Why Specialty Coffee Costs What It Costs (And Why That's Not a Bad Thing)

Specialty coffee pricing perceptions

I want to be upfront about something that shapes this post. I hear from people fairly often who question whether Mood's pricing is fair, whether it reflects real value, or whether it's just what the market will bear. Normally, these comments are from people who would have never been a customer and so I have learned to direct my focus away from this set of people and lean into conversations with actual customers of mine.

So I was thrown off a bit a few weeks ago when I was called a price-gouging capitalist by a customer who "loved" our coffees but disagreed with the pricing. And it really got me thinking. The coffee industry, and coffee as a crop, is complicated by nature. So let's talk about it.

First thing worth knowing: the coffee you buy at the grocery store is most likely not specialty grade, rather it is commodity. There are exceptions. I have a friend with a specialty coffee brand that sells in big box grocery stores, and his coffee is unreal. But exceptions aside, comparing Mood's coffee to a generic grocery brand is akin to comparing a frozen pizza to your mom's secret-recipe lasagna.

The C-Market doesn't dictate our buying

Why does the distinction between commodity and specialty matter? For one, because commodity coffee is a cheap commodity (there is a lot of it). Specialty coffee is not a commodity (it is rare and it is certainly not cheap). Commodity coffee prices are dictated by a stock exchange, the ICE Futures in New York (aka the C-Market). The C-market was trading at $3.38 USD per pound at the time of writing this post. That number moves on speculation, weather, politics, and supply, and it has almost nothing to do with quality. It also has nothing to do with whether it cost the farmer $3.38 USD per pound to harvest and process the coffee. Most commodity coffee farms around the world run at a loss, which means the farmer is essentially subsidizing your morning (and afternoon) cup of coffee.

Coffee is scored on a 100-point scale and quality is a main factor that contributes to the score. Below 80 points, it's commodity, and it sells at whatever the C-market says that day, full stop. But once a coffee crosses into the 80s, everything changes. It enters specialty territory, and the price differential can be huge. An 80-point coffee and an 85-point coffee are NOT a small step apart (a very important point as it relates to Mood's sourcing and pricing).

A record was set last summer when a Panamanian Geisha graded at 98 points sold for over $30,000 USD per kilo, roughly $13,600 USD per pound, to a buyer who later served it for $1,000 USD per cup in Dubai. Would you pay $1,000 for a single cup of coffee? Note to self: try and convince my accountant that this is an acceptable business expense.

You've probably already gathered Mood doesn't buy 98-point coffees since we don't have anything that expensive on our menu. I want to be equally clear we don't buy 80-point coffees either. Generally what we buy sits at 85+ points, and the pricing naturally reflects that.

We purposefully don't seek out certifications

Something else worth knowing: certifications like FairTrade or Bird Friendly don't guarantee specialty quality. A coffee can hold one of these labels and still be commodity grade. Gasp, I know. These certifications are complex and expensive, which in practice means only large corporations can afford them. Think Nestlé or Kicking Horse (which sold a majority-stake to Lavazza in 2017). So where does that leave a smallholder farmer using organic practices as a default, who now has to choose between turning a profit or paying for a certification that eats into her margins? These systems were built to hold multinational corporations accountable. I've never fully understood why that burden gets pushed downstream onto farmers who already have a moral compass and a set of ethical standards guiding them.

We don't negotiate with farmers

Farmers demand more money for higher-graded coffee because that score reflects real effort and real resources poured into harvest and processing. In my opinion, it's entirely within a farmer's right to ask for the price she wants. I have zero interest in negotiating with farmers on price. I give them what they ask for every single time, and work with import partners that employ similar practices. I'd rather spend my negotiating energy on the boring stuff: shipping, boxes and tape, tech subscriptions.

This is also part of why 85+ is a level I love working in. It's where coffee is hyper-traceable and starts to be considered premium specialty, due to the farmer's care and precision. This is why our coffees might be more expensive than other specialty coffee brands. Again, this is done intentionally. Mood could never put a coffee on our menu that was not traceable to the exact farmer and the wet-mill. You'd ask questions. I'd get your emails. You'd figure it out fast because you're intelligent, and you'd know something was off.

We aren't the cheapest option

We are not the cheapest option, and I know that. We're not trying to be. But every so often I'll get a message from a customer who loved the coffee and is still somehow upset that Mood's pricing looks nothing like the stale canister of ground coffee from the grocery store. It's a fair question to ask why a small coffee roaster's pricing gets scrutinized more closely than an Amazon Prime subscription or your last Walmart run. I'm not making a judgement call here. I shop at these places too. But I think it's worth sitting with the question: why judge a small business for wanting a fair margin on a product you wouldn't have had access to otherwise, shipped to your door with a click of a button?

In my opinion, a fair price for specialty coffee is the actual cost of paying people what their work is worth, all the way down the chain. That's the whole idea behind Mood.