At the Upper End of the Specialty Coffee Market, Names Matter
This premium appears to be stable. From December 2014 to December 2015, the 178 SCRPI highest-priced coffees that identified growers sold for an average of $7.55 more per roasted pound (a 33.5% premium):
Things continue to be different among the SCRPI lowest-priced coffees. Over these same five quarters, only 27, or 9.3%, of the lowest-priced coffees identified coffee growers in their on-line marketing materials. These coffees sold for a tiny $0.53, or 3.3% premium.
As the specialty coffee market segments into a stable lower end and a dynamic higher end, it is critical to recognize the role played by growers in driving price premiums. At the more lucrative higher end, several credentials (in addition to bean quality) seem to be associated with higher prices:
- Awards won by the farm, both currently and in the past;
- The elevation of the property where beans were grown;
- The specific location of the farm, which drives micro-climate conditions;
- The processes employed to convert cherries into dried coffee beans; and
- The amount of growing experience that the grower brings to the table.
If specialty coffee growers are supplying both excellent coffee beans and the credentials that support product differentiation, then the individuals and organizations that support coffee growers should develop programming that allows specialty coffee growers to better understand and therefore capitalize on these market dynamics. In addition to the excellent programs that focus on coffee quality and farm efficiency (e.g., Technoserve), and those that provide access to capital (e.g., Root Capital), we need a few programs that focus on issues related to branding and marketing, as well as managing intellectual property, in differentiated specialty markets.