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Peet’s Coffee CEO and President Eric Lauterbach on the power of saying no, not fearing failure, and building a growth-focused team based on humility and curiosity.
When Eric Lauterbach joined Peet’s Coffee as President of the Consumer Division in 2010, the Californian brand was a US$70 million grocery business. Fifteen years on, both Lauterbach and the company have grown: he’s now CEO and Peet’s has expanded to include 200 own-brand coffee bars across the United States (US) and is valued at more than $1 billion.
Naturally, the progress hasn’t always been linear. Since Lauterbach was promoted to COO in 2020 and then CEO in 2022, there’s been a global pandemic, market volatility, and a cost-of-living crisis to contend with, the combined result of which has drastically impacted consumers’ coffee habits. Yet, despite these hurdles, the CEO has been able to achieve the goal he set for himself upon taking the role.
Organic growth
“As Head of the Consumer Business and COO, I was the person in charge of growth. When I reintroduced myself to the team as CEO, I made it very clear that I’m still here to continue growing the company,” Lauterbach tells Global Coffee Report.
“I set the challenge of doubling the business over the next five years. We’ve continued to grow, maybe not at the pace we would have liked, but at a premium level that’s remained true to the brand.”
This growth mindset is deeply rooted. When Lauterbach joined the company, Peet’s was known for its dark-roast coffee, but he could see consumer mindset was shifting. If the business was to keep evolving, it needed to adapt and innovate.
“Our decision to launch a medium roast wasn’t popular with everyone. Some still thought of Peet’s as only a dark-roast company, but we could see that 50 to 60 per cent of the market favoured the lighter style,” he says.
“To continue expanding the brand and reaching new customers, we also knew we had to go beyond the grocery store. So, we expanded to customers such as Costco, expanded our licence store count in airports, and expanded Peet’s into coffee pods.”
What had to remain consistent, however, was the origins of the Peet’s Coffee brand, established in 1966 by Alfred Peet.
“Peet’s is a Berkeley company, and we didn’t want to change that. While we’ve improved how we bring coffee to the market – the roasting technology is certainly different now than it was 30 years ago – but the way we source coffee, how we blend it, and the relationships we have at origin are foundational,” he says.
“Two weeks ago, the executive team was in San Sebastián, Guatemala, visiting a farm that Alfred Peet sourced coffee from 50 years ago, which we continue to work with to this day. You come back from those trips with a greater sense of appreciation and responsibility about what makes us different as a company.”
Continuing to work towards his growth goal, Lauterbach also believes pushing the team and the company outside its comfort zone is essential. Product innovation is a key part of this strategy, thus in 2022 a new leadership team was introduced to explore new store concepts.
“There’s a fine balance when introducing new products of what we have to do and what we don’t have to do,” he says.
“There are certainly some products I wish we hadn’t done. But, as with most things, it’s a case of trial and error. We can do our research and create a product that looks and tastes great, but sometimes when it reaches the shelves, nobody’s interested.”
In fact, Lauterbach believes as a leader failure shouldn’t be feared.
“I’m okay with failing on some of these projects. A mentor once said ‘errors of commission, not errors of omission’ and that’s something that’s stuck with me. We’re not going to get it right every time, but that’s better than doing nothing and hoping the same thing continues to work,” he says.
“For example, we’ve introduced a protein menu at our coffee bars. Some of the drinks are working well and others aren’t. But, the interesting part is exploring ideas of how we build new platforms to make us more appealing.”
Saying no is something the CEO is also comfortable with. While he appreciates that taking risks sometimes pays off, he believes trying everything competitors are doing isn’t the path to success.
“We’re getting better at saying ‘no’ to ensure we’re more focused and not scattered trying to do too many things,” he says.
Rising to the challenge
The increasing competition in the US coffee grocery space is one of the challenges Lauterbach has faced during his tenure at Peet’s Coffee. In the past decade, he believes Peet’s competition on the grocery shelves has grown by around 15 to 20 per cent.
“Competition is one of the biggest challenges we face. From a brand position, it’s important to be aware of what’s out there, but not feel the pressure to copy,” he says.
“Coffee is now promoted like toilet paper and other everyday essentials in that every week a different brand is offering specials and customers will make decisions in a matter of seconds. Therefore, we must stand out from the crowd very quickly.”
Making the product pop off the shelf and ensuring the price is right is what Lauterbach believes makes Peet’s rise above its competitors.
“It’s a fight every week as grocers are under pressure on margins. We must continue to evolve our brand and packaging to meet consumer preferences, and then the price needs to be in the correct zone to continue to do right by our shareholders and bring new people to the brand,” he says.
One of Peet’s unique strengths, according to the CEO, is its multiple channels. With a company-owned café and franchised locations, as well as direct-to-consumer online sales, there are more opportunities to get the brand under the noses of new customers.
“Take someone travelling to San Francisco for the first time, they’re walking through the airport, and they stop at a Peet’s coffee bar for a drink. After discovering its distinctive taste, they recognise the brand at grocery stores or stop by if they pass another café location,” he says.
“These touchpoints are a real advantage and demonstrate that it pays off to be more consistent with your brand.”
While Lauterbach recognises that recent market volatility is an ongoing challenge for the entire coffee industry, he doesn’t believe in worrying about things out of his control.
“You can’t keep changing your prices every two weeks because of the C market,” he says.
“The challenge we face is how do we remain relevant to consumers and make sure we are continuing to be premium but also affordable. It’s a difficult balance, but ultimately, it’s about modernising the company and not being afraid of change.”
Leading with humility
While he’s led the company for almost three years, Lauterbach says he’s still learning about leadership every day. He believes one of the most important elements of his role is making decisions – and not being afraid to get them wrong.
“You have to keep making decisions and being okay with making the wrong one sometimes. If people are waiting for me to make a call on something, the company can freeze, so we have to keep rolling,” he says.
“That being said, I can’t make every decision. I shouldn’t be in every meeting either. I have to create an environment where people have ownership.”
Having a great leadership team around him is another key to Lauterbach’s success.
“I’m not going to be an expert in everything, so our CFO, Head of Marketing, and Chief of Technology should be better at those roles than I am,” he says.
“I need to have people around the table who are going to challenge me with a different point of view. It’s especially useful when you’ve been at a company for 15 years because you can’t always see things as clearly and without bias as you once did.”
Another important lesson he’s learnt as CEO is that he shouldn’t always voice his concerns if something arises.
“If I mention that something bugs me to the wrong person, everyone might run off and try to resolve it. Often that’s not the best thing for the company and it misdirects our focus,” he says.
“Rather, a key skill of a good leader is knowing what is – and isn’t – critical at that moment. Being a good listener also helps you to understand what’s significant.”
When it comes to bringing new people into the company, trust, humility, and curiosity are the most important qualities Lauterbach looks for.
“If somebody has all the answers and doesn’t ask any questions, that’s not going to work with me. I want people who are curious and have humility. I want people that can take feedback and give good direction,” he says.
“When hiring executives, I want people who are going to attract people to come and work with them. We need active leaders to ensure Peet’s continues to evolve and innovate.”
Consumer evolution
Lauterbach knows that if the company wants to continue innovating, it must keep up with evolving consumer preferences and trends. He predicts liquid coffee (cold brew, ready-to-drink beverages, and chilled coffee) will continue to dominate the industry over the next few years.
“Peet’s Coffee is of the size now that we can quickly test, learn, get products through to stores, receive feedback, and then bring them to market a little faster. This puts us in a position to react quickly to these trends,” he says.
“A good example is our Ultra Coffee Concentrate, which we launched directly on our own website instead of waiting for grocery so we could tap into those consumer moments quicker.”
Fresh from the origin trip to Guatemala, sustainability and the future of the coffee industry are also top of mind for Lauterbach and the wider team at Peet’s Coffee.
“We need to ensure we’re continuing to contribute to sustainability and understand how to get productivity out of our countries of origin so they can continue to produce great coffee. It also still needs to be economically viable for the farmers,” he says.
“Therefore, Peet’s Coffee will continue to invest in the future of coffee from a science and agriculture perspective. Without the beans we will have nothing to put onto the shelf.”
This article was first published in the March/April 2025 edition of Global Coffee Report. Read more HERE.
The post Peet’s Coffee CEO Eric Lauterbach on not fearing failure appeared first on Global Coffee Report.
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