The 70-Cent Espresso Paradox: Why High Green Coffee Prices are the Best Thing to Happen to Specialty Roasters
This week I have been asked what is the most controversial thing I can say about coffee.
We were sitting on a bench in the park, I looked around, spotted a traditional Portuguese tasca, and said immediately: “The fact that somewhere in Portugal, in the middle of nowhere, there is a tasca that sells espresso at 70 cents.”
That is the most controversial thing in coffee.
Let me explain myself—I have nothing against Portugal, or tascas. I could say the USA and a diner, I could say a Parisian café.
The fact that coffee, a seed of a tropical fruit, is exported at such a high rate, has such a complex logistical chain—and is widely available thousands of kilometers away from the producing country at a price so outrageous as 70 cents per cup is a mistake.
There is only one explanation for that—and we all know it—the whole chain was built based on “free labor,” on slavery.
Coffee became widespread. Then it became a commodity. Then the specialty coffee movement started.
The specialty coffee illusion
The specialty coffee movement still has not fulfilled the promises of giving a better living to producers. Instead, it focused on the coffee culture in the consuming countries, new fancy equipment launched every year, endless competitions and expos that producers are unable to attend.
When the Arabica prices, due to many factors of the market, started to rise in the last years, it showcased how we buy coffee and how we see coffee in the specialty scene. It actually gave an opportunity to coffee roasting businesses to change the way they are doing business.
Not many of them saw it this way, though. Many entered the coffee industry when green coffee was really cheap, and without a real understanding of the commodity coffee market, they were sure that coffee would always stay this way.
So why do I say high prices for coffee should be seen as an opportunity to define your business better, and redefine the whole concept of specialty?
It is going to become really uncomfortable first.
Even though we say that we buy quality coffee, and love to put the names of the farmers on the packaging as marketing material, does our compromise actually go any further than that?
That’s a rhetorical question, because in most cases, it does not.
The same way we love to have a usual customer that we can count on, that orders the same thing every week, we love to “look for new coffees,” and change our menu every time. Because everybody does it. We like when people are consistent with us, but we are not necessarily consistent with the producers.
We cannot give them the prediction of our consumption for a year ahead, because we want to have the freedom to change. But at the same time, we would love to be able to count on our client for a year.
The same with the price. We like to talk about paying a fair price for coffee (what is a fair price to begin with, and why are we here, in the consuming countries, deciding what is a fair price for a producer???)—but then we always ask for a discount. Always looking for something cheaper.
In other words, although we call ourselves the specialty coffee industry, we still operate under the commodity baseline. Coffee in the end has no face and can be substituted.
Do you think I am being too harsh on us?
Why high prices are an opportunity, not a setback
The situation is way too complex, the whole story started in the wrong way, and was based on the wrong premise. So that’s why when the coffee prices went up a couple of years back, I saw it more as an opportunity than a setback.
First of all, it has barely affected the businesses who were already paying a higher price for coffee, and those paying it for years to the same producer. And I am not saying necessarily direct trade—partnering up with the importer, but having a plan for a year, fixed lots, farmers with whom they wanted to work every single year, stable coffees in the menu.
It was so harsh mainly for the businesses who were counting on coffee staying cheap—who either did their calculations wrong to begin with, or who were consciously buying very cheap coffee. So when the cheap coffee became not so cheap, the whole system became very difficult to maintain.
What are the hidden opportunities of a high price for coffee?
We can finally change the narrative and try to fix the error of coffee ever becoming so widespread and cheap—because it cannot be cheap.
We have an opportunity to disconnect the price for quality coffee from the commodity market, establish stable partnerships, and pay the farmer the price he/she is asking for (aka the real fair price for them)—and stop dictating from our consumer side what the price should be and what is fair and unfair in countries we know nothing about.
We finally have an opportunity to operate from the value perspective—and leave the narrative of every coffee roaster, which is “we source the best beans and roast them to perfection.” The narrative of “we are working with this farm for 10 years, and will continue working in the future” is a real quality coffee mentality. Or relationship coffee mentality.
This kind of value-oriented business attracts the same level of partners and clients to begin with—someone who appreciates the same things, and is capable of being consistent. It builds a business not only on buying the cheapest product and selling it more expensive, but on adding real value to it, or through it—when hiring people and giving them real opportunities to grow and prosper, for example.
Which means in the same way you are not leaving your producer because you found something way cheaper, your client who aligns with you on a value level is probably not going to leave you if your competitor offers them a cheaper option.
You might say that what I am mentioning is way too ephemeral and hard to implement. It probably is. It requires a change of paradigm, and actually treating quality coffee in a different way—maybe even as a somewhat luxury product. Which it actually is.
Step-by-step guide of riding the high coffee prices for roasters:
Check how much money you are actually making with roasting and selling coffee—and check with special attention for the situation when you are roasting a lot of coffee, but ending up with little to no profit. It gives you lots of work, for nothing, keeps you busy, and creates an illusion of money entering the account.
Define your values.
Find partners who agree with you on values.
Find the partners who keep promises to their partners.
Keep the promises to your partners with whom you agree on values.
Base your business on the premise that coffee will become more and more expensive—and calculate if your business still makes sense. Continue if it does. Change if it does not. Do not count on coffee becoming cheaper or staying cheap.
Define the value that you are adding to your clients, find out why they are coming back to you. If that’s only your price, you are in trouble. If they are not coming back, you are in even bigger trouble.
Be ready to find out that probably roasting and selling coffee is not as profitable or easy as you have been assuming.
