Emeryville, Calif. — Doug Welsh hunches over a glass, takes a great slurp and then jets dark brown liquid into a brass spittoon.
Welsh grows animated about what he is tasting: coffee grown at 6,000 feet in the remote Colombian province of Choco, a region previously unknown as a source of fine java.
For The Record
Los Angeles Times Thursday June 22, 2006 Home Edition Main News Part A Page 2 National Desk 1 inches; 43 words Type of Material: Correction
Peet's Coffee: A chart of coffeehouse chains accompanying an article about Peet's Coffee & Tea Inc. in Business on June 11 omitted It's a Grind Coffee House. The Long Beach-based chain has 86 locations, which would have ranked it eighth on the list.
"It's rare to find beans like these from a new area," said Welsh, the coffee czar for Peet's Coffee & Tea Inc.
High-quality beans and a manually controlled roasting system have set Peet's apart from rivals in the sprawling premium coffee business, according to coffee reviewers.
Now, Peet's -- the company credited with kindling the nation's gourmet coffee fervor when Dutch immigrant Alfred Peet opened his first store 40 years ago in Berkeley -- is brewing a plan for rapid growth. That has some wondering whether Peet's can maintain a culture of quality that has created legions of passionate "Peetniks" from Beverly Hills to Baghdad.
"If they put growth ahead of quality, that would be bad," said Robert France, who frequently makes a 25-mile round trip from his home in Chula Vista to a store in the Hillcrest section of San Diego to purchase a cappuccino and some beans to brew at home.
Maintaining "artisan" quality while growing quickly has proved difficult for others, said Kenneth Davids, an industry consultant and editor of the online Coffee Review. . Davids points to Starbucks, where, he contends, roasting skill has deteriorated since Alfred Peet taught the chain's founders how to process beans.
Irvine-based Diedrich Coffee Inc. also had a reputation as a small-scale, high-quality chain but foundered on ambitious growth plans.
For decades, Peet's has grown at barely a slow drip. But its expansion accelerated after the company sold shares to the public in 2001. That year, just two Peet's stores opened. Ten debuted in 2003 and 17 the following year. Last year, the company opened 20 stores, and it expects to launch as many as 28 in 2006.
The chain, which currently has 116 stores, can grow "in the 20% range for as far as the eye can see," said Chief Executive Patrick O'Dea, adding that it's his job "not to mess it up."
Yet even such a torrid pace would only match the rate at which the industry is growing domestically, analysts said.
Americans spent more than $11 billion in 2005 on premium coffee. About 56% of adults in America drink coffee daily, but fewer than 1 in 5 consume the high-end coffee sold by Peet's, Starbucks, Coffee Bean & Tea Leaf and the other chains, according to the National Coffee Assn.
With just $175 million in 2005 sales, Peet's would seem to be a bit player in the industry, but in fact the company has played an integral role in shaping the nation's taste in coffee.
Alfred Peet developed the dark or deep style of roasting coffee, which preserves "a tremendous amount of sweetness and character," Davids said. Starbucks adopted and popularized the style, which Americans now associate with premium coffee, as it grew to 8,000 domestic stores.
But if not for Peet's, Starbucks might never have gotten off the grounds.
Peet served as the Seattle-based chain's wet nurse, training its founders and supplying it with coffee until Starbucks grew too big. At that point, Peet helped Starbucks purchase a secondhand roaster and taught the owners how to use it.
"Without Peet, we would have gone nowhere," said Jerry Baldwin, a Starbucks co-founder and a Peet's director who once served as its chief executive.
On a recent trip to the original Peet's store on Vine Street in Berkeley, Baldwin recalled his first visit 36 years ago, when he and two business partners sifted through investment ideas, including producing films about ethnic music.
"There's still no tables inside or sign on the building. The roaster was right there," Baldwin said, pointing to the middle of the shop.
Even back in 1970, the coffee cognoscenti viewed Alfred Peet's tiny corner store near the UC Berkeley campus as the West Coast's caffeine mecca.
Baldwin and his partners were won over and used Peet's as the model for their new venture, which opened the next year in rain-drenched Seattle. The partners mulled over whether to call the Seattle store Steamers or Customs House but settled on Starbucks, thinking that their shop needed an easily pronounced name, like Peet's.
Baldwin's partnership purchased Peet's for $4 million in 1984, five years after Alfred Peet retired. In 1987, when one of the partners wanted to cash out, Baldwin kept Peet's and sold Starbucks for $3.8 million to a group headed by Howard Schultz, a former Starbucks marketing director who had quit to open his own coffeehouse.
Schultz put Starbucks on the fast track, taking the company from eight stores in the Seattle metropolis to 11,000 worldwide currently. His stake in the company is now worth more than $1.1 billion.
Baldwin, whose stake in Peet's is worth about $10 million, said he didn't regret the move.
