Coffee Without Beans? A Startup Brews a New Cup of Joe
A lunch consisting of beef, onion and tomatoes on a ciabatta bread sandwich, a pot of edamame beans, fruit salad and a cup of coffee sits in this arranged photo. (Photographer: Jason Alden/Bloomberg)

Coffee Without Beans? A Startup Brews a New Cup of Joe

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A block away from the Starbucks on Seattle’s busy Western Ave., a woman bends over a coffee grinder and a black kettle full of bubbling water sits on a hot plate. The air is thick with the roasty aroma of fresh-brewed java. The scene would be entirely unremarkable except for a few outstanding details. One, the woman is wearing a lab coat. Two, there’s a steaming glass beaker instead of a mug. And three, not a single coffee bean was involved in making it.

This is the office of food tech start-up Atomo Coffee Inc., where a team of food scientists and chemists led by friends and co-founders Andy Kleitsch and Jarret Stopforth are working on what they hope will be the successor to meatless meat, eggless eggs, and milkless milk. Atomo’s coffeeless coffee is made from upcycled ingredients, e.g. sunflower seed husks and watermelon seeds, which undergo a patented chemical process to yield molecules that mimic the flavor and mouthfeel of the real thing. The resulting grounds are brewed just like a regular cup of coffee. And yes, it has caffeine.

The $100 billion coffee industry is one of the world’s most vulnerable to climate change. The plants that grow arabica beans—the most common worldwide, favored by both coffee snobs and chains like Starbucks Corp.—thrive in cool regions with distinct rainy and dry seasons. But global warming is causing those regions to shrink. Within the next seven decades, arabica is likely to lose at least 50% of its habitat, according to a 2019 report from scientists at Britain’s Royal Botanic Gardens, Kew. As temperatures continue to rise and growers move their farms in search of cooler temperatures, rates of deforestation rise, as well.

This is where Kleitsch and Stopforth are hoping to step in. After more than two years of development, they’ll finally roll out their coffee this year, selling cans of cold brew. Eventually they plan to expand into instant, brew-at-home grounds and whole beans—a roll-out strategy followed by one of the company’s role models.

“We like to think of ourselves as the Tesla of coffee,” said Stopforth, who’s spent the last two decades working in food science and development. Kleitsch, meanwhile, is a serial entrepreneur and former product manager at Amazon.com Inc. “Before Tesla came along, if you wanted a luxurious, powerful vehicle that was detached from diesel and fuel, you had no option,” Stopforth said. “In the same way, before Atomo, if you wanted coffee that wasn’t linked to deforestation, you had no choice. Now you do.”

Coffee Without Beans? A Startup Brews a New Cup of Joe

While there are numerous certifications available to show that products are sustainably sourced, the lack of a unified standard with transparent metrics leaves the door wide open for fraud from producers and mistrust from consumers. Investors with experience backing plant-based food tech are betting Atomo can fill that gap. The company has raised about $11.5 million in two rounds of funding since 2019, when it launched with a $25,000 Kickstarter campaign. Its backers now include Hong Kong-based Horizons Ventures, which invested in Impossible Foods Inc., and S2G Ventures, whose portfolio includes Beyond Meat Inc.

Plant-based foods are a high-growth category, and not just for start-ups. Nestle SA, for instance, is rolling out everything from vegan chocolates to sausage substitutes; fast food giant McDonald’s Corp. is doing a trial run of its first meat-free McPlant burger in Europe, developed with Beyond Meat; and even America’s biggest meat company, Tyson Foods Inc., unveiled a line of 100% vegan meat products in May, including ground “beef” and multiple varieties of “sausage.”

That said, coffee is an especially tricky market. For one, many people have a more intimate connection with coffee than with other food products, even such iconic items as ice cream and hamburgers. For another, coffee culture varies dramatically region to region—the name Atomo, Italian for ‘atom,’ is an homage to that country’s espresso bars.

Even plant-based alternatives that have already amassed major market share are facing a potential regulatory challenge emanating from traditional producers who aren’t willing to give up their exclusive claims to “meat” and “milk” so easily. Vegan food-makers say the meat and dairy industry is marshaling scientists and lobbyists to defend their turf by pushing to restrict the labelling of “milks” and “meats” strictly to products derived from animals.

One advantage Atomo has over these businesses is that, unlike meat and dairy, coffee doesn’t have a standard of identity regulated by the Food and Drug Administration. This means it doesn’t have to come from a particular place, or even a particular plant, said Kleitsch. “We anticipate there will be legal challenges around the naming of our coffee,” he said, but that won’t stop them from labelling it as such. “We are challenging norms and disrupting big giants.”

Kleitsch and Stopforth are trying to form partnerships with high-end coffee shops, particularly ones interested in reducing their carbon footprint. Whether those come together will depend on how quickly the food service industry bounces back from Covid-19. Atomo is also considering selling its coffee online via its website.

Any level of success, of course, is predicated on the answer to a single question: does Atomo’s coffeeless coffee actually taste good? While the cold brew lacks some of the bitterness one might expect from a cup of traditional coffee, it’s refreshingly smooth with a lingering sweetness on the palate.

Dani Cone, the fourth-generation owner of local Seattle grocery chain Cone and Steiner, is in talks to become one of Atomo’s first retail partners. Having been in the coffee industry for three decades and spent the last fifteen years running a coffee shop in Seattle, she admits to being skeptical about Atomo’s molecular coffee initially. But once she tasted it, she was convinced, said Cone, who met Kleitsch when they attended mentoring sessions at a business school.

“As with any new product like this, there will be a curve of consumer education, just like it was for me,” Cone said. But she’s confident Atomo will reach its niche market of busy, environment-conscious people looking for ready-to-drink coffee-like beverages.

“In the same way that bottled frappuccino opened up a new category of coffee,” Cone said, “this too capitalizes on a super-hot category.”

©2021 Bloomberg L.P.

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