Supermarket coffee is available at dumping prices. How do supermarkets manage to offer such cheap coffee? What's actually in it? And can such coffees even be produced fairly? One thing is certain: if supermarkets do only a little better, that's a lot.
Again and again, we are asked if we could test supermarket coffees. No, we don't do that; it would be far too easy. Because if small players just point fingers at big ones, it wouldn't be productive for anyone. What we can do, however, is try to contextualize supermarket coffees. Why they are so often dirt cheap, why many taste the same, and whether anyone still profits from them.
It is also important to clearly identify the opportunities that supermarket coffee can offer – for consumers as well as producers. So we can now ask ourselves:
What is the purpose of supermarket coffee?
Why are coffees often so cheap?
And what potential do supermarkets have that hardly anyone else has?
The Purpose of Supermarket Coffees
The purpose of coffee in supermarkets, in many cases, is to attract people to the supermarkets. Coffee in supermarkets often works like laundry detergent – when there are promotions. Coffee is then often available in economy packs, at precisely defined promotional times that have been planned long in advance.
Taste of Supermarket Coffees
It should come as no surprise that many supermarket coffees taste very similar. There are two primary reasons for this: firstly, large quantities of coffee are needed that always taste roughly the same. This limits the selection of green coffee origins. Secondly, and this is the corollary, coffees with more special aromas rarely make it into supermarkets because they are rarer and, above all, more expensive.
The larger a coffee brand, the less special the taste. Because a brand must keep its promise to always taste the same. And similar coffees in ever similar compositions ensure this.
The cheaper the coffees become, the nastier they become in quality. Coffee is one of the few products that genuinely tastes worse as the price drops. Expensive coffees don't have to, but can taste much better. Here, sensory analysis is needed to find out what distinguishes a good coffee from well-intentioned marketing.
Cheap coffees that taste like coffee certainly have their absolute justification. Not everyone wants coffees that smell extremely aromatic and taste like everything but coffee. However, one should not set expectations too high for sensory high-flights with cheap coffees. Quality in coffee costs.
What's in Supermarket Coffees? Almost Always the Same.
While this sounds somewhat bold, I have by no means tasted even nearly all supermarket coffees. Why do I venture such a statement? Because of the price and the clientele a supermarket targets.
Supermarket coffees are generally blends, i.e., mixtures. These allow for sensory, price, and supply fluctuations to be smoothed out. It's not that many different green coffees bring many different aromas to the supermarket blend; no, they bring stability. And they lower the price.
Supermarket coffees are stable in terms of price and taste. Therefore, coffees are needed that can meet precisely these requirements. So many come from regions where a lot is produced, a large part of the production is mechanized, and post-harvest processes are extremely efficiently designed.
These are – with exceptions – mainly Arabicas from Brazil, Honduras, Peru, and Mexico, as well as Robustas from Vietnam, West Africa, and increasingly also India.
The most commonly used green coffees in supermarket coffee
In the mentioned countries, a lot of coffee is produced, sometimes at extremely low prices which, except in Brazil, have little to nothing to do with the real production costs.
The standard qualities from these origins are available in large volumes and serve most purposes that supermarket coffee aims to fulfill.
But why are some coffees in the supermarket more expensive?
This is mostly about brand strengthening, not drastic differences in green coffee quality. A supermarket needs different segments to appeal to different customers. The good thing about this is that someone who buys the premium product is unlikely to buy the budget line of the same product. So, the most expensive and the cheapest coffee are rarely found in the same shopping cart.
And that's a huge advantage for a supermarket: the difference in the blend, or even in taste, doesn't necessarily have to be there; sometimes a lighter or darker roast can help. And, of course, the packages, which come in different designs, names, and emotions, are also at different heights.
The premium products at eye level, the mid-range segment at belly level, and the discount goods at knee level. Take a closer look at the coffee shelves during your next supermarket visit; they are full of simple psychological tricks.
Why are coffees in the supermarket so cheap?
Mainly because supermarket coffees are produced in large quantities. Economies of scale and efficiency in roasting, packaging, logistics, and storage lead to lower prices that can be passed on to consumers. Large roasteries are always significantly more efficient than smaller and medium-sized roasteries in terms of personnel costs.
from our blog: https://kaffeemacher.de/blogs/kaffeewissen/wer-roestet-wie-kaffee/
Lower prices are often, but not always, passed on, because a higher price for supermarket coffee does not necessarily reflect green coffee quality, but rather appeals to the emotions a brand can evoke.
The green coffee itself accounts for a small part of the final cost breakdown of supermarket coffees. The overhead, i.e., the total costs for the operating apparatus, must be covered by the coffees. This is not only the case with large roasteries, but with every enterprise. However, the distribution is significantly larger for supermarket coffees because they can be produced so efficiently.
The Cheap Green Coffees
Green coffees for supermarket coffees are bought in large quantities. This requires a roastery, and the roastery usually has a trader who organizes the coffees for the roastery. And because the food industry is an industry with low margins, it's all about volume – more volume means more margin. These volume deals are therefore also attractive for trading houses, so they often pass on very good prices to large roasteries. At the same time, this is also interesting for large coffee producers, such as very large cooperatives. More quantity is sold, albeit at a smaller margin, but that is recouped through the large quantity.
That is purchasing power. Those who buy a lot are sought after.
Do supermarkets and their associated roasteries pay enough for green coffee?
We cannot answer this question, but we can speculate. It's best to simply ask customer service what prices were paid for the green coffees in blend X in the supermarket. That should spark an interesting discussion – if supermarkets would disclose their purchase prices.
But there is silence here – and not only from supermarkets, but from the vast majority of coffee roasters. Transparency Coffee tries to counteract this and invites to disclose green coffee prices. And, does that hurt? No. It feels good. That's why we also publish our purchase prices. More discussion is needed here.
Are low coffee prices sensible?
Counter-question: for whom? For those who buy – yes. And for everyone else in the coffee chain? For those who produce, deliver, sort, carry, transport, stock on shelves? That remains to be answered.
Basically, and not only with coffee but with all foodstuffs in particular, the following applies:
Someone pays if we don't pay.
The message that coffee has to be cheap is therefore a false one. Coffee has to cost something because all the work behind it costs. If coffee costs little, then that is not a sustainable approach.
What opportunities does supermarket coffee offer?
The biggest ones for change. Because, do small ones do everything better? By no means. Small may sometimes be beautiful, but to deliver on big promises, you also need big volumes. And where are they? In the supermarkets.
The market power of supermarket coffee is massive. The coffee market for roasted coffee is extremely consolidated, as this impressive graph from the Hivos Coffee Barometer shows. The top 10 roasters in the world roast at least 35% of the coffee, which is then primarily sold in supermarkets.
And what exactly does this power consist of, besides being able to drive down prices and making accountability difficult to trace?
The powerful freedom of substitution. To swap out coffees when they become too expensive for supermarkets.
Blends, which we discussed earlier, allow a roastery to achieve financial stability in addition to sensory stability. If one coffee suddenly becomes much more expensive due to a bad harvest or rising domestic prices as a result of social unrest, this coffee can be replaced with one that is sensorially similar. For this reason alone, it is hardly worth putting more sensorially interesting green coffees into a supermarket blend.
So it is normal that entire blend components can be exchanged. This sounds logical, but the whole ripple effect behind it is massive. The full impact is distant and not perceptible or, in this case, tasteable. If several containers of a coffee X are exchanged, it has an effect on everyone involved in production and export.
And here lies the great opportunity for supermarket coffee to do things better
Let's imagine a roastery that roasts 50,000 tons of coffee annually – an industrial roastery in Germany, for example – imports about 3000 shipping containers full of coffee each year. A container holds approximately 17 tons of green coffee.
A cooperative in Honduras might produce 5 containers a year, 1 of which goes to the said roastery.
That would be 20% of the cooperative's volume, or 0.03% of the roastery's roasted volume. This is almost nothing for the roastery, and a lot for the cooperative.
If the supermarket now decides to price, market, pay, etc. this coffee in this container differently with this cooperative, it has a huge impact on the producers. And for the supermarket, it's a low-hanging fruit. In terms of volume, marketing (e.g., "our sustainability range"), and of course financially.
Now there are – albeit on a very small scale – supermarkets that choose precisely such approaches. And these projects need to be supported. But inform yourselves, ask questions, be critical. How long-term these projects are intended to be – as the name suggests – remains to be seen.
You can find various examples online of supermarkets writing their own coffee story. This often applies only to a fraction of their coffee range, but it is a start. And it would be proof that market power can also be used positively.
