September 2022 - Our big pivot to save our blends. Coffee pricing remains high. Secret Label tames a Blueberry beast

Date Posted:7 September 2022 

“Moral courage is a higher and rarer virtue than physical courage". William Slim

 

 

September 2022

Welcome to our subscriber newsletter.

This month we take a look at the major pivot we took towards fruity coffees almost a year ago and how that’s been playing out.

But first, let's get the not-so-good news out of the way.

Coffee prices are not showing any sign of softening soon after touching 20 year highs during the last 12 months. Prices are expected to remain elevated until mid 2023. Bummer, not the info we wanted to share.

Last month the entire industry was caught by surprise with another round of unexpected 10+% hikes. Combined with a weakened USD exchange rate, landed costs are holding firm with no signs of retreat or reversion.

12 months ago extreme frost events in Brazil set in motion the spiraling rise in global coffee prices.

Ironically, this time around it's mother nature again with a fear of potential drought as mixed forecasts of limited rains and dryer soil moisture levels during the critical spring flowering stage in Brazil keeps everyone guessing, adding to the volatility.

By far the greatest disappointment in all this tension are that global coffee markets are driven by theoretical and speculative futures with prices set by traders in designer suits at New York exchanges, not farmers in denims and muddy boots.

That game of "shorts" continues (and becomes less believable by the day) using rubbery numbers from origin inventory forecasts. With no good news on crop harvest yields for such a long time, markets are left with nothing to help push down pricing.

Apparently, if a few hundred thousand tons of raw coffee is not "certified" (or officially counted) in origin inventory, it feeds the loop to push up prices.

Hard not to imagine there might be some players gaming the system – subtle hiding or short-counting raw stock help keeps pricing high.

Those caught in the middle - roasters, cafes and retailers are certainly being squeezed. No doubt the most difficult and challenging market we can remember in 15 years. What is perplexing are that few, if any, coffee brands have shut, unlike the construction industry that also has to deal with the big squeeze.

We are doing our best to soften the impact for our customers. Our prices are super-competitive and our bulk special on shipping has already saved customers more than $35,000 in the last couple of months.

The Stuff of Secrets

This month's Secret Label has been another truly excellent adventure.

Taming the wild beast that can be Blueberry presented us with the opportunity to pull back and refine acids to control the cocoa length and finish. Sometimes, less is more.

The result is delicious and surprising.
 

 

September 2022 Secret Label

This month’s Secret Label coffee ended up being a difficult design - again breaking many of the traditional approaches in blending coffees.

First up there are Blueberry notes.

But we have been careful to avoid crafting a blueberry trumpet that blows out your palate.

Instead, we have applied a reduction on the fruits and acids to tame and corral flavors.

A little bit of history of Blueberry in coffee.

Blueberry has previously been one of the most prized attributes in coffee. A throw back to early days when the very best Ethiopian Harrar’s delivered amazing blueberry notes and coffee roasters would beg, borrow or steal whatever they could to get their hands on those Blueberry lots - it gave their blends an enchanting boost.

For our Secret Label, those muted Blueberry notes are sitting in the background where they belong, rather than taking over the cup.

Then it came to the delicate part – a risk in pairing a bit of red cherry with blueberry. We say risk, because it could cause a "reaction" that is not pleasant, lucky it turned out OK.

This month we also deliberately pulled back on the body, richness and finish using a savvy little trick to restrain acids.

You may also find a hint of peach, nectarine, papaya and mushroom. Yep, that's right, it's no mistake......for the first time ever we have detected "mushroom" in the coffee. Not sure how that will go down, but in the spirit of transparency there it is.

The finish is where coffee is the most memorable and for these moments we chose cocoa.

It’s lovely and at the same time a nice departure from everything that came before it. Exactly what Secret label is about, being different.

Sorry, all sold out.

 

 

Why we made a big pivot to save our coffee blends.

In case you were wondering why almost all of our coffee blends, whether it’s a Secret or an everyday offering, have featured fruit elements so prominently over the last 10 months, then top marks for keen observation.

Fruit in coffee can be the equivalent of playing Russian roulette. You never, ever know how it's going to end.

Let me tell you straight up after 40+ years in coffee, chocolate is what sells. Chocolate is the slam-dunk for coffees.

So why then are we trying to swim against the tide by showcasing more fruits in coffee ?

Are we crazy !

Well, hopefully not and maybe this might make sense once you read below.

The past 12 month period of high raw coffee prices have not been kind on quality. In effect, it’s created a "shit-storm" of "shit-coffees" and finding gems has been incredibly difficult.

We have said that a few times now and it seems to keep on stretching boundaries for "how low can you go" on the quality scale.

You can't blame the Importers who ultimately select and choose what gets sold in Australia. All they are doing is trying to accommodate the huge gap between rational price and quality grades. Importers have to feed huge demand from coffee brands locked inside of “extreme margin squeezes”. It's where the majority of the market plays.

These coffee companies with big supply contracts to retailers or wholesales are dealing with awkward, painful and emotional moments when attempting to lift prices. Some can't, hence the squeeze.

So it stands to reason, some must do whatever is possible and it might mean using lower grade coffees to survive.

On the other side, when farmers are being paid huge premiums for anything that resembles coffees, even if it tastes terrible, normal care and devotion is quickly replaced by zombie raw coffees churning out like super-market sausages.

Not unlike Australia's over-heated property market in the 3rd quarter of 2021 when B and C-grade properties, including absolute dumps were being sold for high prices in record time frames.

Those lovely, sweet chocolate lots so abundantly available pre-2021 are now rare as Hen's teeth. It's a universal problem across the industry, not just for us.

Many coffees with some chocolate have a complimentary a side-dish of other attributes that are not so pleasant.

Just like prospecting for gold, instead of dragging through muddy rivers for that elusive hint of chocolate, we had to find a solution and strategy to combat junky tasting lots.

So we took a bold move to pivot in October 2021 to the less contested fruity coffee arena.

Risky - yes. Difficult – you bet. Worthwhile - we think so.

Most of our blends and all of our Secret labels have contained higher levels of fruity elements than at any point in the past. Put into context, we are talking about more than double and in some cases triple.

It has not been easy loading up on fruits as it changes the cup dramatically.

This was a strategy about safety and avoiding risk. It was never about trying to save money. In fact, we ended up spending a lot more to stay on the higher ground with cleaner flavours and complexity in the cup.

Call it an insurance policy on the drink-ability of our coffees. As we don't operate with safety nets of selling contracts, our business is only ever as good as the last batch of roasted coffee - we simply don't take risks of "dropping" quality.

September's Secret Label is yet another exciting example of this approach at play.