The Price of a Cup: History, Quality, and Our Difficult Times

I think that anyone who comes by Volta knows that we are pretty serious about how we approach our coffees, teas, and chocolates. Ok, sometimes we're borderline obsessive. First and foremost, we started Volta because we think that Gainesville deserves to have just as good a drink as anywhere in the world. If you can boil water and buy quality ingredients, you can make make great tea and coffee. It's not rocket science. As a business, it requires that we go out on a bit of a limb: we have gone against the grain to create a menu that shows each ingredient at its best. Sometimes we disappoint the occasional customer who wants a jumbo-sized drink, or a specific drink made exactly like it is by a multinational chain-- but the overwhelming majority of the people who come in to Volta understand and appreciate that we're serving something very special.

Personally, I consider the quality of what's in the cup to be a signifier of a chain of respect that stretches back to the farmers who grow the trees and the generations of working people who have suffered and strived to make their living by growing commodities that are entangled in a very troubling mesh of social and political forces. (I highly recommend Wolfgang Schivelbusch's Tastes of Paradise, Mark Pendergrast's Uncommon Grounds, or Coe and Coe's The True History of Chocolate if you are interested in how these luxury commodities are borne by hundreds of years of political and social injustice.) The coffees, chocolates, and teas are getting better every season, but it comes at a cost. Our wholesale cost of a pound of coffee is higher than the retail pound of coffee costs at Walmart or Target. When you see that our coffee prices are differentiated, it is because the different coffees have a considerable range of costs to us. It costs more to us because we partnered with a roaster that is extremely pro-active in working directly with the farmers to produce better coffees. Intelligentsia is fanatical in their desire to bring higher quality coffee to market, but they do so by working directly with the farmers and co-ops to produce better coffee cherries and to improve processing methods. They work with the farmers and producers to research better mill procedures, they invest in new technologies to ensure that the coffee arrives at the roasting works in better shape, and they put incredible focus on roasting each new harvest to bring out its potential based on the seasonal qualities of each crop. I strongly believe that the cost of our coffee is worth it because it is the cost of improving the lives of everyone down the supply chain to the farmer-- and because it is the best damned cup of coffee that you'll be able to buy in town.

As a retail coffee establishment, Intelligentsia's cafes in Chicago developed in a different time from Volta. Until recently, if you went to an Intelli cafe, you saw many of the same approaches that had been used over the last ten years to compete with the mermaid, including 20 ounce drinks and a lower quality blended coffee brewed by the gallon and sold for a reduced price. I feel a bit of pride to see that Intelligentsia is now switching their Chicago shops over to an approach that any Volta customer would recognize: selections of their best seasonal coffees brewed by the cup on the Clover or Chemex, served in sizes that are appropriate for the intensity of the experience. The change for Intelligentsia hasn't been without criticism; especially at a time when people are feeling financially at risk, the idea that a coffee-- no matter how spectacular-- might cost more than any other commodity coffee seems to bring out very emotional responses from some people.

Intelligentsia has caught a fair amount of heat in response to their changes in the Chicago press; a story in the Tribune about eliminating jumbo drink sizes brought out hundreds of very angry responses (although I'd wager that few if any of the respondents were actual customers). The move this week to brew-by-the-cup has ignited more debate, with the added twist of questioning the value of a $2.50 or $3 cup of coffee at a time when the media drumbeat about depression economics would have you believe that we should only be drinking watered-down Maxwell House. Intelligentsia's buyer, Geoff Watts, responded in depth to one such story recently. I'm indulging in reprinting the entire response here because I think anyone who frequents Volta will be interested in what he has to say about how Intelligentsia thinks about coffee in both an historical and a commercial context:

Coffee is probably one of the most poorly understood food products in the world, especially considering how ubiquitous it is in our lives. I don’t think the Specialty Coffee industry as a whole has done a very good job of changing that, unfortunately. Part of the reason, in my opinion, is that in the last ten years there has been such relentless proliferation of certifications, seals, buzz-words, fancy brewing gear, new flavor additives, over-wrought milk-based coffee drinks and that sort of thing that the average consumer is overwhelmed and perhaps even a bit cynical about what they come to see as a lot of fancified hubbub masquerading as a culinary and cultural coffee revolution. Considering all of the misinformed proselytizing and disingenuous storytelling the industry at large has turned to as a means of marketing itself and it is no wonder that the actual coffee (the basic raw material that transforms into coffee beverages) has gotten pushed into the background.

But it needn’t be that way. I thought about the comment Doug made in that Time Out article and realized that it may have been taken the wrong way out of context. I share his belief that coffee has historically been way under-priced. Ever since the Dutch started to commercialize coffee in their East Indies island colonies and the Portuguese went crazy planting coffee all over Brazil, it has been treated, with extremely rare exception, as a commodity—easily replaceable (“if Guatemalan coffee gets too expensive we’ll just buy from Peru instead”), minimally differentiated, and valued as a function of worldwide supply and demand rather than as relation to true production costs or intrinsic quality.

There have been a few times over the last couple of centuries when becoming a coffee farmer seemed like a good idea. In the 1700’s, when coffee first came to the Americas, lots of coffee was produced at low cost for the European markets and farmers expanded their land holdings as fast as they could cut down trees. In the 1800’s you saw plantations turning into small fiefdoms, and coffee farms became coffee empires. By the early 20th century the US had already become one of the world’s most important consuming countries, and farms kept proliferating. Coffee was the go-to-crop for many aspiring landholders/entrepreneurs who enjoyed some success in the 50’s and 60’s. There was huge price spike in 1953 that stimulated a lot of further planting (coffee was THE thing to do, man) and within 5 or 6 years a pattern of over-production was initiated that drove prices into the gutter and has kept them there, more or less, ever since. By this time many Central and South American and East African countries had come to depend on coffee as a critical source of export income. The economic fallout from the price drops was intense and led to the founding of an international regulatory body (the International Coffee Organization) which went on to institute a series of agreements (and a quota system) aimed at stabilizing prices in the world-wide market and preventing huge spikes/drops. It worked OK for a while. Countries had newly-imposed limits on what they could export annually, and ‘extra’ coffee got put into reserve stocks for the future. Supply was regulated so that markets could be more predictable.

By the 70’s and 80’s coffee had evolved into the default cash crop for many smallholder peasant farmers who planted coffee for lack of other clear alternative or inherited small plots as a result of various land-reform policies that broke apart big farms. There were fewer “big estates” and millions more small-scale farmers. Sometime in the 80’s the United States pulled out of the ICO, the quota system was dismantled, and things started to derail for coffee farmers. Between 1990 and 2000 Vietnam went from being an insignificant producer to the second largest in the world (behind only Brazil) and the world found itself flooded with very low-cost (and low quality) Robusta coffee. This led to a total collapse in the coffee market, wherein the prices hit rock bottom and stayed there. This time, from about 1999-2003, is often called the “coffee crisis”. It would be understating matters to say that this depression ravaged the industry…it was a fatal blow for many coffee growers, and hundreds of thousands of people around the world who depended solely on coffee for cash income lost their livelihoods.

It still hasn’t recovered, and probably won’t for some time. Production costs are higher than ever before in history in most places due mostly to increased costs of fertilizer, which have almost tripled in the last few years, along with big-time increases in labor costs, energy costs, and transport costs. Your average coffee farmer today is making less money per pound of sold coffee than his grandparents did, in real (unadjusted) dollars, despite drastically higher living costs and production costs.

It is a problem—most coffee farmers I know are of an advanced age and continue to grow coffee because they have no other options. Their children want nothing to do with growing coffee—it has the appearance of the ultimate dead-end job. It is a question I ask myself often—why would one even consider growing coffee as a reasonable career option? Coffee growing, at least of the smallholder and family estate variety, is becoming increasingly unsustainable. Even producing low-quality coffee with the fewest inputs, the lowest costs, skeleton crew labor and little attention paid to detail, maximum attention to volume and minimal regard for environmental impacts…even this kind of production is failing to add up to any profit for coffee farmers. We’ve watched a race to the bottom taking place over the last two decades as the majority of farmers in the world scaled back on farm husbandry, cut harvest costs by sacrificing selectivity, and hustled just to get by.

Meanwhile, the mainstream first-world consumer has held stubbornly to the idea that coffee is a cheap luxury, that the $1.00 bottomless mug is somehow a right or a deserved privilege. It is this very attitude that will continue to ensure that the modern smallholder coffee farmer has little hope of escaping a life of extreme poverty. Cheap coffee (and by “cheap” I mean low cost, which typically equates to low quality) is one of the many forces shackling the developing world and suppressing opportunity for advancement for a huge chunk of the planet’s population who depend on coffee to make a living.

I would argue that even downright crappy coffee ought to carry a higher price tag than it currently does, especially considering the higher production costs that most farmers face today. Current prices are not sustainable for farmers in the long term under even the most optimistic of economic outlooks. Something has got to give.

But high quality coffee (and by this I mean coffee with definite, perceptible sweetness in the cup, a profundity of positive flavor and aroma attributes, and free of taint or off-taste, which is clean coffee, sweet coffee, intrinsically pleasurable coffee, with no additives required) costs a lot more to produce than low quality coffee. Most of this cost accumulates in additional labor—much more highly selective picking, meticulous washing and drying, separation of individual lots rather than bulking, and so forth. Some of it comes in the form of more inputs and more intense plant husbandry—more attention to soil health and nutrition, cultivation of shade trees, good pruning and weeding, and that kind of thing. And some comes as a result of infrastructure improvement—cement or ceramic-tiled tanks for fermentation, raised screens for drying, better de-pulping equipment—there is a long list of things that can be done to dramatically improve the chances of producing a great tasting coffee. Typically it also means paying higher wages to farm workers, investing in training programs, giving attention to water quality issues. All of these things are necessary simply to produce a better tasting coffee in the field.

Once social and environmental issues are considered, the costs begin to accumulate further. If the farmer is serious about treating the water they use for fermentation and de-pulping before putting it back into the ecosystem, there is a cost involved. If an estate farmer is committed to giving increased opportunity and services to the many workers on the farms, they ought perhaps to invest in day-care services for pickers with children, a small health clinic for the community, a water pump for local use, or other basic services that are most often lacking in coffee producing areas.

Protecting coffee quality post-harvest is another matter. Green coffee is very perishable, and in the wrong circumstances can lose most of its quality in a matter or weeks or months. Investing in better packaging material (instead of the traditional jute bags) and organized warehouses with climate/humidity controls can make a huge difference in quality, but comes at a significant price.

Perhaps I’ve rambled a bit much, and I didn’t really intend to when I started writing, but you know that happens sometimes. The point I’m really trying to make is that the reason we’ve raised prices is that we must. We are after the best coffee we can possibly develop, that is the purpose that drives us. To achieve that means paying higher prices to growers and giving them the resources (and the reason!) to produce better tasting coffees. While we certainly feel the impact of the depressed economy here in the States, that impact is not limited to us. The farmers that Intelligentsia works with around the world are feeling the same kinds of pressure—it’s a global phenomenon. And while of course it makes sense to be thrifty in difficult economic times, we still need to realize that the decisions we make will have an impact further down the line. For a consumer the choice to purchase cheaper coffee has ramifications that extend far beyond the personal sacrifice of taste in favor of lower cost. It impacts the way coffee is produced, the way it will be produced in the future, and the ability of those who produce it to earn a living wage from their efforts.

And when you really think about it, even the best coffees are really not that expensive as compared to any other “luxury” product I can think of. You can access the very best, highest quality coffees in the world for between $13 and $30 per pound. Considering that a pound of whole-bean coffee will yield anywhere from 25-40 cups (depending on how it is brewed) the per-cup cost is still measured in cents, not dollars. Or you can go to a top end coffeehouse, where you will likely pay $3-$4.00 for a cup made to order by a professional barista. Now you are paying for the convenience, the vessel, the ability to chill out in a nice space in a nice neighborhood, you know what I mean? That’s a choice as well. The very cost-conscious consumer might consider brewing more coffee at home as an alternative to changing venues and buying a mediocre-to-poor coffee from another coffeehouse. Perhaps it is a little less convenient, but the return is far higher—a truly tasty coffee that is, in a very real and measurable way, supporting artisan farmers and helping to secure them a future in coffee production.
I do agree that there are limits—your wine analogy was right on target. The $100 bottle of wine ($20 per glass?) is for a particular niche, probably not suitable for the mainstream drinker. In most cases not that suitable for even the connoisseur, since a committed wine freak will likely go through several bottles a week, and spending thousands of dollars per month on wine doesn’t seem like a great idea. With coffee I don’t think we’ve ever gotten anywhere close to that place though. Even the glorious and now-famous La Esmeralda Geisha (which sold at auction for $130.00/lb in 2007 and officially became the most expensive specialty coffee in the world) was still available to be had for less than a couple dollars per cup if one were to buy a half-pound at a time and brew at home. Most of today’s most celebrated and delicious Specialty Coffees still come in at a price that is remarkably affordable.

My three cents.

Geoff Watts
Intelligentsia Coffee Buyer

Geoff's comments were in response to the original article on the Hungry Magazine website.