By Peter Giuliano
At the SCA, one of the most common questions we are asked has to do with how coffee is priced. How much of the cost of a cup of coffee comes from transporting the coffee from its place of origin, or from roasting loss, or from the labor at the coffee shop? The coffee chain is complex, so it can be hard to pin-point all of the different factors influencing the final price of a cup of coffee.
Starting eight years ago, we began compiling data from roasters, retailers, and importers, with the idea of painting a broad picture to help anyone seeking to understand the economics of coffee. This data was then aggregated to create an illustration of a typical coffee supply chain, titled The Economics of the Coffee Supply Chain: An Illustrative Outlook.
This year, we added our Roaster and Retailer Benchmarking Study and the SCA/Square Coffee Price Report to the data inputs. It’s important to keep in mind that these figures are an illustration, rather than prescriptive figures, and don’t represent one specific set of data or case study. Instead, this illustration reveals a broad representation of the specialty coffee value stream based on real data.
Want to see the costs of your own supply chain? You can calculate that with this template: Economics of Supply Chain Template.
How can this illustration serve the coffee community?
First, these figures can serve as a jumping off point for a number of discussions around the specialty coffee value stream as we begin to more closely examine how value is distributed and how various costs enter into the economic picture of coffee. More specifically:
- A coffee producer might use it to understand the business models of the importer, roaster, and coffee shop.
- A barista or shop owner might use these figures to understand typical costs and risks of their partners.
- Anyone studying coffee will be able to better understand how value is distributed and how various costs enter into the economic picture of coffee.
We hope this illustration sheds light on the economics of the coffee trade and becomes a fruitful part of the discussion around coffee production, pricing, and trading.
You can find the updated Economics of the Coffee Supply Chain: An Illustrative Outlook for free here.