The first two years of our business, I followed local coffee pricing pretty closely*. I monitored local groceries every couple months, noting changes in pricing and availability. This past summer, life started getting pretty crazy, and my last price check-in was in July 2009. Given that we do all our food shopping in farmer’s markets, that was probably the last time I was in a grocery store.
My first reaction upon returning to the grocery store was to be glad I’m not in the ice cream business - Breyers blowout in progress, but 2, get 3 free. Man, that’s some tough competition.
My second reaction was, “What happened to all the coffee?”. It was immediately evident that there was a much smaller selection than I saw in July. Consulting my spreadsheet later, the numbers revealed that there was fully 33% smaller brand selection than in July 2009, and the brands that remained were large, national brands. I’ve never tracked the SKU level, but my sense as that even within the remaining brands, the number of individual SKUs was reduced (essentially, there was just less shelf space devoted to premium coffee). Bottom line, if you buy coffee at the grocery store, you have a lot less choice than you did just nine months ago, and you will be selecting from major national brands. This isn’t entirely surprising, except that exactly the opposite has occurred in the beer aisle. Given there are just about 500 craft brewers in the US, and 1600 craft roasters, this is a little counter-intuitive. My best guess is that structural aspects are driving the difference, e..g, beer has a better distribution network, and the profitability to retailers is higher. But that’s just a guess. Maybe people just like beer more – some days, I do.
The final unpleasant surprise came when I entered the prices into my spreadsheet. In the past nine months, the average price of coffee has increased 3.7%. This, in a period where the inflation rate was 1.06%. The average price of premium coffee when I calculated it last night was $13.91 per pound, up from $13.44 per pound on July 27, 2009.
Interestingly, in July there was only one 16 oz. put-up. Now there are none available in the grocery. Most of the put-ups are 12 oz., a couple are 10 oz, and one is 11 oz. This smacks of the incident with propane sellers about a year ago, where tank exchange companies quietly decreased the fill weight of tanks while keeping price constant. It seems that coffee sellers are using the same cleverness to hide the fact that small increases in package price translate into large changes in the per pound price.
Now, you may think I’m going to argue that coffee prices are too high. Well, I’m not about to argue that; in fact, I think coffee is still too much of a bargain, as are many food items in the United States. Read the book Cheap to get some perspective on food prices.
But I am going to argue that if you buy premium coffee in the grocery store, you should be buying from us instead. You like variety? You like fresh? You like local? You like a good deal? Our coffee averages in the low 12′s per pound. We have about three dozen SKUs to choose from. We roast fresh weekly. We roast date the packages. We can tell you about the pedigrees of the coffees we buy. We are a local bricks-and-mortar merchant and tax-paying member of the community. The only thing we’re not is as convenient as a grocery store. So what’s the problem? Why are you still buying coffee in the grocery store?
Break the habit of buying bad, stale coffee from the grocery store. Come visit us and let us show you a real value.
*Comment on methodology: I follow coffee prices in a few “mid-range” groceries in my area, e.g., Harris Teeter, Lowes. I look at coffees I think of as “premium”, that is, comparable to what we sell – coffees like Peets, Starbucks, Green Mountain, and a few local roasters. I do NOT include what I think of as commodity coffees, e.g., Dunkin Donuts, Folgers, etc.