I was surprised to see how many of my predictions from 5 years ago have come about. Some have clearly occurred; others are just beginning now, and a couple I missed. Specialty coffee continues to be the supernova of the coffee industry. Yet we still have a way to go before it's a part of American life as it is to the European. Specialty coffee has well over a decade of broad expansion ahead.

I'll make the leap to look over the horizon for the first five years of the new millennium.

Espresso Bars, Seattle Style.

With a huge lead, Starbucks will continue growing, creating a common vocabulary for coffee drinks in the entire world. Starbucks' expansion will continue into virtually all world markets with money and become almost as ubiquitous as McDonalds. To grow the same store sales picture to satisfy stock analysts, it will continue to move into breakfast and lunch food categories in North America.

By 2005, Starbucks will have 5000 branded U.S. locations, including alternative venues. Their current run at the grocery kiosk business will be a solid hit and give them significant sales in whole bean sold at supermarkets. Starbucks will change its dispensing equipment technology so that anyone, in a day's time, can make the drinks with proficiency. No one will notice their failures at ventures in non-food categories.

Many independent 'mom and pop' operators will be rolled up in a consolidation wave. Four national chains will emerge besides the looming green mermaid. There will be a struggle for the distant #2 position with Tully's of Seattle and Dietrich Coffee of Irvine vying for the role.

There is no sign of my prediction of the great espresso-wine bars in sight. If it happens, it is not likely to have a great impact on the lifestyle of Americans. I think that Starbucks will form a small successful specialized chain of espresso-wine bars.

Coffee and fresh juice/smoothies will merge in many locations as some operators come to understand the combined use of expensive real estate and the common retailing of premium beverage products. They will emphasize a coffee identity in the morning and the smoothie message in the mid-day. Co-branding of established coffee and juice lines will be the strong players here.

Espresso Drive Thru

Drive thru espresso vendors will become an American fixture. Every city in the U.S. will have them. My prediction from five years ago is pushed out to the next 5 years. I missed on the time frame, but I am as bullish as before. As with other long-term trends, changing consumption patterns takes time. This one will happen. Given the correct market entry timing, drive thru espresso has been successful in all regions of the country.

In 2005 AD, there will be recognized brands of drive thru chains, led by Portland's Caffe Diva and they will dominate this segment. While there will still be many independent operators popping up in underserved areas, the national brands will dominate the maturing markets and be constantly consolidating the independents.

There will some moderately successful co-branding with the national coffee chains and fast food chains because of the cost of prime real estate. Fast food chains will exert effort to get into espresso to grow their morning revenue and increase their profit margins and same-store sales.

Food Service and Restaurants

Five years from now, you will have a 50% chance of getting a decent espresso in a fine dining restaurant (now it's less than 10%). Because of this, restaurants will see a shift from virtually all filter coffee to more espresso drinks. Espresso pods (one of my previous predictions of success but still building steam) will be available from all major roasters and responsible for a large part of quality espresso in fine dining. In higher volume locations, superautomatic machines will be responsible for the higher quality product produced.

Organic Coffee

As specialty coffee becomes more widely consumed, there will become more awareness of the poorly paid grower and the environment that the coffee is grown in. The opportunity to create niches in coffee brands for 'who and what are you helping' will be evidenced.

In summary, the rest of the country will look a little like Seattle. Canned coffee in 5 years for the entire U.S. will be like wearing a polyester leisure suit was in the 90's. The mean public level of understanding of what good coffee is will be elevated to the current point of wine comprehension- not huge, but farther than we are now.

Let's hope that supply of great Arabica can keep up with demand. See you in 2005 for the next set of predictions.