Issue 2 - For The Love Of Money

​Optional soundtrack for this piece - yes, it is obvious, but it is still great!

Let’s start with the last cup of coffee you bought. Picture it in your mind. (I hope it was good.)

You paid your hard-earned money, and now you own the extract of those beans, carefully dissolved into some hot water. The money you paid went into the cafe’s bank account, but chances are they haven’t paid for those beans yet. Many cafes will get credit terms from their suppliers (though certainly not every single cafe). So, if the cafe hasn't paid yet, does this mean the roaster still “owns” the beans? Well, maybe not. In many cases, the roaster may have credit terms with their supplier too, and so when you buy a cup of coffee, it is very possible that the entity that last actually paid for them was the importer of the raw coffee. Eventually, your money will flow back to them, but it could take weeks.

It’s a fun kind of example of the strange way money sloshes around the economy, but money is something I’ve been thinking about more and more due to a project that we’re working on.

We set out to make a longer video on the price of raw coffee. The increases in coffee prices on the commodities market, which ultimately influence the price of almost all coffee around the world, seemed like a worthwhile subject. Why did prices increase? Will they stay high? What’s going to happen in the future? How will people adapt? Is this a good or a bad thing?

The original plan was to ask these questions to people across the entire supply chain. For this project, we spoke to producers, wet mill owners, exporters, importers, roasters, and cafe owners, and captured most of these interviews on camera. While a consumer in the UK might argue that coffee prices going up is bad, a producer would argue the opposite - though from our conversations, it is fair to call this overly simplistic. Producers are getting paid more for their coffee, but that doesn’t mean that they’re getting to keep all of that premium.

One particular irony is that roasters have long argued we should be paying more for coffee, so they should be happy about this, right? Yet again, the conversation turns nuanced.

Taking a step back, this should be a moment to celebrate! Prices are higher, consumers are paying them, consumption is increasing - this is what we’ve been working towards. However, roasters and cafe owners are definitely not celebrating.

With this project, we felt that if we could capture a broad spectrum of responses, we could offer you, the viewer, a more nuanced video. I’m ok with not simplifying things down into black and white all the time. Sometimes, a bit of grey is good. One recurring theme in the interviews was money itself. If we go back to the importer at the start, who still owned the cup of coffee that you bought and drank, their need for capital was profoundly changed by the rise in the price of coffee.

An importer might plan to source 10 million kilos of coffee for their roasting clients, to meet their needs for the year. When the price of coffee increases 200% then suddenly they need 3 times as much money to pay for the same volume of coffee that they’re planning on sourcing, even though the amount of coffee they’re purchasing hasn’t changed. Where does that money come from?

Not that long ago, this wouldn’t have been a huge problem. Interest rates were very low, and borrowing money was considered cheap. Now, increases in interest rates mean money has gotten more expensive. This problem isn’t unique to importers of coffee - it affects pretty much everyone who buys coffee at some point in the supply chain. That could be wet mills that buy coffee cherries from producers, dry mills that buy parchment, exporters, importers, roasters, cafe owners, and, of course, consumers. One might hope that higher prices for coffee equate to more value flowing to producers. What was frustrating to see is that the cost of money itself was capturing a significant portion of the additional value that could have flowed back to producers.

This feels like an absurd sentence to write. Where is this money coming from? Banks will lend you money, but they need collateral. If you’re a wet mill, your machinery is your collateral. The problem is that it didn’t triple in value when the price of coffee went up, so banks don’t want to lend more money against it. Often, money comes from private institutions or individuals, who can set the terms of the loan… It is a classic expression of modern capitalism: those who have a lot of money find it very easy to make more money.

This is not to say that none of the premiums paid for coffee make their way to the producers. Producers are earning more from coffee right now, and that is a good thing. What is worth highlighting here is that there are several barriers in place to prevent the full value being passed back, and money is just one of them, albeit quite a large one! Global logistics remain… challenging. About a third of the world’s seaborne fertiliser passes through the Strait of Hormuz. Coffee’s price spike has made theft both more attractive and more prevalent.

The video project has now taken a slightly different direction, as a different realisation became the central idea behind it, but this newsletter gives me a little more space to explore the themes and ideas behind the videos we make. I wanted to draw out the theme of money a little more than we could in the upcoming video. The video will touch on this, but is more focused on what I see as a moment of profound change in the timeline of speciality coffee. We're not very good at looking at our industry in longer timelines. The term speciality coffee was coined in the 1970s, but The Third Wave is at best 30 years old. That isn't that old at all, but modern culture has people desperate to declare that we're already in some Fourth or Fifth wave. (We're not - if you understand the tenets of the whole Third Wave properly, then there's nothing materially different happening now than was happening 20 years ago. It has obviously evolved - but we're still pushing traceability and brewing approaches that highlight the intrinsic flavours of the raw coffee.) I think we're coming to a pivotal moment of the Third Wave, perhaps that might be a kind of peak in its narrative arc, perhaps something else, but I think we'll look back at this decade in 20 years time and see that a shift started here...

A Question For You

One of the questions we have is what to do with the interviews from the project. There are more than 20 hours of footage, and so even a longer-than-normal video will show a fraction of what we captured. We are considering releasing them as a podcast series, or on the second channel, or something else if you have a better idea. We’d love your thoughts on this!

The Fermentation Project

You've already had the email, I know. This is just a quick nudge because roasters are selling out, so if you're on the fence then I'd encourage you to grab a set and join us. The live tasting will be on the 3rd of October at 3pm BST. It's going to be fun! There's a tonne of roasters around the world to try out, if you're looking for something new. We're also plotting away, and aim to ramp up the live tasting experience a little this time too!

New Videos

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The Fellow ES1 Review: this was one we had a lot of requests for, and one we wanted to approach differently. Hopefully we managed to get the nuanced side of this right, because while it isn't a machine for everyone, it is a solid choice for a lot of people.

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We want your feedback on this one, mostly around the title/name for the series. The premise is this: We love speciality coffee, but it can be a very similar experience regardless of where in the world you are. When travelling, we also want to explore coffee experiences that are unique to the place. We want to eat what people eat with coffee. It isn't about speciality, it is more about just enjoying something distinct and unique. What is a good name for the series? We're currently testing: Coffee Like A Local - but can you do better? If you suggest an idea and we test it, then we'll send you some goodies to say thank you.

Coffee Science Round Up

There's not a lot out there this time around. I did end up speaking to the BBC about one particular paper, but I don't know if that piece is out yet.

On face value, the paper isn't super interesting, but don't let that fool you. I think it is a good jumping-off point for some discussion - especially when we apply this back to my own review of the Fellow ES1 mentioned above.

The paper is titled "Under pressure: Poroelastic regulation of flow in espresso brewing." (PDF available at this link). It asks what happens to flow rate in espresso when you change the pressure. This isn't about dynamic changes in pressure during the shot (i.e. pressure profiling), but the target pressure the machine's pump is set to.

Here's a couple of charts that get us to the main findings:

The key thing to note here is that they're talking about basket pressure. This isn't the same as pump pressure - pump pressure is usually about 1 bar higher, because the basket is leaking some pressure through the puck. The chart on the right is a little hard to read. Here's a better one (sort of):

I really wish they had used different colours here, because it definitely hampers the readability. Using the earlier image as a key, you can see pressure increases cause an increase in flow rate - to a point. Once you go above a ceiling of pressure (around 9 bars), then flow will start to decrease. So far, not too much to write home about. The idea of a bell curve of flow is not new. It was in the first edition of "The Chemistry of Quality" from Illy. (They changed the name to "The Science of Quality" for the 2nd edition. Scott Rao also talked about this in his e-book about espresso back in 2013.

This chart is the interesting one that is giving me pause, and the need to do more testing:

Generally, the paper found that peak flow exists between 6 and 9 bars (at the pump). This is a wider window of high flow than I'd anticipated, and is an argument for dialling your pressure down to 6. I do not have the hard data for this, because the work hasn't been done, but in my experience higher pressures tend to produce a higher incidence of channelling. However, you could argue I have some confirmation bias. It is certainly an area worth revisiting. I will note that this paper used a Fiorenzato F64 EVO grinder for its testing. I don't know how much that played a role, or how it compares to high-end grinders when it comes to performance and particle size distribution. They were just using a Brazilian coffee in the test, and those do behave differently to coffees grown at higher altitudes.

As an aside - they put some coffee in a CT scanner too. (We did that, it was fun!) They came up against the same problem as I did - the pressure release in most machines that occurs at the end of the shot is very destructive and examining the puck after brewing tells you very little about how the shot brewed.

Is there a video in all this testing? Maybe. Maybe it will be a part of the testing with something like the Meticulous, which we are working away on. In the short term though, and this isn't new advice - John Buckman from Decent Espresso has been making this recommendation for literally years - if you don't have a high-end grinder then lowering your pump pressure to 6 bars may make espresso a little more forgiving. And that's worth experimenting with.

That just about wraps up this second edition. To give us feedback, you can hit reply - we'll read everything, but I cannot promise we can reply to every message. One thing we might be missing is a little moment of levity. We're looking for them, we promise, but if you find one feel free to share it with us!
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For now, I will say thank you so much for reading, and I hope you have a great day.

James