By Deborah Belgum

Inside a popular coffee hangout, where patrons sit in overstuffed rmchairs and thumb through the morning paper, three men are plotting a caffeine war.

Mike Sheldrake is the wise and white-haired veteran of the caffeine clashes that nearly shuttered his decades-old Polly's Gourmet Coffee shop a few years back. When he opened his specialty coffee store in Long Beach's trendy Belmont Shores in 1976, a good cup of java cost you 25 cents and there wasn't a competitor around for miles.

But in 1994, Starbucks Corp. opened a store nine blocks away. Later it opened a second store one block away in 1998. Sheldrake nearly went out of business. Now Marty Cox is having the same problem. Five years ago, the 34-year-old entrepreneur and his wife, Louise, opened their first coffeehouse called, "It's a Grind," in east Long Beach. They now have five stores in Long Beach and plan to open two more in Orange County. No. 1 specialty coffee retailer, which is planning to open five stores nearby.

But the Coxes are beginning to feel the pinch of Starbucks, the country's his coffeehouses. Sheldrake and Cox have banded together with a third independent Long Beach retailer, Gary Paterno of The Library Coffeehouse, to form an alliance to battle the Seattle-based coffee purveyor whose sales last year totaled $1.6 billion. Their group is called the Long Beach Independent Coffee House Alliance, organized with the help of Bob Phibbs, a Long Beach marketing and sales consultant.

"Starbucks has obviously recognized that we have a good market," said Cox, who is worried that the coffee giant will be taking a large chunk of his business and leaving him with only crumbs to nibble on. "Starbucks moves into an area and because they have unlimited funds for the first three months they try to pull a market away (from other coffeehouses) with things like double staffing and sending coupons in the mail."

The coffeehouse owners may feel they are in a unique position, but they are no different from the hundreds of other small independent retailers across the country who have had to deal with behemoth chains cutting into their market share. Wal-Mart, the largest retailer in the world, has been criticized for shuttering locally owned general retail stores in small towns across America. Home Depot is the devil incarnate to many small hardware stores up and down Main Street. Barnes & Noble along with Borders, Books and Music have been accused of sending small independent bookstores to an early grave.

Starbucks is no different. The company already operates more than 3,200 coffee shops around the world * 265 in the greater Los Angeles area -- and is on a mission to have hundreds more open in the next few years. Starbucks' mission to saturate the world in gourmet coffee has been met with resistance in various areas around the country, including Seattle.  In Chicago recently there were a series of protests railing against the company that has 134 coffee shops in the greater Chicago area. Starbucks maintains it is not aiming to put independent coffeehouses out of business. "We are looking for new communities and areas to develop, but Starbucks is not in the business of opening across the street from a local coffeehouse to put them out of business," said company spokeswoman Shauna Hendricks.

But the reality is that 30 percent of the 12,000 independent coffeehouse owners in the U.S. will be gone in three years, according to a study by the Specialty Coffee Association. The Long Beach Alliance is making sure that doesn't happen to them.

"The three of us are working together to raise the level of specialty coffee and remind our customers that they have a choice of atmospheres as different as the neighborhoods we are located in," said Sheldrake whose coffeehouse experienced a 10 percent monthly drop in retail sales after the first Starbucks opened in his neighborhood in 1994.

The trio of coffeehouse owners have each pooled $2,000 to advertise in local weekly and daily publications. One of their first joint ads appeared in the Grunion Gazette, a weekly neighborhood paper for the Belmont Shore and Belmont Heights area of Long Beach. "We Wake Up Long Beach Every Day,"read the ad. "Look for your Local Coffee House." The addresses and logos of the three coffeehouses were listed. They are also thinking of sponsoring some kind of charity event, such as a golf tournament and providing free coffee for community get-togethers, such as poetry readings.

While the three are in direct competition with Starbucks, they don't compete with each other. Each fills a different niche.

Paterno, who opened The Library Coffeehouse in 1994 with partner Jay Stanbridge, is a popular meeting place for coffee drinkers who want to sit around in the evening and enjoy the Bohemian feel of the place. It has crystal chandeliers hanging from the ceiling, an eclectic mix of tables and chairs, bookshelves crammed with used tomes, and portraits on the wall. "It's a Grind" caters more to the morning crowd that stops on the way to work for a coffee or pauses in mid-morning to sit down at the wooden tables inside. Polly's has an on-sight coffee bean roaster and an in-house bakery. Sheldrake wholesales coffee beans to local restaurants and hotels on top of selling coffee to individual customers. Since 1998, Phibbs has been sharpening Polly's marketing tools to compete with the "big green guys" down the street. Sheldrake offers classes on coffee, has a newsletter he mails to more than 3,500 customers, got local artists to design his coffee cups, doubled his advertising budget and started a training program for his employees. Sales have increased 45 percent in two years to $1 million this year. The trio hopes that with a concerted advertising campaign, consumers will wake up and smell the coffee at their stores instead of at Starbucks.