Monday, April 19, 2004


a differing view too good to be overlooked in the comments, part iii

as usual, bracketed comments are mine for reference, as are the links. who'd a thunk one of my usual silly rants would produce this great response? i'm so honored and grateful. anyway:

"Dear Fortune,

I read with great interest Mark Inman’s letter published by you on Bread Coffee Chocolate Yoga.
Coffee is a product that, like other world commodities has historically floated in value based on consumer demand and availability. All efforts to control the price at a level acceptable to consumers and producers alike, in the past, have met with failure. Efforts to control coffee to the benefit of individual growing countries or regions or individuals or groups of dealers (importers) in consuming countries have always failed in the long term.

The ICO succeeded, in the seventies and eighties, in protecting farmers, and had no interest in protecting member consumer populations. The United States wisely opted out of the ICO and its disastrous quota system, and with our leave-taking coffee found its own true values again. The "C" contract [how coffee is traded on the exchange a the NYBOT] has seen [US]$3.00-LB and [US]$0.45-LB during the period.

The intervention of international organizations on behalf of a select few origins has, in the last years, turned the coffee world upside down by dramatically increasing production of the lowest grades of commercial coffee.

Commercial coffee businesses do not live in an economic vacuum. They compete against each other for market share. Brand market share in turn is determined by many factors including among others raw material and manufacturing costs, marketing effectiveness and ultimately the way selling price and value are perceived by the customer.

One hundred fifty years ago most coffee was sold by appearance and price values alone. Taste, oddly enough, was not an issue. This system favored coffees that were low grown, and by nature having duller, less acid [this is a coffee-tasting attribute also known as "brightness" or that dry-ish, "sparkling," sunshine-y feeling some coffees have on the tip of the tongue; it's usually considered a very desirable thing nowadays] character in the cup. Brazil, Arabia, and Indonesian coffees were for the most part processed as what we now call "Naturals."

Only the West Indies (WIP-West Indies Prep.) were known for Washed (Wet Process) coffees. This method of preparation was developed where high moisture and rain challenged the more traditional preparation process in select origins.

The development of the blind cup test permitted buyers for the first time to choose coffees solely on the basis of what they liked in the taste and smell of the beverage. Buyers preferred the taste of the washed coffees, and this has become the preferred taste during the last hundred years. Values have moved along with consumer demand.

Though in use, at the time of the development of taste as the main reason for giving coffee value, the drip method of brewing was not the prevalent brewing method.

Throughout economic history people, who have held jobs in areas where fashion or technology have made their labors unnecessary, have been dislocated. While this may be tragic on a human scale; broadly progress, often driven by man, creates new jobs and new opportunities while bringing a better (often defined as "less costly") product to market, and making it available to a wider number of people.

The introduction of poor-grade filler Robusta coffees, from origins with extremely low, sometimes government controlled, labor costs has destroyed the market for lower-grown [remember that in general, the higher the altitude at which the coffee is grown, the more desirable it is; lower-grown is usually less desirable, so worth less money] Arabica coffees that sold for higher prices than the newly introduced goods. This is not a function of the Specialty Coffee market which only buys the better grades.

Nevertheless the Specialty community was the first to respond in a positive way to the plight of coffee farmers and farm workers being displaced, by the influx of cheap bad coffee, through programs including Coffee Kids, Grounds for Health, Cup for Education, Care, and Fair Trade etc.

Americans were thrown out of work wholesale when the Europeans and Asians built better cars, and made cheaper steel than we in the 1970s. We were forced to stop, think, take stock, and retrain our people. Today white collar jobs are in jeopardy in the U.S. as world telecommunications has advanced to the point where a technician in India can help me with my computer glitch in Brooklyn.

My guess is that outsourcing technical white collar support jobs costs the technology companies less than having U.S. workers performing the tasks in Florida or Texas. We are again going to face a large dislocation of the work force because it is natural for business to go to those who can do the job, and do it at a lower cost to the employer (providing wider margins of profit) and ultimately at a savings to the consumer.

The Luddites, a band of English artisans (1811-16), raised riots during the first Industrial Revolution urging the destruction of machinery that was stripping them of their livelihood. The pioneer specialty coffee roasters in the U.S. did this in reverse, by using their craft skills to take market from the large industrial roasting companies in the 1970s and 1980s. In the 1990s the large industrial roaster corporations began to market goods as Specialties creating confusion and changing the market dynamics for coffee in the U.S. again.

Specialty coffee people must compete not only against others within their own community, but with the larger coffee community as well, and still there is time found to support our friends at origin, and the environment at home and abroad, and the consumer too. It’s a big order for a relatively small group of entrepreneurial businesses, with limited resources. Still, it is amazing sometimes just how much Specialty Coffee people can accomplish when they set their minds to a task.

Espresso is a relatively new phenomenon in the U.S. Drip is far and away the prevailing coffee delivery system. The Espresso culture as developed by the best quality Italian brands (according to the coffee manufacturers themselves) is an Arabica coffee culture. The American Espresso culture has developed as an Arabica culture as well.

In part, the American interest in dark roasting is that higher roasting tames the natural acidity of the brighter coffees while accentuating its sugars and bringing their marvelous complexity to the fore. This complexity, cherished, in the American specialty cup is lacking in the lower grown Arabicas explaining why they are traditionally not chosen by true specialty roasters but by the industrial roasters to be used as non-descript filler coffees.

Espresso, in my opinion, cries out for smooth, sweet heavier bodied coffees. It often excels when "Naturals" are added to or comprise the blend base. Alas, there is not enough call for sweet/neutral cupping otherwise defect freed coffees to significantly change the coffee price/values landscape for lower grown Arabicas of the Americas.

Increased coffee consumption is part of the answer to raising international coffee prices. Brazil has seen significant success in raising internal consumption of coffee in recent years. Other countries including Guatemala are taking lessons from the Brazilians and are establishing programs to promote internal consumption of coffee in their lands.

New markets in Asia have proved that they can develop and sustain substantial coffee cultures. It is expected as these markets grow their demand on the coffee resources of the world will increase coffee values. The unspoken long term fear, of course, is that higher values will spark a new round of investment in coffee plantings which will result a decade later in yet another round of coffee deflation as supply again outstrips demand.

Boom and bust and agricultural economy appear to be forever linked. Good people of good will on both sides of the equator can find ways to help each other mitigate the effecdts of the natural price hills and valleys, and that is what Specialty Coffee as a community is striving to do. Unfortunately, as Mark points out specialty coffee is a niche market.

We can highlight weaknesses and strengths in the coffee world. We can act as a laboratory for experimenting with change, and alternative approaches, products, and solutions. We can even succeed brilliantly on occasion and illustrate coffee’s positive possibilities to the larger coffee world, but we will always just be what we are "Specialty" and not "Mainstream" coffee. It sometimes behoves us to remember that we are not at fault in the coffee world. We are that world’s best hope for the future.

Donald N. Schoenholt

Gillies Coffee Co. "

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