30 Days of Blog - Day 24 - Coffee price versus flavor experience

Welcome to day 24 of 30. We are in the final week of posts, and I can't believe how much I have talked about so far. I'll try to make this last week the best (even though you seem to have liked the latte art post the most so far!).

Today let's talk about coffee price versus flavor experience. 

We have long been fighting the battle for consumers' kitchen cabinet space against large brands, who we consider to give sub-optimal coffee. This can be a difficult battle here in the US, as lower prices and/or brand recognition can be tough to compete with. In particular, grocery and big box retail stores have a huge presence in consumers lives. Coffee is still thought of as a food item and gets lumped in with groceries. The exception being those who frequent your cafe regularly and have the dedication to your quality products already in place.

It is becoming more common for some of these retailer consumers to buy regularly from the grocery aisle, but remember one specific local cafe when someone asks about "the best" coffee, or some other version of it. They may even buy from your cafe on a special occasion or as a gift, but they are not compelled to do so every week or two. Why is this? Is it laziness? Do they not care? 

They probably don't care in the same way you do, and when they care they are more likely to think about humanitarian focused efforts (such as Fair Trade or Rainforest Alliance certifications) more than your super elite sourcing trips. Sure, your raving fans love that you fly allllll the way to Mexico to buy beans, but we are talking about those who are less savvy about cafes and the coffee world. Let's face it, these are value buyers. Few people will say they prefer more bitter and harsh coffee over "smooth" or "sweet" coffee, but plenty will tell you in no uncertain terms that they can't afford a $4.00 cup of drip coffee every morning. 

The same thing goes for buying a bag of beans. 

Not as many people can justify buying an $18 bag of beans, but plenty will justify $8 or $10 (although far too many are still buying K-cups equating to $35+/lb, which blows my mind). We are talking demographics here. Expendable income demographic groups are the golden target of any smart business owner, and there will always be a bit of a bell curve when it comes to price vs value. $2/lb is highly questionable, and for many $25/lb is as well. Even though you may well have incurred expenses putting your green coffee price even higher than that, the market is set with expectations. Let's say that the current expectation price point is $10/lb for easy math. 

When we set out with the goal to increase the price people are willing to pay, we have to start by seeing where that price is first. Unless something extreme influences the demand, the price point needs to be increased gradually. This of course has its caveat as well, that being if you can provide an improved perceived value for a perceived reasonable increase. Let's say you improve upon flavor quality by 30%, and increase the price by the same 30%. You are still only charging $13/lb for your superior coffee, which isn't much. The specialty coffee market has an element of scarcity at the higher levels. This has been illustrated for years by professionals in the form of a pyramid. 

This pyramid originally came from www.coffeeresearch.org

So in order to provide a 30% increase in flavor quality, it may indeed cost you considerably more for green coffee than a 30% markup in price. I don't think this is a mystery to most of you, as the price of the average specialty cafe bag of beans has jumped considerably lately. Here is the meat and potatoes of my post today though:

Too many of you are not creating an improved experience!

I have seen a huge price increase primarily because of increased costs of sourcing and quality controls, but the coffee is just not that great. It might be because of roasting, or poor green coffee storage, or even poor preparation. In my opinion it is commonly a combination of green selection and poor roasting. 

When I say the experience is not being improved it doesn't mean the the experience is the same. In fact the experience itself is almost always very different from the norm of average level, darkly roasted coffee known by the mainstream here in the US. The problem most of the time is that the coffee is getting under roasted. Maybe too light, maybe just not enough "development", but the experience being created in specialty cafes is highly acidic.

I know, I know, acidity is the hallmark of high quality coffee.

Except that it isn't for most non coffee professionals. "Smoothness" or "lack of bittness" usually is. Acidity can range from juicy and dynamic to sour and mouth puckering, but the only way to make the coffee sing is through balanced sweetness. Remember that whole post I made about balance? This is where it leads. I hate to say it but many of you are not doing justice to those highly expensive beans by under developing the coffee. Others are doing the same by going a bit too far in roast time or temperature. A few are doing an excellent job of it, and you probably see some of their names behind championship winners and other comparative coffee competitions. 

In the end the experience is just as low or lower for the everyday coffee drinker. Sometimes they frequent a cafe because they want to fit into a trend, or maybe they are just trusting that they don't know something about coffee, thus believing that what they are tasting is actually good. But deep inside they know what they taste. While the trends keep some going, it will wear off eventually and where will that lead? 

So when we are seeking to raise the price point of coffee we need to be certain that we are also increasing the experience noticeably. Without this experience increase there is little reason to continue buying our beans for a higher price. It can be done, but it takes experience, knowledge, and hard work. There is no other real way for us to sell our single food product to the masses at a fair (increased) price than to make its value crystal clear. 

There is of course another dimension to this value, which is the on site experience. This can be less tangible, as it relies on your staff training and behavior, but in some cases equally or more important than the coffee itself. When you are giving both the top level store experience with the top level flavor experience your value goes through the roof, but don't forget we are talking about bags of coffee as well. When they take your coffee home will they have a great experience still? This is why the product quality is still vital.

What do you think about the current state of specialty coffee in the US? I would love to hear your thoughts on social media or email!

Thanks for joining me today. See you tomorrow.

Pete

 

 

Posted on September 29, 2017 and filed under Blog.