Saturday, May 18, 2013

Traceability, Certification & Elitism

I just finished reading this excellent article in the New York Times. It's inspired by the tragic garment factory collapse in Bangladesh, but the implications are much broader, and of course I naturally thought of coffee when I read this:

"Mysterious origins are a hidden cost of cheap things....To have money today is often to acquire the right to know which person knitted your sweater or which farm bred the pigs in your chorizo. To be without money is to buy from a placeless netherworld and to be told to take it or leave it, no questions asked. 

It's a strange reversal. For most of history, the poor would have eaten the local pigs and known the origin of their socks, and the rich had better access to a global marketplace. But changing elite tastes and the relentless efficiency of supply chains have slowly inverted tastes: In many categories, the poor now buy from the exotic unknown, and the rich insist on what can be traced..."

My friend Tim Castle wrote recently about the sloppy surface-skimming that characterizes media coverage of various coffee certification schemes, but in my view he (uncharacteristically!) doesn't go far enough in the case of the Fair Trade and Organic certifications, which are rife with corruption and abuse. More interestingly still is what, if I'm not misreading it, looks like an unqualified endorsement of the so-called Direct Trade model. 

Returning to the themes raised in the Times article, here's a representative single origin offering from a highly-touted Third Wave roaster. The asking price - nearly $28.00 per pound* is quite typical of their offerings. 

Now considering that many estimable specialty coffee companies are profitably selling stellar single-origin coffee for $14.00 or less per pound, one wonders what the pie chart disclosing exactly who gets what from the $28 (which presumably any self-respecting Direct Trade roaster would be happy to share as part of their much-touted transparency and fairness ethos) would look like. It certainly doesn't have to do with "direct" trade per se as larger companies like Starbucks, Peets, Illycaffe and the like trade much more directly (that is to say, with fewer intermediaries needed and no need for exporters to act as tour guides and educators or importers to act as banks and shipping facilitators) than do smaller players who aren't buying all of their coffees in full containers. Maybe it's the cost of amortizing all of those farm visits, glossy web sites and Cup of Excellence bids over so few pounds that accounts for the doubling of costs to the consumer.....

More to the point though, this kind of pricing drives home with a vengeance the idea that artfully-roasted coffee is a luxury item for special-occasion consumption only - unless you are rich. And while the Times piece focuses primarily on clothing, the effects of a luxury pricing strategy on an extremely pershisable product tend to be more disastrous, in that the odds of it being sold stale are greatly increased. I still vividly recall being struck at the modest prices, quick turnover and shared sensibility about ripeness and quality I saw at cheese mongers all over France, followed by the jarring contrast of seeing the same cheese at triple or quadruple the price at my local Whole Foods, often in sorry condition, and of course not selling because at the price, and with no sampling or educational effort, a vital everyday foodstuff had been turned into a luxury buy. 

At the end of the day, I think there's more to be learned and emulated from the truly vertically-integrated approach of Brazil's Café Bom Dia than from any of the current crop of elitist roaster-retailers. Perhaps the "Fourth Wave," when and if it occurs, will be based on farmers deciding what constitutes fair and/or direct trade and taking the means of production and adding of value into their own hands. 


* They've chosen to set retail prices in grams [coffee worldwide is bought by pound] - which is at least more original than the dominant Third Wave pricing strategy of charging a usurious full pound price for a 12 ounce valve bag. 




3 comments:

  1. I had trouble following your post. Are you taking objection to the Direct Trade coffee movement because you believe it is not leading to better coffee or better wages for the coffee growers? Believeing that the coffee roasters are painting themselves into a corner where they are going to have to continue to increase their prices because they sell less coffee and therefore have to increase their prices to continue to visit farms etc.

    AND

    What is it that makes Cafe Bom Dia something that should be emulated? I could not tell from their site what they are doing differently. Other than being an multinational company that buys directly from their famers.

    Are they something similar to the Pachamama Coop? http://www.pacha.coop/ Basically they are a group of co-ops from coffee producing countries, which sell their coffee directly. (Roasting is done by Thanksgiving Coffee)

    ReplyDelete
  2. My points regarding "direct" trade include:

    1. It's basically marketing hype rather than reality. Truly trading directly in the sense of fewer intermediaries is nothing new, but it's done by companies with the expertise and access to capital required to buy in full containers, offer farmers pre-financing, etc.

    2. A small farmer in a place like Guatemala is producing 2-6 two hundred fifty bag containers of coffee a year. A microroaster paying a fabulous price for 20 or even 50 of those bags is nice, but is a heck of a lot less meaningful than the medium or larger specialty roaster buying 2 or 4 containers, with a chunk of money upfront and a large premium for the rest.

    3. It's not a question of "painting themselves into a corner because they have to increase prices." it's a matter of prices bearing no relationship to costs, to what other coffees of equivalent quality are selling for, or - most important - to what kind of price range for coffee will result in a consumer base that cares about the taste of great single-origin coffee, can afford to drink it daily, etc.

    Regarding Café Bom Dia: take a more thorough look at their web site and business model. They are roasting right at the farm gate, packaing the coffee fresh in state-of-the-art packaging and delivering it to the customer for importation right there. They work with retailers who have superb inventory management systems so that roasting to order and replenishment are efficient. I'm not saying that their coffee is the best in the world by any stretch, but the value of the model is in part that the farmers capture a much higher share of the retail price, and that that price represents outstanding value-for-money for the consumer.

    Thanks for sharing the Pachamama Co-op site. It's a somewhat similar idea but as you say the roasting is being done by Thanksgiving and the prices are at the high end of the range for the kind of coffee they're selling. What Bom Dia is doing is much more efficient and large scale, but as always with Thanksgiving I admire the intention and it's great to see them doing this.

    ReplyDelete
  3. Thank you for your response, I appreciate it.

    Something I remembered reading quite sometime ago about a roaster's struggle with Direct trade that you might find interesting; http://www.hasblog.co.uk/direct-trade-sucks

    ReplyDelete

Note: Only a member of this blog may post a comment.