There are several reasons I tend to shy away from writing about mainstream coffee reportage — not least among them, it seems kind of rude. Also, mainstream sources are generally writing for a different audience than ours, with broader topics and a consumer focus, and there is little in the way of meaningful crossover.
But I cannot ignore two mainstream stories that have come out in recent days that each touch on the perception of coffee value among consumers — specifically, I’m struck by how one got it so right and how another got it so wrong. Let’s start with the right:
Yesterday, The Guardian published an opinion piece from Chérmelle Edwards titled, “The hipster coffee revolution is going to save your morning and the planet. Are you ready to pay a little more to help?” Pitched as a “manifesto for the end of Starbucksification,” the piece describes the “intimacy from source to shop” that has become so prevalent in many of today’s coffee retailers operating at the highest levels. Writes Edwards:
Sorry, but I’m a fanatic of coffee culture: I’ve bought into paying more to know where my coffee comes from, tracing the coffee I buy to a website that tells me about its trip – from my coffee’s home country and farm to my cup, in one of the two coffee shops I visit each day. I was riding the “third wave” of coffee way before I knew the term even existed.
(related: NGO Consortium Calls Out Roasting Industry for Poor Efforts Toward Supply Sustainability)
Edwards then questions what will happen when “the big four” of coffee’s latest wave — Blue Bottle, Stumptown, Intelligentsia and Counter Culture — further expand their retail reach to consumers, in the process expanding their collective footprint as buyers of coffee as a commodity. This, she argues, could be a good thing, so long as those companies are responding to the consumer interests that popularized them in the first place: commitments to supply sustainability and consumer engagement in origin; processing methods; alternative brew methods; and other factors that can elevate the coffee drinking experience.
Edwards concludes, appropriately, with questions:
There’s always another wave coming, and the small artisanal coffee indies will be riding it, too – not just the big four, who are trying to take their current business model to the masses. The real question is: are there enough coffee-curious among us to support the evolution? Will you pay enough to support specialty coffee while it stays sustainable?
Rephrased, Edwards’ final question is also an important one for the industry: How can coffee command more value in the marketplace?
Now, onto the wrong:
Slate on Monday published a piece that begins with the headline, “How to Make Money Off Rising Coffee Prices.”
(related: Win For Folgers Results in Unprovoked Attacks on ‘Coffee Snobbery’)
For many in the coffee world, the headline alone has appalling global implications. As we know, rising coffee prices generally reflect increased demand in consuming countries, combined with diminished supply in producing countries, where issues like food security, poverty, and lack of basic healthcare and sanitation affect huge numbers of people working at origin. The basic question, “How can one capitalize on this?” is shallow, at best.
Slate staff writer Alison Griswold begins with the following:
The cost of packaged coffee sold in stores from Starbucks and Dunkin’ Donuts and Maxwell and you-name-it is rising between 8 and 10 percent to compensate for the increased prices of blighted and drought-stricken coffee beans. Many of those price hikes have already taken effect. But some — like the up-to-9-percent raise for Keurig Green Mountain Coffee’s K-Cups— don’t hit until the fall. And herein lies a great business opportunity.
The story then goes on to consider whether one might be able to turn a decent profit by, for example, stocking away K-cups purchased at the current retail price and reselling slightly below retail value once prices rise. Griswold then reaches out to law professors to see if this kind of deal may be a) profitable, and b) legal, concluding with the following:
Law professors say that attempting to make a buck off rising coffee prices is a legitimate business venture. “I’m happy to report that this raises no legal issues — you are free to buy and sell coffee in massive quantities,” Ryan Bubb, a professor at New York University School of Law, emailed. It might not be the next gold rush, but the window for coffee arbitrage is open and now is the time to act.
There is no shame in making a dollar off coffee, just as there no inherent shame in being the first to act on something (see “coffee wine”). But in my mind, the juxtaposition of these two stories begs one of the most important questions facing the specialty coffee industry: Can growing coffee companies stay true to their social and environmental values in a world where the perception of retail value among consumers is being driven by the Starbucksian and plastic pod segments?
As each of these specialty segments grows, as has been the trend, this question should only become more pressing.
Nick Brown is the editor of Daily Coffee News by Roast Magazine.
A fun read. Clearly we fall into the Indie realm. I think in general people like knowing where their food comes from. Plus the ritual. But do I really need to explain that to anybody reading this article?
Honestly there is not that much of a price difference in bad coffee and good coffee. People pay far less buying good whole beans and brewing at home vs. visiting a local fast food chain for a cheap cup of burned mud.
In regards to the K Cups…you would need so much volume to make a profit. I guess major chain stores could pull that trick. But they could be doing that already.
Are coffee prices really rising because of an upward C price? If so, wouldn’t they go down when the C price drops (as it does every 4-5 years)? My suspicion is they won’t. The increase in coffee prices at Starbucks and for k-cups probably reflects more of an adjustment from manufacturing, marketing, and retail costs as applicable. The reality is that there is a price for coffee in the trade, and a price for coffee at the consumer level. Consumers only see the coffee prices go up, while producers often end up selling coffee under the price of production, especially when talking about smallholders.
I am coffee trader from the Birth place of Arabica coffee, where still in southern and south-western part of Ethiopia coffee grows wild. Most of Ethipian coffee export depends on smallholders farm. No matter what the New York “C” goes sky high the livelihood of smallholders never changes because a)lack of knowledge b)malmarketing system c)under developed infrastructures and d) lack of good governance. Therefore, we need the final consumer to understand the increase in coffee price brings nothing to the coffee producer.
I personally agree the consumer world need to ask and get remedy to support the poor farmer in coffee producing countries specially in AFRICA.
I agree put the profit into the small growers hands source small farmers buy their beans then roast your own
“…a different audience than ours, with broader topics and a consumer focus”
Is the insinuation here that the indie/3rd wave coffee shops aren’t interested in attracting customers? I’ve been to some that you could make that argument around, but the customers those articles are addressing are precisely the people needed to change the perception of coffee on a broader scale. Otherwise the idea of specialty coffee continues to be niche, and prices paid to producers will continue as they have for centuries.
Yeah that’s right, hoard the coffee, hold onto it for a long time, and then sell it even more stale than it was when you bought it. A surefire way to make money.
Actually I would argue that “coffee’s biggest crossroads” isn’t in either of these headlines but rather in the photo of K-Cups you incongroulsy chose to accompany your write-up. The Keurig 2.0 system was released to considerable fanfare this week (I saw it in a huge display at Costco yesterday) and it’s capable of brewing both individual cups and full pots of coffee while overcoming the low temperature brewing and other issues of past units.
The growth of Keurig, Nespresso and the like from nothing to nearly 30% of the coffee market in the past 5 years is the real story in coffee, and in my opinion it speaks very eloquently to the near total failure of the specialty coffee community to make it easy, fun and affordable for consumers to brew great coffee at home. Instead the 3rd wave folks in particular have done their best to turn simple home brewing methods like pour-over drip into arcane arts requiring goose-neck kettles, weighing of water, $300 grinders and so on, thereby helping Keurig and anyone else who sees a business opportunity in meeting actual consumer needs (for a good, consistent cup of coffee in the morning) to flourish.
We (on the specialty side) talk about the K cup waste (still a real issue but being addressed) and taste (getting better all the time) while envying their margins, but clearly consumers see a great deal more actual added value in K Cups than they do in arcane offerings of single varietal this and seasonal that. And if we’re going to restrict the conversation to issues of interest to industry insiders, let’s start with a pie chart of where the extra ~$8-10 a pound being charged by leading Third Wave roaster-retailers vs. the big second wave players actually goes, ’cause it sure as hell isn’t mostly going to farmers.
Thank you for your insight, the most reasonable at the moment. Why do we need to do things so overly complicated?
Stop it with the coffee bush hugging 1st world guilt already! Next time you buy a dozen eggs, just know that the Californian egg farmer gets 90 cents a dozen!