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Thread: $7 cup of coffee?

  1. #1
    Senior Member flynnaus's Avatar
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    $7 cup of coffee?

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    We already pay $7+ per cup for premium coffee prepared as pour over, syphon, etc.This article argues the case for increasing the general retail cost per cup to help ensure growers receive their fair share. It also discusses commodity prices and climate change. I'm not knowledgeable enough about the coffee industry to verify or dispute the claims but, as has been discussed on CS previously, would any price increase end up in the farmer's pocket.

    https://www.smh.com.au/national/the-...28-p51rti.html
    Last edited by flynnaus; 5th June 2019 at 12:57 PM.

  2. #2
    Senior Member Yelta's Avatar
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    Morning Flynn.

    The cynic in me says its more about Aussie retailers looking for a larger bite of the cherry.

    Gets a little wearing hearing Australian operators beating the premium coffee drum in an attempt to justify high (compared to the rest of the world) coffee prices.

    Pleased I'm stuck in second wave territory, $7 a cup would see me looking for an alternative.
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  3. #3
    Senior Member Lyrebird's Avatar
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    The $7 coffee used ~20g of coffee, even at $50 per kg that's $1. The other $6 is where his problems lie.

    Oh and BTW the $12 pint of craft beer has an ingredient cost around $1 but also pays double that in excise and tax. That being said the majority of the $12 is the cost of serving it.
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    Senior Member flynnaus's Avatar
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    Yes, Dundon may be experiencing the effects of market saturation and so many competitors. He doesn't outline how the coffee farm gate prices will be increased or how the farmers will manage climate change.

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    Senior Member solace's Avatar
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    I can see the large corporations flogging off pseudo speciality coffee (paying marginally more for what they already get in the C market but preaching about how they invest back into the farms which in turn improves quality) in attempt to woo the masses with ‘transparency’ and ‘sustainability’. This is one of the only ways the average coffee consumer in Australia will come to grips with paying > $5 per standard cup.

    There might also be a small increase in demand on true specialty grade as larger roasters look to capitalise on that model, though this comes with a potential cost of over saturation which starts prices moving in the direction of C market.
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  6. #6
    Senior Member flynnaus's Avatar
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    Quote Originally Posted by Lyrebird View Post
    The $7 coffee used ~20g of coffee, even at $50 per kg that's $1. The other $6 is where his problems lie.
    ...and that's assuming the 20g shot isn't split .
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    Senior Member LeroyC's Avatar
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    Paying more for coffee at the very end of the supply chain is just one very small thing that will need to happen to fix what is essentially a broken system that is the result of old European colonization and exploitation of the third world. Iíd happily pay more for coffee if I knew for sure that it would make a difference, but unfortunately itís not that simple. Having the discussion is important though as the more people that know about the C market crisis the better. I wonder how many members here know about it? Probably not too many Iím guessing so itís a good topic to bring up Flynn.
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  8. #8
    Senior Member Yelta's Avatar
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    Idealism is well and good, I suspect any price rises will be consumed by the market, growers will see bugger all benefit, Australia cant even sustain its own dairy industry, let alone trying to fix agricultural problems in third word countries.

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    Site Sponsor Leaf_Bean_Machine's Avatar
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    Personally I think it is a fantastic conversation to have. I understand that cafes have overheads but a $7/cup coffee price is not helping the farmer. The farmers need relationships with coffee brokers who are ethical and who help them sell their coffee in good times and bad.
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    Senior Member chokkidog's Avatar
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    Just in case some of you are wondering..... I'm saving my second crack until I have more time. ;-)
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  11. #11
    Senior Member woodhouse's Avatar
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    eh, all that will happen is that growing coffee will no longer be a way of making a living for farmers, so they’ll just hack down their coffee trees and plant other stuff for which they can get a fair price. that’ll probably do something to supply/demand and drive up prices anyway....but whatever I had a laugh

  12. #12
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    Quote Originally Posted by flynnaus View Post
    Yes, Dundon may be experiencing the effects of market saturation and so many competitors. He doesn't outline how the coffee farm gate prices will be increased or how the farmers will manage climate change.
    Yeah, I think that one of the weaknesses of the article, and the focus on it, has been that it doesn't actually do a very good job of explaining where the cost increase from $4/cup to $7/cup will go. My guess would be that if you added $0.5 per cup and that got back to the producers with fairly minimal margins taken out along the supply chain ... like maybe 10% margins each, that would probably be a colossal uplift in what they are earning.

    MD sort of does allude to other costs in the article when he talks about automation and cutting labour costs. One really good example is the Marco SP9 brewer, which is basically an automated pourover kettle. So if you go to MD's Paramount Coffee Project in LA, you can have batch brew for USD$4 a cup or you can pay USD$5 for a filter cup brewed to order through SP9 + Kalita wave (equipment costs in the thousands). So brewed to order costs 25% more than batch brew there. Compare it to Australia where you might pay AUD$4 for a batch brew and AUD$7 for brew to order ... invariably v60 with a pouring kettle (equipment costs in the hundreds). The problem is that, in my mind, most baristas add precisely zero value over the auto pour kettle. When you drink coffee, the quality that's achievable is determined by green quality, roast quality and extraction quality. Thinking about it in these terms, the manually brewed pourovers that I have had in cafes that have actually had good extraction quality is dismal. Probably less than five in my life, and even then they haven't resulted in cups good enough for me to really remember them. So when I tried the Marco SP9 auto kettle coffee at PCPLA, I was pretty stunned that the extraction quality was easily better than most manually poured filter coffee that I have had. Who knows; maybe manually poured coffee can be better, but from my perspective, the barista pouring the kettle manually instead of pressing a button on an SP9 is costing us 50% of the base batch brew price, but is delivering nothing of value. From a cafe operator's perspective, I'm sure that thousands of dollars on yet another piece of equipment that has to be built into your bar isn't enticing as an up-front cost ... but if it saves you having to hire another person, I'd imagine it could start to get attractive pretty quickly.

    We've already seen that automation is winning the battle on the espresso machine front, too: for all of the quality potential of pressure profiling machines, most cafes that have them just use them as on-off switches and I've seen many cafes get rid of paddle group machines and replace them with volumetric machines.

    MD took the very brave step of publishing the prices that Seven Seeds pays for each coffee on the Seven Seeds webpage. Personally, I think that this is a crazy business decision, since:
    1) There isn't really a standard green coffee trade model that's comparable over all green coffee, so the question that you need to ask about any price is "at what point"? So, for example, I think that the public sort of has this romanticised notion that there's a green price that is what a "farmer" gets. Well what if the farmer doesn't have enough, so sells to a co-op? I mean, the co-op probably has costs, so where do they come out? And how do you compare the costs paid to a "farmer" if the green that you buy is at different stages? Like are you buying it dry milled from the farmer or not? The price at the last point in the origin country before shipping is probably the most comparable cost, but, then, the closer you get to the landed cost in Australia, the further away you are from knowing what the "farmer" was paid. And let's not forget that it's not like the "farmer" is the most vulnerable person on the supply chain. Spare a thought for the people working on the farm, especially the seasonal pickers. So there's a lot of complexity in even understanding what these prices mean.
    2) Whatever the price is, it shows that it's a pretty low percentage of what we, as consumers, pay for retail coffee beans or brewed coffee.

    Anyway, if some people are transparent on what they pay, then it at least puts pressure on others to follow suit. I'm sure that Mark wouldn't be publishing the prices they pay if he thought that they were low compared with what others are playing. Personally, it really greatly irritates me to see roasteries - I won't name names - using all of the language of people who pay high prices and put a lot of effort into their sourcing to market coffee that you can guess pretty obviously is commodity coffee that they've bought spot from a local importer's inventory, invariably priced at the higher end of the market.

    On the climate change front, there's no doubt that the whole system is unfair. Finding and breeding disease resistant varieties that are suitable for a particular area and a climate that is becoming hotter is something that first world consumers largely aren't paying for and it's not as if farmers can really afford to do that. This is just one aspect, but it's one that requires long-term planning and thinking. Personally, I think that this is something that it would be nice for us as consumers to put money towards. In part, one of the reasons why I think we should be doing this is because the decisions on what gets planted are going to be made taking into account the demands of the customers of the nurseries; the farmers. They will rightly be concerned with climate and disease resistance and yield. We can hardly complain if the new varieties are developed without regard to cup quality if we haven't paid for it.

    Lots to think about!

    Luca



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