The Speciality Coffee Crisis

October 24th, 2010

This isn’t designed to be a fear-mongering post, but this is really something we have to talk about and think about as an industry.

I think we can accept as fact that the growth in consumption of high quality coffee is not being matched by growth in production. At some point in the not too distant future there will be a tipping point where total demand starts to comfortably exceed total production and this will result in a dramatic price spike.

How dramatic that price spike will be it is hard to say. It will certainly be more dramatic than the one seen in commodity coffee right now due to the competitive nature of the speciality industry, combined with free market supply/demand economics.

Great coffee is going to get a lot more expensive. This is, from an ethical point of view, no bad thing. We’ve talked, as an industry, for a long time about the price of coffee being too low and that is going to change. What we really need to start thinking about is how we plan to deal with that change when it comes. It is going to affect absolutely everyone in the industry.

Most obviously coffee roasters – and there will be two choices: keeping buying speciality (and end up paying 2-3x what you are paying now for a lot you want) or buy lower quality commodity coffees. Buying more expensive coffees means your wholesale and retail prices will have to increase dramatically. How will you approach this? Will it cause a dramatic loss of business? Are you going to be able to deliver value for money on higher priced product?

It will affect cafes too. If you want to serve better coffee than your competitors then you’ll have to pay dramatically more for it. This will push up prices for coffee you brew and retail. Will you be able to communicate why a customer should pay more? Will you be able to compete against other businesses buying and brew top quality? Will your drinks still be good value for money when their prices have to increase in a more dramatic fashion than any previous price changes you might have brought into effect?

The theme of the above is, of course, value. If we’re struggling to deliver value for money now – how successful will we be when prices jump?

While I do want to see coffee prices increase and growing sustainable, excellent coffee to be an increasingly profitable business – I’d like to see these changes occur at a pace that the whole industry can keep up with so that Speciality continues to grow healthily. Equally I’d like to see more coffee producers earning sustainable prices for great coffee – rather than have an ever widening gap between speciality producers and ‘the rest’. I don’t want to see Speciality hit a wall or even start to shrink back again.

So what can we do?

I’ve mentioned the Global Coffee Quality Research Initiative (GCQRI) on here before. We understand an embarrassing fraction of what we need to when it comes to growing better coffee. We need to increase production of great coffee, but we don’t really know how to do it effectively – be it planting in new areas, or increasing quality of coffee already being produced. This initiative aims to work on that problem. It isn’t just nerding out over coffee science – this is important work with huge potential impact. Next week I go to Texas to take part in the Congress there, and I will try and share as much as possible. I’m not fund raising or anything like that – but I do think this program needs as much support as possible globally – not just from US companies – as it is relevant to all of us.

They have set up a simple website here, and as the project gets going I am sure the online presence will grow as well. Do get in touch with them, do please support this. If people have questions, ideas, thoughts or anything to add – please do leave a comment.

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