The price of coffee at home

There have been two great posts from Coffee and Conservation recently, detailing Julie Craves’ year of consumption.

I buy a lot of really high-quality coffee. The average price per pound (not including shipping) this year was $22. The big outlier was a half-pound of Finca La Valentina Geisha from PT’s Coffee, which retailed at the equivalent of almost $120/lb. Including that coffee, I indulged in 23 bags of coffee that retailed for over $20/lb. If I take out the five most expensive bags of coffee (over $30/lb) my cost per cup declines to $0.83, or $0.75 without shipping. Most average coffee consumers will be able to bring even this price down substantially without compromising sustainability, or taste.

Great coffee is incredibly cheap.  We’ve been saying this for a long time, but it is nice to have it written aloud by someone buying a lot of coffee as a retail consumer.

Most interesting to me was seeing the increase in per cup cost since 2008.  A mixture of increasing retail prices, perhaps coupled with an increasing preference for certain coffees:

The high elevations of my favorite coffees also stood out to me. The average elevation of these coffee was over 1600 meters! Higher elevation slows bean development, resulting in a denser bean and typically more well-developed flavors. Alas, we may be seeing more coffee grown at these high elevations in the decades to come. This doesn’t mean there will be a proliferation of coffees with characteristics like that of high-grown coffees today. Climate change will mean the temperatures required by fine arabica coffee will move upslope, but of course conditions at 1600 meters may soon be the same as 1200-1400 meters today.

Both posts are an interesting and enjoyable read, and it made me want to do more to track my own consumption in these terms:

My Year in Beans: 2011

Favourite Coffees of 2011 

10 Comments

  1. what frustrates me is how much of that cost is branding. if a hip roaster buys coffeeshrub’s new rwanda coko at $4.75 / lb including shipping, the cost of a 12 oz. bag is about $4.19 + packaging once you lose ~15% in the roast. but a lot of places charge $16-18 for that same 12 oz. bag. so while i think it’s fine that coffee is costing more, it seems unfair for the roaster and retailer to take 75% of the pie and leave the farmer (and importer) 25%. but people don’t think of it that way, they just see slick packaging with good design and buy it.

  2. I think that gross margins are interesting and important, but I don’t think one can imply overcharging without being sure that the net profits at the end of the year are excessive.  I don’t think many wholesale roasters are netting 25%+.
    One could easily argue that cafes are to blame too – their gross margins on many drinks are higher still than margin on retail coffee.

  3. Valid points, but bear in mind that the “hip” new roaster has to not only buy bulk to receive a decent price, but also has to cover the cost of the roaster itself, natural gas bills, the roast master’s wages, bldg lease, etc., etc. And the list goes on. If an end consumer would like exquisite coffees at a better price, and is cool with buying 20+ lbs at a time, AND is willing to soldier through many a bad experimental test batches- have at it!

    I’ll admit, the journey to roasting well is fun. But I myself, still idulge in $19 dollar 12oz coffees (excluding shipping fees) and enjoy it!

  4. Thanks, James. I am now recording (in my ever-growing spreadsheet) elevations and flavor descriptors, since I found that data really interesting. And am now putting photos of all coffee bags for the year on Pinterest (am I insane?).

  5. There are also huge costs with being a ‘hip’ new roaster.  My friends at Doma Coffee run a fully sustainable operation.  All of their bags are biodegradable and are printed with soy ink, as well as the materials they used in building their new roasting and training facility are sustainable.  
    I think it is very easy to look at the gross profit margin and gawk at the prices that we are paying for quality specialty coffee.  At the same time, when all the associated costs are added up and you are being responsible and sustainable, the cost gets driven up quickly.
    Therefore, I would argue that if you want both great quality coffee and an organization that wants do be responsible, you are going to pay a premium.

  6. James, do you think that with the rising costs on the c-market, bad weather in Costa Rica, and the issues/fear of the Ethiopian trade ministry will eat into the profits of a roaster? Or, would that rise in green bean cost be purely passed on to the consumer? I guess the real question is, are we nearing a consumer/retail price ceiling in specialty coffee?
    thanks,
    -a-

  7. Selling ten bags with 75% margin won’t make you a millionaire therefore it will always be a mix of quantity, quality, knowledge and brand. But important: quality is still one of the main factors.

    That’s different to cafes – the price seldom depends on quality. In our town the best cup of coffee is sold at a mid range price while most noble restaurants delivers mediocre coffee in the same expensive range than their dishes.

    At home we should also bear in mind the costs of equipment. The best bag of coffee is waste of money if your eqipments sucks. Fortunately there exists now some good gear for filter (Hario, Aeropress, Baratza) and the Vario delivers professional grind with a domestic footprint. But when it comes to espresso machines there is still a lack of progress. E61 and HX isn’t something I would call “domestic”and modding some gear like a Silvia isn’t the way to go I like to recommend. Hope that this will change soon..

  8. This is very interesting. I had no idea how much coffee cost before shipping and packaging costs. It will make me think twice when I buy coffee at a coffee shop next time. I think $0.75 cents a cup for great coffee is a very good price. 

  9. The economics portrayed are grossly oversimplified. Roaster retailers have significant costs, largest among them are rent, personnel, utilities and insurance. Years ago one of the biggest factors in determining a roasted coffee’s selling price was the cost of the unroasted coffee and shrinkage.  But, that is now far exceeded by the expenses detailed above and numerous lesser ones.  Home and micro-roasters have minimal expenses and risk, whereas most roaster retailers have big overhead and significant risk, albeit for potentially larger reward.

  10. misleading arithmetic. what about the cost of a burr grinder + brewing equipment?

    how about the fact that since coffee stales so quickly, day 1 is going to taste a heck of a lot better than day 12. heck, day 12 might even be worth the effort. i’d rather pay $2 for a well-brewed and fresh cup at a local cafe a couple times a week than pay “$0.80″ for a cup every day at home. 

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