[S4:E11] Coffee News Report: High-end specialty coffees

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In this report, I discuss two articles that talk about the very high end of specialty coffee and how these unique coffees benefit the industry as a whole and producers in particular.


Article 1

Are we overestimating the size of the market for high-end specialty coffees? by Shirley Wiraran, June 21, 2023

Article 2

Suburban cafe sells $100 cup of coffee – and it’s not the first time by Emma Young, September 12, 2022

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Michael: In this coffee news report. I’m going to talk about two separate articles. The first article is titled, "Are we overestimating the size of the market for high-end specialty coffees?" written by Shirley Wiraran . Published June 21st, 2023. The second article is titled "Suburban cafe sells $100 cup of coffee, and it’s not the first time." written by Emma Young published September 12th, 2022.

I’ll start with some points from the first article. The global specialty coffee industry is expected to grow by $40 billion over the next four years. The proportion of high-end specialty coffee, let’s call 90 plus is low. Very low. However. 90 plus coffees act as a signal to the market. They’re a signal of experimentation and innovation.

And they also have a tastemaker function by steering consumer preferences.

I see this growth as positive for the market, especially on the supply side. And I’ll touch on that in a little bit.

Three points I want to make that will help make sense of this.

The first is to think of 90 plus coffees, akin to loss-leaders. They aren’t designed to move the profit needle, but rather to entice consumers in one way or another. So with a loss leader. You have a product that’s expensive that you price below your cost of production, in order to get it in front of customers.

My second point is; 90 plus coffees are often unobtainium for the average consumer. They’re too expensive. And the taste is too radical.

But again, point three, they signal to the consumer that the seller be they a cafe or a roastery knows quality. And this is a function of the tastemakers; steering consumer preferences.

So the example to illustrate this comes from the second article. And that second article was talking about the $100 cup of coffee.

A cafe in Perth, Australia. Nu Noir sold $100 cups of coffee last year. This was September of 2022. The coffee placed second in the 26th Best of Panama coffee auction.

The coffee was called the Black Jaguar and graded at 93.25 and sold at auction for almost 280 us dollars a pound. Now to put that in perspective. The cafe’s house blend 2 Keys is an 84 point blend that sells for around five bucks a cup.

So just the difference between an 84 point blend. And a 93 point single origin. Was. $95. this shows that number one, that 93 point coffee is unobtainium for your average consumer, they just, who can afford a hundred dollar cup of coffee? It’s not going to be your average consumer.

But what’s going to happen is your average consumer is gonna see this and think, well, wait a second, maybe this Nu Noir cafe knows quality. So maybe I want to go in and see what all the hubbub is about. So I’m going to go in and I’m going to buy one of their house blend. And see what it tastes like. If they know so much about coffee and they’re able to buy this 93 point coffee surely their 84 point coffee is pretty good.

Now, this is a quote from the second article, "from a business perspective, I knew we’d have to do well with everyday coffee and it will be a slow thing with the specialty coffee. But we have actually had people catch on quick and be curious about why. And that’s the question everybody’s asking. Why is it worth so much? How do you justify it?

And that is what these high-end specialty coffees are all about for a cafe or a roastery. Getting eyes-on. Getting people interested in these odd unique, esoteric, flavors in coffee that could be. Interesting. And enjoyable.

Now going back to how this is good for the supply side. I see it good in a couple of ways. First. For a producer to explore what it takes to produce a 93 point coffee means that farmer is locking down their processes. They are using meters to become more accurate in their processing techniques.

They’re becoming disciplined. They are positioning themselves to become consistent and repetitive in how they process their coffee. And all of that is empowering. Because consistency and quality is what roasters are looking for. That’s what they look for most.

The second way this is good for coffee farmers is, if you think about Cup of Excellence and how it works in an origin country. A farmer wins Cup of Excellence or a farmer places Cup of Excellence, and they sell their coffee for much more money than they would have otherwise.

And so they come back to whatever farming communities they’re in and they talk to other farmers and they say, yeah, I w I placed in cup of excellence and I sold my coffee for let’s just say, $40 a pound. Where I normally sell it for $8 a pound. And with that money, I was able to buy a new motorbike.

That farmer that he’s talking to is going to be curious as to how he did it. He’s going to start talking to that farmer, asking questions. A conversation will break out. And they will share knowledge. And that will start to raise the quality in that region slowly-but-surely.

And so these kind of knock-on effects are what I hope to see when we talk about the specialty coffee industry becoming commercialized and growing and rapidly expanding. That’s going to force more cafes and roasteries and importers and exporters to start to target more specialty coffee. And that is hopefully going to get more money In origin to those producers who deserve it By producing and manufacturing specialty coffee

This is Michael with oil slick coffee And this is the coffee news report