Specialty coffee drinkers squeezed by U.S. slowdown

MANAGUA (Reuters) - Consumers pinched by a slowing U.S. economy are cutting back on expensive espresso drinks and choosing to drink brewed drip coffee to save money, the head of a U.S. specialty coffee group said on Tuesday.

"In the middle range, the consumer is shifting away from espresso to drip products," Ric Reinhart, director of the Specialty Coffee Association of America, told Reuters at a regional coffee conference in Nicaragua.

In recent years, high-end coffee shops like Starbucks (SBUX.O) have exploded in popularity, selling pricey lattes at between $3 and $5 a drink.

But even the Seattle-based chain is planning to use more special deals and discounts to perk up its flagging U.S. coffee sales. Hurt by the economic downturn, Starbucks has closed 600 poorly performing stores and cut jobs across the country.

The shift away from fancy coffee drinks might not be bad news for producers, said Reinhart, as customers choose to buy cheaper drip coffee from their local shops, which requires more ground beans.

"In terms of raw consumption this points consumption upwards but dollar consumption down," he said.

The specialty coffee sector represents only 17 percent of the U.S. coffee market, but connoisseurs are willing to pay a premium for the best beans from high-end growers, Reinhart said.

It will be more difficult for the most sophisticated coffee drinkers to give up their expensive coffee habit, he said.

"The highly engaged coffee consumer is not backing off coffee," he said. "If you start out life as a Budweiser drinker and then you move to Belgian ale, you don't go back."

He said small specialty coffee shops are tending towards consolidation, with small regional businesses merging into larger companies, but did not say what effect this trend would have on prices at the stores.

(Editing by Braden Reddall)