May 27, 2020

Why Producers Grow Expensive Coffees – And Why Roasters Buy Them

Occasionally, a specialty coffee lot makes headlines for the record-breaking prices it’s fetched at an auction or private sale. These hyper-expensive coffees are usually award-winning and highly regarded by the industry. 

To find out more about what role these exclusive and expensive coffees play in today’s market. I spoke to some of the people responsible for producing, selling, and buying them to find out their perspectives on the topic.

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How Hyper-Expensive Coffee Is Priced

Most coffees are priced highly because they’ve won competitions or awards. Jordan Dabov is CEO of Dabov Specialty Coffee, a Bulgarian roastery, and explains that expensive, exclusive coffees sold at auctions like Best of Panama (BoP) or Cup of Excellence (CoE) have won quality competitions after being evaluated by judges – making them high-quality, winning lots.

BoP is a competition which scores Panamanian producers’ coffee lots according to their quality, before auctioning them to the highest bidder. Hacienda La Esmeralda is a family farm that first introduced the Geisha coffee to BoP, kickstarting the trend of expensive coffees being sold at auctions, and inspiring other producers to start cultivating it. Another prestigious competition is CoE. Here, the top ten coffees are cupped at least 120 times and assessed according to qualities like its flavour, mouthfeel, and balance. Last year, Jordan paid 120 US $/lb for a Honduras CoE Lot Number 1.

It often takes producers months to decide which coffee to submit. It will usually first be judged locally before proceeding to the next round, which will involve an international panel of judges and an auditing process to ensure judging is impartial. Buyers wishing to purchase a lot must also go through a strict approval process, which will depend on factors such as their reputation and their ability to secure credit.

While most auctions and awards require coffees to reach a certain score to justify their price, others are expensive as they’re unusual or come from an award-winning producer. Wilford Lamastus Jr operates Lamastus Family Estates, a group of coffee farms in Panama founded in 1918. His family’s coffees have won BoP several times and have scooped five first-place awards in the Geisha category since 2016 – with their Elida Estate awarded BoP in 2019 and 2020. He is also Panama’s Brewers Cup Champion for 2019 and 2020. 

Wilford says that producers who have won awards or competitions in the past often send samples to buyers before private auctions, to create a bidding war that raises the prices of certain lots. He adds that these coffees “aren’t necessarily backed up by an evaluation of quality or competition, in the way, for example, Kopi Luwak is sold.”

He stresses that a coffee’s price isn’t necessarily correlated with its quality. Some coffees will win competitions and be auctioned to the professionals that evaluated it, as they can attest to its value. Others will be sold privately, without the producer receiving any attention from the sale, and without the buyer having evidence of the coffee’s quality through a score or award.

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How Customers React to High-Priced Coffee

The primary market for expensive coffee is roasters, but a growing number of consumers are interested in these coffees too. Ibrahim Al Mallouhi is a United Arab Emirates (UAE) 2018 Brewers Championship winner and owner of The Espresso Lab, a roastery in Dubai. He recently purchased Batch #2105 of the Joseph Brodsky Signature Coffee from Ninety Plus at US $10,000/kg. 

He tells me that the coffee (which tastes like persimmon, baby jackfruit, cloves, aguapanela, and tamarind) was promoted to a limited audience at The Espresso Lab before he purchased it. He also says that usually, expensive coffees are purchased by “anyone passionate about coffee. I like to buy rare lots of coffee as a collector and to showcase its potential to the UAE coffee community and beyond”. 

Jordan believes that these coffees appeal to those with coffee knowledge – or those wanting to increase their knowledge. He says that often they’re curious about specialty coffee, which leads to them buying and falling in love with different types. He believes that exclusive coffee will open the doors of the specialty coffee market. “Right now specialty coffee is mostly concentrated in a niche, but exclusive coffees are… opening the doors of high-end markets [and helping] the public understand that coffee isn’t just a caffeinated beverage.”

Ibrahim cautions that while expensive coffees can have amazing taste profiles and offer customers a unique experience, they should be roasted, calibrated, and “brought to life” by knowledgeable and skilled roasters. He believes that these roasters should hone their skills through exposure and experimentation, and that they need to “get exposed to advanced methods by experimenting [with] limited batches and … processing innovations.”

This will help highlight the coffee’s best qualities and educate consumers on its origins. As Jordan says, the roaster is the bridge between a coffee’s producers (the real stars of the specialty coffee scene) and its consumer.

How Producers Benefit From Expensive Coffees

The high prices fetched by expensive coffees allow their producers to improve their coffee production by investing in training, equipment and other improvements. Ibrahim says, “This will… promote innovation and new processes that result in a high calibre product.” 

Wilford hopes that sales of these coffees will also boost the prices that all producers get for their coffee, helping grow specialty coffee production and make it more profitable for all involved. He cites 2004 as an example, as this is when the first Geisha coffee won BoP before being auctioned for US $21/lb – something that had never happened before. “Since that happened, the specialty coffee industry prices are rising every year… in every country… The high prices … will pull up the curve for coffee prices in the specialty field, adding a lot more value in the industry.”

To access these benefits, producers will need to keep focusing on improving their coffee’s quality and not just on creating a unique or rare lot. In addition, Wilford explains that producers should understand that by entering a competition, they’ll be competing against hundreds of farmers. He stresses that even if they auction their coffee, the competition judges, market, and bidder will decide if the coffee is exclusive – and expensive. 

He adds that should a producer choose to price tag their coffee to a specific buyer to guarantee a purchase, it will usually occur without quality recognition by a judging panel or group of bidders. Should this happen, the coffee can’t be marketed as a high-quality coffee – only an expensive one. 

How Do Roasters Benefit From Exclusive Coffees?

While roasters purchase hyper-expensive coffees for consumers to eventually enjoy, they might also buy it for the media coverage it will generate for them. One buyer told me that buying an exclusive coffee provides him with international interest and publicity that would be costly to purchase directly. He explained that the cost of the coffee will be less than a marketer’s fee. He compares the cost of paying a PR firm to get his business mentioned on major online news networks like CNN and the BBC to how much he purchased the coffee for.

For example, when a Geisha from the Lamastus Family Estate was sold for a record breaking US $1029/lb, it was covered by the BBC, L.A. Weekly, VinePair, and other international online news publications.

The resulting publicity that these coffees might generate could increase the demand for the coffee purchased. It could also improve the roaster’s coffee sales overall, as adding an exclusive coffee to their menu can create the perception that all their coffees are high-quality. As Wilford says, “A buyer with a champion coffee has something special in their menus, and customers will remember them as the roastery or café that gets the top quality coffees. [This] will help the daily sales [and] create a lot of awareness [with] the public.”

Another way that these coffees help roasteries drum up future publicity – and cement their position as specialty coffee authorities – is that roaster staff members can use them in brewing and barista championships.

Expensive coffees already play a significant role in today’s specialty coffee market, benefitting the producers growing them, the roasters buying them, and the consumers enjoying them. They might be costly to produce and purchase, but with each sale, they help draw attention to the efforts being made by producers and the value of specialty coffee.

While the media coverage generated by making such a purchase can benefit roasters, care should be taken in conflating the price a roaster is willing to pay with a coffee’s quality – as while quality coffee often fetches high prices, not all high priced coffee is quality. 

Roasters wanting to purchase an expensive coffee should make sure it aligns with their target market’s tastes and that it has a suitable quality score, instead of solely basing their decision on the marketing and publicity they might receive.

Enjoyed this? Then Read Why Caparaó, Brazil Is Winning Specialty Coffee Awards

Photo credits: The Espresso Lab, Lamastus Family Estates, Julio Guevara 

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