Advertising

The Seattle Times Company

NWjobs | NWautos | NWhomes | NWsource | Free Classifieds | seattletimes.com

Business / Technology


Our network sites seattletimes.com | Advanced

Originally published Thursday, April 3, 2008 at 12:00 AM

Print

Clover coffee machines catch Starbucks' fancy

Zander Nosler and two engineer buddies created a machine that struck Starbucks' fancy. Called the Clover, it is a single-cup brewer that costs coffee shops $11,000. In two years, Coffee Equipment Co. has delivered fewer than 250 Clover machines to coffee

Seattle Times business reporter

Coffee Equipment Co.

The Clover maker

STARBUCKS IS BUYING Coffee Equipment Co., which makes a single-cup brewing machine called the Clover.

Headquarters: Ballard

Founded: 2004 by Zander Nosler, Randy Hulett and Jorah Wyer; Nosler is chief executive

Employees: 11

Clover name: Picked from a list because of the alliteration with "coffee"

If this doesn't work out: Zander says he once wanted to start a company to make a "beef-o-meter," a remote device that would tell ranchers which steer were in a field.

Zander Nosler's first scent memory is of Peet's Coffee in the Bay Area, where he grew up.

"It was so disappointing that coffee never tasted as good as it smelled," said Nosler, who set out to improve the flavor with two other engineers and a few hundred thousand dollars from investors.

Four years later, their machine — the Clover — has become part of Starbucks' strategy for a revolution in brewed coffee and a turnaround in its stock price.

Starbucks last month announced plans to buy Coffee Equipment Co., the 11-employee company that makes Clovers in an old trolley shed in Ballard. Nosler is thrilled.

"It's always nice to get asked to go steady, and I love not having to go ask for more investor money," he said of the deal, whose price and other terms, including a possible closing date, have been kept secret.

The machine that struck Starbucks' fancy is a single-cup brewer that costs coffee shops $11,000, about the same price as many commercial espresso machines and at least $9,000 above most high-end commercial drip-coffee machines.

In two years, Coffee Equipment has delivered fewer than 250 Clover machines to coffee shops around the world.

Clover fans are smitten with the flavor.

"I woke up thinking about it," said Starbucks customer Steve Fernbacher while drinking a cup at a Queen Anne store that has tested the machine for the past few months.

"It's definitely worth it," he said of the $2.50 price for a 12-ounce cup. Starbucks charges $1.55 for a 12-ounce drip coffee at that store, or $3.30 for a French press of about 16 ounces.

Some coffee shops charge more for their Clover brew. In Manhattan, Starbucks CEO Howard Schultz paid $7 for his first cup of coffee from a Clover.

"How do you do that?" Schultz jokingly asked Nosler in front of shareholders at Starbucks' annual meeting last month.

Nosler designed the Clover with two fellow engineering alumni from Stanford University, Randy Hulett and Jorah Wyer.

Only Nosler drank coffee, and the idea for a new machine sprang mostly from his passion for engineering. At age 12, he had what he considers an epiphany, "that someone designed even milk crates."

As a teenager, Nosler noticed that not all things are designed equally. He was irked by the turn-signal stalk of his father's Cutlass Ciera and thought a Honda Civic stalk "felt silky, substantial, like someone cared about how it felt."

By his early 30s, Nosler was a full-fledged design perfectionist with a business idea — to make a coffee machine that could brew French press-quality coffee that was not as slow and messy as an actual French press.

"I'd done work on coffee machines and I was struck by how the hardware manufacturers didn't seem very responsive to roasters' needs," he said. "The espresso folks got it, but the brewed-coffee world seemed so driven by costs and utilitarian."

In 2004, the three engineers launched their project, spending the first month brewing coffee every way possible — drip, espresso, vending machines, vacuum pots — to learn how it was done.

Employees came and went, including Wyer, who left in 2005. By early 2006, the first Clover was delivered to Caffé Artigiano in Vancouver, B.C.

The machine is basically a semiautomatic French press that allows baristas to set the temperature and brew time for individual cups of coffee. The idea is to grind the coffee fresh and to calibrate the brewer so that its settings extract the ideal flavor from different types of beans.

Some Clover owners are not pleased with the Starbucks buyout.

Portland-based Stumptown Coffee Roasters sold five of its six machines to Chicago-based Intelligentsia Coffee because "we'd have to buy the parts and services from Starbucks, and we've never done that before and we're not going start now," said Matt Lounsbury, Stumptown's director of operations.

He's keeping one Clover in a coffee-cupping lab but isn't sure what he'll do with it.

For Stumptown customers, it's back to French press or, at its Annex tasting room in Portland, an old-fashioned manual Melitta drip system. Clover doesn't have competition, Lounsbury said, but its flavor profile falls between a French press and the manual Melitta system.

Jeff Babcock, of Zoka Coffee Roaster & Tea, was the first Seattle coffee-shop owner to buy a Clover. He doesn't know what the Starbucks deal will mean for his six Clover machines but says he's "too old to get upset about it."

Babcock likes the ease of making good coffee with the Clover and figures "we'll have a lot better coffees coming out of our Clovers than Starbucks will. We're the ones that go after the really, really special coffees."

Nosler targeted independent coffee shops because investors — family, friends and a couple of angel investors — would not give money if the company was counting on a windfall from Starbucks to be profitable.

"We consciously trained ourselves that Starbucks would never do business with us, much less buy us," he said.

Starbucks' interest in the Clovers makes sense, he thinks, because "they're unique in their size and resources. They can control every aspect of their value chain."

The companies are still "trying to figure out what it all means" and have not decided whether they will ramp up Clover production, or how many Starbucks stores will get the machine. Starbucks does not often buy other companies.

While they decide, Clovers continue to be made on a 50-foot assembly line in Ballard. Nosler is scheduled to make a machine soon, after a few months off the line.

"I'm looking forward to it. It will be a nice break," he said.

Now that the Clover has pioneered a brewing alternative, Nosler, 36, said he wouldn't be surprised if others follow.

"But I don't know. We've been out there more than two years and haven't heard a peep," he said. "It's expensive and it's really hard. I've aged 10 years."

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Copyright © 2008 The Seattle Times Company

More Business & Technology headlines...

Print      Share:    Digg     Newsvine

advertising

UPDATE - 09:46 AM
Exxon Mobil wins ruling in Alaska oil spill case

UPDATE - 09:32 AM
Bank stocks push indexes higher; oil prices dip

UPDATE - 08:04 AM
Ford CEO Mulally gets $56.5M in stock award

UPDATE - 07:54 AM
Underwater mortgages rise as home prices fall

NEW - 09:43 AM
Warner Bros. to offer movie rentals on Facebook

Advertising

Video

Marketplace

Advertising