Community vs industry

Coffee can be both & some more thoughts on private equity in coffee.

Jenn Chen

Apr 24, 2024 — 7 min read

Community vs industry

An industry colleague once opined that “coffee isn’t a community—it’s an industry.” I’m here to ask, why can’t it be both? Isn’t it a wonder how some thriving communities have been built despite the strong, adverse winds? Despite the glaring power and wage inequities?

On April 11 evening, the week of Expo, I “debated” on the anti side, “Is private equity good for specialty coffee?” I have debated in quotes because we only had time for opening statements—there were no rebuttals, though I really wanted to rebuttal. For reference, I haven’t debated since high school, and I’ve never been a fan of debates, which are less about your points and more about how good you are at presenting and engaging the audience.

But shoutout to my anxiety med that did a lot of heavy lifting leading up to and on the stage. It’s one of the few times I can remember being on stage and not completely disassociating. I also only had my talking points, willing to go “off the cuff.” This was just super out of character for me—one who historically over-prepares and freezes on stage—but it went in my favor because I spoke from the heart. I wasn’t unprepared—I had just published my article on first-hand accounts of working at companies with PE investments.

What I would like to express on this topic is that it’s far more complex than what any one article or 10 minutes of opening statements can distill.

To begin with, we have to define some of the words. What do you mean by private equity? Does it include both the large holding companies and the small, value-driven ones?

And how do you define “good”? If you’re all about the coffee industry in the Global North (which, let’s face it, is where the PE money is going), do you define “good” as driving the industry valuation up, outside-industry investors seeing potential in new companies, contributing to a sustainable future, and/or increasing how much producers are paid?

To paraphrase Jax from my previous article, “If you see a problem, take the time to learn the industry and tailor your approach to it.” A solution in the transportation industry won’t have the same outcome in the coffee industry. A small investment to help a company expand isn’t the same as a majority stake or complete buyout.

What I feel like the proponents of PE miss is acknowledging the harm the industry has caused to workers and entire industries, with no oversight or repercussions until recently. “We’re not like that.” Who’s going to admit that they want the quick cash and don’t care for workers? What makes you think that PE in the coffee industry will be any different from the journalism or retail industries? And if you’re going to point out the companies with PE investments that are doing good things, who says they’re doing the good things—the PE firm, the company it invested in, or the hourly wage workers?

I am not anti-PE, per se; I am against the big, unregulated movements that PE has made in many industries, including coffee, at the cost of people. For an industry built on community and people, we need to be vigilant about PE, not passive; otherwise, we run the risk of being yet another industry getting taken advantage of.

This article is part of the larger series on community, this first season's topic. Leave a comment on what community means to you and catch up on the past articles. If you enjoyed reading this and would like to support future work like this, paid upgrades and comps are available. Forwarding and sharing are also appreciated.

While I was in Chicago, I visited quite a few new shops and took both a walking and boat architecture tour. Here are some shots from the boat tour & the show floor.

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article links, personal updates, and a plant feature

I do so much more with my personal time, compared to when I worked five days a week in previous jobs. By the end of the three days that I have off, instead of having the Sunday Scaries, I’m ready to go back because I feel refreshed and recovered. I believe it makes me better at my job, because I feel ready to go on Mondays. Before, it was like, ‘Holy smokes, where does the weekend go?’

But over the past three decades, private equity has overtaken the public markets. According to JP Morgan’s research, there were 7,300 public companies in 1996; today, there are just 4,300, a decline of over 40 percent in less than 30 years. During the same period, the number of private companies backed by private equity firms rose almost 500 percent to 11,200.