Diedrich Coffee Announces Long-Term Growth Strategy

Diedrich Coffee Announces Long-Term Growth Strategy; Company to Focus Resources on Growing Wholesale and Franchise Businesses

Announces Changes to Board of Directors

IRVINE, Calif., Sept. 14 /PRNewswire-FirstCall/ -- Recognizing its inherent strength as a premier roaster of imported specialty coffee and the positive trends in the wholesale market, Diedrich Coffee, Inc. (NASDAQ:DDRX) one of the largest specialty coffee suppliers in the United States, announced today that it plans to strengthen its two core business segments by increasing the resources dedicated to its expanding wholesale business and by narrowing its retail focus to its franchise stores.

"Diedrich Coffee has a long and storied tradition of selecting and roasting the finest coffees in the world," said Steve Coffey, chief executive officer of Diedrich Coffee. "The changes that we are announcing today allow us to utilize our core strength as the premier roaster of specialty coffee and to fulfill our promise to sell great coffee to the widest possible market.

With the trends shifting towards specialty coffee in restaurants, offices, and specialty stores, Diedrich Coffee has experienced significant growth in our wholesale business. We are well positioned to be a strong competitor with the potential for greater growth and profitability in the future."

According to Mr. Coffey, Diedrich's wholesale operation has grown substantially over the past 12 months, growing at a rate of 46% over the prior year with sales last quarter trending up at 50% over the same period last year. Third-party sales for the quarter ended June 28, 2006 represented 78% of all coffee sold by the company.

As part of its plan to narrow the focus of the retail side of the business on its franchise operations, the company plans to close its Diedrich Coffee and Coffee People company-owned locations but retain the brands for its wholesale and franchise operations. To this end, the company announced that it entered into an agreement today to sell most of its company-owned locations to Starbucks Corporation for approximately $13.5 million. The completion of the sale is subject to a number of conditions including the approval of Diedrich Coffee's stockholders and the receipt of various approvals, permits and consents in connection with the transfer of the store locations. Assuming these conditions are met, it is anticipated the sale will be completed within the next few months.

The Company noted that its agreement with Starbucks provided the best solution for the company and its landlords. Most importantly it allowed the company to provide its employees with the smoothest transition possible. All non-management employees in good standing will be offered positions with Starbucks and managers will be provided the opportunity to interview for positions.

The company said that its Gloria Jean's franchise system and the franchisee-owned Diedrich Coffee stores are not directly affected by the sale transaction or other strategic changes. "Our franchise partners will benefit from our new strategic direction as they will have a financially stronger and more focused company as their partner without the distraction of also running two company store systems," Mr. Coffey said.

The Diedrich Coffee and Coffee People stores are not expected to transition for several months. Until then, the stores will remain open and continue to serve our guests as they have in the past. Additionally, our customers will be able to continue to purchase the same rich and flavorful coffee at franchise locations and through the company's websites, www.diedrich.com and www.gloriajeans.com." Mr. Coffey added.

In an unrelated matter, the company also announced today that Peter Churm has retired from the board of directors. The board has appointed Greg Palmer to fill the vacancy. Most recently Mr. Palmer served as president and chief executive officer of RemedyTemp, Inc. "On behalf of the board of directors I would like to thank Peter for his many years of exemplary service and also express how pleased we are that Greg is joining the board. His executive management background and experience in sales oriented companies will be invaluable as the company moves forward." said Paul Heeschen, Diedrich Coffee's Chairman.

About Diedrich Coffee

Headquartered in Irvine, California, Diedrich Coffee specializes in sourcing, roasting and selling the world's highest quality coffees. The Company's three brands are Gloria Jean's Coffees, Diedrich Coffee and Coffee People, which it sells through more than 800 wholesale accounts including coffeehouses, office coffee service distributors, restaurants, specialty retailers as well as direct-to-consumer via the Internet. The company's 200 domestic retail outlets, the majority of which are franchised, are located in 33 states. For more information about Diedrich Coffee, call 800/354-5282, or visit the Company's Websites at www.diedrich.com, www.gloriajeans.com, or www.coffeepeople.com.

Forward Looking Statements

Statements in this news release that relate to future plans, financial results or projections, events or performance are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and fall under the safe harbor. Actual results and financial position could differ materially from those anticipated in the forward-looking statements as a result of a number of factors, including, but not limited to, the financial and operating performance of the Company's retail operations, the Company's ability to maintain profitability over time, the successful execution of the Company's growth strategies, franchisee's adherence to the Company's practices, policies and procedures, the impact of competition, the availability of working capital, and other risks and uncertainties described in detail under "Risk Factors and Trends Affecting Diedrich Coffee and its Business" in the Company's annual report on Form 10-K/A for the fiscal year ended June 29, 2005.

Contact:
Sitrick and Company
Maya Pogoda
(310) 788-2850

Source: Diedrich Coffee, Inc.

Peet's Coffee & Tea Introduces Ethiopian Super Natural

EMERYVILLE, Calif., Sept. 14 /PRNewswire-FirstCall/ -- Peet's Coffee & Tea, Inc. (NASDAQ:PEET), a specialty coffee roaster and marketer, today introduced Ethiopian Super Natural, a rare wonder from the heart of the crop in the famed Yirgacheffe region of Ethiopia. Appropriately named, this uniquely special coffee offering yields a remarkable cup replete with floral qualities, vivid wine dark flavors, wild blueberry sweetness and distinctive, unforgettable richness.

Ethiopian Super Natural is the result of a three-year quest by one of the company's dedicated suppliers to reproduce the flavorful coffees of his grandfather's day. Grown organically and handpicked at the height of ripeness, Ethiopian Super Natural is meticulously processed using the natural method where the pulpy fruit of the coffee cherry is dried on the bean, then hulled off. The essence of the natural method of processing coffee is that the fruit or "cherry" imparts its concentrating, distinctive flavors to the bean as it dries.

"When I brought this coffee back from Ethiopia, I knew that we were going to taste something truly extraordinary," said Doug Welsh, vice-president of coffee, Peet's Coffee & Tea, Inc., "It is one of the finest coffees to have ever crossed our cupping table, and we are proud to offer our customers the opportunity to taste something they may have never experienced before."

Ethiopian Super Natural hails from the birthplace of coffee -- also known for producing very fine washed coffees, such as Peet's Ethiopian Fancy. Produced in limited quantity for Peet's, Ethiopian Super Natural is also certified organically grown.

Availability

Named for its intense flavors and the superb care that went into producing it, Peet's Ethiopian Super Natural is priced at $17.90 per pound and will be available for a limited time at all Peet's retail stores nationwide, online at www.peets.com or by calling 800-999-2132.

About Peet's Coffee & Tea, Inc.

Founded in Berkeley, Calif. in 1966, Peet's Coffee & Tea, Inc. is a specialty coffee roaster and marketer of fresh, deep-roasted whole bean coffee for home and office enjoyment. Peet's fresh-roasted coffee, hand-selected tea and related items are sold in several distribution channels including specialty grocery and gourmet food stores, online and mail order, office and restaurant accounts and company-owned stores throughout the United States. For information about Peet's Coffee & Tea, visit www.peets.com or call 800-999-2132.

This press release contains statements that are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management, including financial and operational information and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. The Company's actual results could differ materially from those set forth in forward-looking statements depending on a variety of factors including, but not limited to, risks arising from accounting adjustments; the Company's ability to implement its business strategy, attract and retain customers, and obtain and expand its market presence in new geographic regions; the availability and cost of high quality Arabica coffee beans; consumers' tastes and preferences; and competition in its market as well as other risk factors as described more fully in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended January 1, 2006. These factors may not be exhaustive. The Company operates in a continually changing business environment, and new risks emerge from time to time. Any forward-looking statements speak only as of the date of this press release.

Source: Peet's Coffee & Tea, Inc.

CONTACT: Jennifer Strasburg of Weber Shandwick, +1-415-449-0125, or
jstrasburg@webershandwick.com, for Peet's Coffee & Tea, Inc.

Web site: http://www.peets.com/

Espesso: Turning coffee world upside down?

BY JANET RAUSA FULLER
Staff Reporter
Chicago Sun-Times

Espresso is meant to be sipped. Espesso, however, requires a spoon.

Spanish uber-chef Ferran Adria, considered the world's most innovative chef, has come up with coffee you can eat, and it's making its American debut today in Chicago.

Espesso -- a play on the Italian word "spesso," meaning thick -- is essentially "taking coffee and solidifying it," said Joerg Oberschmied, vice president of operations for Lavazza, the 111-year-old Italian coffee company that is offering Adria's coffee creation.

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Illy Introduces 'BEAUTY HAS A TASTE' an Exhibition in the Heart of New York City

World Coffee Leader Invites New Yorkers to Experience Art, Culture and Style at New York City's Time Warner Center

NEW YORK, Sept. 12 /PRNewswire/ -- When visitors walk through the glass doors of Time Warner Center this fall, they will be taken on a journey through the senses, as seen through the eyes of one of the world's most iconic coffee companies -- illy. From art and literature to modern design and function, connoisseurs and coffee lovers will leave with so much more than just the taste and aroma of the perfect espresso. The BEAUTY HAS A TASTE exhibit is open from September 12th through October 9th and will take visitors on a journey celebrating illy's unfaltering passion and dedication to art, literature, film, design, cultural events and of course, the world's finest coffee.

Upon entering BEAUTY HAS A TASTE, visitors can savor the moment and awaken their senses to the pleasures of a unique blend of coffee at the illy Taste Bar with complementary illy beverages crafted by master illy baristas. Just steps away, guests can admire state-of-the-art FrancisFrancis! espresso machines and contribute their own personal take on beauty. During the exhibit's one-month run, passionate coffee-lovers can also attend one of illy's weekly CoffeeSense classes, hosted by leading food journalist, author and television contributor David Rosengarten. Home to CoffeeSense and a magical, interactive installation called "Text Rain", the illy Lounge on the second floor will be transformed into a visual lecture-style setting, designed to refine the senses and take visitors on an enriching journey of coffee history, taste and culture, from bean to cup.

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The Insider: Principal roasts Starbucks over steamy retro logo

Starbucks' trip down memory lane to bring back its original mermaid logo on its cups has brewed up some controversy.

In honor of its 35th anniversary, Starbucks' replaced its current mermaid logo with the original, top.

A Kent elementary school principal, according to a local TV station, asked teachers last week that if they were bringing their daily joe to school that they make sure they get a sleeve to cover the image of a topless mermaid on Starbucks cups.

The Seattle-based coffee giant, as part of its 35th anniversary, this month put its original logo with the bare-breasted mermaid on its cups in stores in Washington and Oregon.

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Coffee shops: The new soda fountain of youth

By Margaret Webb Pressler
The Washington Post

WASHINGTON — Josh Hyatt is a Frappuccino kind of guy. His brother, Chris, prefers a smooth, hot mocha.

They are 14 and 11.

Like many of their peers, Josh and Chris are habitues of Starbucks, which along with other chains and independent coffee shops has become a major hangout for preteens and teenagers. The quest for a place to congregate is nothing new, of course. Kids have camped out in ice cream parlors, pizza shops, pool halls, shopping malls and basements.

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The Good And Bad Of Coffee

by Brock Parker

If you were seen with a cup of coffee in your hand 20 years ago, you might have received a lecture on how bad it was for you. However, new studies suggest a few cups can be very beneficial as long as you don't overdo it.

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The perfect cup of coffee -- at home

By MATT DEGEN
SqueezeOC

You love coffee. There's just no other way of saying it. Your feelings toward the liquid indulgence go beyond mere appreciation for it as a morning or afternoon pick-me-up: This borders on obsession.

You get your daily fix -- or two or three -- at one of the myriad coffeehouses that dot the land. But whenever you brew, it just doesn't taste the same as what you get at a coffeehouse. In fact, it's quite inferior.

So how do you make the perfect cup of coffee at home?

We posed the question to a man who knows: Martin Diedrich.

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