January 2022 - Ethiopia Bensa, why some coffees are disappearing.

Date Posted:6 January 2022 

 

“Better three hours too soon, than one minute too late." - William Shakespeare

January 2022

Welcome to our subscriber newsletter.

This month we have made some changes as we say goodbye to a handful of our everyday coffee in the store, victims of the “difficult” ongoing sourcing problems that you guessed it are caused by this annoying pandemic and supply chains breaking.

Holding a large array of coffee choices at this moment makes no sense, so we have trimmed back half a dozen coffees with potentially a few more facing the chop in the coming months if we can't replace depleted holdings, so it's going to depend upon the conditions around supply and we are hopeful things can't get much worse than they are now.

Also impacted this month is our hugely popular Secret Label with so many coffee beans stranded either at origin or in boats somewhere floating up and down on the ocean. But don’t worry as we have something extra nice locked and loaded in it's place as we look forward to Secret Label returning next month.

It seems that every day becomes more frustrating dealing with the ludicrous responses of none, nothing, delayed, waiting, don’t know, can’t explain, never happened before, etc. Of course you only discover this at the last moment when asking why something hasn’t arrived yet.

It not just coffees being “stonewalled”, even our basic Australian-made packaging has become a frustrating commodity – imagine waiting 50 days for sheets of cardboard to be cut into simple cartons, mind you it’s done in a warehouse that’s only 11km away and the stock is not imported.

Apparently, for some suppliers there's a convenience in blaming delays on the pandemic and yet it was only 12 months ago we were waiting barely 5 days for the same cartons from the same supplier under much tougher restrictions. Makes you wonder.

For sure, there are many genuine difficulties in sourcing and worsening labor shortages so we are not claiming every delay is bogus but this pandemic seems to be generating an awfully expensive tax that’s making most things dearer into the future.

In place of our eponymous Secret Label is a special lot we had stashed away like Darryl Kerrigan’s “this is going straight to the pool room“. It's like the equivalent of a bottle of Grange in your cellar.

An amazing coffee of immense pedigree – from the birthplace of coffee in Ethiopia comes a rare and exotic heirloom varietal in the Bensa district, a naturally processed micro lot developing intense fruit sweetness.

With a super-clean, fruity and well balanced cup profile, we are loving the soft and complex acidity, full syrupy body and rich textures from the holy grail in coffee flavors - “candied blueberries”.

As a black, it’s off the scale in deliciousness and for milk drinkers it pairs the sweet fruits with chocolate and caramel.

Our blog this month looks at why many of the “high-end” coffees will essentially disappear from the market – but the good news is it should only be temporary.

 

Ethiopia Bensa

With so many coffees stranded at origin or taking longer in transit, the plans for January's Secret Label have still not arrived yet, so we can't package up our month's surprise offering.

Instead, we are featuring an amazing coffee that had been put aside for special occasions - an exotic heirloom varietal from Ethiopia Bensa.

This coffee is a naturally processed lot, dried in the sun to enhance sweetness and fruitiness.

We have been loving the candied blueberries, syrupy body and delicious chocolate and caramel finish.

For a limited time only.

All Sold Our Sorry

 

Why are high-end coffees disappearing - it's only temporary.

By now everyone has heard of the problems plaguing the global coffee industry - not unlike many other industries around the world where demand outstrips supply, or we should say demand outstripping the forecast of supply because in some instances these are rubbery numbers being bent in some extreme directions to suit the narrative.

Surprisingly, the story about coffee has a few more elements to it beyond the most obvious explanation of the pandemic, in fact the pandemic is just a part of the existing problems in the coffee supply chain.

True, sea freight and container shortage debacles ongoing for the last 12 months (and likely to continue for another year) remains a significant factor, so too is the shortage of labour to pick and process the cherries from the trees, often a transient workforce just like seasonal fruit and veggie pickers and in places like Central America, these workforces had historically moved across borders.

However, the story of coffee goes a bit deeper with coffee farmers doing it really tough for many years before the pandemic struck. Throw in a few severe weather events, a 9 week shutdown in the #2 arabica producer and escalating prices from futures traders worried about shortfalls and we have a situation today where the cost of coffee is around $5 more per kilo than the same time last year.

Ironically, the price increases have little to do with increasing levels of coffee consumption which typically tracks in the sub 3-5% growth rates per annum. So it's not so much a demand side influence but purely driven by perceptions of reduced supply and the forecast impact in up to 6 months time. Even the major frost events at Brazil back in late June are still accurately quantified until the current rainy season finishes, so we've had almost 6 months of escalated prices based upon largely hypothetical scenarios.

With ongoing shortages from Brazil and Colombia and the high prices being paid for even the lowest qualities, coffee farmers are abandoning their focus on high-end quality lots and chasing the easier volume of basic qualities.

You see, for a coffee farmer to produce the high grade speciality lots we and other quality-focused companies are interested in sourcing, the coffee farmer must spend a lot more time, energy and cost in "managing" the lots that command such higher prices. The care of the coffee trees, picking, processing and grading take around 2 to 3 times longer.

With the surging prices of coffee, the roasting businesses are likely to look at alternative qualities to maintain margins between retail or wholesale and the escalating raw coffee.

A relaxing of strict sourcing standards is about trying to survive in a rising market where the lag between the higher input cost and the adjustment of selling prices can be sometimes measured in months, unlike other food commodities or the price of energy and fuels that change almost immediately at the first sign of news.

As demand for high-end coffee lots diminishes, the import brokers will also jump to lower grade lots thinking these lower quality lots are far easier to sell in the elevated market.

So demand for the high-end lots effectively falls off the end of a cliff face and when you add farmers being disinterested in wasting time developing expensive lots, then you have the recipe for a dramatic fall in demand and supply. Farmers can today already obtain the same or higher prices for lower grades requiring a fraction of the effort and additional expense.

Unfortunately, when it comes to the quality end of the coffee market, there's still so much smoke and mirrors used in the marketing that this internal change or switch to lower qualities will be hidden by sellers.

As price seems to be the primary tool many sellers use to create a perception of quality, it's never a reliable indicator of quality because quite frankly many selling prices are determined or governed by what a seller may think they can "get away with".

A classic example of this is many coffee companies selling Brazil coffees for the same price as Kenyan when in reality the Kenyans are always at least twice as expensive to purchase in the raw state.

Today, the available range of high-end quality raw coffee lots sits a barely 15% of the normal pre-pandemic periods.

That means slim pickings and an ever present risk of paying too much for an over-hyped coffee that could in fact be "old" or "baggy" as it's been sitting unloved in an importers warehouse for way too long and losing it's "shine" (yes, raw coffee degrades over time but not at the same rapid rate as roasted coffee).

So the rock star coffees we love to offer, those diamonds that shine so brightly, are indeed becoming more difficult to source, as well as being ridiculously expensive. Expense will not discourage us, but availability certain does.

These conditions will prevail in the short term, although we don't own a crystal ball it's fair to say that whilst global coffee pricing remains at 10 year highs, farmers are less interested in wasting time developing high-end lots.

Coffee roasters may continue to sit on their hands by refusing to pay such expensive premiums and import brokers are less inclined to source high grade lots. A triple jeopardy.

When the global coffee market finds a comfortable balance where farmers generate a healthy return and coffee roasters can operate within their margin constraints, we can expect the emergence of more high-end specialty lots, but the demand is certainly not there today, despite all the misleading marketing by sellers on the retail side trying to hide the truth from consumers with their "nothing to see here folks, everything's OK".

It might be 6 to 8 or at most 18 months until the peak of the rising market has subdued and the herd moves to better qualities because nobody enjoys living on the equivalent of baked beans and sausages forever.