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Comments on: On Coffee All Things Tasty 2010-10-23T00:04:25Z WordPress By: Theo Theo 2010-10-23T00:04:25Z 2010-10-23T00:04:25Z Great piece and I couldn’t agree more regarding the pricing considerations. VIA, the Kopi Luwak of instant coffee, is a good example. I guess it all depends upon each person’s situation. Personally, I’d rather drop by a Starbucks rather than make a VIA coffee at home.

By: Brian Brian 2009-03-27T00:04:01Z 2009-03-27T00:04:01Z As an American soon to be returning from 2 years in Spain I have a bit of anxiety about losing my local cafes here. Sitting down for a typical Café con leche has become a ritual for me. Although I appreciate the depth of your contemplation of American coffee culture, I want to suggest that the brew itself is only part of the equation. The magic of coffee is so much broader. From cultivation and selection, to roasting and the romanticism of each cups preparation, and finally in the ambiance that we Americans have never quite appreciated the way Europeans do-coffee is unlike any other consumable in its overall experience.

By: Wide World of Coffee at INTELLI.LA Wide World of Coffee at INTELLI.LA 2009-03-15T22:22:24Z 2009-03-15T22:22:24Z [...] A fantastic discussion about coffee pricing over on Hungry Mag’s blog. Look out for comments from our very own Geoff Watts and Doug [...]

By: Sky Full of Bacon » Blog Archive » 7 Links of Terror: Number One Rat Edition Sky Full of Bacon » Blog Archive » 7 Links of Terror: Number One Rat Edition 2009-03-13T14:28:28Z 2009-03-13T14:28:28Z [...] his first banh mi… at a military prison in Vietnam in 1969. Which sorta puts worrying about how politically correct your coffee is into perspective, if you ask me. 2. A hell of a good sounding burger in Sikeston, MO. 3. The [...]

By: Barry I. Strum Barry I. Strum 2009-03-06T18:56:40Z 2009-03-06T18:56:40Z Great piece Michael. You raise some crucial points about the equities involved or at least in the coffee trade and acknowledge that a growing number of today’s specialty growers have made this a real priority. You also honestly ask what is worth what in troubled economic times.

Coffee’s cultural transformation has been huge over the past two decades. As one of your older readers, I remember the coffee price spike in 1953. Though just a very young child, I do remember that it took on crisis proportions, much as the gasoline shortages of the mid- 1970’s.

Coffee culture at the time was almost an oxymoron. To a nation emerging from not only the War, but also the sacrifices it demanded in daily life, consumers were faced with a multitude of products unheard of in terms of quantity and choice. Pitching to the public through advertising motivated customers and drove economic growth with little need to inform, educate, or refine the consumer’s taste in meaningful ways.

As noted in previous comments, the large national brands dominated the market. Quality was defined more by pretentious advertising copywriting than substantive differences in bean cultivation, roasting, or “terroir”. Don Draper and his fellow Madmen dictated our coffee tastes and defined the varying levels of so-called quality. Chuck Full “o” Nuts and Yuban both implied that they were the high rollers’ brews. Maxwell House was good to the last drop. It was either had a good taste or was designed for the frugal, value customer. Folgers had Mrs. Olson, the lovable elderly lady who lived next door and counseled young couples in the rough and tumble world of early married life. Naturally, the prescribed tonic was a freshly brewed cup of Folgers. Ms Olson always seemed to have a freshly brewed pot at the ready. P& G even had her soldier on through a broken leg (real or scripted). The moment America was told it was in a hurry, instant coffee arrived on the scene. The cycle repeated itself, with instant’s various iterations.

Percolated coffee ruled the world from the humble dishwater diner dives of Edward Hopper’s imagination to the most elegant restaurants. An over-extracted, boiling cup of bitterness welcomed one each morning and perhaps did much for popularizing the use of milk and other assorted dairy and dairy-like additives. In New York City, if one preferred their brew black, you had to specifically state it. Otherwise you were served a well-souped cup of coffee held under the cream dispenser for a full count.

My parents actually schlepped up to what was then Yorkville, the ethnic German neighborhood forerunner of Manhattan’s Upper East Side, to a coffee roaster named Rohr Bros. They had the beans ground for their radical “Chemex”, a sleek glass beaker that made coffee by the drip method. It was great looking and the coffee finally didn’t taste burned. I never really knew if they appreciated the coffee or the fact that the gorgeous thing was in the Museum of Modern Art’s collection. They still appear on coffee equipment shelves at specialty shops, but unless one is marvelously coordinated, the glass beaker will be dashed upon the walls of your sink within a week.

A coffee shop was anyplace that had coffee for sale. It usually supplemented this with sandwiches and other light fare. A coffeehouse on the other hand, was exotic, usually associated with the academy or Bohemian settings. In New York City this meant Greenwich Village as it must have meant Hyde Park in Chicago. None could have had much of a business plan until folk music arrived in the 60’s.

Coffee prices were a one-sided topic. Few people except those principled souls who recognized the industry’s history of and its predilection for exploiting the growers aired the issue publicly. Despite its excesses, arrogances, and generous dose of naïveté, my generation did leave the post-60’s decades a legacy of social consciousness. We now appropriately wrestle with our appreciation of commodities and recognition of their origins and those who produce them.

As an adolescent, the coffee drill was a legitimate right of passage. My father’s “holy trinity” was a cup of coffee, a smoke, and a copy of the New York Times. As cigarette smoking approached pariah status, the Kaiser Roll, Danish pastries, and eventually all manner of faux bagels ruled. Coffee went for at most, 50 cents a cup. In most places you could keep drinking it until either you exploded or they ran out of coffee. Prices pushed their way to about 75 cents before Starbucks and other specialty brands emerged. By that time, people were doing well, buying $3 loaves of hand crafted bread, some early micro-brews, and of course, organics.

Specialty coffee arrived with its own set of pretensions. At least there was substance behind some of them. The higher price was quickly transformed into “upscale”. I work in economic development. There actually was a time, and not too long ago at that, when a Starbucks in the neighborhood was visible proof of affluence. Suddenly we were applauding the “lifestyle center, a euphemism for affluent. Starbuck and perhaps Caribou have been the chains that have carried their respective images with them to the shopping center. The independents can’t make the rent and wisely decide to establish themselves in urban neighborhoods. The successive mall /chain generations such as Panera Bread, Breugger’s Bagels, and the like are serving just a shade better stuff than I remember at the local diner.

Much of the coffee experience was and continues to be framed by surrounding circumstances (consider Army coffee). As for me, however, there is no turning back. I cannot abide Mc Donald’s for reasons that go far beyond the coffee.

If socio-economic equities are a legitimate goal as I believe they are, I plan to stick with specialty coffees. Stands to reason that they will be more inclined to pursue this course and their customers will be more inclined to support their efforts. The traditional giants really won’t do it. If they tell you they doo, parse their words very carefully. They pay big bucks to says one thing and do another. Besides, the brew is garbage.

When I don’t have the energy to prepare a press pot of coffee in my office I occasionally pour a cup of the office swill. It is thoroughly wretched.
Instant? In your dreams.

By: Eric Eric 2009-03-02T20:43:30Z 2009-03-02T20:43:30Z This is a fascinating piece and an important discussion.

Coffee, however, is no more magical than other processed agricultural products. The above concerns about pricing, input costs, environmental impacts, fair trade, etc., can be applied to pretty much anything we eat or drink.

McDonald’s sells more coffee than anyone, but if people really tasted their food, they wouldn’t set foot in there in the first place. McDonald’s coffee has greatly improved its reputation in recent years, although I don’t have the personal experience to back it up. That said, if McDonald’s coffee is better than brown dishwater, and isn’t too bitter, people will gladly buy some with their cheap breakfast. They may even start going there FOR the coffee, if they perceive “gourmet” coffee to be harsh.

Julie writes above: “if you can’t afford to pay the true price of coffee, you shouldn’t drink it at all.” Great philosophy, and you could say the same about any product. Especially petroleum. But if we know anything about microeconomics, it’s that people make their decisions based on the value to themselves. Why do people think coffee should cost a buck? Because usually it does, and it took Starbucks to teach them that they *can* pay a little more for differentiated quality.

But most consumers from this Era of Good Coffee have never known a recession as deep and mean as this one. Businesses need to appreciate this and adapt. Starbucks is losing business to McDonald’s, to office brewing, and just to people being out and about less. The economy still has years of hurt in front of it. Smart businesses will understand the difference between value and luxury. The others will be gone by 2011. I hope the smaller roasters and retailers understand this, too.

By: Julie Julie 2009-02-28T14:44:21Z 2009-02-28T14:44:21Z Geoff’s comment is so right on, I’ve added a link to my post about the connection between cheap coffee and poverty.

As an ecologist, I’m often focused on the steep environmental costs of cheap coffee that Geoff touched upon. The loss of habitat caused by increasingly intense management practices, as well as abandonment of coffee altogether and a switch to less eco-friendly crops, has profound effects. These go beyond just accelerating the decline of migratory birds, but impact overall biodiversity, the buffering of climate change, soil loss from erosion…the list goes on.

My philosophy is that if you can’t afford to pay the true price of coffee, you shouldn’t drink it at all.

By: Ian Callahan Ian Callahan 2009-02-28T11:49:59Z 2009-02-28T11:49:59Z Fantastic article, a very interesting read. And thank you Geoff for your comments which have made this article one of the most interesting reads online that I’ve had in quite some time. Well done to you all

By: Geoff Watts Geoff Watts 2009-02-27T22:26:33Z 2009-02-27T22:26:33Z Hiya Michael,

I enjoyed reading your blog—any time someone is willing to spend the time to contemplate seriously the products they consume and apply a range of perspective (allowing the thought process to wander freely through pragmatic considerations, ideological ones, aesthetic interests, and such) when trying to form an opinion it is a victory for us all. It pushes us one step further away from dogma and empty rhetoric and helps to expose the fact that, despite the best of intentions, it remains almost inevitable that we at times will slip into lazy thought patterns where the amount of value we perceive in products is affected as much by blind acceptance of a trend or symbol as by meaningful thought about the true, intrinsic, material value (or even relative value) that they possess.

Coffee is probably one of the most poorly understood food products in the world, especially considering how ubiquitous it is in our lives. I don’t think the Specialty Coffee industry as a whole has done a very good job of changing that, unfortunately. Part of the reason, in my opinion, is that in the last ten years there has been such relentless proliferation of certifications, seals, buzz-words, fancy brewing gear, new flavor additives, over-wrought milk-based coffee drinks and that sort of thing that the average consumer is overwhelmed and perhaps even a bit cynical about what they come to see as a lot of fancified hubbub masquerading as a culinary and cultural coffee revolution. Considering all of the misinformed proselytizing and disingenuous storytelling the industry at large has turned to as a means of marketing itself and it is no wonder that the actual coffee (the basic raw material that transforms into coffee beverages) has gotten pushed into the background.

But it needn’t be that way. I thought about the comment Doug made in that Time Out article and realized that it may have been taken the wrong way out of context. I share his belief that coffee has historically been way under-priced. Ever since the Dutch started to commercialize coffee in their East Indies island colonies and the Portuguese went crazy planting coffee all over Brazil, it has been treated, with extremely rare exception, as a commodity—easily replaceable (“if Guatemalan coffee gets too expensive we’ll just buy from Peru instead”), minimally differentiated, and valued as a function of worldwide supply and demand rather than as relation to true production costs or intrinsic quality.

There have been a few times over the last couple of centuries when becoming a coffee farmer seemed like a good idea. In the 1700’s, when coffee first came to the Americas, lots of coffee was produced at low cost for the European markets and farmers expanded their land holdings as fast as they could cut down trees. In the 1800’s you saw plantations turning into small fiefdoms, and coffee farms became coffee empires. By the early 20th century the US had already become one of the world’s most important consuming countries, and farms kept proliferating. Coffee was the go-to-crop for many aspiring landholders/entrepreneurs who enjoyed some success in the 50’s and 60’s. There was huge price spike in 1953 that stimulated a lot of further planting (coffee was THE thing to do, man) and within 5 or 6 years a pattern of over-production was initiated that drove prices into the gutter and has kept them there, more or less, ever since. By this time many Central and South American and East African countries had come to depend on coffee as a critical source of export income. The economic fallout from the price drops was intense and led to the founding of an international regulatory body (the International Coffee Organization) which went on to institute a series of agreements (and a quota system) aimed at stabilizing prices in the world-wide market and preventing huge spikes/drops. It worked OK for a while. Countries had newly-imposed limits on what they could export annually, and ‘extra’ coffee got put into reserve stocks for the future. Supply was regulated so that markets could be more predictable.

By the 70’s and 80’s coffee had evolved into the default cash crop for many smallholder peasant farmers who planted coffee for lack of other clear alternative or inherited small plots as a result of various land-reform policies that broke apart big farms. There were fewer “big estates” and millions more small-scale farmers. Sometime in the 80’s the United States pulled out of the ICO, the quota system was dismantled, and things started to derail for coffee farmers. Between 1990 and 2000 Vietnam went from being an insignificant producer to the second largest in the world (behind only Brazil) and the world found itself flooded with very low-cost (and low quality) Robusta coffee. This led to a total collapse in the coffee market, wherein the prices hit rock bottom and stayed there. This time, from about 1999-2003, is often called the “coffee crisis”. It would be understating matters to say that this depression ravaged the industry…it was a fatal blow for many coffee growers, and hundreds of thousands of people around the world who depended solely on coffee for cash income lost their livelihoods.

It still hasn’t recovered, and probably won’t for some time. Production costs are higher than ever before in history in most places due mostly to increased costs of fertilizer, which have almost tripled in the last few years, along with big-time increases in labor costs, energy costs, and transport costs. Your average coffee farmer today is making less money per pound of sold coffee than his grandparents did, in real (unadjusted) dollars, despite drastically higher living costs and production costs.

It is a problem—most coffee farmers I know are of an advanced age and continue to grow coffee because they have no other options. Their children want nothing to do with growing coffee—it has the appearance of the ultimate dead-end job. It is a question I ask myself often—why would one even consider growing coffee as a reasonable career option? Coffee growing, at least of the smallholder and family estate variety, is becoming increasingly unsustainable. Even producing low-quality coffee with the fewest inputs, the lowest costs, skeleton crew labor and little attention paid to detail, maximum attention to volume and minimal regard for environmental impacts…even this kind of production is failing to add up to any profit for coffee farmers. We’ve watched a race to the bottom taking place over the last two decades as the majority of farmers in the world scaled back on farm husbandry, cut harvest costs by sacrificing selectivity, and hustled just to get by.

Meanwhile, the mainstream first-world consumer has held stubbornly to the idea that coffee is a cheap luxury, that the $1.00 bottomless mug is somehow a right or a deserved privilege. It is this very attitude that will continue to ensure that the modern smallholder coffee farmer has little hope of escaping a life of extreme poverty. Cheap coffee (and by “cheap” I mean low cost, which typically equates to low quality) is one of the many forces shackling the developing world and suppressing opportunity for advancement for a huge chunk of the planet’s population who depend on coffee to make a living.

I would argue that even downright crappy coffee ought to carry a higher price tag than it currently does, especially considering the higher production costs that most farmers face today. Current prices are not sustainable for farmers in the long term under even the most optimistic of economic outlooks. Something has got to give.

But high quality coffee (and by this I mean coffee with definite, perceptible sweetness in the cup, a profundity of positive flavor and aroma attributes, and free of taint or off-taste, which is clean coffee, sweet coffee, intrinsically pleasurable coffee, with no additives required) costs a lot more to produce than low quality coffee. Most of this cost accumulates in additional labor—much more highly selective picking, meticulous washing and drying, separation of individual lots rather than bulking, and so forth. Some of it comes in the form of more inputs and more intense plant husbandry—more attention to soil health and nutrition, cultivation of shade trees, good pruning and weeding, and that kind of thing. And some comes as a result of infrastructure improvement—cement or ceramic-tiled tanks for fermentation, raised screens for drying, better de-pulping equipment—there is a long list of things that can be done to dramatically improve the chances of producing a great tasting coffee. Typically it also means paying higher wages to farm workers, investing in training programs, giving attention to water quality issues. All of these things are necessary simply to produce a better tasting coffee in the field.

Once social and environmental issues are considered, the costs begin to accumulate further. If the farmer is serious about treating the water they use for fermentation and de-pulping before putting it back into the ecosystem, there is a cost involved. If an estate farmer is committed to giving increased opportunity and services to the many workers on the farms, they ought perhaps to invest in day-care services for pickers with children, a small health clinic for the community, a water pump for local use, or other basic services that are most often lacking in coffee producing areas.

Protecting coffee quality post-harvest is another matter. Green coffee is very perishable, and in the wrong circumstances can lose most of its quality in a matter or weeks or months. Investing in better packaging material (instead of the traditional jute bags) and organized warehouses with climate/humidity controls can make a huge difference in quality, but comes at a significant price.

Perhaps I’ve rambled a bit much, and I didn’t really intend to when I started writing, but you know that happens sometimes. The point I’m really trying to make is that the reason we’ve raised prices is that we must. We are after the best coffee we can possibly develop, that is the purpose that drives us. To achieve that means paying higher prices to growers and giving them the resources (and the reason!) to produce better tasting coffees. While we certainly feel the impact of the depressed economy here in the States, that impact is not limited to us. The farmers that Intelligentsia works with around the world are feeling the same kinds of pressure—it’s a global phenomenon. And while of course it makes sense to be thrifty in difficult economic times, we still need to realize that the decisions we make will have an impact further down the line. For a consumer the choice to purchase cheaper coffee has ramifications that extend far beyond the personal sacrifice of taste in favor of lower cost. It impacts the way coffee is produced, the way it will be produced in the future, and the ability of those who produce it to earn a living wage from their efforts.

And when you really think about it, even the best coffees are really not that expensive as compared to any other “luxury” product I can think of. You can access the very best, highest quality coffees in the world for between $13 and $30 per pound. Considering that a pound of whole-bean coffee will yield anywhere from 25-40 cups (depending on how it is brewed) the per-cup cost is still measured in cents, not dollars. Or you can go to a top end coffeehouse, where you will likely pay $3-$4.00 for a cup made to order by a professional barista. Now you are paying for the convenience, the vessel, the ability to chill out in a nice space in a nice neighborhood, you know what I mean? That’s a choice as well. The very cost-conscious consumer might consider brewing more coffee at home as an alternative to changing venues and buying a mediocre-to-poor coffee from another coffeehouse. Perhaps it is a little less convenient, but the return is far higher—a truly tasty coffee that is, in a very real and measurable way, supporting artisan farmers and helping to secure them a future in coffee production.
I do agree that there are limits—your wine analogy was right on target. The $100 bottle of wine ($20 per glass?) is for a particular niche, probably not suitable for the mainstream drinker. In most cases not that suitable for even the connoisseur, since a committed wine freak will likely go through several bottles a week, and spending thousands of dollars per month on wine doesn’t seem like a great idea. With coffee I don’t think we’ve ever gotten anywhere close to that place though. Even the glorious and now-famous La Esmeralda Geisha (which sold at auction for $130.00/lb in 2007 and officially became the most expensive specialty coffee in the world) was still available to be had for less than a couple dollars per cup if one were to buy a half-pound at a time and brew at home. Most of today’s most celebrated and delicious Specialty Coffees still come in at a price that is remarkably affordable.

My three cents.

Geoff Watts
Intelligentsia Coffee Buyer

By: Doug Zell Doug Zell 2009-02-27T19:18:18Z 2009-02-27T19:18:18Z Mike,

I enjoyed your piece very much.

If you are looking for a great value on a pound of our coffee, we offer a couple of weekly specials. We offer $2.00 off on any of our coffees every Tuesday at all of our Chicago locations. At our Monadnock and Millennium Park coffeebars, we also offer a Friday “Roaster’s Special” where we take $3 off a selected coffee.

As far the value proposition for an individually brewed-to-order cup of coffee, I believe that something for under $3.00 keeps great coffee in an entirely accessible class. At this price, our coffee is closer to a PBR or MGD on tap than to a $6-12 dollar glass of wine. At its current price point, I think great coffee (whether by the pound or the cup) is still the best foodie deal to be had almost anywhere. (Although I gotta say, I have tasted some tacos for under $2.00 that may make me question this.) And yes, through the Direct Trade model that we created and others are beginning to follow, the price we are paying, and as a result you are paying, does make its way back to the farmer. It also helps to pay for things like our staff’s health insurance, 401 k and other benefits.

We did not go to smaller cup sizes based on profitability, but rather in the pursuit of quality and the best tasting coffee and espresso-based drinks. We do not take price increases lightly nor do we assume that customers will always be willing to accept them, but our company, as well as the growers, their families and their communities, really do appreciate it when our customers are willing to be part of the solution to help make great coffee even better and to improve the lives of those that bring the coffee to them. I spoke with Geoff Watts, our Coffee Buyer, and he will be posting something here as it related to the coffee growers we work with.

Thanks for listening,

Doug Zell

By: Eric Beach Eric Beach 2009-02-27T17:13:17Z 2009-02-27T17:13:17Z Great post and very well-informed. I’ve tried both versions of the VIA and your descriptions and conclusions about it were right on. For instant coffee, it’s good, but it’s still instant coffee.

By: E L E L 2009-02-27T16:00:02Z 2009-02-27T16:00:02Z great piece, michael! you should do these longer-from musings more often. very good stuff. as a big fan of both coffee and DFW, i enjoyed reading it.

oh, and coffee aficionado that i am, i’ve always found that the best-tasting coffee is the cup that is placed in front of me in the morning. iow, quality is important, but there’s also something to be said for convenience and accessibility.

btw, casteel coffee is a great micro-roaster in evanston with lower prices than intelligentsia and metropolis.