Unlike in 2010 where we did buy a lot of expensive Cup of Excellence coffee and some other auction coffees that lifted the average price a lot,  in 2011 we only sourced coffees direct from the farmers. The reason for this is to be able to buy fresher coffees and we also had better opportunity to do so as we have developed good relations to the producers we buy from. Instead of buying from many countries, we decided to focus on a few ones and rather get better coffees from these origins. We believe this has given us better value for our money. The average price for our coffees F.O.B (Free on board) in 2010 was USD 5,06 per lb. In 2011 the average price we payed per lb was 5,45, ranging from USD 4 to USD 7,55.

In 2012 we aim to get even better quality from the same producers as well as we will get to know some new origins that we have started working with through our sister company Nordic Approach. Ethiopia is one of the origins we will be getting coffees from this year and that is very exciting for all of us.

Before we list the prices we payed for coffee in 2011 please take a note that these are prices FOB, which means for unroasted coffee delivered to the boat that ships it to Norway. We still need to cover shipping cost that varies from where it is shipped from, storage, handling, roasting, packing, labour, rent, gas, electricity, etc, etc. I did a blog post  last year that explains why quality coffee costs more and if you are interested I recommend reading it to get a better understanding of how these mechanisms work.

So, for those who are curious here are the prices we payed for coffee last year:

TW coffee prices payed in 2011

Transparency

A lot of high quality driven roasters, including ourselves, preach that transparency is the most important part of our trade, but rarely do we actually get to see the numbers in the coffee industry. Sustainable Harvest is one of the few companies that are trying to do something about this through their Relationship Information Tracking System.

Cup of Excellence is also a great example of where consumers can get full traceability of the coffee trade.

I have been trying to establish a traceability system of our own and also to develop a contract that shows what the farmer gets when we pay USD 3 pr. lb (453g) FOB for coffee. We do have the contracts in Kenya as this is cooperative coffees created by hundreds of farmers. For all the other coffees we have bought this year we feel we don’t need it as we are communicating directly with the farmers anyway. We are still far away from being 100% transparent but hopefully in the future we will be able to get a system for it that enables our customers to get all the info they need.

As a temporary solution I have started to systemize all the information about our coffee purchases from the end of last year, and to my surprise we are actually paying a higher average price for our coffee than I thought we were.

Coffee prices

For the past months we have read that the C market price for coffee is at it’s highest in over 10 years at about USD 1,6 pr. lb. (453 g) of green coffee.

Although this is not a very high price for coffee it is still very positive that it is going up, as the price has been way too low for the last 10 years, forcing a lot of producers to start growing other cash crops in order to survive.

As you all probably know, we do not trade coffee based on the C market price and we do not sign future contracts based upon today’s prices like most of the bigger roasteries do. We buy the coffee direct from exporters or farmers and negotiate the price based on taste and quality. We negotiate with the farmer and the exporter. Not with a broker. We also have gentlemen’s agreements with farmers that if they continue their work with quality, we will be there to support them by buying their coffees.

As promised, I will try to do an effort for transparency, so here are the prices in USD pr. lb that we have payed for our coffees FOB  (free on board) in 2010:

Panama, Hacienda la Esmeralda:______ 26,50 $ + packing

Honduras, Cielito Lindo 2010 COE:_____  8,10 + packing

El Salvador, Las Palmas 2010 COE:_____ 5,31 + packing

Honduras, Naciemento:______________  3,50

Honduras, Finca El Pantanal:___________3,00

Guatemala, Santa Ana:_______________ 3,50

Kenya, Mugaga:_____________________ 4,77

Kenya, Tekangu:____________________  5,23

Of course these lots are not the same size. The Esmeralda was only about 120kg for instance. So the average price per lb. so far this year is actually USD 5,06.

Adding to the cost

As you may know, this is just for the green coffee. We also need to  pay for the shipping and handling of the coffee before it gets to our roastery. Shipping cost can vary greatly depending on the origin of the coffee. The price of the coffee gets about 25 to 30 % higher for the coffee when we include these costs. On average this means the price for the coffee when it has arrived to Norway is about USD 6,58 pr.lb.

We also need to cover our travel expenses that we spend when we travel around the world to find these coffees and visit the producers.

So far this year I have been to Kenya and Honduras, and I am going to Brazil next week, to Colombia in October and visiting Kenya again in November. That adds up to 60 days of traveling and a cost around NOK 120.000,- or about USD 20.200,- only for 2010.

My accountant may think I am crazy spending so much on traveling, but I think it is totally necessary and a good investment for the future. We are building relationships with serious farmers and we are trying to secure a good supply of great coffees in the future. We want to develop long term relationships with the farmers, not have one night stands with them.

After the coffee has arrived to Norway we still need to roast it, so you have to add the  cost of production, rent needs to be payed as well as salaries, delivery truck, electricity, maintenance, etc, etc. Of course the cost of living is higher in Norway than in Colombia and therefore we need to add a bigger margin to the coffee than a farmer in a producing country needs in order to make a living. For example, a beer in Colombia is about 1 USD. In Norway a beer in a bar is about 10 USD.

Is coffee expensive?

Some people think our coffees are expensive, and I understand that they believe so, especially if they compare us to a coffee sold in a supermarket. But if you taste the difference and understand how much work and effort is behind these coffees, I still believe that our coffees are cheap. It all boils down to about NOK 5,- or about USD 0,9 pr. cup. Compare that to what you pay for a bottle of water here in Norway (USD 5) where we have plenty of super clean water free from the tap, I think there is no need to discuss whether coffee is expensive or not.

Why is some coffees worth more than others?

Because quality of the coffee varies. Not only from farm to farm but within the same farm we can sometimes find a huge range of different qualities and varietals.

Take Cielito Lindo and Naciemento for instance. These 2 farms are neighbouring farms run by father and son. They grow coffee from 1500 to 1800 masl. in 2 very different types of soil. They grow 5 different Arabica varietals (Pacas, Catuai, Catimor, Geisha and Bourbon) These trees produce (like all other fruit trees) both very mature coffee cherries and also unripe and cherries that fall to the ground and get mouldy and rotten. Of course this will produce coffee of different quality.

Next year we will be there during their harvest in order to help them separate the different varietals. We are going to taste the coffees blind and  score them according to the COE cupping form. We will pay more for the better tasting lots and less for the lots that get lower scores. Would we do this if there wasn’t a difference? I think not. So, why do we do this? Because we want to encourage the farmers (above: Jobneel and Extreberto) to grow more of the qualities we like so that we can get more of this coffee in future years.

Simple and easy.

Why pay more for coffee?

Well, I see it as an investment. The farmers are able to invest in necessary equipment in order to raise the quality and they are able to save a little money and make a decent living. If we treat them well today, they will treat us well tomorrow.

I  believe that we cannot continue to exploit the coffee producers. Sooner or later they will stop producing coffee and that is a scenario I would not like to see. So, if you love coffee and would like to continue to be able to appreciate its wonderful flavours and diversity, then choose quality coffee before cheap quantity coffee.

I also think all roasters need to practice transparency in a greater way. It is time we practice what we preach so that more people understand what we are all about.

Hopefully this post was of some help to clarify what we are doing and trying to do in the coffee world. I could go on and on writing about this, but instead I encourage you to leave comments in our comments section and I will make sure I reply as soon as I can.

Extreberto from Cielito Lindo at the Cup of Excellence 2010

We are very pleased and proud to announce the purchase of Cielito Lindo CoE #18 in the Honduras Cup of Excellence for the 3rd year running. The purchase price was $8.10 per pound.

Tim was part of the international jury this year, so had a very close relationship with the top coffees – and especially with the wonderful Cielito Lindo which has become a favourite at Tim Wendelboe between both staff and our customers. It is very exciting to know we will be offering this coffee again soon!

More information on the Cup of Excellence and what it means to us and the farmers can be found here.

More info on Cielito Lindo can be found here.

Hope you like it.

2010 Honduras COE and visit to Cielito, Santa Barbara from Tim Wendelboe on Vimeo.

If you think there is a little too much driving in this video, think about how I felt after sitting in a car for 4-6 hours every day for 7 days.

I am glad we got our hands on some coffee from the same farm on their last weeks auction for “only” USD 26.50.

The normal market price for specialty coffee today is between USD 1,50 to 2,50 per lb.

Congratulations to the Petersons at Hacienda La Esmeralda once again for setting the record. They also had the previous record at a ground breaking USD 130 pr. lb.

I am delighted, and equally exhausted after 8 hours of bidding, to report that we won a lot of the Mario San José from Hacienda La Esmeralda from Panama. The Mario San José is of the Geisha varietal and was harvested in March 2010.

It has floral notes, it is elegant, crisp, fresh, sweet, has stone fruit, is balanced, great dried fruit attributes, nice body, juicy, balanced and energetic.

More info on the auction can be found here. More information on Hacienda La Esmeralda can be found here. And more information on Mario San José can be found here.

For more info about the coffee go here.

The Christmas espresso blend consists of:

50% Badnekhan Estate, washed coffee from India
50% Suaza, washed coffee from Huila Colombia

Flavour profile: Rich, nutty, chocolaty, dried fruit, oak and spice.

The Panamacoffees are:

Lot no. 14: Panacoffee, espresso roast
Lot size: 220 kg
Producer: Finca la Milagrosa, Mr. Héctor Vargas
Harvest: January 2009
Origin: Alto Jaramillo, Boquete, Panama.
Growing conditions: 1600 m.a.s.
Botanical variety: 50% Caturra & 50% Typica
Processing: Washed.
Flavour profile: Fruity, light, sweet and refreshing.

Lot no. 7: Café Ole
Lot size: 150 kg
Producer: Café Olé S.A.
Harvest: January 2009.
Origin: Barriles, Volcan, Panama.
Growing conditions: 1380 m.a.s.
Botanical variety: Geisha.
Process: Washed.
Flavour profile: Floral, fruity, citric and sweet.

Some of you might remember Cielito Lindo from last year as a fruity and sweet coffee.

This year I believe it is even cleaner and more balanced than it was last year and it has even more sweetness and very delicate aromas of ripe stonefruits.

It is definately one of my all time favourite coffees from Central America.

I really hope you like it too.

TW

The coffee is grown on the farm San Antonio De Esquipulas y Anexos and is a mix of Bourbón, Catuaí and Caturra.

Here is a taste description:

Aroma: Hints of almonds and chocolate.
Acidity: Tropical and stone fruit-like acidity. Lively and refreshing.
Mouthfeel: A clean cup with a fat texture without being heavy. Intense sweetness and a really nice balance.
Flavour: Intense chocolate flavour. Hints of rasberries and peach. Sweet finish.

The coffee was bought for USD 7.45 per lb. (453g) of green unpacked coffee ex. transportation cost. This is about USD 6.19 above fair trade price. The farmer gets 80% of the money, the remaining 20% goes to managing the Cup of Excellence system.