[Now confirmed by Willamette Week- see bottom of this story.]
Though a spokesman for Stumptown Coffee says that Duane Sorenson is still in control of the Portland coffee chain, doubts are beginning to form. I may have to retract my original post on the subject. Here are some of the rumors that have me wondering what is really going on, and a bit of commentary.
1. These are the numbers I am hearing: TSG owns 90% of Stumptown, leaving Duane a minority owner.
When TSG invests in a company, they seem to pay between $30-40 million dollars. This would mean Duane has some nice pocket change. Unfortunately TSG is in the money making business, so everyone will be squeezed – growers, buyers and even employees. It is all going to trickle down.
2. TSG is a very large investment firm that buys and sells companies for the sole reason of making money. From Willamette Week’s investigation –
Alexander Stavros Panos oversees the New York City office of private equity fund TSG Consumer Partners, which, according to the company’s website, “is the recognized leader in the U.S. in building and investing in leading middle-market branded consumer companies.” TSG has a track record of investing in specialty drinks: Previous investments have included Glaceau Vitamin Water and Voss Water, and the fund currently holds a $15 million stake in Island Oasis Frozen Cocktail Co., a Walpole, Mass. company that makes machines and mixes for frozen margaritas.
Why would they bother with a small stake in Stumptown Coffee? This does not sound like a company that does this sort of investing.
3. Why is Stumptown being so obtuse? In typical corporate speak, they dance all around whether Duane is majority owner, just saying that “Duane is still very much in charge of Stumptown.” Here is another pearl from the Willamette Week article –
‘When asked who currently owns a majority share of Stumptown, Lounsbury said: “I can’t really answer that one way or another. I can just tell you Duane is very much in charge of Stumptown.”‘
In filings in Oregon, he is named the president and secretary of Stumptown Coffee Corp., and as the authorized representative of its two subsidiaries, Stumptown Coffee and Stumptown Coffee Roasters Inc. Mr. Panos also said that he had no involvement with an entity registered in Delaware as Stumptown Coffee Corp. on April 11, even though it was originally listed under the name TSG Coffee Corp.
“We can’t disclose the structure of the investment,” Mr. Panos said. “What I can say is that Duane controls the company.”
What’s certain is that there will be more Stumptowns, and soon.
When I see answers like this, I feel like they are trying to hide something, which makes me think there is a much bigger story here.
4. Why would Duane/TSG lie about a sale? Because Stumptown is a beloved Portland institution. It’s the story of a little coffee roaster fighting its way to the top, creating a whole new culture of coffee along the way. Portlanders love this sort of thing, which means Stumptown has a lot to lose if the story gets out. They will no longer be the local hipster brand that everyone loves, rather just another of the big players in the international coffee scene, more known for their bottled beverage than their ‘real’ coffee. Remember the way Stumptown dropped the much vaunted Clover Coffee system when they were purchased by Starbucks? They wouldn’t want the same thing to happen to them. Restaurants that are riding the wave of local, sustainable ethos would switch to someone else. Stumptown might feel the same backlash from the many coffeehouses which carry their product; a big hit to the company.
5. What is in it for TSG? Stumptown Stubbies. As stated above, Previous investments have included Glaceau Vitamin Water and Voss Water, and the fund currently holds a$15 million stake in Island Oasis Frozen Cocktail Co., a Walpole, Mass. company that makes machines and mixes for frozen margaritas. If you want to go national it takes a ton of money. TSG seems to specialize in this sort of product. Remember, Stumptown announced earlier that they plan to add a Stubbie bottling facility in Red Hook in Brooklyn, so it seems they are not planning on keeping it local.
If Stumptown wants to quell these rumors, they better move fast. Eventually the whole story will be known, and if it turns out that the coffee company has not only sold out, but has lied about the transaction, their future in Portland may be much dimmer than they had hoped.
Update – Willamette Week has now confirmed the sale of Stumptown and the 90-10% split.
Portland Food Adventures says
It would seem no matter what, they’re in hot water from a PR standpoint–locally. If it smells like a duck…
But there are some benefits. Great that the smaller coffee roasters in PDX would benefit (because there are some really special shops and roasters), but in the long run if Stumptown becomes a known brand outside of Portland and the Northwest, that will be a win for Portland itself. That image will help promote Portland as a culinary destination, which is crucial in supporting this amazing industry we have here.
Starbucks didn’t hurt Seattle’s image. I am sure some will argue that point, but on face value, when many people see Starbucks, they think of Seattle. That’s a great marketing coup for Seattle. And it costs the city nothing.
So perhaps one way of viewing this is that Stumptown may be taking one for the team.
shawn says
If selling your company for tens of millions of dollars is “taking one for the team,” then I’d love to take several for the team. He is not taking anything for any team, except Team Duane, which is certainly his right as owner of the company. Would I be disappointed? Sure, probably a little. But I wouldn’t bear the man a grudge at all. His company, his right to sell.
Portland Food Adventures says
OK, millions for the team then. And himself.
Food Dude says
I’d disagree with many people thinking of Seattle when they see a Starbucks. I would bet 95 out of 100 people don’t even know the company started in Seattle.
aroyo says
You don’t think that names like “Seattles Best” blend and “Pikes Place” blend tip them off? And for what its worth, about 9 years ago, a friend of mine from Northern Japan came to visit me in Portland. I asked him where the first place he wanted to go was – Mt. Hood? Multnomah Falls? The Coast? He replied, “The Pendelton store!”. I didn’t even know at that point that the Pendleton brand was associated with Oregon. He told me everyone in Japan knew that Pendleton shirts/blankets, etc were made in Oregon. Seems they cost a boat-load in Tokyo.
YT says
If Stumptown becomes a known brand outside PNW? You must live in the PNW.
You can buy Stumptown in NYC, Providence, and Boston, just to my off-hand knowledge. I don’t think people think about Portland at all when they buy Stumptown considering in the Northeast they have shops in NYC.
polloelastico says
Inside baseball about a small scale coffee roaster is about as exciting as discovering Devendra Barnhart and Natalie Portman were dating. That aside, why does this company owe you or Portland any answers at all? They are a private company.
truedat says
True – they don’t have to explain a single thing, and that’s something that will take Portland hipsters awhile to understand.
It sucks to be cool, doesn’t it?
John says
They may not owe explanations to the general public, but one hopes that they won’t lie if they decide to give an explanation. And the WW article suggests they did lie. So bad on them. But good on them for growing and helping to shape the coffee market here and elsewhere. Let’s hope they at least keep headquartered here as they grow . . . Stumptown Inc. NY, NY would be a bit much, no?
nathaniel says
I agree they don’t owe an explanation, but given they have attempted at one, and a weak one at that… people are talking. It’s what folks do, look at Anthony Weiner. Stumptown is fine with me, sold or otherwise. I doubt even if sold and changed a bit for the masses across the states much can really change, it’s coffee. They will try and carve out their share of the market and the new marketers/owners will be sure to maintain the brand for success, will it suffer a bit? Perhaps, but it’s coffee… only to a minority (one that doesn’t drive profits) will there be any real discerning taste… they’ll still put out a respectable cup and in all likelihood it will be fine.
Food Dude says
Obviously it is exciting to some people – this sale has been covered 2x by NY Times, 3x by WW, 1x Esquire, Oregonian…
Tim Roth says
I am still unconvinced that any of this actually matters to the general coffee-drinking public. It’s no secret that Stumptown has changed quite a bit over the last several years as they have expanded to other cities and become a bit more ambitious. Sure, quality control has taken a bit of a dive, but they are still buying some of the highest quality coffee that’s available in the specialty market, and that translates into a consistently delicious product even if the preparation isn’t exactly perfect. I think they’ve already shucked the so-called “little coffee roaster” image and people are just now realizing what that means. If you look at a company like Intelligentsia, I don’t think the argument that people will revolt to this alleged sell-out holds much water. People still want to drink delicious coffee, and Stumptown is not really going anywhere but up, or into further reaches of the world. I don’t view what they are doing as selling out, and I don’t think I’m alone. Worst case scenario, we are left with a vacancy that other roasters will gladly fill. There are many more “little coffee roaster” stories left to tell!
extramsg says
Far more people go to Starbucks, which was once a small artisan roaster as well. Things change. That change often follows success and/or investment dollars.
greg says
Cash in big, Duane. You deserve it.
Nancy Rommelmann says
Further details, from Willamette Week
http://www.wweek.com/portland/blog-27226-stumptown_coffee_has_been_sold_industry_sources_te.html
mh says
If TSG is banking on those cold-brewed stubbies to make the investment work, they need to go back to the drawing board.
$3.50/bottle and it sucks (and I’m a long-term huge fan of cold brewed coffee; I do it myself, in fact).
Albina Press and Barista have the best in town right now. Tiny’s and Ristretto are next in line.
Mary Sue says
We’re not the market for the Stumptown Stubbies, though. I’m seeing them marketed to the suburban Yoga Mom set in major metropolitan areas– Sacramento and Denver spring to mind, mostly because I don’t get any farther east than that.
It’ll go well if they market it based on the little bit of outsider cool that Portland brings to mind– as long as they keep that advertising out of Oregon.
pastamaven says
More power to Duane. Only in Portland is this an issue. A perfect example of Portland foodie hand wringing.
Dave J. says
I wouldn’t be surprised to see Duane pattern himself after Steven Smith, who developed both Tazo and Stash teas before selling each to larger companies, and then moving on to found something else. Developed Stash, sold it, then founded Tazo, sold it, and now has his boutique tea shop in NW Portland. Duane will sell Stumptown, use the money to do whatever the hell he wants for a few years, and then without question in 3 or 4 years you’ll hear that Duane Sorenson has an idea for a roaster that’s EVEN BETTER THAN STUMPTOWN ZOMG, and it’s like free PR for a month as he opens it and everyone who remembers how awesome Stumptown used to be lines up outside.
Food Dude says
Most likely he can’t compete while he has the 10% ownership, but after the non-compete is up, he could certainly do just that… or he could sit on the deck of his mansion and watch the swans swim past. Nothing wrong with either choice.
Jill-O says
Amen, my brother.
His company to sell, and farking congrats to him for it. He owes the City of PDX nothing and is entitled to his good fortune.
Seriously folks, Steven Smith sold Stash (whose teas I still really like), and then created Tazo (which he sold, too) and now he has Steven Smith Teamaker. No one has ridden him out of town on a rail for it, why pick on Duane??! And, how many folks have jobs in PDX because of him and Steven Smith??
And if those stubbies were in my budget, I would buy them, because finding unsweetened soft drinks you can grab on the fly other than water is a bitch!
Jill-O says
And P.S., if you have not tried Oblique, you have no clue how great coffee can be in this town. AWESOME coffee, beans, espresso and a comfy space and cool/mellow vibe. John and Heather are coffee geeks and will NOT let you down:
http://www.obliquecoffeeroasters.com/
Norskiewa says
My initial thoughts are that they’re bungling the PR with me, a local customer. Fortunately, I have lots of options for both beans and cafes (Ristretto, Coava, Sterling, Water Avenue, Barista, Thatcher’s,Spella, Trailhead, Courier, Red E, just for starters — gosh, I love Portland/Vancouver).
As others have said, the bigger market may not care.
Luke says
I was once a Stumptown-trained barista in PDX at a smaller local shop. I was in Brooklyn when they arrived there and could not get a job serving Stumptown coffee because I was not nearly hipster enough. All this hemming and hawing over selling out and coolness is laughable. Duane is both human and American (we all have our price), and if you didn’t see this coming you are a fool.
I am currently drinking a better cup of coffee than any I ever had at Stumptown or any other coffee shop, in PDX or NYC. I made it myself, as I have every morning for many years now. Why purchase something you can do yourself for a tenth of the price?
sidemeat says
‘Why purchase something you can do yourself for a tenth of the price?’
I’m particularly fond of a morning croque monsieur,
and I’m willing to pay for the service…
theinternets says
The “coffee industry executive” that WW sourced for the 90/10 split quote is Todd Carmicheal. Mr. Carmicheal has a less than favorable reputation in the coffee industry. The first word that comes to mind is gossip. Anyone gullible enough to believe a major investor would disclose such details to a little guy like that is nuts. Sure. Duane took on an investor. This is not a shocker. Banks aren’t loaning money. If he sticks to his guns with the great coffee and solid politics, I don’t see why a little more of a good thing is a bad thing. Everyone keeps throwing around the word “lied”. Since when is not revealing your exact, successful, and surely complicated financial structure to the public lying?
mostly_running says
+1
The most interesting thing that could come out of all of this is Carmicheal going down like the heap of dog shit in a bag that he is. The worst thing was me going back through his writings and seeing what a self-centered douchebag he is. If there is an editor at Esquire, he or she should be paying attention to the dogs in the yard.
Foop says
Well, there’s always Sterling Coffee Roasters. And their cold coffee is good.
jimster says
Teapot meet Tempest. Tempest meet Teapot.
Bill says
Well, at least Stumptown is confirming it. They are linking to the NYT article on their news page:
http://info.stumptowncoffee.com/category/news/latest/
–Bill