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Read Additional "IN MY OPINION" Coffee Articles by Stuart
Daw: Excitement in the Coffee Businessby Stuart Daw Over 10,000 people crowded into the Washington State Convention Center for 2005's Specialty Coffee Association of America (SCAA) trade show, a testimonial to Executive Director Ted Lingle and those who have helped him in this great achievement. For an old timer in the coffee business these SCAA conventions are an interesting study, both in the actual business of running specialty “coffee” stores (where, not incidentally, milk is the chief item sold), and in the psychology of those who comprise this unique industry. Nations from all over the coffee growing world were represented. Undoubtedly driven by pride in the results of their toil, coffee growers from countries of origin exhibiting at the convention may have been unaware that there is nothing really “special” about what they were selling at all. But what they have seen is the strange spectacle of various groups such as Fair Trade, Bird Friendly, Organic, and other categories getting wild premiums for coffee that have little or no incremental intrinsic value in terms of actual quality and flavor. Maybe some of them hoped they might be able to cash in on the trend, especially if they represented countries or regions with romantic names, like Nicaraguan Matagalpa, Tanzanian Kilimanjaro, Costa Rican Tarrazu, or Indian Mysore Plantation, to name but a few of the myriad sources and appellations. Fuelled by the Starbuckian success in what some moderns call “the coffee store experience,” operators often trade on the mystique of coffee as opposed to the reality of it. For example, we have never heard of a grand prize for the ordinary restaurant worker who can put on the best coffee brewing demonstration, while for specialty people, becoming a champion “barista” can now be a childhood dream, performing before hundreds at a national convention. As an operator of four specialty stores in the 60’s and early 70’s when there were no exotic mixed coffee drinks, espresso was still in Italy and coffee sold for 15 cents a cup, the business really wasn’t that glamorous for me. But today no facet of the coffee industry has a greater penchant for showmanship than specialty, and none enjoys a higher margin. For many small operators bearing the relatively high expense of attending, this year’s show provided a cornucopia of things and ideas designed to assist in the opening of new stores, or in building sales in existing locations. As for the need that the retail stores have for exotic non-coffee products to sell, one could hardly hope for a nicer array from which to choose. In the hundreds of booths displaying gastronomical goodies, high calories seemed to take precedence over anything appealing to Atkins devotees. My favorite beverage is coffee, and my favorite foods are fat and sugar. The convention provided ample opportunity to indulge in these. But not to worry, for speaking of fattening goodies, concurrent with the convention there was great new news on the effects of eating them. It is great news for people in general, but maybe bad news for busybody bureaucrats, the Calorie Police (not that bureaucrats aren’t people, but you know what I mean). It comes from the most comprehensive study to date on the incidence of death relating to body fat. Published in the Journal of the American Medical Association were the conclusions of the National Cancer Institute that “being thin increases the risk of death.” Conducted in the US and after eliminating the anorexic and the “very obese” (under 8% of the population), those people who are very thin are apparently at equal risk of dying with those who are just plain fat. “What’s Good About Goodbye? What’s Fair About Farewell?” I am reminded of those lines from an old love song when I behold the operations of the Fair Trade people, just one segment of the whole “social justice” movement in the specialty coffee business. They, along with similarly motivated groups, have a ubiquitous presence at these trade shows, and indeed have been somewhat successful in their mission of raising green coffee prices paid to farmers well above their true value. Definitions can be our friends, and the word “fair” needs a new definition here. If not the free market, who makes the judgment as to what is fair? If we feel badly about the economic conditions in some country, do we arbitrarily ask the buyers of that country’s products to pay more for them? And what is the real psychological motivation of the people indulging in this kind of thing? I recall the story of Professor George Reissman of Pepperdyne University in California who, after having delivered a lecture on economics, heard the following question from a young woman in the class: “Are you saying that capitalism is the economic system that produces more wealth, more evenly distributed than any other?” “Yes, that’s right; laissez faire capitalism,” replied Reissman. “But can’t something be done about this?” came the plaintive cry. The student had trouble relating a free market to “fairness.” During the past few years of over-supply and low prices, Fair Trade types arbitrarily set $1.26 per pound of coffee (US$ green) as the fair number. Now that green prices have shot upward beyond that, suddenly the need for a new definition of “fair” arises, for the growers are raising the bar. The bureaucrats running the show, while carving off a neat slice for themselves, suddenly realized that what the farmers want now is the real market value for their coffee, and to hell with the code of ethics that served them so well in the past. What they fail to grasp is that the numbers of those who toil on the farms will eventually be greatly reduced by mechanization, as has happened in the US where the farm population has dropped from around 47 of the total populace in the late 19th century to about 1.5% today, while the production of food continues to rise. But by insisting that coffee farmers be paid more than the real value of their merchandise, they only encourage overproduction with the resulting boom-and-bust cycles endemic in this industry. Still, these and other similar new groups seem to add a lot of interest to what used to be a pretty jaded, stodgy business. The general public and the media have caught this sense of excitement from all the enthusiastic newcomers purveying coffee. In modern jargon, “this is a good thing.” Copyright 2005 Stuart Daw |
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