Best Peet’s Coffee

Founded in California, Berkeley in the mid-1960s, Peet’s Coffee & Tea, Inc. contains 57 retail shops (38 in northern California) along with an online and mail-order system offering 33 coffee and tea varieties. In late 2000, it launched its first attempt to cater to a national audience and prepared for an initial public offering.

The IPO, held on 25 January 2001, met with huge success, increasing the corporation $24.6 million. Peet’s sales profile is distinctive: approximately 15 to 20 percent of its revenue comes from brewed coffee, compared to 85 percent in other coffee houses on the consumer market.

Sales of beans and teas online, and parcel-order account for the rest of its sales. Since the beginning, the company proudly believes in the quality of its beans and the immediacy of its operation. Peet’s roasts coffee to order six days a week, and they accept orders every day for roasting and shipping the next day.

In the 25- to 45-year-old bracket, Peet deliberately appeals to college-educated clients. Around one-third of Peet’s clients buy beans, one-third buy drinks, and about one-third buy both.

The Founding of Peet’s in the 1960s

Peet’s Coffee & Tea was founded in 1966 when good coffee meant vacuum-packed grinding percolator. National coffee brands had debased their product for the preceding decade. It included the addition of an ever-increasing proportion of cheap, tannic robusta beans.

Meanwhile, Arthur Peet, a Dutch immigrant, began importing Arabica coffee beans in the 1950s. With a passion for dark European-style roasts, he created the hot and oily brews that Europeans preferred. Peet had grown up in Alkmaar, Holland, in the family’s coffee and tea business. He had worked in Indonesia’s tea trade since World War II.

Arthur Peet began to brew his own blend of dark roast beans in San Francisco in the mid-1960s. He sold at his first retail store in Walnut and Vine Streets, North Berkeley. While some dismissed his dark-roasted coffee as a ‘burnt’ degustation, the brew caught on with students, artists, writers, and musicians. The outfit was quickly known as a small, premium supplier of quality beans.

It would be five years before Peet’s opened its second store in Menlo Park and nine years more in 1980, before opening its third outlet on Berkeley’s Domingo Avenue. From the outset, Peet’s emphasizes quality over quantity and fine bean roasting rather than coffee shop creation.

In reality, it actively concentrated on selling whole beans for home consumption and ensuring that its beans were delivered fresh from the roasting plant. Making its customers order their coffee by mail and make their own morning cup at home was as happy as letting them come in to buy a cup of ready-made coffee.

That commitment continued throughout the eighties and nineties. ‘I still consider ourselves more than a drinks bar as a specialty roaster,’ Jerry Baldwin, who in 1984 took over ownership of Peet’s from Arthur Peet, was quoted as saying in a 1999 San Francisco Chronicle.

Peet’s coffee beans and teas were never vacuum-packed and delivered to order within 24 hours after they were roasted. Coffee was made fresh in-store every half hour, and no beans could last for more than seven days.

Peet’s in the 1970s- 80s

In 1984, Jerry Baldwin purchased Peet’s. This year the espresso machines made their debut, including Caravali, a wholesale coffee company, and a small Seattle chain known as Starbucks. In 1971, inspired by Peet’s, Baldwin and his two associates, Gordon Bowker and Zev Siegl, pulled $8,000 in cash and loans together to found Starbucks.

This happened when Baldwin initially visited Peet; he and his collaborators traveled to Berkeley in 1971. They visited this place to learn about Peet’s coffee before Arthur Peet was going to market it for Starbucks use to them. They sold Peet’s coffee at their new store in the Pike Place Market for the next 18 months, before they returned to Seattle.

The growth of Peet during the 1970s and 1980s, by contrast, was conservative. The company sporadically opened stores one or two each year. They opened these stores throughout northern California along with a low-key marketing plan. To uphold the legacy of Alfred Peet, they kept the firm small and local. Baldwin promoted quality over volume and word-of-mouth ads. The idea behind it was to promote the company’s quality message with ‘a whisper instead of a shout.

Yet, Baldwin clearly did not like the corporate environment for his administration. In a Boston Globe article, in 1999, he acknowledged that his tenure at Boeing gave him some indication of his skills.

Peet’s Accelerating Expansion in The Middle of ’90s

Peet’s growth picked up considerably in 1994 after the San Francisco investment company, Hambrecht & Quist, secured a $6 million private placement. The money allowed Peet’s to open a 60,000 square-foot Emeryville roastery. It had the capacity to supply 150 stores. These stores reported $1.2 million in annual revenue and during the rest of the 1990s.

By 1996, Peet’s had around 30 outlets, which sold coffee, tea, scones, and muffins at the time. A range of brewing products and equipment had cost about $40 million. Also, Starbucks pulled in $696.5 million from its more than 1,100 outlets around the US, Canada, Japan, and Singapore.

By 1999, Peet’s had nearly 50 outlets which expanded to the areas of Chicago, Portland, and Oregon. Moreover, it was preparing to enter the Boston market where heavy mail-order business had signaled that the city was ready for a new coffee plant.

In 1999, Peet’s had a direct approach to sell its West Coast coffee. It negotiated 3.3 million shares of common stock for its January 2001 IPO. It happened due to the consumption of 450 million cups of coffee by Americans, by investing 18 billion dollars per year at the beginning of the 21st century, and coffee houses becoming the nation’s boardrooms. The sale would increase the company’s share of Baldwin from 31 to around 15 percent.

Baldwin still insisted that Peet’s could ride the wave of coffee excitement generated by rival Starbucks and others. Peet’s timing, as Baldwin saw it, was fine. With its better product, Peet’s will step in and reap the rewards of selling to an already educated public ready to upgrade from super-premium coffee.

Principal Competitors of Peet’s Coffee

Essentially, any coffee roaster is a competitor. However, the major competitors include Starbucks corporation, Green Mountain Coffee, Diedrich Coffee, Coffee People, and Caribou Coffee Company.

Peet’s Chronology

• 1966: Arthur Peet opens North Berkeley’s principal Peet’s shop.

• 1971: Peet’s opened the second store in Menlo Park; Jerry Baldwin and his accomplices launched the first Starbucks location in the Pike Place Market in Seattle, selling Peet’s espresso.

• 1975: Peet’s opens its third Berkeley store.

• 1984: Baldwin’s gathering purchases Peet’s Coffee and Tea.

• 1987: The proprietors of Peet sell Howard Schultz the Starbucks chain. 

• 1994: In Emeryville, Peet’s opened a 60,000 square foot roastery. 

• 1995: Peet’s opens the first store outside the Bay Area; Peet’s starts selling espresso to Au Bon Pain pastry kitchen bistros. 

• 1997: Peet’s opens the first store outside of northern California; Chris Mottern succeeds Salkin as Chairman and CEO.

• 1999: Peet’s advertisement for Boston; the first Chicago store opens. 

• 2001: 17 percent share of Peet’s growth on the first day of NASDAQ trading.

Is Peet’s Coffee Environmentally Friendly?

Peet’s Coffee Alameda coffee roastery was the first LEED-certified coffee roasting facility in the U.S. 

LEED is an acronym for ‘Leadership in Energy and Environmental Design’ and was developed by the U.S. Green Building Council (USGBC). As stated by Boston University

LEED is an internationally recognized green building certification system, providing third-party verification that a building or community was designed and built using strategies aimed at improving performance across all the metrics that matter most: energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts.

Peet’s coffee is also concerned with the impact of coffee production through its sustainability program as outlined below.

Is Peet’s Coffee Sustainable?

Peet’s Coffee and Tea source the highest quality coffees that supports farmers, respects the environment, and recognizes the role of farming communities. 

Peet’s Coffee has a strict verification program that is measured and monitored for environmental impact from a non-profit partner called Enveritas. Peet’s also sources coffee beans by direct trade and welcomes certifications such as Organic, Fair Trade, Rainforest Alliance, and Bird-friendly certifications. You can read more about Peet’s Coffee and Tea sustainability plan here.