Carl Diedrich, Founder of Coffee Firm, Dies at 86

Carl Diedrich, a German-born vagabond whose modest coffee-roasting business gave rise to the international Diedrich Coffee chain, died at his Costa Mesa home of complications from Parkinson’s disease. He was 86.

As patriarch of the family business, Diedrich, who died July 31, oversaw the birth of a chain of more than 370 of the signature red-and-gold coffeehouses in 37 states and 11 other countries--a distant second behind Starbucks’ 3,300 outlets.

Yet, in a career that moved from mechanical engineering to running a tropical plantation, Diedrich’s life fell far outside the usual path to the corporate boardroom.

There was no MBA from an elite business school, no period of tutelage beneath an established CEO. Instead, Diedrich’s move into the retail coffee business began with a jury-rigged roaster in a Costa Mesa garage, a variation of the old adage that building a better mousetrap will bring the world to your door.

Diedrich simply roasted a better coffee bean, drawing customers with the aroma that rarely comes from a can.

“He’s been what I would call a bridge back to the origins” of the specialty coffee industry, said Ted Lingle, executive director of the Specialty Coffee Assn. of America, based in Long Beach. “In the beginning, they were the very model of what a specialty coffee store should be--high-quality standards, a lively offering of countries and a knowledgeable and skilled staff.”

Over the past three years, long after Diedrich passed the coffee cup to son Martin, the Irvine-based company has struggled with what analysts described as overly ambitious expansion plans.

Many of the problems stem from the company’s 1998 purchase of a larger competitor, Coffee People Inc., in the corporate equivalent of a minnow swallowing a trout. The firm has since struggled to fit new mall outlets into a business geared more toward stand-alone restaurants and franchises.

Earlier this year, the firm’s stock was nearly dropped from Nasdaq after it fell below $1 a share, though it has rebounded to $3.40, well below its 52-week high of $7.87 a share.

He Struggled to Overcome Obstacles

But those struggles pale against the backdrop of a life that endured war and the loss of the Diedrich family’s land in Germany, a career that included helping build roads for the Ford Motor Co. in the Balkans before World War II, an auto plant in Jidda, Saudi Arabia, in the years after, teaching engineering at colleges in Egypt and Spain, and then eking out a living planting trees in rainy Vancouver, Canada.

“We had a wild and adventurous upbringing,” said Michael Diedrich, one of five sons and chief coffee officer of Diedrich Coffee. “He was a very unconventional father, truly an individualist. He comes from a day and age when one could still be that way.”

The Diedrich family’s coffee roots run deep. In 1916, Diedrich’s mother inherited a Costa Rican coffee plantation from a distant uncle and visited often until the family lost it during World War II.

At the time, Diedrich was a conscript in Hitler’s army. With a background in engineering, he was assigned to the artillery as a spotter, selecting targets and determining settings for firing big guns. He was captured by the Russians, his son said, but managed to escape from a Siberia-bound transport train.

He survived the Battle of the Bulge, and at the end of the war was among the troops trying to protect his hometown of Berlin from the advancing Allies.

Disillusioned with Germany and stripped of the family’s property, Diedrich rejoined Ford and was assigned to a series of jobs in the Middle East, including building an auto plant for the royal family of Saudi Arabia, the son said.

But he also studied coffee, learning roasting techniques in Naples, Italy, and absorbing the ambience of coffeehouses across the Middle East. Family legend says he traced coffee to its source in the Yeman Mountains at the southern tip of the Arabian Peninsula, spending time with local harvesters.

Diedrich returned to Germany in the early 1950s, married Inga Zeitz, whose family ran a coffee, tea and cocoa business, and then hit the road again, ending up in North America. There, Diedrich worked a series of jobs--ranging from marine biology in Canada to construction foreman in Los Angeles--before moving to Central America.

In 1966, he and fellow investors bought a 45-acre plantation in Guatemala, and some five years later Diedrich lit out again, deciding finally to settle in the United States.

His plan was to open a business importing coffee from his plantation and from other Central American growers. A chance stop at a Corona del Mar gas station convinced him that the Newport Beach area would be perfect, and the first tentative roots were put down, the son said.

His Sons Had Ideas for Growth

Diedrich opened up shop in a rented Costa Mesa garage before moving to a nearby strip mall, selling fresh-roasted coffee by the pound. In 1983, Martin Diedrich joined the business. About the same time, his brothers Steve and Carl Jr. began refining Diedrich’s design for a commercial coffee roaster and set up production in Idaho.

Working separately but complementing each other, the sons became key players in the growth of the specialty coffee industry, combining their father’s passion for the coffee itself with a vision of establishing businesses that would become neighborhood gathering spots.

“The whole Diedrich story is fascinating,” Lingle said. He said Diedrich believed in trying to improve the lives of the coffee growers. “That philosophy is part of the development of the industry, in which the members are concerned with what happens with the people and the farming communities in the countries that they get their beans from.”

Diedrich stepped back from the business about 1985, after the focus expanded from roasting to retailing. But his role as a pioneer in the coffeehouse retail industry was secure.

“He had a huge impact,” said Don Holly, a former employee now in charge of quality control at Green Mountain Coffee Roasters in Vermont.

Holly said that while Starbucks, the reigning heavyweight of coffeehouses, was founded with the intent of becoming a large-scale business, Diedrich sought only to import coffee.

“Carl never had such aspirations,” Holly said. “When I first ran across his shop in 1978 it was in a small, 250-square-foot retail space at the inside end of a strip mall that you couldn’t find unless someone took you to it. And that was great for him, because it was quiet, he knew all his customers, they knew what they wanted to buy and he would roast the coffee for them while they waited.

“And the stories this man told were incredible. He lived so many lives.”

Diedrich is survived by his wife, Inga, of Costa Mesa and his five sons. A memorial service will be held later this month.