The second wave of coffee began in Berkeley, California, in a small shop on Vine Street, with a Dutch immigrant named Alfred Peet who had grown up around coffee and had opinions about how it should be tasted.

Peet opened his first store — Peet’s Coffee & Tea — in 1966, at a moment when American coffee culture was dominated entirely by the percolated or instant coffee of the first wave. His approach was deliberately different: he sourced higher-quality arabica, roasted it darker and fresher than the commodity roasters, and sold it by the pound to customers he considered worth educating. Peet’s was, from the start, as much about coffee knowledge as about coffee sales.

Peet’s Influence

Alfred Peet was not the first person to sell quality coffee in America, but he was the first to create a coherent retail model around it. His shop became a gathering place for coffee enthusiasts, and his willingness to share his knowledge created a community of informed consumers. Among his earliest regular customers were three young men named Jerry Baldwin, Zev Siegl, and Gordon Bowker, who were so impressed by Peet’s approach that they opened their own coffee shop in Seattle in 1971.

They named it after the first mate in Moby Dick: Starbucks.

The original Starbucks was more influenced by Peet than it initially influenced the world. In its early years it sold high-quality coffee beans, following Peet’s model closely. Baldwin and Peet remained close, and Peet helped supply the early Starbucks with beans and knowledge. What transformed Starbucks into a global phenomenon was the arrival, in 1982, of a marketing director named Howard Schultz.

Schultz, Milan, and the Espresso Revelation

Howard Schultz’s transformation of Starbucks is well documented and, by now, one of the foundational myths of American business. In 1983, Schultz visited Milan on a business trip and was struck by the centrality of espresso bars to Italian urban life. The bar on every corner, the quick espresso drunk standing at the counter, the relaxed lingering over a cappuccino — it represented a relationship with coffee utterly alien to American experience.

Schultz wanted to bring this to America, adapted for American tastes and habits. He left Starbucks temporarily, started his own espresso bar concept called Il Giornale, and in 1987 bought Starbucks from its original owners when they decided to sell. He then merged the two concepts — the high-quality sourcing of the original Starbucks with the espresso bar model of Il Giornale — and began expanding.

The key innovation was not espresso itself — espresso had been available in Italian-American communities for decades — but the combination of espresso with the third place concept: a comfortable space, neither home nor office, where people could sit for extended periods with a drink and a laptop or a conversation. Starbucks charged more than a diner would for coffee, but offered something the diner did not: an identity. Ordering a grande non-fat caramel latte was not just getting a drink; it was a statement about lifestyle, taste, and urban sophistication.

The Drinks That Defined an Era

The second wave’s relationship with coffee was mediated primarily through milk. The drinks that drove Starbucks’s growth — caramel macchiato, Frappuccino, pumpkin spice latte — were coffee-adjacent rather than coffee-forward. Espresso provided the caffeine and a baseline of coffee flavour; milk, sugar, and flavour syrups provided the palatability.

This was a commercially rational approach. Most American coffee drinkers in the early 1990s had been raised on first-wave instant or percolated coffee that was bitter and astringent. Softening espresso with milk and sweetening it with syrups made the transition to espresso-based drinks accessible. Millions of people who would never have chosen to drink a straight espresso happily consumed a Starbucks latte every morning.

The result was a massive expansion of espresso consumption in the United States and, following Starbucks’s global expansion, across the world. Countries that had no espresso tradition — the UK, Australia, many parts of Asia — developed one, mediated through the Starbucks model. The economics of espresso equipment became accessible to independent operators, and a generation of coffeehouses opened across the English-speaking world in Starbucks’s wake.

What the Second Wave Achieved and What It Missed

The second wave was enormously successful at creating a coffee culture where little had existed. It trained consumers to expect espresso, to pay more than commodity prices for coffee, and to see the coffeehouse as a social space. These were genuine advances.

What it missed — or did not prioritise — was the coffee itself. The beans in a Starbucks latte were largely interchangeable, roasted very dark to produce a consistent flavour regardless of origin, and valued primarily as a vehicle for milk and syrup. Questions of origin, processing, variety, and terroir — the questions that would define the third wave — were essentially absent. Coffee was a commodity experience delivered in a lifestyle wrapper.

The specialty roasters who would build the third wave admired some of what Starbucks had done — particularly its success in building consumer willingness to pay more for coffee — while rejecting its fundamental premise that the coffee itself didn’t really matter. They argued, and would prove, that it mattered enormously.