Kaleidoscope Overview of Coffee Industry
July 7, 2011 by baldguy · 1 Comment
Well, it took a tad bit longer than I would’ve liked to finish this series on my coffee predictions…kinda been busy roasting coffee, riding a bike, and chillin’ with the fam. There are two realities, however, that won’t go away: higher gas prices and higher coffee prices. Everyone is in a coffee fix. Consumers, roasters, baristas, and importers are all trying to figure out how to navigate the current spike in green coffee.
For the consumer, the cheaper, off-the-shelf coffees at the grocery store are now at an all time high. For the roaster, purchasing quality coffee is difficult due to the increased monies needed to maintain inventory. For the barista, less people are visiting their local shop as they choose to brew at home. Finally, the green coffee importer wrestles with broken contracts and increased difficulties as banks are hesitant to increase lines of credit.
The good news is that producers are seeing a brighter future in the coffee industry. In the past, many farms had been abandoned as farmers searched for more gainful employment. Now, after talking with two farms in Costa Rica, I hear words of hope. Not that the farmers are making some serious jack, but there is hope of earning a decent wage after years of below market-value pay.
Of course is there is no guarantee that gas, coffee, sugar, wheat, and other commodities will level off. For that matter, there is no guarantee that our current economy will right itself in the near future. However, in light of all that is going on, I’m very thankful to still be in business and that our coffees are still of a very high quality.
As Theodore N. Vail once wrote, “Real difficulties can be overcome; it is only the imaginary ones that are unconquerable.”
Coffee Predictions: Market breaks 34 year record
April 23, 2011 by baldguy · Leave a Comment
Well, it was bound to happen…on April 21, the coffee market broke the $3.00 a pound barrier. This movement on the C market breaks a 34 year old record that has weathered many a storm. According to a post in the Guardian the price increase is a result of ” poor harvests of high-grade arabica coffee beans and a growing taste for gourmet coffee among burgeoning middle classes in China, Brazil, Indonesia and India”.
What does that mean for the crew at Bald Guy Brew Coffee Roasting Company? First off, it means that the coffee we have on reserve will give us a couple of months to see whether or not the C market will even out. Second, don’t be surprised to see Folgers and friends raising their prices for a fourth time this year.
Finally, the deal breaker will be the Brazilian Harvest. Since Brazil is the largest producer of coffee in the world, a poor harvest will rock the C market as the demand for coffee from the Americas will drive the price through the roof to make up for the shortage.
Coffee Predictions: A look at Kenyan Coffee
March 20, 2011 by baldguy · Leave a Comment
Here we go again… guestimating on the nature of the specialty coffee market.
So far, prices have not gone down, but rather increased, and for no apparent reason other than day traders speculating on the “C” market. Now that I said that, there are some factors that are definitely driving the price of green coffee to new levels, especially in Kenya.
The first factor is a common issue: weather. Last season, Kenya saw decreased coffee production due to an extended rainfall when it wasn’t needed and not enough rain when it was needed, severely hurting the coffee plant while flowering. This resulted in higher than usual prices for mid-grade Kenyan coffee, with the AA coffees breaking new records due to the shortage.
The second factor is a little more complex. It appears that coffee is the new “cash crop”. More and more coffee is being stolen, either right before harvest, shortly after the processing, or while it is on its way to the pier. This results in farmers and processors defaulting on loans made by the government. This is by no means an isolated event, with reports of organized crime coming from the Americas, Asia, and this report from Kenya.
The third factor, development, is another serious threat. According to the Kenyan Broadcasting Corporation, “The development of the real estate sector in Kenya is threatening the existence of the coffee industry. Statistics reveal that the country has lost over 8% of acreage under coffee in the last 10 years to real estate developers.”
John Logan, Kenya Coffee Initiative Director at Technoserve, a non-profit body that helps people in the developing world build businesses, warned that much more was needed to rejuvenate the industry than just high prices. According to Logan, “A coffee buyer will tell you that the best fertiliser for coffee is price, it’s true but it’s not only that… It’s how much the farmer really gets that counts.”
Let’s hope that the prices, which are at a forty year high, make it to the farmer.
2011 Coffee Predictions
January 10, 2011 by baldguy · 2 Comments
Back in 1934 or 1935, American statisticians came up with a new word: guesstimate. It is the process of arriving at a conclusion based on an educated guess. Well, that sums up my approach to making sense of the specialty coffee market.
After talking with a green coffee broker, we both decided that my guess was as good a his with one truth standing: “the only thing predictable about the coffee market is its unpredictability!” So, with that in mind, here we go…
Prediction One: Green Coffee Prices will Increase…kinda.
Last year, the coffee market was at a 13 year high. So far for 2011, the market has not dropped back down to early 2010 levels. There are three factors that are contributing to the increase:
1. reports of coffee shortages.
2. reports of increased consumption within producing countries.
3. the presence of day traders driving the prices as traditional securities stagger.
As a roaster of green coffee, I am amazed that nowhere in the equation is there reference to coffee farmers receiving an increase for their labor and product. The sharp increase in the price of green coffee is more a result of share holders needing to make a reasonable profit.
As my plumber friend once told me, “it is what it is”…the big boys like Nescafe, Sara Lee, and Kraft Foods (I’m sure there are more) control the “futures” market and the ROI (return on invested capital) is the bottom line.
So what does that mean for the rest of us?
I think…or better yet, guesstimate, that prices will decrease when global securities stabilize. Now when that happens, your guess is as good as mine!
Fortunately, Bald Guy Brew has been able to hold off from raising our prices. This is primarily due to the fact that we operate on the skinny! The other factor is that living in Western North Carolina isn’t exactly the hub of the specialty coffee universe, and higher prices would be the death of us.
I imagine that one day we will have to raise our prices. In a perfect world, the price increase would reflect the fact that we are sourcing our own coffee and that farmers are getting paid a better than coffee market price!
Please pass the salt!
January 17, 2009 by baldguy · Leave a Comment
i just ran across an interesting trend developing in Taiwan: Sea salt and coffee! Wu Cheng-hsueh, owner of a growing chain of coffee and tea shops called 85°C (the perfect temp. for brewing coffee) has found that by adding sea salt to a milk beverage (think latte), it prepares the palete for the drink by stimulating the senses.
i think last month, someone told me that they were adding salt to their coffee. personally, i only like salt on my micheladas ( a mexican drink). anyway, here is the link that describes a growing trend both in Taiwan and China! who knows, i might include sea salt as an option at the Bald Guy Brew…one pinch or two?