SL28ave wrote:Perhaps, but I wouldn't call it "inflation". Instead: 2008 will be about the deflation of the allowance for small farmers who produce high quality to be paid little. MANY more servings are had out of a bag of coffee than a bottle of wine, and quality coffee is at least as difficult to farm as the most artisinal wine.

For what it's worth, I predict quality will generally increase too at both lower and higher price levels, in 2009 or 2010 if not 2008. We all just need to sell our souls. be smart in our approach to coffee.

Wine is not farmed; grapes are. Coffee beans are an agricultural commodity, not a finished consumable product. They require many additional steps before they can be consumed, including shipping from the point of origin, importation to the country receiving them (generally elsewhere), wholesale distribution and selection, roasting, (sometimes grinding), packaging, retail distribution, and then retail sale. Each of these steps markedly increases the price along the way.

Wine is a finished product that can either be sold through a normal distribution system or directly by the winery (as is done on mailing lists and/or at tasting rooms). A large percentage of the wine sold in the world (especially the best ones) is sold and consumed in the country of origin for relatively high prices, which is obviously not true of coffee, a product grown primarily in the less developed world.

Wine grapes sell for a hell of a lot less than their final product receives in a wine bottle when sold, but at a higher percentage of the total price of the consumable product than does green coffee. This is due to the lack of much of a local market for green coffee, the poverty in the producing countries, overproduction, and all the other steps necessary before coffee can be sold as a finished product in countries that have a population willing and able to pay for it.

One would have to either eliminate some of the steps in production (which increase prices) or reduce markups at each step, in order to have this coffee - wine pricing analogy make any sense or ever actually be played out in the real world. Otherwise, coffee would rapidly become a beverage consumed only by the rich, and not the everyday product as one now encounters it in the world marketplace.

The best coffees will certainly continue to attract high prices, but the overall market for very expensive coffee (say, over $15/lb in roasted and packaged form) is very limited, and unlikely to increase very much until or unless most people view coffee as a luxury good rather than as a hot black liquid drug delivery system for caffeine.

ken

Ken Fox wrote:Wine is not farmed; grapes are. Coffee beans are an agricultural commodity, not a finished consumable product. They require many additional steps before they can be consumed, including shipping from the point of origin, importation to the country receiving them (generally elsewhere), wholesale distribution and selection, roasting, (sometimes grinding), packaging, retail distribution, and then retail sale. Each of these steps markedly increases the price along the way.

Wine is a finished product that can either be sold through a normal distribution system or directly by the winery (as is done on mailing lists and/or at tasting rooms). A large percentage of the wine sold in the world (especially the best ones) is sold and consumed in the country of origin for relatively high prices, which isobviously not true of coffee, a product grown primarily in the less developed world.

Wine grapes sell for a hell of a lot less than their final product receives in a wine bottle when sold, but at a higher percentage of the total price of the consumable product than does green coffee. This is due to the lack of much of a local market for green coffee, the poverty in the producing countries, overproduction, and all the other steps necessary before coffee can be sold as a finished product in countries that have a population willing and able to pay for it.

One would have to either eliminate some of the steps in production (which increase prices) or reduce markups at each step, in order to have this coffee - wine pricing analogy make any sense or ever actually be played out in the real world. Otherwise, coffee would rapidly become a beverage consumed only by the rich, and not the everyday product as one now encounters it in the world marketplace.

There are certain points of comparison. Let's compare a Premiere Cru Bordeaux, to the Bordeaux of coffee, Kenyan.

150 acres of a Premiere Cru gives about 1,125,000 200ml servings.
150 acres of Kenyan gives about 4,250,000 16gram double espresso servings.

Each 200ml glass, at $500/bottle, of a Premiere Cru will cost the consumer about $133.00.
Each Kenyan double espresso, at $20/Lb, will cost the consumer about $000.71 (not including cost of espresso machine/grinder).

150 acres of a Premiere Cru will end with $150,000,000 in final retail sales to the consumer in one year, the majority of which is sold in the US, UK and a growing amount in China I believe.
150 acres of super Kenyan at $20/Lb will end with about $3,000,000 in final retail sales directly from the roaster to the consumer in one year; most of which covers the roasting operations in the consuming countries.

150 acres of super Kenyan would be owned by about 150 farming families, so one acre each, grouped into cooperatives. These families have received almost nothing in the past for what they grow. The amount of work required in the cultivation and processing is akin to wine; coffee cherries take about twice as long to mature than grapes for example.

Zin1953 might shed more light on the whole wine world. Hopefully my #s are correct and there aren't any extra 0's!

More on Kenyan coffee (photos by my boss), http://terroircoffee.smugmug.com/.../3990865#233365320

Ken Fox wrote:The best coffees will certainly continue to attract high prices, but the overall market for very expensive coffee (say, over $15/lb in roasted and packaged form) is very limited, and unlikely to increase very much until or unless most people view coffee as a luxury good rather than as a hot black liquid drug delivery system for caffeine.

ken

The momentum is there for it to be viewed as a luxury, and it doesn't take many more $s/Lb to make a big difference. It also seems like quality is slowly evolving more than devolving, for the moment.

SL28ave wrote:The momentum is there for it to be viewed as a luxury, and it doesn't take many more $s/Lb to make a big difference. It also seems like quality is slowly evolving more than devolving, for the moment.

Your analysis (snipped), however interesting, has no validity whatsoever if the customers won't pay the price.

I'm probably a pretty good example of the sort of person you might think would be interested, being as I have a very nice wine cellar with bottles in it that I would not buy now, at current prices for current vintages.

$500/bottle for a grand cru Bordeaux completely disinterests me. Although my everyday wine prices are probably a lot higher than most, they are nowhere near a tenth of that level. And, there are tons of very nice varietal coffees out there that I can buy for $5 lb, green, tops. I am going to have to see a whole lot of value in something much more expensive, or I am not going to buy it, plain and simple.

Sure, I'll splurge occasionally on a $13/lb green coffee (like the Biloya, which in the end I found quite disappointing), but it is not going to be something I'll buy often if I have other choices.

Further, a 4 or 6oz glass of fine wine can be savored over half an hour; an espresso shot must be consumed in a couple of quick gulps, and that is that. I myself have never found even a fraction of the complexity in any coffee I've had that is easily found in a great wine. The preceding sentence is just my opinion, and yes, I have had some very fine coffees.

What about those people who are less interested in coffee than me (which has to be about 99.98% of the coffee drinkers out there). In the absence of demand, there is no sale. And in general, there is very little demand.

Unlike wine, there is no snob appeal to coffee. Rich people may buy some Chateau Lafite in order to impress their rich friends, but most of their rich friends are not going to be impressed by very expensive coffee; this is to say, there is no "buzz." And how you go about creating a buzz for what most people see as a common drug delivery system they use to wake themselves up each morning, is going to be a real challenge!

ken

SL28ave wrote:Perhaps, but I wouldn't call it "inflation". Instead: 2008 will be about the deflation of the allowance for small farmers who produce high quality to be paid little. MANY more servings are had out of a bag of coffee than a bottle of wine, and quality coffee is at least as difficult to farm as the most artisinal wine.

Uh, okay. Call it what you will but the end result is the same. I think the wine analogy is sort of silly but what percentage of coffee beans would you consider artisan? McDonald's is installing coffee bars in all of their locations, does the deflation of the allowance for small farmers who produce high quality to be paid little come into play?


h

Sorry to interrupt the wine discussion....

I already wrote about this in another thread, but I see the mythical $4,500 GS/3 creating a market for better home machines, particularly double boilers and including grinders, that manufacturers and dealers will rush to fill. Once people passed the mental threshold of being willing to spend that much money on home equipment, a $2,250 Dalla Corte suddenly looks "affordable." A $795 grinder seems perfectly reasonable.

So, I think 2008 will be the year of high end home equipment, at least until we have a recession.

Some more 2008 predictions, which aren't about home baristas.

This year will see more high-quality coffee shops opening across the country, many in places that never saw great espresso before. Some will be devoted to serious brewed coffee. Some will have a more elegant ambience, in line with Viennese coffee shops. McDonalds will squeeze many shops of indifferent quality out of business altogether, because they won't be able to compete on price or convenience.

Here's a peak at the future from eater.l.a.:



This is the new La Mill Coffee Boutique, which opens later this week in Silver Lake. Eton Tsuno (formerly of Groundwork) is running the La Mill espresso operation; so I have high hopes. It will also feature pastries and high-end sandwiches from one of L.A.'s best restaurants (Providence), another new trend?

Marshall wrote:Sorry to interrupt the wine discussion....

I already wrote about this in another thread, but I see the mythical $4,500 GS/3 creating a market for better home machines, particularly double boilers and including grinders, that manufacturers and dealers will rush to fill. Once people passed the mental threshold of being willing to spend that much money on home equipment, a $2,250 Dalla Corte suddenly looks "affordable." A $795 grinder seems perfectly reasonable.

So, I think 2008 will be the year of high end home equipment, at least until we have a recession.

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Marshall, there was a small (e.g. reputed to be 200 or 250 names) list of people who had expressed "interest" in the GS3 at $4500. To my knowledge, no deposits were taken from these people, and no contract or commitment was made. How many of these people would have actually forked over $4500 when the time came is anyone's guess.

In addition, my sources tell me that a whole lot of these people got tired of waiting, long ago, and either bought something else or decided (as you did) that they could live with what they already had.

While there is certainly a continued, incremental increase in the market for home espresso gear, even expensive home espresso gear, I would be astonished if there was any measurable impact of GS3 pricing on the overall home equipment market. As you point out, the economy is a little limpid at the moment, and people fear for their livelihoods and for the piggy bank value of their houses. At the same time, many higher end pieces of espresso equipment have had their prices raised substantially lately.

This is not an environment in which I would expect to see an increase in high end equipment sales. It is rather a situation in which I would expect to see these sales go down.

ken

The cost of equipment will go up across the board, grinders will continue to gain momentum and further evolve, the Mazzer Mini will become the bottom end of the home grinder market with conical's gaining a larger market share. The hybrid Jr will gain momentum and become one of the hot home grinders replacing the Mazzer Mini as the go-to machine.

More top quality beans will continue to hit the market (there has been a steady increase in quality over the past few years) and there will be a shift to brighter and more fruited blends (or rather the current trend will continue to progress). Barista competition blends will become simpler (fewer beans in the blend) to accentuate the quality of a select premium microlot crop and maybe even a single origin blend or two. The cost of these select microlot beans will continue to increase and a new COE auction lot price record will be set.

Home-Barista will continue to grow and the intellectual base of its users and administrators will continue to grow as the latest wave of new home baristas grow beyond that other web page and the uunet groups and I will make more online friends on HB, learn more from the more experienced base of our membership and enjoy life that much more. I may even make it to my first competition and take the sensory judge test just for fun and finally be able to put a face and personality behind a few avatars.

Marshall wrote:Sorry to interrupt the wine discussion....

I already wrote about this in another thread, but I see the mythical $4,500 GS/3 creating a market for better home machines, particularly double boilers and including grinders, that manufacturers and dealers will rush to fill. Once people passed the mental threshold of being willing to spend that much money on home equipment, a $2,250 Dalla Corte suddenly looks "affordable." A $795 grinder seems perfectly reasonable.

So, I think 2008 will be the year of high end home equipment, at least until we have a recession.

What about this Dalla Corte Marshall? It is the first time I hear of this.
Have you any review of this?
(Sorry for the off topic).
Theodore.

Theodore wrote:What about this Dalla Corte Marshall? It is the first time I hear of this.
Have you any review of this?

Searching on Dalla Corte will lead to a few pages of matches, including links to an extensive review/discussion on CoffeeGeek.