Today is less of a tip and more of an update on what many of you have surly noticed or heard. Over the past year, the price of coffee has gone up. Not just a little - but over 70% in one year! Unprecidented for this commodity, over the past year two of the largest coffee growing regions - Brazil and Vietnam - experienced droughts due to climate change which reduced supply and, as we all remember from basic economics class, if demand doesn't slow down, prices will inevitably go up. And up they have.
For example, about a year ago we would purchase every week a pallet of green or "raw" coffee to roast. A pallet holds a mix of 10 burlap bags, each holding 120-160 pounds. We were paying about $4,200 on average for the pallet. We have a pallet of the same mix of coffees coming today that cost us over $7,200!
CONTRACTING
We are able to contract for coffee with our importer for the coffees we like to roast and sell. That means, we commit to a specific number of bags over a specific number of months. They hold the price for us at our agreed to rate no matter if the coffee market goes up or down. And they hold the bags until we need them. It's usually a pretty good deal. However, as prices started rising at unheard of rates over the past year, we like most roasters, did not lock in prices hoping that they would eventually come down. And down they have not.
We believe we are settling into a new normal of coffee prices - both for us as a roaster and for you, the consumer. You're probably seeing the same increase in chocolate prices soon too as cocao shares the same growing climate and regions.
TARIFFS
We were wrapping our heads around this unprecedented rise in green coffee commodity prices, we are now going to be hit with at least a 10% tariff. I will make this as apolitical as possible. It is a significant cost for any business, but particularly a low margin business like a coffee roaster and cafe, and will eventually find it's way to the price of a bag of beans or cup of coffee. We hope, as all coffee roasters do in the United States, that coffee becomes exempt from tariffs soon, as we can not grow coffee in the United States to meet the demand (Hawaii and Puerto Rico grow a fraction of a percent of the demand for coffee at 7-10 times the price).
So that's what's going on. What do we suggest? Well obviously, keep buying coffee from House Cup - you're supporting not only a locally owned family business, but also one that emphasizes a community-first model. We hire our neighbors in our community, we source goods and services locally, we support our immediate community's schools, food banks and fire companies. If that's important to you - and I suspect it is - we thank you.
We'll keep doing everything we can to keep our prices down while not giving up on quality coffee, a friendly environment and support for our neighbors.
Next week we'll talk about acid in your cup of coffee. How to avoid it and, if you can tolerate it, why you would seek it out. Until then, we hope you're having great moments with locally roasted, fresh coffee. Cheers!