces come into play?
To make a long story short, when the Dutch colonized the East Indies and established large coffee plantations, they forbid native farmers from harvesting coffee beans for personal use. However, natives figured out that local civets (pictured below) enjoyed eating the coffee fruits and, better yet, left the coffee beans intact after passing them through their digestive tracts -- which completed fermentation. Collect enough beans, and you can have yourself a brew!
Civet coffee remained a local delicacy until recently, when it took off after being introduced to Western markets. Not surprisingly, the difficult production process makes civet coffee a specialty product that commands specialty product prices -- as high as $80 per cup! To keep up with demand, producers have turned to practices widely interpreted as animal cruelty, often keeping civets locked in cages, and force-feeding them coffee fruits. Others have attempted to cash in on the opportunity by utilizing the digestive tracts of other animals, even elephants. Simply put, coffee made using this method has become quite the cash crop.
Biotech to the rescue
Established in 2008, Starbucks' Coffee and Farmer Equity, or CAFE, Practices ensure coffee quality while setting a high bar for social, economic, and environmental standards. Starbucks sourced 95% of its coffee from ethical sources in 2013 -- and has set the goal to purchase 100% of its coffee from ethical sources by 2015. The only way for Starbucks customers to purchase anything resembling a civet coffee without spending $80 per cup, or harming animals, is through cultured products created with biotech.
Cultured products start-up Afineur is using controlled fermentations with fungi to craft better and healthier coffees in addition to other foods and beverages.The company wasn't formed by corporate interests, or those looking to extract profits from your pockets, but by two people interested in offering better products with smaller ecological footprints. In fact, co-founder Camille Delebecque decided to start the company after conducting do-it-yourself biology experiments, enabled by falling costs of biotech tools, in his kitchen. (The DIY and do-good roots are a common thread among new biotech start-ups, including the platform being developed by Muufri for producing vegan, cow-free milk (also lactose-free) from engineered yeast.)
Afineur's first product will unlock a range of flavors expressed in civet coffee without the civet, and it's currently hammering out an agreement with a roaster and distributor. While it won't be an exact replica of traditional civet coffee, the company plans to sell the beans for $50 to $100 per pound -- well below $80 per cup, and within the price range of premium Starbucks blends. More importantly, Afineur could allow Starbucks to sell premium, civet-like coffee to its curious customers while staying true to its responsible sourcing goals.
So will Starbucks ever offer biotech coffee?
Starbucks has held its ground against activist groups attempting to pressure the global chain into sourcing milk from cows fed non-genetically-altered animal feed, however, that's due to economic reasons and not its affinity for biotech. It still remains much easier for the company to say "no" to Afineur's cultured premium coffee than to stock its shelves with the biotech brew.
Then again, Starbucks is seeking a patent of its own for a novel fermentation system that converts ground coffee into nutritionally enhanced animal feed. Moreover, Afineur could use its platform to create flavors that are truly unique and not found anywhere else on Earth. That would surely help Starbucks -- or another distributor -- stand out from the crowd while fulfilling its role as an environmental steward. Whether or not Starbucks will be brave enough to be the first to take the leap remains to be seen.
Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, CAPS page, previous writing for The Motley Fool, and follow him on Twitter to keep up with developments in the synthetic biology field.
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