As someone with almost a decade in the industry I can safely say that even your most expensive cup of coffee is, in fact, under-priced. For those of you who managed to attend the screening of “a Film about Coffee” at the Contemporary Art Platform in Shuwaikh last week, you might have noticed that this subject was briefly talked about.
So why is there this rift in thoughts? Why is it that coffee producers and coffee consumers disagree with the pricing of coffee? On the one hand we have the people in the coffee supply chain feeling short-changed and on the other the consumers feel that their cup of joe is costing far too much.
*Disclaimer: I am a part of the specialty coffee community, and you will see that the article is heavily in favor of this industry. I have however been as factual as possible, enjoy!*
First things first, we need to realize that there are three different types of coffee at three very different price points. It’s a concept we all know and understand with restaurants, but not with coffee. We can liken coffee stores to three different tiers of restaurants:
– Quick service restaurants (Global franchises; no trained chef) $
– Casual dining restaurants (More focus put on quality of ingredients, store aesthetics; entry level chef, mainly cooks) $$
– Fine dining (Utmost attention to details; traceable, high quality ingredients; well-trained chefs) $$$
To try and simplify, I will refer to the first two tiers as commodity coffee from hereon. So in coffee you have the same thing. The modern 3rd wave (or specialty) coffee can be thought of as “Fine dining coffee”. For this you pay a premium, but it is not just a greater mark up.
In commodity coffee the baristas are site trained according to the company’s standards and not recognized by the Specialty Coffee Association. Whereas in the 3rd wave stores, you will have at the very least one employee who has not only travelled the world to attend courses and seminars, but also constantly learns through online platforms to stay at the cutting edge of coffee knowledge – all to ensure a better coffee experience for you! Now one can certainly see that a more highly skilled barista bears a greater cost to company than an entry level barista.
Green Bean Sourcing
Just as quick service restaurants (QSR) constantly seek to drive the cost prices of the raw materials down, so too do commodity coffee shops. It is no secret that the giants in the industry use anywhere between 25-40% of Robusta coffee beans to make up their blends. But, so what if they use Robusta? Well it is a very cheap, low quality variety of coffee that has zero pleasurable flavor traits to it and is very bitter. I recently attended a course in Copenhagen where we trialled the use of the highest quality Robusta. During a blind tasting (I thought I was taste testing Arabica beans) I noted on my scoresheet that a particular bean was defective, i.e. not good enough to serve. Turns out said bean was in fact some high quality Robusta. This variety is more than likely the reason why the majority of people think of coffee as bitter. On top of that, the Arabica beans that commodity coffee shops do use is considered to be low grade, again it is cheap and has no desirable flavors. To put some numbers to it, Robusta retails for $1-$3/kg, whereas high quality, specialty Arabica coffee can retail anywhere between $25-$300/kg
These high prices are justified though. Specialty coffee is comprised of picked, sorted and processed coffee and is held to a much higher standard. Commodity coffee is grown on flat land and the process is almost fully mechanized. The reason that mechanization doesn’t work with coffee is because not all of the beans ripen at the same time and unripe coffee (unripe anything, really) simply does not taste as good.
What if I told you that most commodity coffee chains don’t even have an espresso machine? Well, it’s the truth! Most of these commodity coffee giants have a “pseudo-espresso” machine which, again, is as automated as possible and yet they are serving you espresso based drinks! The reasons behind this are simple. Making a good espresso and steaming milk correctly is very difficult with incredibly small margins for error. I can assure you it will take months of practice just to learn to steam the milk correctly. Latte art? Forget about it! This is a craft that needs constant upkeep and at least a year behind a machine to become remotely good.
Commodity coffee shops will only use 6-8g of coffee when preparing a regular size coffee. In contrast, specialty coffee shops will use between 16-22g for the same size coffee. This is really important – specialty coffee uses at least double of an already more expensive raw material to prep your coffee, and yet we don’t charge twice or three times the price!
Economies of Scale
This is a pretty basic concept, but those who haven’t taken economics 101 it boils down to this: A company purchasing over 100,000 tonnes of coffee per year has much more leverage to negotiate prices than a company only buying 1-2 tonnes of coffee. This means that even if specialty coffee shops were to use the exact same low quality coffee beans as the larger coffee companies, the cost price would still be higher for those specialty stores.
When all things are considered, I hope you come to the same conclusion that I do, and that is: Specialty coffee is in fact under-priced, hence great value for money and commodity coffee actually has very high profit margins for a substandard product. The other thing you can consider is from a social responsibility point of view: Specialty coffee pays people in the supply chain, commodity coffee pays large corporations and favors mechanization; This in turn leads to higher rates of unemployment in developing areas (yes, I did just guilt trip you into buying specialty coffee!).
Post by Grant Mouton
Self–proclaimed coffee guru, coffee education addict, SCAA/SCAE accredited.
Brand manager at % Arabica.