Unfortunately Ric Rhinehart was unable to make it to the event due to illness, so Peter Giuliano delivered Ric’s presentation and then followed with his own. I’ll try and distinguish the boundaries of them!
General Arabica shortages, market trends (macro)
The key part of the this presentation was a single slide comparing global production and global consumption. Coffee productions seems to run an alternating cycle of high and low production, year on year. Usually there would be a year of excess, followed by a year of deficit which meant that global stores were able to stabilise the market.
As we all know prices on the coffee market are unusually high right now. This is linked to supply and demand. Coffee has not had a year of surplus since 2006, and since then has been in deficit or has met demand. Demand continues to grow and this has resulted in the global stocks being depleted which further results in increased market volatility. The scariest part of the graph was that production met demand this year, but it was on the higher production cycle for coffee. Next year data suggests a drop in production, another increase in consumption and no stocks to make up the missing requirement of coffee. This will result in further price hikes until one of two things happen:
Consumer resistance – when the price gets too high, we’ll start to buy less, and decrease consumption.
Supply increase – with more money in coffee more people will respond by increasing production to meet demands.
It should be noted right now that while this potential crisis presents an opportunity for speciality coffee, many people here hope that it is not our main motivating factor. If it is then it will disappear when the market shifts again and this project requires long term research to really delivery significant rewards.
I will add the chart when I get hold of a digital version of this presentation.
The Understanding Crisis
This was Peter’s own presentation. For this he passed around coffee from Kenya for us to smell. The reason was to highlight the blackcurrant note that is found in Kenyan coffees and highly prized.
This particular coffee had sold for $6.50/lb through the auction system. The price was so high because, despite the strong preference for blackcurrant in Kenyan coffees, coffees like this are becoming harder to find.
While, through anecdotal evidence, we believe this flavour comes from the SL-28, or from particular washing techniques – we have no solid evidence of this. Anecdotal evidence also says that not only is the frequency of this flavour diminishing, so is its intensity in coffees that exhibit it. It is, in Peter’s words, “an endangered species of flavour”.
The talk really highlighted the importance of understanding in coffee, and the value of this kind of knowledge in the future.