Roaster wholesale pricing (re: Lance Hedrick video)

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AuFinger
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#1: Post by AuFinger »

What are the HB thought on Lance's video? I'm unsure what consumers are supposed to do with this info and why they should demand it. Best I can gather, it's so famers can surf the www and see what roasters are paying for their beans. Should I be outraged if someone is paying a quarter less per pound? Or should I be willing to pay $5 more per pound because they're paying a quarter more than someone else? What if my favorite neighborhood roaster doesn't list their pricing? Does that mean I should dump them for Onyx or whatever? And how accurate is this info?

Burgessg3
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#2: Post by Burgessg3 »

Lance makes a good point about coffee selection being more important than having the latest in grinder technology. However, I don't think the idea about roasters sharing cost information is a good idea for at least two reasons. 1) Who decides what is "fair"? 2) Seems like it would get very close to a legal definition of collusion between businesses.

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luca
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#3: Post by luca »

First up, clarification - I don't think Lance really meant roaster wholesale pricing, as in the price that cafe and reseller business consumers pay for roasted coffee, but I think he meant green coffee pricing paid by the roasters for the green coffee they roast. About which, people should download and have a skim through the specialty coffee transaction guide:

https://www.transactionguide.coffee

What you want to do is up to you. What I can tell you is that coffee roasters make all sorts of vague representations about quality, and everyone seems to say they are "specialty coffee" these days. But the thing is that "specialty coffee" doesn't really mean very much. It's not like most people are going to pick a lot of difference between 79.75 point non-specialty coffee and 80.00 point specialty coffee. What you can see is that, at least from the data donors to the SCTG, producers actually do seem to be paid more for each 2 point increase in cup score above 80.

How does this impact on you as a consumer? Well, let's assume that your roasters are not lying and the coffee you are buying is in fact "specialty" grade, ie. 80 points or above. 80 points isn't really saying much. Basically, there's nothing wrong with it, but it really isn't very distinctive. Really, if you are buying single origin coffee, you'd hope that it would be at a minimum about 85 points for it to start to be really distinctive, and really it should be about 86 and up. But you have no idea about this, and for all you know, you might be paying a premium commensurate with 87 point coffee for coffee that's really in the low 80s.

The above is the selfish reason in your favour. You might not care, and that's fine. Part of the market signal is whether or not people are prepared to pay for "quality", whatever that is, and however it is defined. Climate change is real, the areas that can support good quality coffee are shrinking, coffee farmers are getting older and selling prime farmland for development. The coffee producers that remain are generally switching over to disease and climate resistant hybrids, and those tend to taste astringent, musty and earthy. Competition is going to increase for the clean, distinctive and fruity varieties, and hopefully the market will allow us to pay producers of these coffees more to keep them in business, but it is a complicated market, and that's not necessarily the case. But producers need someone to drink the crap, and if you don't want to care about what they are paid, then you seem like a good candidate destination for these coffees.

Finding a comparable basis to express cost information, and understanding it, are all of course great difficulties. But the corollary of every time someone comes up with a difficulty is, essentially, that roasters get a free pass that basically means they can sell you cheap crap with marketing, packaging and prices that lead you to expect a premium product. You consumers are all big boys, and you deserve to be rewarded commensurate with the thought and effort that you put in. If you're buying from a reputable looking roaster with pretty similar farm information and crap to everyone else and some somewhat expensive pricing and pretty good packaging, but you've actually in blissful ignorance been drinking bottom of the barrel quality and priced stuff for your premium price dollars, I don't really have much sympathy for you. And it does happen. Last year was absolutely dreadful for coffee quality for a lot of reasons, and I remember speaking to some green buyers that asked if I noticed last year that many roasters around me had started selling coffee that used to basically be destined for blend components as single origins. Well, you consumers are a pretty ignorant lot, and it looks like roasters didn't really get any drop in sales feedback for doing that, so with all the inflation and business pressures that coffee roasters have been facing, I can't imagine those that got away with dropping their quality are going to be especially motivated to increase it if it hurts their bottom line. And it's also a bit chicken and the egg; speaking to some green importers in Australia, it looks like they've taken the view that roasters aren't actually willing to pay much for quality, so, faced with increasing costs for the same quality, they have certainly bought lesser quality to enable roasters to keep their cost base similar by going down a tier in quality.

What information do you ask for or get? I don't know. Ask for something. Ask them for the FOB cost; that seems to be a somewhat comparable cost that people use. Yeah, it won't be perfect, but you have nothing now. It's not going to be worse. Or show them TW's transparency report and ask them for comparable information.

In terms of what are you supposed to do with the information, I think that you compare your options, and you compare them on a like for like basis. The prices paid by a roaster for a coffee from ethiopia, produced at a co-op that pools together the day's cherry harvest from a bunch of local farmers with 100 trees each, vs the price for a coffee handpicked by a single colombian producer, vs the price of a machine harvested coffee from brazil, really don't give you much insight into how good a deal that price was for any one of those producers vs the producers in other countries, and it really doesn't tell you anything about their relative quality. But if you compare two similar ethiopian coffees and one is half the price of another, that's an apples and apples comparison that all of a sudden might start to mean something. How much should you pay? You decide. But the point is that at the moment, you can't make a decision.

And one more point ... if you really like something ... TELL THE ROASTER. The market has to create signals to encourage production of stuff that we actually want. It probably only takes three people telling a roaster they really liked something that sells out for them to pop an email in to an importer that they want to pre-book for next year, and then that feedback might go back to the producers. For all we know, the producer might be just about to rip out that coffee for an easier variety to farm, or they might be about to quit. Telling the roaster you like something particularly good isn't hard to do. It might not help, but it can't hurt.

Also, I wrote this on Lance's instagram w/r/t the idea of buying coffee from overseas roasters to benchmark, which is something you may want to do:

W/R/T the buying local point, I think that to be an informed consumer, you should buy some coffee from international roasters to establish a wide frame of reference and to benchmark your local roasters. Your local market may be dominated by a particular roast style, and your local market might have great disadvantages in buying good green coffee. To be very blunt, but let me put it in a no value judgment type way, the majority of roasters (even ones that look credible and high end) roast their coffee in a way that does not present the green coffee as aromatically distinctively as it could be presented. This means that it is a very real possibility that consumers have only ever tasted coffee the coffee equivalent of listening with the volume set on one. This also skews consumer perceptions, so a lot of consumers regard gesha as a premium coffee (a fine POV), but they then assume that other varieties are not. I find a well-roasted and well processed caturra to be almost as enjoyable and they can be quite aromatic, but most retail consumers won't even remember that catura is a variety name, and if they do, they probably think of it as boring. What is happening here is that poor roasting is muffling the skill of the grower and their economic opportunity.
LMWDP #034 | 2011: Q Exam, WBrC #3, Aus Cup Tasting #1 | Insta: @lucacoffeenotes

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luca
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#4: Post by luca »

I guess I should add another point. A lot of this actually assumes you are buying single origin coffee. If you are buying blends, technically this point still holds true and you could ask, but actually it's probably likely that it's full of cheap stuff that is barely specialty grade, low 80s coffee. Think of blends like sausages - everyone says never look inside a sausage factory. If you're drinking blends, just make peace with the fact that you are drinking the coffee equivalent of the snouts, entrails, lips and a**holes. It's really quite a good analogy, since the only people that don't like sausages are also people with an ethical focus. If you drink blends, you might prefer to remain in ignorant bliss.
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BodieZoffa
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#5: Post by BodieZoffa »

I'll gladly say to simply ignore the YT 'influencers' (a.k.a. B.S. artists) as they have an opinion like the rest of us, no better or worse and of course quite often the discussions are geared toward financial gain in one way or another. Of course the coffees being used is far more important than grinder technology as quite a few of us figured that out when most 'influencers' were still in diapers, bwahaha...

On sourcing coffee, personally I never intend to buy roasted coffee the rest of this lifetime and gladly home roast. Of course I respect what the farming community, etc. has to deal with every day in order to give us what we like and will only buy quality green from sellers that definitely seem to care what they source and where it comes from. If paying more per lb is required to contribute more toward farming/processing then I'm all for it. I won't settle for bare bones/low grade $3/lb green from ebay, Amazon, etc. as people should be fairly rewarded for their contributions, especially with something so vital in our daily lives.

I will laugh at the current/constant mention of climate change as I'm quite certain our climate has been changing for thousands of years and all living things have figured out ways to adapt and will surely continue doing so. Lots of focus has been placed on maintaining food sources and surely the same will apply to coffee, etc.

BodieZoffa
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#6: Post by BodieZoffa »

luca wrote:I guess I should add another point. A lot of this actually assumes you are buying single origin coffee. If you are buying blends, technically this point still holds true and you could ask, but actually it's probably likely that it's full of cheap stuff that is barely specialty grade, low 80s coffee. Think of blends like sausages - everyone says never look inside a sausage factory. If you're drinking blends, just make peace with the fact that you are drinking the coffee equivalent of the snouts, entrails, lips and a**holes. It's really quite a good analogy, since the only people that don't like sausages are also people with an ethical focus. If you drink blends, you might prefer to remain in ignorant bliss.
I gladly roast/extract blends as the majority of SOs are one-dimensional and lacking. People should realize that there are plenty of high quality blends put together with top notch SOs to bring out the best in each. For espresso a quality blend will give a layered flavor profile than no SO can touch, plain and simple. Of course there are some that will come up with blends to get rid of inferior coffees to make something consumable/minimize waste, but if you know what you're looking for that can be avoided to begin with.

skink91
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#7: Post by skink91 »

Imagine that... 1 extreme take on blends led to an extreme take on single-origins. Both wrong in my estimation by the way.

Blernsball
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#8: Post by Blernsball »

BodieZoffa wrote: I will laugh at the current/constant mention of climate change as I'm quite certain our climate has been changing for thousands of years and all living things have figured out ways to adapt and will surely continue doing so. Lots of focus has been placed on maintaining food sources and surely the same will apply to coffee, etc.
While yes, the climate has been changing for billions of years, the issue is the speed of change. When the climate changes rapidly, like what is happening now, living things don't figure out ways to adapt. They just die.

That will be true for many coffee varietals. There will no place for them to grow and/or nobody willing to grow them at scale.

AuFinger (original poster)
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#9: Post by AuFinger (original poster) »

I'm certainly willing to pay more for quality where it matters. And I'm sympathetic to concerns over exploitation and sustainability. And I'm very much down with focusing on ingredients rather than gadgets.

But given I brew medim to medium dark espresso, and, for me, coffee isn't life meaning I make a cup in the morning, drink it while doing something else, and drink it quickly. In other words, I probably will only notice a significant change in quality and seeking out and paying for the very best for the sake of the very best isn't a worthy pursuit for me. I just try to buy beans I 'll like as fresh as I can get them.

So I'm wondering how should I react to this? Just pay more and trust it's better quality and trust that no one is getting screwed? My spidey sense tingles marketing BS and a way justify higher retail prices. I can't help but to note that said influencer happens to work for one of these roasters that are doing everything right and charges more for the privilege of being their customer. :|

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#10: Post by luca »

AuFinger wrote:So I'm wondering how should I react to this? Just pay more and trust it's better quality and trust that no one is getting screwed? My spidey sense tingles marketing BS and a way justify higher retail prices. I can't help but to note that said influencer happens to work for one of these roasters that are doing everything right and charges more for the privilege of being their customer. :|
Entirely up to you. But it's not like you have to, right now, make some decision that sets the rest of your life in stone. This is a low stakes exercise.

As I said before, one pretty easy first step is to go and get the specialty coffee transaction guide that I linked to and read it. If you go to table 3, you'll get an extensive table that shows how FOB prices vary based on quality. In 2020/2021, bare 80s got a median price of $1.78/lb FOB and 86-88s got $3.68. And more and less for higher and lower scores. An interesting exercise would be to work out how much work this actually is. I gather that you need something like 5-10x the weight of the cherry to get the green and a good picker might pick like 90-180lb/day. So if you picked 180lb/day, that might be 36lb of green coffee, so you got $64.08 for your day's work picking 80 point coffee, right? Except you didn't, that's $64.08 total return to orgin for the actual coffee beans and all of the processing work, including the picking. So how much were you paid for picking that coffee? 10%? 5%? Like the inconvenient truth is, whatever it is, it can't have been much, which is why one of the things threatening coffee now is that coffee producers can't find pickers. Because nobody wants to do it, because it sucks and pays nothing. So I would guess probably machine harvesting like in Brazil is probably looking more and more likely to be how a lot of coffee will be produced, because I think that a lot of coffee consumers don't want to, or can't, pay more.

The easiest first step is, if you have a regular roaster that you like, you can go to their website and see what they have to say. Then, you can go and see if there are some other roasters that pay more, and you can roll the dice with a single bag. You are absolutely right that you might not see any value in paying more. Personally, I have agreed that most of the Onyx coffee that I have tried is quite high quality green, but I don't really like the roast level, and I don't buy it. Ideally, you'd try a few different roasters and see how you go. Perhaps you try different coffee roasters anyway, in which case this is just adding one thing to consider in looking for your next new thing to try.

I suppose the next thing to do is to keep some notes. Write down what you tried and how much you liked it. Over time you will build up a picture of what represents value to you, and hopefully you will find something delicious that puts a smile on your face whilst doing it.

As for marketing BS, I don't know how much of it is BS. I mean I doubt that anyone that publishes prices is lying about them. The part of it that is BS is that we don't have a good frame of reference for what this means. So one exercise might be to get the SCTG, assume the lowest specialty price and start to establish a framework. I mean let's give it a go right now.

Onyx Southern Weather, $17.5/10oz, $4.29 (but call it $4.15 because this is an average of a spot and a FOB price)

What's an average price for 10oz of coffee in the USA? Assume that has $1.78/lb FOB price green in it.

The thing that's actually kind of BS is actually ... to what extent does the money actually make a difference to the producer? Because producers may diversify their risk with some disease resistant hybrids that don't taste nice and some really great trees that are super vulnerable to rust, but if they are selling the hybrids to the commodity market and that's 90% of what they had, those two bags that one roaster bought just one year at $3.04/lb, with no commitments for future years, probably didn't make much of a difference to their bottom line. Paying them $2.00/lb for the hybrids instead of $1.78/lb probably would have been much more of a meaningful contribution. One thing that few coffee roasters talk about doing is coming up with a wholistic strategy to be able to buy more volume from their producers, to make a bigger overall financial difference to them. This requires a certain amount of scale. I'm quite impressed at how Passenger does this with Necessary; they operate them as two totally different brands, and are very open that the cheaper coffees go into Necessary:

https://www.passengercoffee.com/blogs/n ... -necessary

But, ultimately, what you want to do, and what you think is BS, is up to you. You make consumer decisions everyday, and in every product category you are faced with the challenges of ethical consumption, quality and price. Fast fashion. Abbatoir workers. Debt slave farmers. Suicidal phone factory employees. The amount of plastic everything is wrapped in at the supermarket. Environmental damage from the dye for your jeans. Dirty electricity. The only difference between coffee and all of those things is that you are interested enough to be reading a forum about coffee. Like, to be honest, not once today did I spare a thought for whoever grew the wheat in the loaf of bread sitting on my table.
LMWDP #034 | 2011: Q Exam, WBrC #3, Aus Cup Tasting #1 | Insta: @lucacoffeenotes
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