Like everything else, the price of coffee after a certain point is just to support marketing and higher profit margins, not based on the difficulty of production or other "real" reasons that the coffee beans might be slightly more expensive. The bulk of costs are added by the distributors and end sellers, not the farmers.

grog wrote:Also those first two coffees are noted in New Taiwan dollars, not USD. Divide by 32 to get the price in USD, correct?

Thanks for clarifying. That puts the prices in Taiwan in line with the rest of the world.

Eastsideloco wrote:That puts the prices in Taiwan in line with the rest of the world.

Not necessarily. How much does a Big Mac cost in other countries? We pay more than that here for an espresso. How much does a Big Mac meal cost in other countries? We pay more than that here for just a basic brewed coffee. Cost of living--and salaries--in Taiwan is noticeably cheaper than in most Western countries, yet the price we pay for coffee is almost double because coffee is billed as a "luxury". And, while some pretty expensive micro-lots do come here, you'd be surprised to know that average coffee here is priced similarly to premium coffee elsewhere. Don't be fooled by a simple across-the-board currency comparison. Basically, the middle class here can't afford decent coffee the way the middle class in Western countries can. Home roasting helps a lot here, which may be why so many home-use roasters are designed and manufactured in Taiwan. So I reiterate, pray this pricing model never happens in your own countries. You are royally pooched if/when it does.

damonbowe wrote:Like everything else, the price of coffee after a certain point is just to support marketing and higher profit margins, not based on the difficulty of production or other "real" reasons that the coffee beans might be slightly more expensive.

But still, some of the most expensive coffees are sold in auctions - like Hacienda Esmeralda's geisha superior lot green beans may even cost several hundreds per kg in an auction held by the hacienda itself.

At an auction you hardly want to pay more in order to get better profit?

Nick Name wrote: At an auction you hardly want to pay more in order to get better profit?

I know what you're getting at, but damonbowe does make a good point--and it's all the more applicable to the Asian market. It might be difficult to believe, but there probably is a market for specialty coffee in Asia specifically because of the high prices. While not all people in Asia--or the rest of the world, for that matter--are like this, there is a large enough percentage of people who are merely interested in something because of the high price it commands. If newspapers here didn't report the ridiculous amounts paid for these coffees, there would be no market here for them. That is, if the coffees were priced more in line with their cost of production, newspapers wouldn't report on it (because it isn't deemed newsworthy), and there would be no curiosity about it. No curiosity means no market here--or certainly a lesser market. So, yes, there probably are a certain number of Asian importers happy when they have to pay a higher price this year than they did last year--provided the media reports on it. To further add to your incredulity, you may also be surprised to know how dark some roasters here roast Geisha.

SlowRain wrote: How much does a Big Mac cost in other countries? We pay more than that here for an espresso. How much does a Big Mac meal cost in other countries? We pay more than that here for just a basic brewed coffee.

I haven't had a Big Mac or a Big Mac meal since the '80s, but you can track the local value of one on the Goog, just like looking for cheap gas. So I get your point. You are paying a premium compared to the average price in the US for specialty coffee.

If it makes you feel any better, tipping is the great equalizer. I'd spend less buying a Big Mac in Austin than an espresso, by virtue of the fact that the minimum wage workers at McDonald's don't receive gratuities.

SlowRain wrote: While not all people in Asia--or the rest of the world, for that matter--are like this, there is a large enough percentage of people who are merely interested in something because of the high price it commands.

This is very true. There is always the "if it's more expensive it must be better" -factor that affects some people around the globe.
Naturally some companies (whether they sell coffee or something else) take advantage of it.

SlowRain wrote:I know what you're getting at, but damonbowe does make a good point--and it's all the more applicable to the Asian market. It might be difficult to believe, but there probably is a market for specialty coffee in Asia specifically because of the high prices. While not all people in Asia--or the rest of the world, for that matter--are like this, there is a large enough percentage of people who are merely interested in something because of the high price it commands. If newspapers here didn't report the ridiculous amounts paid for these coffees, there would be no market here for them. That is, if the coffees were priced more in line with their cost of production, newspapers wouldn't report on it (because it isn't deemed newsworthy), and there would be no curiosity about it. No curiosity means no market here--or certainly a lesser market. So, yes, there probably are a certain number of Asian importers happy when they have to pay a higher price this year than they did last year--provided the media reports on it. To further add to your incredulity, you may also be surprised to know how dark some roasters here roast Geisha.

Sometimes economics is more about human behavior than dollars and cents. Thorsten Veblen's, Theory of the Leisure Class with its mix of economics and sociology broke notable ground in this area.

Goods which are attractive (or more attractive) precisely because they're expensive (or more expensive) are called "Geffen goods." Geffen goods are a subset of Veblen goods, which are attractive (or more attractive) because of the prestige they confer through "conspicuous consumption."

The idea that something must be better because it's more expensive factors in to what makes a Veblen good, but also reflects a search for value; although the consumer may not be aware how much his sense of value is driven by the society in which he lives.

In short, these are well-discussed (and I think, well-understood) phenomena.

For a lot of reasons -- many of which I neither know nor understand, and none I wish to discuss -- Veblen and Geffen goods do better in Asia than the west.

The problem with Damon's remark is that it's over generalized. Not everyone is out to trick you out of your money.

Some things are expensive simply because they're scarce and high quality.

Rich

Yep, agreed. I'm sure you'll also agree that scarcity has nothing to do with a farmer's cost of production in coffee. Quality can be related to cost of production, but the price we have to pay for it--particularly the high-quality stuff--is not in direct proportion to the increased costs associated with its production. That's what he's getting at, I think. And it's one issue that we, as consumers, are all too quick to overlook and treat as acceptable. It looks like something sweet and innocent, and even like we're supporting the producers, but many people have no idea what it's like to live in a society so permeated by this thinking that it takes something which is actually affordable and then makes it completely unaffordable to the middle class.