Not a day goes without us coming across a story about how the sky is falling on retail quality coffee. For example, ABC News laments, “How do you save on coffee in tough times?” Today the Chicago Tribune ran a semi-humorous column titled “Brother, can you spare (buying) a double latte?

Each one of these stories reference both the tougher economic times and Starbucks97% decline in their most recent quarterly profits. Posters invariably comment on these articles, claiming that pricey coffee was just a faddish aberration akin to the Dutch tulip mania of the 1600s. All of which leaves us with the impression that the era of quality coffee is over now that we’re eating canned cat food. Right?

Except that this story is a load of crap. In fact, this is precisely what Starbucks’ PR team wants us all to believe: that “it’s the economy, stupid,” and that Starbucks’ problems are all external and not internal to the company.

The truth is far different from that. Starbucks is now paying the price for selling out its soul a decade ago — by making more automated, mass-produced, and ubiquitous coffee to meet its insatiable desires to grow as gargantuan as possible, as quickly as possible. But to believe Starbucks’ version of events, we need to conveniently ignore that rival Peet’s Coffee & Tea continues to grow — and that many other Starbucks competitors, such as Café Bustelo and Lavazza (both cited in today’s news), continue to expand their operations in this economic climate. And today, the future of quality coffee has less to do with Starbucks than ever.

And please — don’t get us started on the media myth that home espresso is the way for consumers to both have great coffee and save a lot of money. At least without spending a lot of time on it. We do propose that home espresso is about better quality, saving money, or saving time. However, consumers can choose at most two of the three — and quite often they can choose only one.

UPDATE: Feb. 12, 2009
Sure enough, the day after Starbucks announced thousands of additional job cuts in the face of mounting losses, Peet’s Coffee & Tea reported a 21 percent jump in quarterly profits. And while Peet’s has stuck to their upscale espresso beverage formula, Starbucks continues to bleed as it announces more downscale plans to offer fast food value meals and instant coffee.

Talk about a Dickensian Tale of Two Coffee Fortunes…

UPDATE: Feb. 15, 2009
Apparently it’s not just competitive chains that haven’t chucked their quality standards (such as Peet’s Coffee & Tea) that are growing while Starbucks falters. According to an article from the Associated Press yesterday, many higher-end, neighborhood cafés are also enjoying double-digit profits, baffling many economists: Many small cafes holding their own in recession | Business | – Houston Chronicle.

One theory is that this represents more of a consumer backlash against large corporations — and that consumers are more judiciously spending their dollars on what they perceive to be higher-quality coffee beverages made by the neighborhood café’s well-trained barista. Given our longtime comparison between Starbucks and Mikhail Gorbachev’s rule of the Soviet Union, could the quality revolution among mainstream coffee consumers finally have reached a Boris Yeltsin phase?