The government has been saying for a while that they want education to become our biggest export.
On Budget Night, Treasurer Joe Hockey said that ‘if we could lift our service exports like higher education, tourism, health care and financial services, to just half the level of our commodity exports, it would add $50 billion to our economy each and every year.’ Earlier in the year, he also asked the Productivity Commission to research the barriers to growth of Aussie services exports, including education.
Analysts also think it’s smart to focus on international education. They point out that according to stats from the ABS, education is neck and neck with tourism for visitors’ reasons for coming to Australia. HSBC chief economist Paul Bloxham said that ‘The ongoing rise in Asian middle class incomes … is making studying in Australia more affordable for a larger group of students’. IBISWorld analysts have also pointed out that Australian education providers could benefit from the free trade agreement with China.
So they’ll be happy to know that one of Australia’s hottest new export markets is a type of education. Coffee education, to be precise.
But before we get into the courses themselves, here’s a little background.
A booming specialty coffee scene
There’s a reason that Australia is now able to export coffee education. We’ve finally got some credibility on the international coffee scene. And it’s all thanks to specialty coffee.
Specialty coffee is extremely high quality coffee. The quality is measured in an internationally standardised test called Q-grading. Only coffees that get 80–100 out of 100 are classified as specialty. Only 5–10% of the world’s coffee meets this standard.
It’s already a relatively rare and precious thing. So those who can get the most out of it, through roasting, preparation and service, are poised to profit.
We haven’t really had specialty coffee in Australia for very long. Australian audiences were primed for specialty coffee. We can thank the Italian migrants for that — they brought espresso with them to Australia right after the war. But the first Australian specialty coffee roasteries weren’t established until the early 90s. Though which exactly is the oldest depends on who you listen to. The Australian Specialty Coffee Association (ASCA) was founded in 2001. Contrast that to the Specialty Coffee Association of America, which has been going since 1982.
The Aussie specialty coffee scene has been remarkably cooperative. Businesses have worked together to promote specialty coffee to consumers in Australia, and to make sure the world knows what good coffee we’ve got. According to the ASCA:
‘AASCA began as a vehicle for like-minded people in Australia with an interest in specialty coffee … to bounce ideas off one another, share opinions, successes and to work together collectively on issues affecting the industry as well as to introduce programs that would highlight this niche within the coffee world.
‘Over time, the association has proceeded to adopt international quality standards through benchmarking with it’s [sic] sister organisations (SCAA and SCAE) and has been responsible for organising and running the Australian arm of specialty coffee competitions. The Australian competitions are recognised by and link in to the international competitions.’
Competitions have indeed been a massive part of showing off Aussie specialty coffee to the world. Sasa Sestic from Ona Coffee in Canberra won the World Barista Championship this year. Melbourne’s Matt Perger won the World Brewers Cup in 2012. He came third in the WBC in 2011, and second in 2012. An Australian has won — or made it to the final rounds — of nearly every World Barista Championship since 2008.
We’ve also hosted international coffee events. The first Melbourne International Coffee Expo was held in 2012. In 2013, it also included the WBC.
According to IBISWorld’s ‘Cafes and Coffee Shops Market Research Report’, Australia has a ‘vibrant coffee culture’. And we can thank high competition for that. According to the Report snapshot, ‘Australia’s coffee culture and the growing number of small speciality cafes and coffee shops have resulted in a high level of competition, low barriers to entry and low industry concentration…’
In other words, it’s easy to start a café business in Australia. But because it’s so easy, coffee shops have to try and do things to distinguish themselves. And so far, this has meant raising the standard of coffee they sell and make.
‘Melbourne-style’ cafes around the world
Australia’s coffee cred has spread beyond our borders. You can now find urban Australia inspired coffee shops around the world. Forget about the Italian style espresso bar, or the American coffee lounge. It’s all about the Melbourne-style café.
These cafés take style cues from Melbourne coffee spots. Think hidden laneway spots, industrial-chic premises, designer furniture, coffee sacks hanging on the walls, cool furniture and edgy art. They also have similar food, coffee and service standards. You can get smashed avo on toast (apparently we invented that), and a selection of brunches featuring Vegemite, thousands of kilometres from home.
Just take a look at the images below.
Source: BeanScene, Symmetry, Chye Seng Huat Hardware, Common Man Coffee Roasters
[Click to enlarge]
You’d be forgiven for thinking that they’re laneway coffee shops from Melbourne or Sydney. But they’re not. They’re top rated (according to beanhunter.com) specialty coffee stores in Singapore.
The image on the right is Common Man Coffee Roasters. Owner Harry Grover recently gave an interview about how Australia’s independent coffee scene has influenced the Singapore specialty coffee boom. He said that ‘it’s [specialty coffee] exploded here, and a lot of that came from Aussie influence … Many of the new generation of Singaporeans have studied in Sydney or Melbourne, and they’ve come back home and thought, “I want to have the same quality”’.
Raj Sidhu, owner of the House of Commons coffee bar in Singapore, agrees. In a recent interview with Bloomberg Business, he said ‘That’s [Sydney] where our gurus are … Everyone who’s got a cafe here is influenced by the coffee movement in Australia. Even our decorations — clocks, scales, rugs, burlap coffee bags — it’s all from Sydney.’
It’s not just Singapore, either. Aussie cafés are all over the US. Bronzed Aussie in LA is known for their lamingtons, meat pies and ‘Australian roast’ Longshot coffee. Almost ironically, it’s rated (by Yelp users) as one of the top places to eat in the US. Sydney based specialty coffee brand Toby’s Estate has roasteries and cafés in New York — in the Flatiron District, the West Village, and hip Williamsburg, Brooklyn.
Brooklyn is also home to two Brunswick cafés, one in Bed-Stuy and one on in Windsor Terrace. There’s also a Brunswick on the Lower East Side. And a Little Collins on Lexington Avenue. Confused yet?
New York wasn’t the first world-class city to catch the Melbourne-style café bug. London boasts four Workshop Coffee Co. locations. Workshop used to be called St. Ali — the same St. Ali that’s based in Melbourne. Kaffeine is an Aussie and Kiwi owned café in Fitzrovia. They’ve won a number of awards in the past, including Best Independent Café Europe from the Allegra European Coffee Awards.
London is also home to Flat White, a café opened in Soho in 2005 by Aussie expat Peter Hall. And speaking of flat whites…
Exporting the flat white
The flat white has become known as Australia’s signature coffee.
Australian-style cafés around the world have served flat whites for years. Hall’s café in London is just one example. But perhaps the most high-profile uptake of the flat white was by Starbucks.
Starbucks [NASDAQ:SBUX] introduced the flat white to its American menus in January this year. At first, many customers were confused about what it was. It was incorrectly described as a ‘small latte’ by the New York Times. A barista from Blue Bottle [West Coast specialty coffee chain] reportedly called it a ‘hotter version of a cappuccino’.
A Melburnian writing for CNN summed up the actual definition neatly:
‘A latte is traditionally served in a glass, made up of a single espresso shot (about 30 milliliters), milk and a little foam. Depending where you go, it’s also topped with some unnecessary arty design. The glass is 240 milliliters, or roughly eight ounces. (Americans, please note the glass and its size. Coffee is a small drink, not something you can fill a bathtub with.)
A Flat White is (usually) served in a smaller ceramic cup and is made up of a double ristretto and lightly textured milk. There’s less foam than a latte and the vessel is usually 200 milliliters. A ristretto is the first part, about half, of an espresso — the more flavorsome bit of the actual coffee.’
On 23 April, Starbucks announced record sales figures. Their revenue went up 18% to US$4.56 billion for the quarter. Starbucks CFO Scott Maw partly credited the flat white for the boost in sales.
Starbucks weren’t the first to try and capitalise on Australia’s favourite espresso based beverage. In 2004, McDonalds tried to get a trademark for the phrase flat white.
Source: United States Patent and Trademark Office
[Click to enlarge]
Luckily they abandoned their attempt the next year. If they effectively owned the flat white in the US, it could have shattered a great chance to promote and distinguish Aussie coffee culture in the States.
Australian roaster and barista training
If you’ve read this far, it should come as no surprise that coffee entrepreneurs and budding baristas are coming to Australia for their coffee training.
But what might surprise you is the cost of that training.
In line with Australia’s super high coffee standards, the best training is also high end. That means coffee celebrity trainers, bespoke private tuition, and international certification.
For example, there’s The Coffee Gang in Sydney. For the bargain price of $2,500 (!) you can take a two month advanced barista course with founder Tony Vitiello. Most who take it, reportedly, are international students from across Asia. Barista Basics, also in Sydney, offers nationally accredited coffee prep training. Tellingly, they’ve recently started offering classes in Mandarin.
In Melbourne, there’s the Australian Barista Academy. It’s run by wholesale specialty roaster 5 Senses Coffee. Their main claim to fame is their instructors; according to their website, ‘ABA instructors have collectively won over 15 barista competition awards and are experts in the field.’ At the Academy, you can also take a 6-day $1925 course to become an internationally certified Q-grader. There are 22 tests throughout the course. And no refunds if you don’t pass all of them.
At the top end of the scale, Australia also has the capacity to ‘export’ coffee education in the form of consultancy. We’ve got a number of world-renowned experts who are Australian residents for tax purposes. For example, former world champ Matt Perger offers ‘services … internationally to help individuals and businesses understand and apply this knowledge to their craft.’
Coffee education exposure on the ASX
There aren’t any specialty coffee brands or coffee-only educators listed directly on the ASX. However, there are several sideways sectors.
For example, there are around six to ten listed education providers offering coffee education units as part of some of their courses. Some of these companies own a variety of different schools and colleges, whilst others operate branded vocational education colleges across the country. Another listed company offers business and compliance support to private education providers, including coffee educators.
What they all have in common is that they’re small-caps.
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Eva Mellors,
Contributor, Money Morning
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