Thank you Maxwell for this video. As a coffee roaster based in Kenya, I got asked for coffee roasted at origin for extremely low prices, because people think that I am so closed to the coffee farm therefore I may have it for free! Off course I refuse to sell at such unsustainable price, because I have cost to cover the price of my coffee, and coffee producers also have cost to cover. Coffee Roasted at origin does not mean high quality coffee for cheap. Thank you again for this video. I shared!
Hey, Thank you for sharing your experiences. Thats an interesting assumption people have made about the supply chain based on your location. There is just a lack of thought and consideration in general in the supply chain. Its complex for sure, but I think we can still expect people to be able to understand it.
Never knew how much I needed long-form coffee related video essays in my life on a regular basis 👌 keep up the good work, bloody fascinating stuff you don't see discussed so honestly elsewhere in the space
This was a fascinating discussion, with lots of validity. One thing that stood out for me is the question of brand. Brand should not be a reason there is a race to the bottom. Brands and the values and attributes of that brand should enable a company to do all that you mention (invest in supply chain, sourcing, etc.) without having to absorb that in to the existing cost structure. Brand should enable firms to command a premium, because they claim to stand for x, y, z because x,y,z is important to the customer (coffe shop and their clientele). Is the problem therefore, given this is a young market, that the brands within that, are not mature enough, or are they not being used in the right way?
Thanks Alistair. I totally agree, Brand will be really important in helping to establish and promote enough value. if the brands aren't strong and it seems like a bunch of companies doing the same thing then its open to the race to the bottom, but one could simply argue they can't be very good brands then! haha. I think its the community element hat party makes this hard, i.e.coffee brands are part of a scene and present are actually very nice and supportive of each other in general as they want to support the scene they are a part of. branding that supports the movement of speciality but differentiates and really resonates with a customer and creates loyalty etc that allows for the values to be doubled down on an grown definitely feel few and far between. Thanks again, great points, there's a lot more to talk about here for sure!
Great observations again. I've been seeing it happening with really new roasters coming into the market trying to beat everyone on price just so they can move some volume, and then they get caught in this cycle, which will eventually end up unsustainable for their own growth. I'd like to think that eventually, this bubble will burst when people realise that they probably aren't going to be able to sell or merge their business and need to make some kind of sustainable living for the long term and actually do right by what their "ethics" and values say.
Catch 22 example. Multi-site operator needed £1-£2 off the kg/price, did the maths and only way it was worth it, is if we removed all support. Training couple of times a year, but other than that, nothing. Kind of an experiment but they agreed. Suffice to say without the constant managment and love, however good the coffee was ended up being meaningless to them. They moved to commercial roaster the next chance they got, where they probably should have been in the first place. Green coffee work for new busiess is hard, but do not miss wholesale roasted. Much needed video Man, especially given the previous one.
Thanks for this Maxwell, I love your rational approach to the UK speciality industry, you seem to really believe in the integrity needed for this ‘scene’ to continue growing without the quality and values being lost along the way. I could listen to your musings on coffee for a long time, please keep these videos coming.
There is so much truth in this. Apart from the obvious fact of the UK specialty industry following the Australian and completely bottoming out. I really like your observation about specialty being also as much about the facade as it is the quality. There are minimal Roasters differentiating themselves these days and just duplicating the same businesses worldwide.
Having worked in Wholesale and with competitive pricing your quote of ‘a low price should be alarm bells ringing’ is spot on but it’s hard to explain that to a consumer as they see a lower price and that’s it. Great video and a lot for both roasters and cafe owners to consider. Thanks.
Excellent video, glad someone has spoken up regarding this. The battle shouldn't be price it should making specialty coffee more accessable at a sustainable price across the industry. We'll done Max
Thanks again for another powerful reminder on responsibility, and to practice what you preach in the specialty market. Completely relatable across so many value-driven markets!
Interesting that in the space of 12 hours I watch this video and one from Sprometheus on the launch of Atomo “Coffee”, which in a way mirrors the growth in meat substitutes, but without any of the moral or health arguments. In both cases, the thing to highlight is the threat that these present to the source producers of the coffee and unfortunately, the greatest impact of commercial pressures falls on those least able to withstand them and in both cases, this will be the coffee farmers. Add in the threat to their livelihood of climate change and this race to the bottom could ultimately massively impact on the quality, quantity and variety of coffee available. As consumers, we have to recognise this and, unpleasant as it may be, pay a premium for sustainability. However, the difficulty is in identifying what is a sustainability premium and what is a profit motive for other elements in the supply chain that will never cascade down.
Indeed, I agree and that in itself is a large challenge in speciality, the ability to verify the different approaches from a sustainability point of view. not sure if you saw my video on sourcing claims, but For me the two are directly linked as you outline here. a real lack of audit/verificaiton in speciality claims makes it very hard
Another fizzer, Max. I'm odd. As a previous cafe owner and now simply a Specialty fanboy, I've always eschewed the cheapest available option, as I'm always searching out perfection...and that usually costs. I used to have a milk delivery from a local business. Our delivery guy was great and after a while started to bring me extra bits and bobs...cheeses, dairy products and so on. One day I asked him how he could keep providing these additional items and from our conversation it became clear, that he and other delivery drivers were loading up more than their orders and presumably in larger scale situations (I was cooking in my own small-ish cafe) being handed a few quid for their troubles. In other words...theft. I told him I'd be happy to take stuff 'on date' and use it on the menu that day, but nothing else. "I want to keep using you guys and if stock is wandering off, pretty soon the business will suffer and possibly close. You lose your job and I lose a valued supplier." I say this, because it kinda' feels like a reasonable take on these Roastery offers to cafe owners, who don't really think that hard about the situation. For sure, what owner would not want to strike a bargain...but at what cost, in the very widest sense. Me, personally? I stick with the bean providers that have 'chops' and don't participate in the race to the bottom...or at least as far as I can ascertain. This untenable situation, will level out and I'm certain many of the most recent entrants to roasting, will before too long, disappear over a cliff edge...and you know what... I'll be happy to see that clearout...
Hey Colin, Thank you for the comparison and sharing your experiences. It is a good comparison, its short term thinking. The clearout will happen at some point I am sure, I agree with you. Lets see how the scene evolves and changes in the coming years.
@@coffeewithmaxwell1835 Always a pleasure, man. I also witnessed the birth and demise of several fund management businesses, back in my finance days. This lemming-like rush to zero profitable business, is a rinse/repeat exercise, in all sectors at some point in the curve. It does engender despair (I hear it in your voice!) but quality tends to make it to the finish line...even if it's a rough ride. Great series fella...keep it up!
Surely some of this needs to sit with the customer and what they should be paying for a coffee, and particularly with what has normalised this price of a coffee? A 5p per coffee cost increase has a big impact on a cafe that is turning out thousands of coffees a week and much less to the customer who is buying 1 coffee a day. I think cafe owners need to be braver with their pricing, and I think more needs to be passed onto the end customer.
Hey Dave, I very much agree. I didnt touch on it in this video but I think the perceived price ceiling is rare explored systematically by speciality cafes. I think the thing is the customer would happily pay. I dont think the pricing gets "stress" tested to see what would work, i.e. where it would hinder sales etc, it gets assumed. I agree the cafe operators need to explore this more, if they want to of course. but it should be on the table always when discussing the price through the chain. Thanks Dave
I’m pretty unsympathetic on this Maxwell - a lot of roasters are totally unable to distinguish their coffees from their competitors that are buying lower quality coffee. If your business is based on buying $12/kg green but the roasted coffee you’re sending to your wholesale accounts is indistinguishable, then that’s a problem with your product and not with the industry. The coffee industry seems to contain an unusual number of business owners who think they are entitled to run their business in a particular way - who think that by ‘buying the best green’ the customer owes them a margin. The truth is that their product isn’t good enough - and you can tell because people are not really willing to pay extra for it. The ‘race to the bottom’ is just a transfer of wealth from loss-making roasting businesses to cafes (cafes that themselves often barely turn a profit). It doesn’t matter how hard industry people try and psyopp customers (and themselves) into believing it’s a “values industry” - people buy coffee because they like to drink it. If you want to run a “values industry” business then you need to roast coffee that customers enjoy drinking *more* - and use this profit margin to buy your values (pay farmers more, buy nicer packaging - whatever this means to you). No one, in any industry, is entitled to pursue their own hobby horse issues (most of which are frankly paper-thin - green washed packaging; patronising, colonial attitudes to “helping farmers”, etc.) and *also* extract a profit from their undifferentiated & bland coffee. You can’t “educate your customers” into paying more for your mediocre coffee, you can’t force cafe owners, often barely capable of making coffee let alone choosing “the best” from a choice of 4 or 5 millennial pink, sans serif competitors, into valuing your product more. The only way forward is the same one that’s always there in every industry - constant improvement, on brand, service & product. And not “improvement” as in - you found a cute anaerobic natural - improvement as in, your customer likes your product specifically so much that they’re willing to pay extra for it. The arrogance of the coffee industry - I’m in australia but imagine the situation is the same in the UK - is how people in coffee constantly try and avoid this conclusion: looking to blame everyone but themselves when the obvious answer is that their years of navel gazing, paying a premium for coffees no one outside of industry enjoys and ignoring their own customers have left them with a totally undifferentiated product that can *only* compete on price. None of this, of course, is personal or specific to you Maxwell. But it does seem to go basically totally uncommented on. I’d challenge everyone in coffee to think less about how they have personally been victimised by people trying to compete on price, and more about why their coffee is vulnerable to competition at all from $10/kg Brazilian/Colombian 80 point blends.
Hi Gabriel, Thank you for this - I very much agree on that concept - indie business can have a strong sense of entitlement without actually delivering on value. I don't know if you watched episode three? whereby I challenge that green washing and paper thin claims trend that you also comment on . I don't think indie speciality coffee businesses are inherently virtuous and deserving at all. I do think though that the quality of the coffee doesn't and isnt often able to win these accounts- wether it delivers in the cup or not. I should say that I run cafes, and my roastery actually does very little in the wholesale race. I am not reliant on it or victimised by it. I have simply been observing it whilst not actively taking part in it. I collaborate a lot across the UK industry at all levels and have open conversations with different operators throughout. The point you make about victimised roasters can equally be applied to small independent speciality cafe operators too. I believe more so. Cafes that are lifestyle businesses not thinking about running a developed business model, and then trying to save money - same point as the roaster you made, I would say a cafe thinks its owed a lower price, and I would pose the same question you pose of roasters - is their product and service and operation "good enough". But I don't want to fixate on which side the Blame is on, in regards to this business dynamic this channel. And of course, in both cases- speciality cafes and roasters, the operators are not all the same, like any field, there are better operators and a variety of approaches etc etc. I would like to focus on the "customer" you are referring to. in this instance they are not the end customer choosing the best coffee, they are a purchaser, a cafe owner. Not the drinker. In my experience over the last 15 years, cafes often under estimate the discernment of their clients, and can use this to justify sourcing requirements. The cafe operators are a customer who is thinking about many other things than coffee quality and sustainability, the mind set is not about just the coffee. They will in time be driven by their customers of course, if enough customers demand better coffee. but how does that work - separate discussion! What has been particularly fascinating is Covid. Yes there may be some roasters as you say out there selling a poor execution of a good coffee , but that really isn't a systemic problem here in the UK. Maybe it is in Aus. Roasting is pretty good across the board these days in the scene. cafe buyers can tell the difference, they know the coffee is better. They just dont want to pay for it. They say this openly. They dont say things like you outline" I cant taste the difference". They say that "the coffee is better but we need something at a lower pice, we need all the other tings the other roasters are offering in this tender process." Another interesting point is that the funded businesses are selling good coffee at a loss making price. The customer cafe operator wins in this instance. So those roasters are clearly in the strongest position - a more expensive coffee that the client recognises as tasting better and at the price of a cheaper coffee. As you say cafes are lean businesses and challenging but I also am involved in many cafes that pay good money for coffee and make it a success. Theres another episode here for sure I think on the per cup price ceiling that doesn't actually get tested properly but assumed - i.e. the cafe can likely in most cases charge a little more but perceives it cant. Anyway back to covid. Every speciality roaster I speak to has had 300-600 percent online growth selling really good coffee straight to customers. We have seen huge growth with our expensive coffee more than anything else. This trend shows customers can tell the difference and they want to pay for it, but cafes have historically been the gateway to those customers. I mean really I am saying the cafe channel s problematic to focus on quality and sustainable pricing for multiple reasons. I have never believed they are an ideal channel for the speciality narrative but they appear to be getting an even more challenging place for it. One upside of Covid and coffee going wider than just cafes is that their are now other more sustainable channels to tell the story. Cafes may have been the only "customer" before but they aren't now and this will be a good thing for quality, price and sustainability. I also believe the community and scene is a powerful peer group and a lot of behaviour in coffee is driven by the scene, so changing the conversation is valuable. I think reminding everyone in the chain of these topics is powerful. Yes its complex but on balance I do think there are some factors here that can be changed. the differentiator point in this channel is a really good point, I agree its harder to differentiate here, but not necessarily because coffee isn't god enough, but because the perceived value of this by the operator appears to be getting lower. I think we agree that as businesses we need to think about how to realise value, and not simply expect it, but that doesn't change the fact that when assessing the market to look at how to do that, the cafe supply channel is a bleak place to be. Which is why we are actively in my business avoiding it. Yes its complex but on balance I do think there are some factors
@@coffeewithmaxwell1835 Thank you Maxwell - this was a more thoughtful reply than I deserved, and I think the conversation is better for it! You touched on many interesting things, but i'd like to respond particularly to a few. The first is the problem you quite rightly raise about cafes as the point of intermediation between consumers and roasters. I've thought about this, and it really is a structural issue that's baked into coffee, and with few clear analogies in other industries that we can borrow from. Parts of this are particularly relevant to (i'm making some assumptions here to make the point but understand you're not much in wholesale) roasters like Colonna - cafes serve, say, 80% milk drinks and 20% black, and specialty roasters focus 80% effort on their singles and perhaps 20% on blends etc etc. In my experience this is often an awkward alliance between a cafe that wants to borrow the reputation of a roaster (and get cheap coffee, and get equipment and service), and a roaster that needs to justify the 20kg roaster they bought and is quickly discovering that most potential accounts do not share their approach to coffee. This situation only makes worse the 'race to the bottom' dynamic you talk about. That's a long way of saying that I agree with you - the cafe channel is a challenging one for advancing quality. I do think, though, that this is an opportunity for genuine progress in the industry - roasters that make an effort to understand this sector of the industry (the enthusiastic but naive cafe owner, maybe less sophisticated even than their customer) and meet them where they are raise the bar for everyone. This is course an easy thing to say - and sometimes the best course of action is to fire a bad customer. But there are many specialty roasters for whom their Brazil/Colombian blend is more than half their business, but much worse than it should be (even given the price constraints and green quality they're working with). The second is about where cup quality is at generally. I have nothing but respect for your judgement on this, and it's been a while since i've had coffee from the UK specifically, but I think there remains a lot of complacency in the industry about how good our coffee is. Very little of the improvement that has taken place on cupping tables in the last 3 or 4 years has made it into people's homes (or cafes, for that matter). I've seen the same pattern as a result of covid in Australia, and, while I think it's great for roasters, I do wonder how much of the change in higher end coffees is about how much they enjoy the cup, and how much of it is about signals and ecommerce dynamics and decisions made on great copy. All of these are fine reasons to buy coffee, by the way (and great ways to sell great coffees!), but I do wonder about their lifespan as a genuine competitive advantage. Anyway - I think i'm at risk of distracting from what I now see is the bigger point you were making: that there are some unhealthy dynamics at play in the roaster -> flat white part of the supply chain that both roasters and cafes could do better work to avoid. Well-funded businesses that are happy to operate at a loss are new to the party and do not make this easier for anyone. I'm very interested to see where this all goes, and I look forward to hearing your thoughts as it happens!
@@gabrieldickinson1 Thank you Gabriel. The conversation is good!! agreed positive change in the wholesale space is better than abandonment, Even though I am doing that haha. But lets see what could change that. The online point is valid and I do owner where it goes. It is interesting to me though that online is way better for customers to reward quality. If you are based in an area and there are three cafes, you can choose the best of those but what if they are all "meh" you cant choose higher quality with out travelling or making at home. Cafe market seems slower to evolve I think b3cause of this. and the cafe is a meeting space etc and has other purposes. I do think it would be ironic if customers post cover buy and brew better coffee at home than in their local speciality cafes. Yes, I was hoping to draw attention to the larger dynamic. Thank you for your support!
Would very much care for a follow up video on this, last 2 years have been more than a whimsical kickabout and I know my opinions. But your 2 cents would be interesting to hear as always sir.
I think UK is in a bubble where it developed faster than most countries and being part of the EU in the past it had a larger market to cater to, not just the local market, maybe making it more profitable to have those "competitive" prices. When I first heard about brexit , I feared that it might be an issue with over population of roasters in a "smaller", local market, where those "competitive" prices will end up making roasteries extremely unprofitable. If I would base my sales strict on local market, I would probably not roast anymore. I am sure that with Brexit a lot of EU shops moved on to roasteries based in the EU, mainly due to comfortability and ease of access. I am sorry to see such an amazing market (UK) suffer, although it is interesting to see from a research point of view. When I opened the roastery I set a standard minimum we add on to the price of roasting and the green coffee. Running a shop makes you understand how important it is to have prices set based on your costs of running, number of staff, type of coffees etc. Sustainable prices are required by both sides.
It’s such a strange paradox. If a shop wants a coffee with full traceability and the producer paid above the market value yet pay the roaster the absolute minimum possible then they’re going to get a coffee that is at the lowest end of the specialty spectrum so the roaster can can make ends meet from the sale too. As a result of this the shops who pride themselves on being at the forefront of the speciality scene are actually selling a product that’s really not that great.
That's the TREND from at least 5 years already! It's a very complex topic and brings a lot of different issues about pricing. Point of view of the barista from London: Back then I was wondering if specialty coffee is "dead" (as an idea/values which it created) or how soon it will be and here we go. London for example seems to bring specialty to the commodity level in many ways. For example, it's not really clear for consumers what is specialty coffee anymore and I strongly believe that for many years it was and we were on the right path. We got lost in growing way too fast, not sustainable at all, in the promises and carrots from investors. Now it seems like to be a specialty cafe you only need to serve a bloody flat white with oat milk and have a 'cool vibe', throw some story about farmers you never talked with, have a neat setting, and voila. It's hard to ask people to pay more when there is so much misinformation and very commercial places claiming to be "specialty". We can see "specialty" coffee shops on pretty much every corner and sadly in most of them, you will not get well-tasting espresso. Quality of not only the product itself is down but everything else around it too - we can't deliver what we promise with staff which is not/badly trained and unfortunately in many places equipment which is half working. I am really glad this topic is discussed more and more and really hoping for specialty coffee to become it again on every part of the chain and really stand for values it already established. Great video! Thank you so much, Maxwell!
I agree it's not sustainable and not good news for roasters long term. But on the other hand I think think this problem stems from the beginning of the 3rd wave when some cafes opened and watched there small roasters make huge profits when charging high prices while there cafe struggled to make profits. This made the cafes look for more profits by cutting costs. They got them and it's hasn't stopped since.
Hi William, thanks for the message, do you have some evidence that small roasters were making huge profits and at what prices? I have run both business types and don't see this at all, in fact I think a roastery is way harder to get going and run financially. bigger cash flow etc. In the first years our cafe actually supported our roastery. and the cafe paid a good price for coffee. It was more profitable than the roastery. I think both businesses need to be sustainable and charge sustainable prices. A cafe struggling with pride needs to charge more for the speciality coffee rather than expect the roastery to lose its sustainable margin. I think its a common misconception that roasters find it way easier to be sustainable than cafes, They are both challenging business models.
@@coffeewithmaxwell1835My experience is a bit different as I'm from Ireland. I did work for 2 specialty coffee roasters for over 7 years with bonuses based on percentage of profits. I'm not talking about this happening now. I'm talking about 4 or 5 years ago. At the start of specialty scene there were many including the roasters I worked for making a lot of profit while the majority of the cafes they supplied were barely making profits. This started the pressure on roasters to reduce there prices. Just my thoughts on how the the race to the bottom started. It doesn't make sense they want the best beans at the cheapest price with all the service. This can't happen. I think there is certain amount of crossover from comerical coffee company's too offering more and trying to look more specialty causing issues that drive prices down
@@william7640 That is interesting, thanks for sharing. In most of my experience talking to the two different business operators the cafe owners don't seem to have strong visibility or profit benchmarking to the roastery. They simply get approached by a variety of roasters who offer competing prices and the roaster bids to beat each other and the shop is not really choosing on quality but package. Cafes really are getting promised a lot for not very little, they are coming to expect it as more roasters offer it. it won't last of course, and as you say it cant actually happen.... but theres a period where everyone finds that out, and thats where the UK scene seems to be at. yes the commercial example you give is the same as the heavily funded loss making businesses I mention. They are interesting, as they are happy to sell at a loss with decent coffee and service, so in that case the cafe is getting more a lot for a low price, an unsustainable price. effectively its been subsidised to win the account.
Thanks for the reply. I agree with everything your saying and its hard to see where it will bottom out. I think you got to stick to your guns and charge a good price for a quality service and product. Thanks again love the videos!!
@@william7640 Thanks William, and yes I think you are right on the solution! I do think that customers throughout the chain etc will hit a point where there is a revival of recognising that quality and sustainability will need a higher price, but now seems to be a low point. Not relying on the cafe supply as the only channel also helps I think. Thanks for the channel support and sharing your thoughts !
at least to my ears it sounds like you just spent 27 min dancing around the fundamental flaw in capitalism; its incapability to look after the workforce (nevermind those unfortunate enough to not even be in the workforce to begin with due to no fault of their own). luv the vids tho :) learnt a lot so far
Thank you Maxwell for this video.
As a coffee roaster based in Kenya, I got asked for coffee roasted at origin for extremely low prices, because people think that I am so closed to the coffee farm therefore I may have it for free!
Off course I refuse to sell at such unsustainable price, because I have cost to cover the price of my coffee, and coffee producers also have cost to cover.
Coffee Roasted at origin does not mean high quality coffee for cheap.
Thank you again for this video.
I shared!
Hey, Thank you for sharing your experiences. Thats an interesting assumption people have made about the supply chain based on your location. There is just a lack of thought and consideration in general in the supply chain. Its complex for sure, but I think we can still expect people to be able to understand it.
Love these exposes. It has been needed desperately.
Well done for speaking publicly on this.
Thanks Raf! Appreciate the support.
This subject should become a group research study.
great topic for market study for sure.
Never knew how much I needed long-form coffee related video essays in my life on a regular basis 👌 keep up the good work, bloody fascinating stuff you don't see discussed so honestly elsewhere in the space
haha, Thanks Sam, appreciate the support !
finally catching up on these, fantastic stuff Maxwell!
Thanks Tibor ! hope to catch up soon
This was a fascinating discussion, with lots of validity. One thing that stood out for me is the question of brand. Brand should not be a reason there is a race to the bottom. Brands and the values and attributes of that brand should enable a company to do all that you mention (invest in supply chain, sourcing, etc.) without having to absorb that in to the existing cost structure. Brand should enable firms to command a premium, because they claim to stand for x, y, z because x,y,z is important to the customer (coffe shop and their clientele). Is the problem therefore, given this is a young market, that the brands within that, are not mature enough, or are they not being used in the right way?
Thanks Alistair. I totally agree, Brand will be really important in helping to establish and promote enough value. if the brands aren't strong and it seems like a bunch of companies doing the same thing then its open to the race to the bottom, but one could simply argue they can't be very good brands then! haha. I think its the community element hat party makes this hard, i.e.coffee brands are part of a scene and present are actually very nice and supportive of each other in general as they want to support the scene they are a part of. branding that supports the movement of speciality but differentiates and really resonates with a customer and creates loyalty etc that allows for the values to be doubled down on an grown definitely feel few and far between. Thanks again, great points, there's a lot more to talk about here for sure!
Great observations again. I've been seeing it happening with really new roasters coming into the market trying to beat everyone on price just so they can move some volume, and then they get caught in this cycle, which will eventually end up unsustainable for their own growth.
I'd like to think that eventually, this bubble will burst when people realise that they probably aren't going to be able to sell or merge their business and need to make some kind of sustainable living for the long term and actually do right by what their "ethics" and values say.
Catch 22 example. Multi-site operator needed £1-£2 off the kg/price, did the maths and only way it was worth it, is if we removed all support. Training couple of times a year, but other than that, nothing. Kind of an experiment but they agreed. Suffice to say without the constant managment and love, however good the coffee was ended up being meaningless to them. They moved to commercial roaster the next chance they got, where they probably should have been in the first place.
Green coffee work for new busiess is hard, but do not miss wholesale roasted. Much needed video Man, especially given the previous one.
Thanks Matthew, we have to value the roastery process as well as the green and create the right value through the whole chain.
Cafe community is everything! That tech money helps too
Thanks for this Maxwell, I love your rational approach to the UK speciality industry, you seem to really believe in the integrity needed for this ‘scene’ to continue growing without the quality and values being lost along the way. I could listen to your musings on coffee for a long time, please keep these videos coming.
Thank you Liam, Really appreciate it.
There is so much truth in this. Apart from the obvious fact of the UK specialty industry following the Australian and completely bottoming out. I really like your observation about specialty being also as much about the facade as it is the quality. There are minimal Roasters differentiating themselves these days and just duplicating the same businesses worldwide.
Thanks David. the facade/aesthetic is a real challenge as its more ripe for not mitigating the price or claims problems.
Spot on
Thank you.
I think you're bringing some really interesting thoughts and ideas in to the public sphere. Also love Colonna coffee so there is that haha
haha, Thanks Joe:)
Great video Maxwell and thanks for putting in the work. It's a tricky subject to talk about and you're doing an excellent job.
thanks so much !
Having worked in Wholesale and with competitive pricing your quote of ‘a low price should be alarm bells ringing’ is spot on but it’s hard to explain that to a consumer as they see a lower price and that’s it. Great video and a lot for both roasters and cafe owners to consider. Thanks.
Thank you Jonathan, yes it feels like one of those situations, whereby a great deal isn't also questioned on wether its too low
Excellent video, glad someone has spoken up regarding this. The battle shouldn't be price it should making specialty coffee more accessable at a sustainable price across the industry. We'll done Max
Thanks Jack, well said. Yes thats our battle !
I wish you nothing but the best, including growth, but oh God, so cool that there's only people that SHOULD be here in your subs
Thanks again for another powerful reminder on responsibility, and to practice what you preach in the specialty market. Completely relatable across so many value-driven markets!
Thanks Jack ! yes, it really is true regards of market!
Interesting that in the space of 12 hours I watch this video and one from Sprometheus on the launch of Atomo “Coffee”, which in a way mirrors the growth in meat substitutes, but without any of the moral or health arguments. In both cases, the thing to highlight is the threat that these present to the source producers of the coffee and unfortunately, the greatest impact of commercial pressures falls on those least able to withstand them and in both cases, this will be the coffee farmers. Add in the threat to their livelihood of climate change and this race to the bottom could ultimately massively impact on the quality, quantity and variety of coffee available.
As consumers, we have to recognise this and, unpleasant as it may be, pay a premium for sustainability. However, the difficulty is in identifying what is a sustainability premium and what is a profit motive for other elements in the supply chain that will never cascade down.
Indeed, I agree and that in itself is a large challenge in speciality, the ability to verify the different approaches from a sustainability point of view. not sure if you saw my video on sourcing claims, but For me the two are directly linked as you outline here. a real lack of audit/verificaiton in speciality claims makes it very hard
*cough* origin *ahem* 😕
Another fizzer, Max.
I'm odd. As a previous cafe owner and now simply a Specialty fanboy, I've always eschewed the cheapest available option, as I'm always searching out perfection...and that usually costs.
I used to have a milk delivery from a local business. Our delivery guy was great and after a while started to bring me extra bits and bobs...cheeses, dairy products and so on. One day I asked him how he could keep providing these additional items and from our conversation it became clear, that he and other delivery drivers were loading up more than their orders and presumably in larger scale situations (I was cooking in my own small-ish cafe) being handed a few quid for their troubles. In other words...theft. I told him I'd be happy to take stuff 'on date' and use it on the menu that day, but nothing else. "I want to keep using you guys and if stock is wandering off, pretty soon the business will suffer and possibly close. You lose your job and I lose a valued supplier."
I say this, because it kinda' feels like a reasonable take on these Roastery offers to cafe owners, who don't really think that hard about the situation. For sure, what owner would not want to strike a bargain...but at what cost, in the very widest sense.
Me, personally? I stick with the bean providers that have 'chops' and don't participate in the race to the bottom...or at least as far as I can ascertain. This untenable situation, will level out and I'm certain many of the most recent entrants to roasting, will before too long, disappear over a cliff edge...and you know what... I'll be happy to see that clearout...
Hey Colin, Thank you for the comparison and sharing your experiences. It is a good comparison, its short term thinking. The clearout will happen at some point I am sure, I agree with you. Lets see how the scene evolves and changes in the coming years.
@@coffeewithmaxwell1835 Always a pleasure, man. I also witnessed the birth and demise of several fund management businesses, back in my finance days. This lemming-like rush to zero profitable business, is a rinse/repeat exercise, in all sectors at some point in the curve. It does engender despair (I hear it in your voice!) but quality tends to make it to the finish line...even if it's a rough ride. Great series fella...keep it up!
Such a powerful video
Thank you.
Surely some of this needs to sit with the customer and what they should be paying for a coffee, and particularly with what has normalised this price of a coffee?
A 5p per coffee cost increase has a big impact on a cafe that is turning out thousands of coffees a week and much less to the customer who is buying 1 coffee a day.
I think cafe owners need to be braver with their pricing, and I think more needs to be passed onto the end customer.
Hey Dave, I very much agree. I didnt touch on it in this video but I think the perceived price ceiling is rare explored systematically by speciality cafes. I think the thing is the customer would happily pay. I dont think the pricing gets "stress" tested to see what would work, i.e. where it would hinder sales etc, it gets assumed. I agree the cafe operators need to explore this more, if they want to of course. but it should be on the table always when discussing the price through the chain. Thanks Dave
I’m pretty unsympathetic on this Maxwell - a lot of roasters are totally unable to distinguish their coffees from their competitors that are buying lower quality coffee. If your business is based on buying $12/kg green but the roasted coffee you’re sending to your wholesale accounts is indistinguishable, then that’s a problem with your product and not with the industry.
The coffee industry seems to contain an unusual number of business owners who think they are entitled to run their business in a particular way - who think that by ‘buying the best green’ the customer owes them a margin. The truth is that their product isn’t good enough - and you can tell because people are not really willing to pay extra for it.
The ‘race to the bottom’ is just a transfer of wealth from loss-making roasting businesses to cafes (cafes that themselves often barely turn a profit). It doesn’t matter how hard industry people try and psyopp customers (and themselves) into believing it’s a “values industry” - people buy coffee because they like to drink it. If you want to run a “values industry” business then you need to roast coffee that customers enjoy drinking *more* - and use this profit margin to buy your values (pay farmers more, buy nicer packaging - whatever this means to you).
No one, in any industry, is entitled to pursue their own hobby horse issues (most of which are frankly paper-thin - green washed packaging; patronising, colonial attitudes to “helping farmers”, etc.) and *also* extract a profit from their undifferentiated & bland coffee. You can’t “educate your customers” into paying more for your mediocre coffee, you can’t force cafe owners, often barely capable of making coffee let alone choosing “the best” from a choice of 4 or 5 millennial pink, sans serif competitors, into valuing your product more.
The only way forward is the same one that’s always there in every industry - constant improvement, on brand, service & product. And not “improvement” as in - you found a cute anaerobic natural - improvement as in, your customer likes your product specifically so much that they’re willing to pay extra for it.
The arrogance of the coffee industry - I’m in australia but imagine the situation is the same in the UK - is how people in coffee constantly try and avoid this conclusion: looking to blame everyone but themselves when the obvious answer is that their years of navel gazing, paying a premium for coffees no one outside of industry enjoys and ignoring their own customers have left them with a totally undifferentiated product that can *only* compete on price.
None of this, of course, is personal or specific to you Maxwell. But it does seem to go basically totally uncommented on. I’d challenge everyone in coffee to think less about how they have personally been victimised by people trying to compete on price, and more about why their coffee is vulnerable to competition at all from $10/kg Brazilian/Colombian 80 point blends.
Hi Gabriel, Thank you for this - I very much agree on that concept - indie business can have a strong sense of entitlement without actually delivering on value. I don't know if you watched episode three? whereby I challenge that green washing and paper thin claims trend that you also comment on . I don't think indie speciality coffee businesses are inherently virtuous and deserving at all.
I do think though that the quality of the coffee doesn't and isnt often able to win these accounts- wether it delivers in the cup or not. I should say that I run cafes, and my roastery actually does very little in the wholesale race. I am not reliant on it or victimised by it. I have simply been observing it whilst not actively taking part in it. I collaborate a lot across the UK industry at all levels and have open conversations with different operators throughout.
The point you make about victimised roasters can equally be applied to small independent speciality cafe operators too. I believe more so. Cafes that are lifestyle businesses not thinking about running a developed business model, and then trying to save money - same point as the roaster you made, I would say a cafe thinks its owed a lower price, and I would pose the same question you pose of roasters - is their product and service and operation "good enough". But I don't want to fixate on which side the Blame is on, in regards to this business dynamic this channel. And of course, in both cases- speciality cafes and roasters, the operators are not all the same, like any field, there are better operators and a variety of approaches etc etc.
I would like to focus on the "customer" you are referring to. in this instance they are not the end customer choosing the best coffee, they are a purchaser, a cafe owner. Not the drinker. In my experience over the last 15 years, cafes often under estimate the discernment of their clients, and can use this to justify sourcing requirements. The cafe operators are a customer who is thinking about many other things than coffee quality and sustainability, the mind set is not about just the coffee. They will in time be driven by their customers of course, if enough customers demand better coffee. but how does that work - separate discussion!
What has been particularly fascinating is Covid. Yes there may be some roasters as you say out there selling a poor execution of a good coffee , but that really isn't a systemic problem here in the UK. Maybe it is in Aus.
Roasting is pretty good across the board these days in the scene. cafe buyers can tell the difference, they know the coffee is better. They just dont want to pay for it. They say this openly. They dont say things like you outline" I cant taste the difference". They say that "the coffee is better but we need something at a lower pice, we need all the other tings the other roasters are offering in this tender process."
Another interesting point is that the funded businesses are selling good coffee at a loss making price. The customer cafe operator wins in this instance. So those roasters are clearly in the strongest position - a more expensive coffee that the client recognises as tasting better and at the price of a cheaper coffee.
As you say cafes are lean businesses and challenging but I also am involved in many cafes that pay good money for coffee and make it a success. Theres another episode here for sure I think on the per cup price ceiling that doesn't actually get tested properly but assumed - i.e. the cafe can likely in most cases charge a little more but perceives it cant.
Anyway back to covid. Every speciality roaster I speak to has had 300-600 percent online growth selling really good coffee straight to customers. We have seen huge growth with our expensive coffee more than anything else. This trend shows customers can tell the difference and they want to pay for it, but cafes have historically been the gateway to those customers.
I mean really I am saying the cafe channel s problematic to focus on quality and sustainable pricing for multiple reasons. I have never believed they are an ideal channel for the speciality narrative but they appear to be getting an even more challenging place for it. One upside of Covid and coffee going wider than just cafes is that their are now other more sustainable channels to tell the story. Cafes may have been the only "customer" before but they aren't now and this will be a good thing for quality, price and sustainability.
I also believe the community and scene is a powerful peer group and a lot of behaviour in coffee is driven by the scene, so changing the conversation is valuable. I think reminding everyone in the chain of these topics is powerful. Yes its complex but on balance I do think there are some factors here that can be changed. the differentiator point in this channel is a really good point, I agree its harder to differentiate here, but not necessarily because coffee isn't god enough, but because the perceived value of this by the operator appears to be getting lower.
I think we agree that as businesses we need to think about how to realise value, and not simply expect it, but that doesn't change the fact that when assessing the market to look at how to do that, the cafe supply channel is a bleak place to be. Which is why we are actively in my business avoiding it. Yes its complex but on balance I do think there are some factors
@@coffeewithmaxwell1835 Thank you Maxwell - this was a more thoughtful reply than I deserved, and I think the conversation is better for it! You touched on many interesting things, but i'd like to respond particularly to a few.
The first is the problem you quite rightly raise about cafes as the point of intermediation between consumers and roasters. I've thought about this, and it really is a structural issue that's baked into coffee, and with few clear analogies in other industries that we can borrow from. Parts of this are particularly relevant to (i'm making some assumptions here to make the point but understand you're not much in wholesale) roasters like Colonna - cafes serve, say, 80% milk drinks and 20% black, and specialty roasters focus 80% effort on their singles and perhaps 20% on blends etc etc. In my experience this is often an awkward alliance between a cafe that wants to borrow the reputation of a roaster (and get cheap coffee, and get equipment and service), and a roaster that needs to justify the 20kg roaster they bought and is quickly discovering that most potential accounts do not share their approach to coffee. This situation only makes worse the 'race to the bottom' dynamic you talk about.
That's a long way of saying that I agree with you - the cafe channel is a challenging one for advancing quality. I do think, though, that this is an opportunity for genuine progress in the industry - roasters that make an effort to understand this sector of the industry (the enthusiastic but naive cafe owner, maybe less sophisticated even than their customer) and meet them where they are raise the bar for everyone. This is course an easy thing to say - and sometimes the best course of action is to fire a bad customer. But there are many specialty roasters for whom their Brazil/Colombian blend is more than half their business, but much worse than it should be (even given the price constraints and green quality they're working with).
The second is about where cup quality is at generally. I have nothing but respect for your judgement on this, and it's been a while since i've had coffee from the UK specifically, but I think there remains a lot of complacency in the industry about how good our coffee is. Very little of the improvement that has taken place on cupping tables in the last 3 or 4 years has made it into people's homes (or cafes, for that matter). I've seen the same pattern as a result of covid in Australia, and, while I think it's great for roasters, I do wonder how much of the change in higher end coffees is about how much they enjoy the cup, and how much of it is about signals and ecommerce dynamics and decisions made on great copy. All of these are fine reasons to buy coffee, by the way (and great ways to sell great coffees!), but I do wonder about their lifespan as a genuine competitive advantage.
Anyway - I think i'm at risk of distracting from what I now see is the bigger point you were making: that there are some unhealthy dynamics at play in the roaster -> flat white part of the supply chain that both roasters and cafes could do better work to avoid. Well-funded businesses that are happy to operate at a loss are new to the party and do not make this easier for anyone. I'm very interested to see where this all goes, and I look forward to hearing your thoughts as it happens!
@@gabrieldickinson1 Thank you Gabriel. The conversation is good!! agreed positive change in the wholesale space is better than abandonment, Even though I am doing that haha. But lets see what could change that. The online point is valid and I do owner where it goes. It is interesting to me though that online is way better for customers to reward quality. If you are based in an area and there are three cafes, you can choose the best of those but what if they are all "meh" you cant choose higher quality with out travelling or making at home. Cafe market seems slower to evolve I think b3cause of this. and the cafe is a meeting space etc and has other purposes. I do think it would be ironic if customers post cover buy and brew better coffee at home than in their local speciality cafes.
Yes, I was hoping to draw attention to the larger dynamic. Thank you for your support!
Would very much care for a follow up video on this, last 2 years have been more than a whimsical kickabout and I know my opinions. But your 2 cents would be interesting to hear as always sir.
I think UK is in a bubble where it developed faster than most countries and being part of the EU in the past it had a larger market to cater to, not just the local market, maybe making it more profitable to have those "competitive" prices. When I first heard about brexit , I feared that it might be an issue with over population of roasters in a "smaller", local market, where those "competitive" prices will end up making roasteries extremely unprofitable. If I would base my sales strict on local market, I would probably not roast anymore. I am sure that with Brexit a lot of EU shops moved on to roasteries based in the EU, mainly due to comfortability and ease of access. I am sorry to see such an amazing market (UK) suffer, although it is interesting to see from a research point of view.
When I opened the roastery I set a standard minimum we add on to the price of roasting and the green coffee. Running a shop makes you understand how important it is to have prices set based on your costs of running, number of staff, type of coffees etc. Sustainable prices are required by both sides.
Hey Cosmin, interesting thought, to think how Brexit affects this. lets see. feels like it will make UK scene worse hahaha if there is customers lost
Damn Maxwell thanks for the real talks, these are great
Thank you Antoine!
It’s such a strange paradox. If a shop wants a coffee with full traceability and the producer paid above the market value yet pay the roaster the absolute minimum possible then they’re going to get a coffee that is at the lowest end of the specialty spectrum so the roaster can can make ends meet from the sale too.
As a result of this the shops who pride themselves on being at the forefront of the speciality scene are actually selling a product that’s really not that great.
Precisely
That's the TREND from at least 5 years already! It's a very complex topic and brings a lot of different issues about pricing.
Point of view of the barista from London:
Back then I was wondering if specialty coffee is "dead" (as an idea/values which it created) or how soon it will be and here we go. London for example seems to bring specialty to the commodity level in many ways. For example, it's not really clear for consumers what is specialty coffee anymore and I strongly believe that for many years it was and we were on the right path. We got lost in growing way too fast, not sustainable at all, in the promises and carrots from investors. Now it seems like to be a specialty cafe you only need to serve a bloody flat white with oat milk and have a 'cool vibe', throw some story about farmers you never talked with, have a neat setting, and voila. It's hard to ask people to pay more when there is so much misinformation and very commercial places claiming to be "specialty".
We can see "specialty" coffee shops on pretty much every corner and sadly in most of them, you will not get well-tasting espresso. Quality of not only the product itself is down but everything else around it too - we can't deliver what we promise with staff which is not/badly trained and unfortunately in many places equipment which is half working. I am really glad this topic is discussed more and more and really hoping for specialty coffee to become it again on every part of the chain and really stand for values it already established. Great video! Thank you so much, Maxwell!
I agree it's not sustainable and not good news for roasters long term. But on the other hand I think think this problem stems from the beginning of the 3rd wave when some cafes opened and watched there small roasters make huge profits when charging high prices while there cafe struggled to make profits. This made the cafes look for more profits by cutting costs. They got them and it's hasn't stopped since.
Hi William, thanks for the message, do you have some evidence that small roasters were making huge profits and at what prices? I have run both business types and don't see this at all, in fact I think a roastery is way harder to get going and run financially. bigger cash flow etc. In the first years our cafe actually supported our roastery. and the cafe paid a good price for coffee. It was more profitable than the roastery. I think both businesses need to be sustainable and charge sustainable prices. A cafe struggling with pride needs to charge more for the speciality coffee rather than expect the roastery to lose its sustainable margin. I think its a common misconception that roasters find it way easier to be sustainable than cafes, They are both challenging business models.
@@coffeewithmaxwell1835My experience is a bit different as I'm from Ireland. I did work for 2 specialty coffee roasters for over 7 years with bonuses based on percentage of profits. I'm not talking about this happening now. I'm talking about 4 or 5 years ago. At the start of specialty scene there were many including the roasters I worked for making a lot of profit while the majority of the cafes they supplied were barely making profits. This started the pressure on roasters to reduce there prices. Just my thoughts on how the the race to the bottom started. It doesn't make sense they want the best beans at the cheapest price with all the service. This can't happen. I think there is certain amount of crossover from comerical coffee company's too offering more and trying to look more specialty causing issues that drive prices down
@@william7640 That is interesting, thanks for sharing. In most of my experience talking to the two different business operators the cafe owners don't seem to have strong visibility or profit benchmarking to the roastery. They simply get approached by a variety of roasters who offer competing prices and the roaster bids to beat each other and the shop is not really choosing on quality but package. Cafes really are getting promised a lot for not very little, they are coming to expect it as more roasters offer it. it won't last of course, and as you say it cant actually happen.... but theres a period where everyone finds that out, and thats where the UK scene seems to be at. yes the commercial example you give is the same as the heavily funded loss making businesses I mention. They are interesting, as they are happy to sell at a loss with decent coffee and service, so in that case the cafe is getting more a lot for a low price, an unsustainable price. effectively its been subsidised to win the account.
Thanks for the reply. I agree with everything your saying and its hard to see where it will bottom out. I think you got to stick to your guns and charge a good price for a quality service and product. Thanks again love the videos!!
@@william7640 Thanks William, and yes I think you are right on the solution! I do think that customers throughout the chain etc will hit a point where there is a revival of recognising that quality and sustainability will need a higher price, but now seems to be a low point. Not relying on the cafe supply as the only channel also helps I think. Thanks for the channel support and sharing your thoughts !
awh my comment disappeared
Weird. Can you please re try ? It’s a valuable and interesting contribution!
at least to my ears it sounds like you just spent 27 min dancing around the fundamental flaw in capitalism; its incapability to look after the workforce (nevermind those unfortunate enough to not even be in the workforce to begin with due to no fault of their own). luv the vids tho :) learnt a lot so far