EXHIBIT 99.1
                                          
                                          
                                  [Diedrich Logo]



FOR IMMEDIATE RELEASE


                      Diedrich Coffee to Acquire Coffee People
       COMBINATION CREATES SECOND LARGEST OPERATOR IN SPECIALTY COFFEE MARKET

     Irvine, California - February 9, 1999 - Diedrich Coffee, Inc. (NASDAQ: 
DDRX), a leading retailer, wholesaler and custom roaster of specialty coffee, 
announced today that it has signed a letter of intent to acquire Coffee 
People, Inc. (NASDAQ:  MOKA).

     This acquisition positions Diedrich Coffee as the second largest company 
in the specialty coffee market and as an industry leader in mall-based retail 
coffee stores.  The combined company will have annual system-wide sales of 
more than $150 million through 363 outlets in 38 states and seven countries.  
The company's brands will include Diedrich Coffee, Coffee People and Coffee 
Plantation coffeehouses and Gloria Jean's mall-based retail coffee stores. 

     "Profitability, synergies, access to capital and infrastructure are the 
four big gains from this transaction," said John E. Martin, Chairman of 
Diedrich Coffee, Inc.  "The transaction is immediately accretive to earnings 
and provides the management, distribution and roasting infrastructures that 
are necessary to drive future growth.  Diedrich Coffee has always stood out 
in terms of product quality and the unique neighborhood environment we offer 
our customers.  This transaction makes us stand out in terms of size as well."

     Under the terms of the letter of intent, Coffee People shareholders will 
receive $10.75 million in cash, 1,667,000 shares of Diedrich Coffee common 
stock, and $14.25 million in cash or a combination of cash and stock based on 
the successful completion of a public equity offering by Diedrich Coffee.  As 
of February 8, there were approximately 10,760,000 shares of Coffee People 
common stock outstanding.  This transaction is expected to close in early 
summer and is subject to a number of conditions including the execution of a 
definitive agreement, securing financing and shareholder and regulatory 
approval.

     "Our companies have a shared vision of expanding nationally through 
franchising," said Alton W. McEwen, President and Chief Executive Officer of 
Coffee People, Inc.  "The strength and experience that John Martin and Tim 
Ryan offer will help us realize that vision.  Their leadership at Taco Bell 
in growing the concept from 1,500 to 25,000 outlets in a thirteen year period 
is a case study in capitalizing on a rapidly expanding segment with 
aggressive growth."

     Diedrich Coffee's national expansion objective is to add 1,500 
coffeehouses over the next six years through franchise area development 
agreements with large multi-unit franchise operators. The company has already 
signed two major franchise agreements with contracts for the opening of up to 
145 Diedrich Coffee coffeehouses and plans to expand the Gloria Jean's brand.

     With this transaction, Diedrich Coffee hopes to aggressively exploit the 
emerging segmentation of the specialty coffee market.  "We believe that, as 
the market evolves, three 

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distinct segments are emerging.  These are neighborhood coffeehouses, 
mall-based coffee stores and espresso/coffee bars.  Now we have a leg up in 
the first two," said Tim Ryan, President and Chief Executive Officer of 
Diedrich Coffee, Inc.

     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 and 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 successful 
closing of this transaction, impact of competition, the availability of 
working capital and other risks and uncertainties described in detail under 
"Certain Factors and Trends Affecting Diedrich Coffee and its Business" in 
the Company's annual report on form 10-K for the fiscal year ended January 
28, 1998, and in the Company's subsequent reports on form 10-Q, as well as in 
Coffee People's Form 10-K filed with the Securities and Exchange Commission 
on September 25, 1998 and Registration Statement on Form S-4 as filed with 
the Securities and Exchange Commission on April 23, 1998.

     Media Contact:      Dan Cahill
                         Diedrich Coffee, Inc.
                         (310) 966-5513
                         Dolores Chenoweth 
                         Coffee People, Inc.
                         (503) 469-0338

     Investor Contact:   Ann Wride, Chief Financial Officer
                         Diedrich Coffee, Inc.
                         (949) 260-6713
                         Mark Archer, Chief Financial Officer
                         Coffee People, Inc.
                         (831) 633-4001

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