Small coffeehouses battle for a share of the caffeine market

ATLANTA -- You have money. You need a caffeine fix. You have so-o-o many options.

Starbucks, the giant java icon pushing a lot of latte into America's heartland, is on pace to add 2,400 stores this fiscal year, bringing its total to nearly 15,000. Competitors from McDonald's to Dunkin' Donuts are scrambling to sell America cups of premium coffee.

That has smaller coffeehouses searching for ways to grab a corner of the market.

"It's pretty hard for an independent to try to stay away from where a Starbucks is," said Bruce Milletto, president of Oregon-based consultant Bellissimo Coffee InfoGroup.

In fact, Milletto said he advises clients to be close to a Starbucks, which does extensive research before choosing store locations. "It tells me that must be a great area demographically to sell coffee in."

To survive, smaller operators need to differentiate themselves from Starbucks and highlight their community connections, Milletto said.

On the upside for small shops, Starbucks and other big players are expanding the market for everyone, including two very different chains with Georgia ties:

Jittery Joe's, a little Athens-based chain favored by bicyclists and college students, and Minneapolis-based Caribou Coffee, run by Atlantan Michael Coles.

Caribou considers itself the second-biggest coffeehouse chain in the nation. Yet Starbucks "opens a company my size every two months," Coles said.