Coffee pricing

Our general goal is to have a gross margin at minimum 27 % on average throughout the year to cover our overhead costs such as staffing, office space, warehousing, handling fees, palletizing, wrapping & strapping, sample distribution, financing, travels, pre-financing of producers, investments at origin etc.

For any great coffee we add on 30 -50% when we put it on the offer list. It will depend on the volumes of each lot, performance, uniqueness etc. This will be the price based on small volume sales SPOT off the list. As many of our clients are planning purchases with us in advance and get discounts based on volumes, and as we always have a risk on default both on quality as well as some sales the actual average will then be much lower.

The customer is contracted to paying the price per kg which applies at the time of order, regardless of any discounts that may have been added at a later date.

From the 1st of August there will be an added charge of 50 USD for any orders lower than 300kg. This fee means we can continue to offer minimum orders of just one bag or box. Until know we have being doing this at a loss, which is not sustainable for us, or the producers, in the long run.
Read more on our blog.

Below you can see some examples of how it works typically in Africa VS Central America. Still, every product and country will be different in cost break down based on structure, activity level and the type of producer.

Example 1: Burundi

Burundi Shembati # 8

Direct payment to producer, FOT Kayanza                                            7.27 USD/kg

Cost of transport land + sea                                                                      0.34 USD/kg

Handling fees, port charges at arrival, trucking, samples                   0.19 USD/kg

7.80 USD/kg

Price on the offer list NA                                                                          11.70 USD/Kg

After volume discount, or as part of purchase planning program e.g. 7% discount = 10.88 USD/kg

This coffee came out with relatively unique characteristics and is a result of longer-term investment and effort. There has been a lot of follow behind these coffees in Burundi for many years. We have been on the ground in many periods throughout the seasons spent a lot of time on selective cupping of the regions and daily lots with the producer. We have also pre-financed the producer with 30 000 USD up front of the harvest season so he has more working capital. We are taking all cost of all samples sent several times from origin of the same coffees to do quality control and feedback, have PSS samples for clients and to follow up quality on future projects.

Example 2: Central America

Costa Rica – La Casona – El Rodeo

Payment to producer, Exporter, QC at site, transport,

milling, vac pack                                                                                          7.71 USD/kg

Shipment to Europe                                                                                     0.31 USD/kg

Handling fees, port charges at arrival, trucking, samples                   0.19 USD/kg

8.21 USD/kg

Price on the offer list NA                                                                           11.50 USD/Kg

After volume discount, or as part of purchase planning program e.g. 7% discount = 10.70 USD/kg

In this case the producer and exporter is doing most of the groundwork on our behalf. We travel to visit the producers, plan accordingly for purchase and exports, are doing the selection through loads of cupping, but don’t necessary put in as much time and spend as much resources as we might do other places. We are then taking the margins slightly down.

Example 3: Special offers

Kenya Kiandu AA

Payment to exporter Nairobi                                                                      10,00 USD/kg

Cost of transport land + sea                                                                          0,25 USD/kg

Handling fees, port charges at arrival, trucking, samples                      0,19 USD/kg

original price on offer list10,45 USD/kg

Price on the offer list NA                                                                                9,50 USD/Kg

In this case the coffee was beautiful at the time of purchase. Somehow it gained some moist during storage or transport and developed some stored/aged flavors that was detected by quality control at arrival. Even if the coffee was still tasting well on an average level we decided to immediately discount it and take the loss. It was still full of fruit and complexity and compared to the pricing it valuable for many of our clients that uses it as an espresso component etc.

What are special offers?

Special offers can either be a good coffee that we buy to fill up a container or a coffee that was initially great, but don’t meet our quality standards at arrival. Coffees in both segments can be of great value!

In the case of a container filler that coffee might have great attributes compared to price, but might not meet all our criteria on uniqueness, or have the documentation on full traceability.

From time to time we will also have some default on quality. This could typically be coffees that taste great at the time of purchase, but due to drying in challenging conditions, storage issues in high temperature and humidity, transport etc it might decrease quicker in quality than expected, and develop e.g. some aged flavors. If this happens we immediately put it on the special offer list at a lower price, or even at the loss. It is better for us to take the loss, get it out while it is still useable, and can contribute with something good in blends.