A New Day on Earth for Coffee
Cometeer: The Official Coffee of Not Boring
Welcome to the 1,332 newly Not Boring people who have joined us since Monday! Join 57,550 smart, curious folks by subscribing here:
Today’s Not Boring is brought to you by… Cometeer
Whenever I have a sponsor, I say “This week’s Not Boring was brought to you by…” In truth, every Not Boring is brought to you by Cometeer. I write seven days a week, waking up as early as 5am before the baby gets up so that I can get some work done before the day’s craziness. Every day, without fail, I drink three Cometeers to keep me going.
Normally, when I tell people about Cometeer, I leave them hanging. The company has had a pretty tight waitlist until now. But today, exclusively for Not Boring Readers, they’re opening the floodgates. Use this link to skip the waitlist and get 50% off your first box (you can share it with friends, too). I’m biased, but I think you’d be crazy not to take us up on this.
Read on to learn about the $94 billion coffee market, why I drink three Cometeer special, and why Starbucks tastes like ash…
Hi friends 👋 ,
I’ll keep this intro short. I love this product, and I can’t wait to tell you about it. I’m a Daily Active Drinker (DAD) and Cometeer is to thank for the 10k+ words that hit your inbox every week.
Important note: today’s post is a Sponsored Deep Dive — you can read more about how I select which companies to work with here — crossed with an Investment Memo. I am a proud small investor in Cometeer, and this post is part of the reason they let me invest in the last round.
Let’s get to it.
A New Day on Earth for Coffee
Cometeer: The Official Coffee of Not Boring
With Stripe Sessions kicking off this week, one question is on everyone’s mind: what coffee do the Collison brothers drink?
That’s easy. Cometeer, of course.
Cometeer grinds, brews, and flash freezes coffees from some of the country’s best roasters to preserve the full complexity and deliciousness of each cup until you’re ready to drink it. This is not instant coffee, which is brewed and dehydrated coffee; this is brewed and flash frozen coffee that you melt. To make that happen, they’re solving a whole bunch of challenges that have plagued the coffee supply chain, and delivering my favorite cup of coffee in the process.
Drop the puck in a mug, pour hot water, and voila. The Cometeer I make at home in 30 seconds is better than the vast majority of pour-overs I’ve had in NYC.
Cometeer is great for iced coffees and espresso-based beverages, too. Really, the taste is as good if not better than barista-quality, and even I can whip up the fancier ones with minimal effort. I didn’t even know how to brew a pot of coffee until a couple years ago.
The Collisons are just two of the company’s high-profile fans. Cometeer has confirmed that it’s raised over $50 million from a stacked list of venture funds, founders, DTC experts, coffee connoisseurs, and celebrities.
Institutional Investors include D1 Capital, Elephant, Tao Capital, Addition Ventures, Avenir, Greycroft Partners, and TQ Ventures. Coffee-related backers include the founder of Keurig Green Mountain, the former President of Nespresso, and lead investors in Blue Bottle. Celebrity backers include models, celebrity chefs, actors, and musicians ranging from Maroon 5 frontman Adam Levine to Breaking Bad star Aaron Paul. Notable entrepreneur investors include the founders of Allbirds, Android Mobile, Better Mortgage, Candid, Daring Foods, Dollar Shave Club, Gloss Genius, Flatiron Health, Harry's, Dollar Shave Club, Materialize, Morning Brew, Omaze, Parade, Snorkel AI, Scopely, Stripe, Ramp, and Warby Parker, to name a few. In fact, over twenty founders of billion-dollar businesses sit on the cap table.
Not Boring isn’t a billion dollar business (yet), but I’m investing too, because I did the math. I drink 3 Cometeers per day on average. That’s 1,095 Cometeers per year. Count ‘em:
At $2 per capsule, I’ll spend $2,190 on Cometeer this year. And assuming that I drink this stuff ‘til I die (I give myself a good 50 years), my lifetime spend on Cometeer is going to be $109,500. It seems high, but I get three coffees for less than the price of two from a decent coffee shop, and it’s in a whole different league than other capsules or pods in terms of taste and caffeine levels.
What it all comes back to is the fact that the coffee is really good. I’m biased and not an expert, so don’t take my word for it. Cometeer won Best New Product at the Specialty Coffee Expo in 2019, the Expo’s most prestigious award. That’s an event at which people normally run away from anything in a capsule or a pod, and Global Coffee Reports Magazine noted, “Just went you thought you’d seen it all, the Cometeer Coffee Capsule, winner of the Best New Product open class category, had fans flocking to the product like seagulls to a chip.”
So this is a post about coffee, as a product and as a business. We’ll treat this post like an Investment Memo, and answer the question: why am I, and so many other investors, so excited about what Cometeer’s brewing?
Founding Story and Team: Cometeer Co-Founder and CEO Matt Roberts used to be a Dunkin’ guy, until he went abroad and met George Howell, who turned him on to the good stuff. He and his Co-founder/CTO Doug Hoon have built a stellar team.
Market: Coffee is a $94 billion market in the US alone, and there’s a lot of room for improvement. Cometeer has the chance to do to coffee what craft beer did to beer.
Product: Cometeer is legitimately great coffee. The magic is in the how.
Mission: The why is important, too. Cometeer wants to pay farmers more, promote independent roasters, and stop throwing pods into landfills.
Challenges: Brewing and sourcing great coffee at scale is hard. Cold supply chain is hard.
Opportunity: Cometeer has the chance to redefine normal peoples’ expectations around coffee and become a platform for the world’s best coffee.
When Austin Rief first told me about Cometeer and its valuation, I thought it sounded a little crazy. “Just try it and let me know what you think.”
I’m going to write a bunch of words today, but to really understand it, I’m going to tell you the same thing that Austin told me: you just need to try it. Everyone drinks coffee. You should drink the good stuff. Use the Not Boring link to jump the waitlist and get 50% off your first box, just $1 a cup, and let me know what you think.
Cometeer is delicious, patent-protected, and creating a new market within a massive market that’s ripe for innovation. Put down that burnt Starbucks and let’s learn about coffee.
Founding Story & Team: Inspiration from Abroad
Investors who’ve been doing it for a while like to talk about their ability to “pattern match.” Borrowed from computer science, pattern matching for investors means noticing similarities between things they’ve seen in the past and things they’re seeing now. If an investor, for example, found success six out of six times she invested in someone with purple hair, she’ll take the next purple-haired founder she meets very seriously.
Well, there’s a pretty clear pattern of successful coffee brands inspired by European travel.
In 1975, a young Nestlé engineer named Eric Favre took a trip from the company’s headquarters in Vevey, Switzerland to Rome, Italy. At the time, Nestlé made the popular Nescafé instant coffee, and Favre was tasked with building a machine that would, “combine the convenience of domestic coffee with the quality of an Italian espresso bar.” Wandering the streets of Rome, he noticed one café with a line snaking around the block: Sant’Eustachio Il Caffè. The secret, he discovered, was that while other baristas pumped the piston on the espresso machine once, Sant’Eustachio baristas pumped it repeatedly, pushing more water and air into the beans, which drew out more flavor and produced more of a crema on top. He went back to Switzerland, and spent the next eleven years creating what would become the Nespresso machine.
While Favre and his team were in the lab, a young man from Brooklyn’s Canarsie neighborhood, Howard Schultz, took a job at a young Seattle-based coffee company called Starbucks, as its Director of Retail Operations and Marketing. Two years in, in 1983, a trip abroad turned his profession into a calling. As Mario Gabriele wrote in Starbucks, a Tech Company:
Like so many before him, Schultz took a trip to Italy and fell in love with the country’s culture. As you might expect, he particularly marveled at the quality of the espresso, and even more importantly, found himself captivated by the “romance” that illuminated Milan’s coffee bars.
John Sylvan spent the late ‘80s and early ‘90s tinkering on a product that would solve the all-or-nothing nature of coffee -- brew a full pot and leave some sitting out, stale, or don’t have coffee at all. In 1992, he landed on a single-serving pod of coffee grounds and the machine to brew it, brought on his college roommate, Peter Dragone to help him build an actual business, and the two launched Keurig.
Keurig wasn’t born abroad, although the name came from looking up the Dutch word for “excellence” in the dictionary. It was born in Boston.
It’s poetic, then, that the next big thing in coffee was born during a Massachusettsan’s semester abroad in Spain.
Matt Roberts grew up outside of Boston, loving coffee. But by coffee, he meant something weak and watery, loaded up with cream and sugar, like an adult milkshake. Then in 2012, Roberts, a computer science and economics double major at Bentley University, studied abroad in Pamplona, Spain. When he got there, he couldn’t find anywhere that would serve him his sugary, creamy iced coffee.
So he did what entrepreneurs do: he experimented with ways to make his own iced coffee at home. While he was tinkering in Spain, he made a discovery that he continued pursuing when he got back home, and continues pursuing to this day. He froze his coffee into ice cubes.
Matt knew he was on to something, so he filed some patents around his process and started meeting people, one of whom was George Howell, the founder of Coffee Connection and the inventor of the frappuccino. Howell was a coffee legend. When they met, Matt made him a frappuccino, because that’s what you do for the frappuccino guy. He spit it out, and instead introduced Matt to a delicious Ethiopian roast. After tasting great coffee, he knew that he had to pursue that level of quality.
This was his insight: combining the convenience of the melting ice cubes with the quality of specialty coffee would be a home run... if it was possible.
Up until that point, people who wanted to drink great coffee had a couple of choices: go to a great coffee shop or buy good equipment, get good beans, and do it yourself. The former is great if you live or work near a great coffee shop and want to spend $3-5 a few times a day, and the latter is great if you’re one of the handful of people who’s willing to put in the time to learn how to brew a great cup of coffee.
But nothing on the market combined convenience and quality. That was Matt’s opportunity. He raised some money, met and partnered with great chemists and engineers, and went into the lab to create the perfect coffee capsule.
He believed that if he were able to perfectly roast, brew, and deliver the world’s very best coffee, from a variety of roasters all using a variety of beans, drinkers would come to appreciate the many regions, styles, and flavor profiles of coffee, like they do wine or craft beer.
Market: Coffee & Craft Beer
To understand Cometeer’s opportunity, you need to understand two markets: coffee and craft beer. The coffee market, and the holes therein, speak to the size of the prize, and the craft beer industry points to how the industry might evolve. Let’s start there.
Between the end of Prohibition in 1933 and the mid-1960s, the US beer industry mainly consisted of American lagers. Think Budweiser or Miller. It was consistent, smooth, and refreshing, but nothing to write home about. Beer was beer. In 1978, at the nadir, there were only 100 brewing locations owned by 42 brewers in the entire country.
Starting in the 1960s, some people, tired of the same bland flavors, decided to start brewing the best beer styles from around the world, at home. It wasn’t easy or convenient, but for a select few who wanted a wider range of flavor profiles, home brewing was worth the time and effort.
Home brewing kicked off the craft brewing movement. In the 1970s, breweries like Anchor Brewing Co. in California and Boston Beer (Sam Adams) in Massachusetts launched with new styles and flavors. In the early 1990s, microbrewing took off, and started to form the landscape we’re familiar with today. Even small towns might have a dozen different breweries, all with their own unique range of beers.
What started as a small movement among at-home connoisseurs and craftspeople is now a major piece of the American beer industry. In 2019, pre-pandemic, $29.3 billion in craft beer was sold in the US, good for 25.2% of the entire market. There were 8,275 independent breweries in 2019, nearly 200x the number of brewers of any kind operating in 1978.
When presented with more options, people have proven willing to purchase the good stuff.
The Coffee Industry
In the bull case for Cometeer, craft beer’s dramatic rise is a preview of things to come in coffee. Cometeer is well-positioned to take a big sip of the enormous US coffee market.
According to a survey from Dig Research and the National Coffee Association (so caveat lector), “More Americans (nearly 60%) choose coffee each day than any other beverage, including tap water.” Now that’s tap water, and hopefully every American has at least some water every day, but that’s still astounding. Coffee is essentially the national beverage of the USA.
That translates into the revenue numbers. In 2019, pre-COVID, coffee was a $94 billion retail market in the US.
Of that, Away From Home is the larger market, at $79.8 billion, led by coffeehouses ($28.2 billion), Foodservice & Hospitality ($21.6 billion), and Quick Service Retail ($16.3 billion). The entire At Home market is $14.1 billion, of which ground coffee makes up the vast majority at $12.1 billion. Within that is the $5.5 billion market for pods, the market that Cometeer is going after to start. While 2020 numbers haven’t been released yet, it would be safe to assume that the At Home market has grown its share relative to Away From Home, and that Pods played a meaningful role in that.
The coffee market in the US is just the end of a very long supply chain, and the piece to which most of the value accrues. To generate that $94 billion in 2019 revenue, the industry imported roughly $5.5 billion worth of coffee.
The first four steps in the coffee supply chain mostly happen abroad. Most of the world’s coffee is grown, picked, processed, and milled in countries like Brazil, Vietnam, Colombia, Indonesia, and Uganda (the top five in the world). Brazil exports nearly twice as much coffee as the next largest exporter, Vietnam. In America, roasters -- which range from enormous companies like Starbucks to specialty roasters like George Howell or Counter Culture -- source the best beans and roast them to perfection. At that point, they might ship whole, roasted beans to consumers, grind them and ship them, or brew coffee themselves.
The problem is, the supply chain is broken, and so much of the complexity of coffee gets lost in the process. Some of the most complex coffees -- like a Panama Geisha varietal -- can have more complexity than a 100 point bottle of wine, but most of us have never had the chance to appreciate that. Most of us just drink Starbucks.
The US coffee industry is dominated by a few very large companies, and then a long-tail of very small ones. The largest, with $16.1 billion in US revenue across product lines in 2019, is Starbucks.
Starbucks has built a phenomenal business on mediocre coffee.
Over the past five years, its market cap has grown 71% to $131.8 billion, despite a global pandemic that killed traffic to its retail locations. That scale comes with a trade-off, though. Schultz’s early dream of fantastic, Italian café-style coffee are dead, a victim to his company’s success. There’s no coffee farm in the world that can grow nearly enough beans to feed the Starbucks machine. Like McDonald’s, though, part of Starbucks’ brand promise is consistency.
So if you can’t use the same beans everywhere, what do you do to ensure that the taste remains the same? You buy a bunch of different beans at under $2/lb, mix them together, and burn the shit out of them. Burnt coffee tastes pretty much the same no matter which beans you use. Dunkin does largely the same thing, with more emphasis on watering the coffee down than burning it. In either case, through this process, so much of the flavor and nuance is lost.
They’re not the only ones with challenges delivering perfect coffee, though, because scale isn’t the only issue. Smaller roasters and pod-makers have problems, too.
The ideal time to drink a coffee is right after it’s roasted. After that, it’s all downhill. The roasted beans emit gases, which are essentially flavor leaving the bean. Look at the bag of coffee in your kitchen, it has a little valve. That’s to let the gas / flavor out. With a roasted bean, you can taste the difference in flavor after 3-4 weeks. Once you’ve ground the coffee, and leave it exposed to the air, you can taste the difference in one hour.
One obvious solution is to roast or grind, and then seal it up to lock in the flavor. I wouldn’t do that if I were you. The gas builds up, and the container explodes. Blue Bottle tried to seal its beans in a can in 2019. They voluntarily recalled 194,000 units when the cans started popping off on customers.
Keurig, Nespresso, and the other coffee pod makers have an even tougher challenge since they grind the coffee first. If they sealed ground coffee into K-Cups and other pod formats, they’d explode pretty quickly. So they “degas” the ground beans, letting them sit out for 24 hours, before sealing them in. That process essentially stales the coffee, and kills its complexity.
All of which to say, we’re looking at a $94 billion industry in which no one has figured out how to deliver the product to customers at scale in a way that does justice to its complexity and richness. Until now.
Product: A New Day On Earth for Coffee
“A new day has arrived on Earth for coffee,” Cometeer announced when it launched its private beta in 2020, six years after Matt froze his first ice cubes.
Cometeer isn’t a normal coffee company. It looks a lot like a tech company, and there’s certainly tech at play in the company’s grinding, brewing, and freezing process and in its Direct-to-Consumer approach. The company has hired people from heavy-hitting tech companies like Palantir, Amazon, Desktop Metal, Toast, and Tesla. But really, it comes down to the coffee. Cometeer is tech-enabled. Tech isn’t the product; coffee is.
The perfect cup of coffee is a combination of great beans, freshly roasted to perfection, ground consistently, and brewed well. Part of Cometeer’s magic comes from knowing which parts of that process it’s world-class at, and which parts it’s not. As Matt told me, “Farmers farm, roasters cook it to perfection, and we grind, brew, and freeze.”
It does that by essentially splitting responsibility for the supply chain in half. Cometeer works with some of the best roasters in the country: Counter Culture, Bird Rock, George Howell, Equator, Birch, Joe Coffee, and Red Bay (with more on the way that I’m not allowed to announce yet). Those roasters are responsible for working with farmers, sourcing the best beans, and roasting them to perfection, and getting them to Cometeer fresh.
Cometeer takes those freshly roasted beans and handles the rest. Here’s how they do it:
Grinding. Cometeer claims that it’s able to grind beans so that the particle size distribution is more uniform than anyone else on the planet (this is part of the tech-enabled piece). Particle distribution size is important because it allows brewers to dissolve the grounds to the right level. When grind sizes are mismatched, the brew over-extracts from the smallest particles, pulling out the wood cellulose at the core.
Brewing. Each coffee bean needs its own extraction recipe. Brewing is essentially dissolving the right compounds in the grounds in water, and Cometeer is able to access and pull flavor from the bean like never before. The Golden Cup Standard is between 18-22%. Keurig typically hits somewhere between 16-17%, wasting beans and resulting in a weaker coffee. Cometeer is in the sweet spot. Serious brewers measure something called Total Dissolved Solid (TDS). A great café hits 1.3 - 1.4. A Keurig machine is 0.9. Cometeer hits 1.4 with an 8oz brew. It’s a great cup of coffee, with twice the caffeine.
Packaging. As soon as Cometeer brews coffee, it injects the extract into capsules in an oxygen-free environment and flash freezes it in a liquid nitrogen bath at -321° F to lock in the flavor. This is key. Roasted and ground beans start leaking flavor immediately. Frozen capsules can stay fresh for months or years, and can hold flavor refrigerated for about three days.
Fun fact: Cometeer is actually located in the birthplace of flash freezing: Gloucester, MA.
Shipping. Cometeer ships four boxes (with add-on boxes) of eight capsules direct-to-consumer on subscription, on dry ice. Mine comes every two weeks, and I get texts letting me know when the coffee is on the way and when it’s arrived so that I can move it to the freezer as quickly as possible.
That’s where we take over. The next step in the process is to make the coffee. That can be super simple -- I drop the puck in a mug, heat up water, pour about 7 ounces in, and drink it black -- and you can even make it in any machine you’d put a K-Cup in.
Important note here: I never drank black coffee before Cometeer. Now, it’s all I drink. I have a weak palate and I can taste the difference. Cometeer is good enough to break my cream habit.
If you want, you can get crazy with Cometeer. Espresso-based beverages, iced coffee, espresso martinis, milkshakes. There’s a whole list of recipes here.
Obviously, to do any of that, you’ll need the Cometeer. Just order it already, it’s $1 a cup.
The result of all of that is the best coffee I’ve ever had at home. I’m not a coffee connoisseur, and I’m a Cometeer investor, so take my recommendation with a grain of salt. But people whose word you should trust way more than mine seem to agree.
As a new product with a radical approach, Cometeer had to win over the industry. It unveiled its product at the Speciality Coffee Expo in 2019, and won best new product. That triggered a flood of inbound interest from roasters across the country who wanted to work with Cometeer, many of whom wouldn’t take Matt’s calls before the Expo.
People who have run successful coffee businesses see the potential, too. As mentioned, its investors include key execs at Keurig, Starbucks and Nespresso, and people who sold businesses to them, as well.
Those are businesspeople, though. The hardest-to-win folks are the professional coffee brewers, the ones with the expensive at-home setups and a passion for making the perfect cup. Cometeer does pretty well there, too. I love this video, from a coffee professional based in the Pacific Northwest. This is as coffee-snob as it gets.
He wasn’t sold the first time he reviewed the product, but kept drinking it, and made a follow-up video to set the record straight. He said: "I felt like I sold the product short in my first video. I'm a sucker for convenience, but I don't sacrifice quality. With Cometeer, you always win.” He doesn’t like Cometeer as much as the stuff he makes himself, of course, because he’s a pro, but he drinks it and recommends it. If you want to hear from another coffee pro, this video is great too.
If you want a third through hundredth opinion, check out all of the love for the product on twitter.
All of that, and Cometeer is more environmentally- and farmer-friendly than alternatives, too.
Mission: Waste Less, Promote Roasters, Pay More
Remember John Sylvan, the guy who invented the K-Cup? He sometimes wishes he’d never done it. In a 2015 interview with The Atlantic, Sylvan expressed regret over the environmental impact his creation has had. Mother Jones quantified that impact: the 8.3 billion K-Cups sold in 2013 would wrap around the earth 10.5 times, and none of them were recyclable. (By 2015, the last year with public numbers before it went private, Keurig Green Mountain sold 10.5 billion K-Cups.)
“No matter what they say about recycling,” Sylvan told The Atlantic, “those things will never be recyclable.”
That quote makes Keurig Green Mountain sound a little more malicious than it is, like it was actively trying to mislead people and consciously choosing to make non-recyclable products. The challenge isn’t the plastic; it’s that spent coffee grounds are a contaminant in the recycling process. You can’t recycle a pod full of grounds, no matter what it’s made out of, so they just go with plastic.
Cometeer’s capsules, on the other hand, are 100% recyclable. There are no grounds, all of the coffee ends up in the cups, and its capsules are made out of the same recyclable aluminum as beer cans. Cometeer is all of the convenience of K-Cups with better ingredients and less guilt.
Recyclable is table-stakes. Cometeer’s real mission is to de-commoditize coffee and put more money into the hands of the farmers who grow the beans in the first place.
Traditionally, most of the demand for coffee beans has come from large players who are looking for a mostly commodity product. When you burn the coffee anyway, you don’t want to pay up for better beans. That means that farmers get paid commodity prices, which means that they can’t invest back into the farm, which means that they grow a commodity product. There is more investment into some California vineyards than there is in entire countries’ coffee farms.
I heard this same idea from Nguyen Coffee’s Sahra Nguyen. The more you can de-commoditize coffee in America, the more you can pay farmers, and the more you can pay farmers, the better the product.
So how does Cometeer plan to fix it? There’s a back-end piece and a front-end piece.
On the back-end, it’s all about working with the right roaster partners. As specialty coffee roasters, Cometeer’s partners have unparalleled relationships at the farm level that are ingrained in their ethos. Cometeer does due diligence to partner with not only the best roasters (the ones that technically roast the beans the right way), but also the best in terms of fair wages and equity within the coffee industry. It’s already paying 2-5x more per pound than many of the big roasters.
On the front-end, Cometeer’s job is to show consumers that it’s possible to drink great coffee at home with little effort at an affordable price point. Today, in the early days, it’s selling variety packs to give people a diverse drinking experience, but over time, it plans to help people understand more about what coffee they like to drink. It will build a taste profile for each user, educating them on the complexity and nuance along the way.
Education is the key to de-commoditization. You’d pay more for a Delirium Tremens than a Miller Lite; Cometeer wants you to pay a little more for great coffee than bad coffee, so it can pay the farmers and help the whole ecosystem. And a little more is still less than a commodity cup at a big chain.
That’s not to say there aren’t any challenges today.
Challenges: The Cold Supply Chain
No one has ever scaled great coffee. There are technical reasons that have thwarted others, like cans that literally explode from pent up gas, and Cometeer has solved many of them. But everything is a trade-off. With those challenges solved, others pop up.
The trade-off that Cometeer makes is really interesting. Delivering bags of coffee or packs of K-cups or even bottles of extract is pretty easy. Billions of bags, pods, and bottles are delivered to customers, across all of food and bev, every year. But as we’ve covered, delivering coffee that way means losing flavor. Coffee companies are saying, intentionally or unintentionally, “We’re OK giving you a slightly worse product in exchange for making distribution easier on us.”
Cometeer believes that freezing coffee and keeping it frozen is the best way to optimize for both flavor and consumer convenience, but that means taking on a really big challenge: delivering frozen product.
Shipping frozen product isn’t cheap or easy. Puja is a supply chain whiz and a massive Cometeer fan, but her main concern is that, “Cold supply chains are notoriously difficult.”
I’ve received about ten Cometeer shipments at this point, and nine of them arrived perfectly frozen. The tenth was back in February, in the middle of a national snowstorm that delayed shipments of everything. We were in Miami (I know, I know) and re-routed my subscription down there, but because of the delays, it was four days late. When it arrived, the capsules had all melted. I let the Cometeer support team know, and they immediately sent me a new box, free of charge, which was awesome, but certainly expensive for the company.
The company plans to address this challenge in the near term by adding distribution centers throughout the country, so that 70% of all shipments are in one-day zones, but it will no doubt be an ongoing challenge. This stuff is hard.
The second big challenge that Cometeer faces is price. After watching a bunch of review videos, the $2/capsule price point seems a bit higher than some people want to pay for every day, and is certainly more expensive than a K-cup, which can be about one-quarter of the price.
The company has a couple of answers to this. First, they have more coffee in each capsule. A Nespresso pod has 5-7 grams of coffee, a K-cup has 9-12 grams, and a Cometeer capsule has 25 grams. Second, and most importantly Cometeer wants to change the view on pricing altogether. It wants to de-commoditize coffee.
Opportunity: De-Commoditize Coffee, Build the Platform, Then Freeze Everything
Cometeer’s biggest opportunity, right now, is to grow. It’s coming out of what was essentially a closed beta and opening up a little more widely. The best way that we can help Cometeer (and help ourselves) is to buy and try the coffee, and share our feedback on Twitter, Instagram, or wherever you share.
Longer-term, though, its big opportunity is to turn specialty coffee into a major segment of the market, like craft beer has become in that market. There are clear parallels between craft beer and coffee.
The overall markets are similarly-sized.
Both are dominated by large players with bland products.
Passionate home brewers took matters into their own hands.
There’s a growing appreciation for different flavor profiles and styles.
But while craft beer as a category has thrived, the market is such that no one craft player captures most of that upside. It’s fragmented into 8,275 independent breweries. Part of the reason may be that beer bottling and distribution is a long-solved problem. Every microbrewery can bottle beer cheaply and easily, and get it to the store in pretty much the same format and freshness level.
Delivering great coffee to consumers, on the other hand, is not a solved problem. The supply chain is complex and broken. Unlike micro brewers, who can bottle and ship their own product without sacrificing flavor, coffee roasters are beholden to the downstream supply chain for a customer’s ultimate experience with their product.
Cometeer, with patented technology and relationships with roasters and customers, has the opportunity to both grow the specialty coffee industry and capture much of the value from that growth. It can essentially develop a platform -- grinding, brewing, flash freezing, distribution, and customer relationships -- via which the country’s best roasters can sell coffee made from the world’s best beans.
In other words, by being the platform, Cometeer can own a meaningful part of the upside as it grows specialty coffee in a way that no craft brewery or specialty coffee brand could alone. But like the Bill Gates definition of a platform suggests, Cometeer’s real success will come “when the economic value of everybody that uses it, exceeds the value” of Cometeer itself.
It goes back to the Cometeer supply chain: farmers farm, roasters roast, and Cometeer brews and freezes. “If a coffee is great,” Matt told me, “It should be packaged in the Cometeer format.”
Over time, Cometeer will add more roasters to the platform. It will build a marketplace of world-class coffees, all flash frozen and shipped to your door. It’s going to do limited edition drops of the absolute best coffees in the world.
Coffee can be every bit as complex and flavorful as wine, but even the very best stuff is infinitely more accessible. The most expensive coffee ever sold up until 2019 cost $4,535 per pound. A pound of coffee can make 24 cups. The most expensive bottle of wine ever sold cost $310,700. A bottle of wine holds four glasses’ worth. That means that while it would cost $77,675 to have a glass of the world’s best wine, it would only cost $188 to have a cup of the world’s best coffee.
Already, Cometeer is buying up excellent coffee. It recently bought the most expensive lot ever out of Ethiopia in last year’s Cup of Excellence auction, and George Howell, who founded the Cup of excellence years ago to get farmers paid more, is going to roast it for them. In the near future, Cometeer customers might be able to try some of the very best small batch coffee for less than an average cocktail in Manhattan.
Cometeer’s plan is simple: open customers’ eyes to great coffee, expand the variety of great coffees on the platform, invest back into the coffee ecosystem to help produce even better coffee, and sell great coffee in more places. Today, Cometeer is DTC. Tomorrow, it will be in retail and coffee shops and hotels and all of the non-big-box places that you drink coffee today.
A new day has arrived on Earth for coffee. Enjoy.
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Thanks for reading and see you on Thursday,