The Hidden Costs of Coffee
Some folks are more than happy to plunk down $4 or $5 for their morning coffee or latte, while others marvel at how expensive coffee has become, especially over the past ten years. It certainly can seem like a mystery: the market price for green, unroasted coffee currently averages about $1.53 per pound—so why does the price increase tenfold (or more) when it arrives on shelves here?
Let's take a look at what dictates the costs of coffee, from seed to roaster to café to cup.
The price of unroasted green coffee depends on multiple complicated factors. For example, to start: Is the coffee Arabica or Robusta? Arabica is a higher-altitude-grown, lower-yielding species of the coffee plant that is considered the "gourmet" bean type. Robusta is just what the name implies: highly productive and robust even in the face of disease, drought, and infestation (largely because it's higher in caffeine, which is a natural pesticide), but not typically as delicious or delicate as its cousin Arabica.
As a general rule, 100% Arabica coffees cost more all around—to the farmer, the roaster, and the consumer—than Robustas. Furthermore, if the coffee is organically grown, or Fair Trade–certified, it might command additional premiums.
Then, there's the quality to consider: coffee buyers usually grade every coffee on a quality scale (say, 1 to 100), and choose selections that score well (an 80 at least), paying more per pound of green beans as the score creeps higher.
Roasters (like the one I work for, Counter Culture) negotiate the price of a coffee with whomever is brokering the deal: Sometimes that's literally a broker or an importer; other times it's the owner of a mill or a farm itself; many times it's leadership representatives from a co-op. The price we offer to a producer is based on the quality of the coffee itself, but also on the cost of production incurred by the farmer: After all, if farmers are unable to make a profit on what they grow, eventually they'll stop growing it. Many farmers already find it too risky to continue focusing their attention on a difficult-to-grow product that commands little money and has no nutritional benefit to their families whatsoever.
Not all coffee companies' buying policies and philosophies are the same, but they do drive a lot of the price of the green beans—which in turn drives the ultimate price a consumer pays.
Above and beyond the cost of the beans themselves, there are a host of other expenses to consider: Taxes and tariffs in the country of origin as well as the final destination; warehousing and packaging fees; shipping costs; and then freight expenses from the warehouse to the roasting facility as needed. (Only the largest roasters have space enough to keep their entire green stock on-site.)
After a lot of hand-shaking, tasting, negotiating, calculations, and paperwork, the green coffee arrives in the hands of the roasters who've bought it. Roasting green coffee comes with its own share of financial burdens that include maintaining year-round stock both off- and on-site; keeping up-to-the-minute tabs on quality and quantity; hiring, training, and retaining highly skilled professionals to command the roasting machines; devising blends and coffee profiles; and doing the actual labor of lifting, sorting, blending, and cupping coffee after coffee, all day long.
(Did I mention that coffee beans shrink during roasting, too? That loss must get factored into their price as well.)
Not only all of that, but no roasting company runs on caffeine alone: A team of people do the officey things that are required when running any business. Consider personnel needs for any company of modest size: Warm bodies are needed to answer phones and take orders; put the roasted coffee into bags and those bags into boxes; design those bags and boxes in the first place; print shipping labels or manage local deliveries; handle account payment and paperwork; write paychecks and answer benefits questions; and handle IT hiccups—among other things.
Oh, and then there's the rent of the building, the utilities, the maintenance on the machines, the office supplies, the packing and printed material, the taxes, the marketing, the trash removal...
This is all of course working off of the assumption that everything goes well with the coffee arriving at the roaster's digs in the first place. Shipping errors, processing failure, holdups in customs, unexpectedly diminished green-coffee quality upon arrival, and other snafus can cause vast amounts of financial loss that have to be accounted for somewhere, lest the company be forced to close its doors.
Green coffee might be acquired by a roaster for less than $2 per pound and turned around into a bag of beans that wholesales for $8 per pound or so. (Consider this a rough example, not a perfect universal illustration: Coffee can be bought and sold for much less, and also much more.)
A pound of coffee equals 448 grams. According to convention, most brewing methods take between 1.5 and 2 grams of coffee beans per ounce of liquid, which means your 10-ounce cup might require anywhere from 15 to 20 grams of coffee to prepare, adjusted to taste. One pound of the stuff, then, has the potential to yield about 30 10-ounce cups, when brewing with the absolute minimum coffee-to-water ratio. (Note: That probably wouldn't be the best-tasting coffee, though it sure would be more cost-effective for the shop owner.) More likely, factoring in waste and other considerations, a café might squeak 23 or 24 cups out of a pound of beans.
"Sure," you might be thinking, "but if they charge $2 for that 10-ounce cup, they're making almost $40 profit off an $8 bag of wholesale beans!"
In a vacuum that might be the case, but that money is by no means pure profit for a café. Besides the beans, there's the cost of the filter to use in the brewer (which itself costs money, plus electricity to boot); the water that passes through the grounds; the cup it gets poured into; the milk and sugar you add before your first sip; the lid you put on it to avoid spilling on your shirt; and the wad of napkins you snag before walking out, "just in case."
All this, of course, takes place in a building that costs money to rent, heat, light, and furnish (and clean), and is the result of actions performed by baristas who require payment for their services. Business owners often don't make much more per hour than their employees; most of whatever profit an independent café brings in goes back toward operations.
If you still think $3 is too steep a price for a cup of coffee, then you might simply be drinking the wrong coffee: Switching to something that you feel is truly worth what it costs might help you justify the expense (for better and more, or worse and less), but know that even cheaper coffee comes at a price. If all we collectively want to drink is cheap stuff from the bodega, eventually that's all that will be available to us anyway. (That is to say: Be careful what you wish for.)
How much are you normally willing to pay for a cup of coffee?
About the author: Erin Meister trains baristas and inspires coffee-driven people for Counter Culture Coffee. She's a confident barista, an audacious eater, and a smiling runner, but she remains a Nervous Cook.