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Q&A with Michael Riady, Founder of Tentera Coffee

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Q&A with Michael Riady, Founder of Tentera Coffee

The top beverage trends were highlighted in the “5 Trends Shaping the Beverage Industry” article. One additional trend that The Food Institute is following is the transition from “conventional” coffee and tea brands into specialty and artisanal brands. I recently interviewed Michael Riady, the founder of one such brand, Tentera Coffee Roasters—a specialty coffee with roots in Indonesia.

Q: Tell us about yourself and how you started the Tentera concept.

A: I’m from a five generation Indonesian family. I was born there, grew up there. I went to the U.S. for college, then I went back to Indonesia after I graduated. The idea of coffee as a business started in 2000, I was still in college when my brother-in-law’s younger brother said we should open a coffee shop.

I’ve been drinking coffee since high school but I never thought of opening a coffee business. It wasn’t until after working 13 years in real estate that I decided to pursue my long-time coffee passion.

I thought, “What does the U.S. need that Indonesia has?” I wanted to bridge the two countries. America is the largest coffee consumer in the world with 35% market share and Indonesia is the fourth largest producer. I moved back to Los Angeles and launched an e-commerce coffee brand specializing only in premium and highly sought-after Indonesian coffee (Sumatra, Java, Bali, Toraja islands, and more) called Tentera Coffee Roasters.

We started not knowing much about coffee or e-commerce. Now fast forward, it’s been around three years, we went through a lot of hurdles and we’re at a place for growth.

Tentera is an authentic Indonesian specialty coffee—part of the “fourth wave” of coffee (a term used to describe the trend from conventional to premium localized coffee). Americans drink a lot of Indonesian coffee, but the quality is different. We focus on the premium Indonesian coffee and expand the variety. I travel frequently between my home country and LA to handpick all the coffee imported to the U.S.

Q: What does Tentera mean?

A: Tentera comes from an Indonesian word “tantara,” which means soldier that does good causes-I changed one letter…it means fight for a good cause. I thought, “What if every time I sell coffee, I give a percentage to a conservation project?” Coffee can be a very interesting tool to help conservations continue on a sustainable basis. We give 1% of gross revenues of anything that sells to conservation projects. We work with 1% For the Planet.

Q: You mentioned third wave and fourth wave. Can you explain what the different waves mean in coffee?

A: First wave would be “pre-Starbucks” coffee in America, or coffee that you consume at home. Very basic, just a traded commodity, no brand. Second wave would be Starbucks. They started opening stores on every block and expanding globally. Starbucks turned coffee into a lifestyle and made it more popular, but not necessarily focusing on quality—rather on being able to go out for coffee.

Third wave would be brands that are much more farm to cup. Direct from the farm, they know how it’s farmed, they buy small batches, etc. Third wave cuts out all the traders and middle men as much as they can, roasting coffee to perfection. It is more about the supply chain and quality being improved significantly. The roasting is also much more specialized in third wave. You must know how each bean is roasted and how to get the best extraction.

Third wave is getting popular as people open cafes all over, but it is still new in America. Fourth wave, which I made up, is basically third wave plus coming from the country. You are the original founder of it, the pure local, not relying on foreigners. People want to find authentic business and my family has been in the business/country for a long time.

Q: Are the consumers who drink fourth wave coffee connoisseurs?

A: Third wave is already trading at double the price, but I think the people who come to Tentera aren’t necessarily connoisseurs. The connoisseurs are a fraction of people who set the trends, etc. Our customer base are mid- to upper-market and they don’t mind paying a bit more and want the experience—it’s all about the experience we can provide them.

The price isn’t necessarily higher in fourth wave [over third wave], but people are relying more on the trust and experience factors. People who drink Starbucks don’t care as much for the experience.

Q: Are you finding a trend toward consumers wanting this experience? What is the momentum like?

A: Yes, but I can tell you for sure it’s not only coffee. If you look at beer, its already starting. It’s happening in a lot of areas of the food and beverage industry. Consumers will walk up to a shelf and will want to find those unique upcoming coffee brands. Smaller brands are taking shelf space from Starbucks.

Especially regarding Millennials, people have traveled and are on social media more and want a specialized experience. I think that will continue going forward.

Q: Is Tentera the largest Indonesia-based coffee company in terms of market share?

A: There are larger companies in Indonesia, but in America specifically, we are the largest. We are by far the most trusted right now, no one else is really doing it.

When you search “Sumatra,” “Indonesian coffee beans,” etc. on Amazon, a couple thousand searches come up, proving consumers are looking for these specific keywords. A couple years ago, I wanted to pay for the ad word “coffee” and found it was very expensive and broad because everyone uses it. I decided to look only at Indonesian keywords and found that our sales picked up dramatically. People who search Indonesian specific words are much more knowledgeable and have some sort of past experience. We want to be number one in that space.

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Q: What sort of growth rates have you been experiencing as you build up your brand?

A: I officially started my e-commerce in April 2018. We started picking up sales on day one. Year after year we are growing at 100% without doing any marketing, but this year since COVID started we shot up more. In April and May of this year, I started building up more resources to help maximize the backend of the business. So now I feel like we can grow even faster.

Q: What milestones are you trying to hit over the next three years?

A: We are going to focus on e-commerce and then the grocery business-which takes more time. E-commerce is something we are very optimistic about, especially with COVID accelerating online shopping.

Second, we are going to be signing a deal, hopefully, with a major celebrity in America. We hope that with somebody like this figure it will create more awareness and visibility.

We will also launch in Asia very soon.

Q: Where is your product available in the U.S.?

A: All over America, we ship everywhere. As for retail, we are mostly in natural store formats and are in the middle of signing with a major distributor. We are one of the pioneers of the single serve, pour over coffee bag. It’s a small coffee bag with ground coffee, you put it over your cup and pour hot water over it and coffee seeps over it. If you think about the coffee space today, you have instant coffee on your left and the expensive coffee on your right. In between, you have the convenience sector-people who want good coffee but want it fast. Our product targets that market in the middle. Instant coffee is always perceived to be cheap, low-quality, but that doesn’t have to be the case. We took high-quality, specialty grade coffee and made it convenient.

Q: Closing thoughts?

A: Life is so short and coffee is something people don’t pay a lot of attention to. Why drink the same cup every day? Each day is a different day for everyone. Make coffee fun.

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