Supermarket coffee is available at dumping prices. How do supermarkets manage to offer such cheap coffee? What is actually in it? And can such coffees even be produced fairly? One thing is certain: if supermarkets make even small improvements, it makes a big difference.
We are repeatedly asked if we could test supermarket coffees. No, we won't do that; that would be far too easy. Because if small companies just point fingers at big ones, it wouldn't lead anywhere for anyone. However, what we can do is try to contextualize supermarket coffees. Why they are so often dirt cheap, why many taste the same, and whether anyone actually makes any money from them at all.
It is also important here to clearly identify the opportunities that supermarket coffee can offer – for consumers as well as for producers. So we can now ask ourselves:
What is the purpose of supermarket coffee?
Why are these coffees often so cheap?
And what potential do supermarkets have that hardly anyone else has?
The purpose of supermarket coffee
The purpose of coffee in supermarkets is, in many cases, simply to lure people into the stores. Coffee in supermarkets often functions just like laundry detergent – especially when there are promotions. Coffee is often available in bulk packs during fixed promotional periods that have been planned long in advance.
The taste of supermarket coffees
It should come as little surprise that many supermarket coffees taste very similar. There are primarily two reasons for this: first, there is a need for large quantities of coffee that always taste roughly the same. This limits the choice of countries of origin for the green coffee. Second, and this is the logical conclusion, coffees with more specific flavor profiles rarely make it into the supermarket because they are rarer and, above all, more expensive.
The larger a coffee brand is, the less specific its taste. Because a brand must keep its promise to always taste the same. And that is ensured by similar coffees in a consistent composition.
The cheaper the coffees become, the worse they are in terms of quality. Coffee is one of the few products that truly tastes worse as the price goes down. Expensive coffees don't have to taste much better, but they can. This is where sensory analysis is needed to distinguish what sets a good coffee apart from well-intentioned marketing.
Inexpensive coffees that taste like coffee certainly have their absolute justification. Not everyone wants coffees that smell extremely aromatic and taste like everything except coffee. However, one should not set expectations for sensory highs too high with low-cost coffees. Quality in coffee comes at a price.
What is inside supermarket coffees? Almost always the same thing.
That might sound a bit bold, and I certainly haven't drunk even remotely all the supermarket coffees out there. Why do I venture such a statement? Because of the price and the clientele that a supermarket is targeting.
Supermarket coffees are generally blends. These allow sensory, price-related, and supply-related fluctuations to be ironed out. It is not that many different green coffees bring many different flavors to the supermarket blend; no, they provide stability. And they lower the price.
Supermarket coffees are stable in terms of price and taste. Therefore, they need coffees that can meet exactly these requirements. Thus, many come from regions where there is high production, a large part of production is mechanized, and post-harvest processes are designed to be extremely efficient.
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 frequently used green coffees in supermarket coffee
A lot of coffee is produced in the mentioned countries, sometimes at extremely low prices, which, except in Brazil, have little to nothing to do with real production costs.
Standard qualities from these origins are available in large volumes and serve most of the purposes that supermarket coffee aims to fulfill.
But why are some of the coffees in the supermarket more expensive?
It is usually about brand strengthening, not drastic differences in raw coffee quality. A supermarket needs different segments to reach different customers. The good thing about this is that someone who buys the premium product hardly ever buys the cheap version of the same product. So, you will rarely find the most expensive and the cheapest coffee in the same shopping cart.
And that is a huge advantage for a supermarket: the difference in the blend, or even the taste, does not necessarily have to be significant; perhaps a lighter or darker type of roasting is enough. And of course, the packages, which come in different designs, names, and emotional appeals, are also placed at different heights.
The premium products at eye level, the middle segment at belly level, and the discount goods at knee level. Take a closer look at the coffee shelves during your next visit to the supermarket; they are full of simple psychological tricks.
Why are coffees in the supermarket so cheap?
Above all, because supermarket coffees are produced in large quantities. Economies of scale and efficiency in roasting, packaging, logistics, and storage ensure lower prices that can be passed on to consumers. Large roasteries are always significantly more efficient than small and medium-sized roasteries when it comes to personnel costs.
from our blog: https://kaffeemacher.de/blogs/kaffeewissen/wer-roestet-wie-kaffee/
Lower prices are often, but of course not always, passed on, because a higher price for supermarket coffee does not necessarily reflect the quality of the green coffee, but rather appeals to the emotions that a brand can evoke.
The green coffee itself makes up a small part of the final cost structure of supermarket coffees. The overhead, i.e., all costs for the operating apparatus, must be carried by the coffees. This is, of course, not only the case with large roasteries, but with every company. It's just that the distribution is much larger with supermarket coffees because production can be so efficient.
The cheap green coffees
The green coffees for supermarket coffees are purchased in large quantities. This requires a roastery, and the roastery usually has a trader who organizes the coffees for them. And because the food industry is a low-margin sector, it's about volume here – more volume means more margin. These volume businesses are therefore also interesting 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 volume is sold; even if at a lower margin, it is recovered through the sheer quantity.
That is buying power. Those who buy a lot are in demand.
Do supermarkets and their associated roasteries pay enough for green coffee?
We cannot answer this question, but we can speculate. It is best if you simply ask customer service what prices were paid for the green coffees in blend X at the supermarket. That would likely trigger an interesting discussion – if supermarkets were to disclose their purchase prices.
However, silence reigns here – and not only among supermarkets but among the vast majority of coffee roasteries. Transparency Coffee is trying to counteract this and invites everyone to disclose green coffee prices. And, does that hurt? No. It feels good. That is why we also publish our purchase prices. There is a need for more discussion here.
Do low prices for coffee make sense?
Counter-question: for whom? For those who buy – yes. And for everyone else in the coffee supply chain? For those who produce, supply, sort, carry, transport, and stock the coffee on the shelf? That remains to be answered.
Basically, and this applies not only to coffee but especially to all food products:
Someone else pays if we don't pay.
The message that coffee has to be cheap is, therefore, a false one. Coffee must cost something because all the work behind it costs money. If coffee costs very little, then that is not a sustainable approach.
What opportunities does supermarket coffee offer?
The greatest ones for change. For do the small ones do everything better? By no means. Small is sometimes beautiful, but to be able to keep big promises, you need large volumes. And where are those? At the supermarkets.
The market power of supermarket coffee is massive. The coffee market for roasted coffee is extremely consolidated, as this impressive graphic on the Hivos Coffee Barometer shows. The top 10 roasteries in the world roast at least 35% of the coffee that is then mainly sold in supermarkets.
And what exactly does this power consist of, besides the fact that prices can be pushed down and responsibilities are difficult to trace?
The powerful freedom of substitution. Replacing coffees when they become too expensive for supermarkets.
Blends, which we discussed earlier, allow a roastery to bring not only sensory but also financial stability. If one coffee suddenly becomes much more expensive due to a bad harvest or because domestic prices are rising due to 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. That sounds logical, but the whole trail of consequences behind it is massive. The entire effects are far away and not palpable and, in this case, tasteable here. If several containers of a coffee X are exchanged, then that has an effect on everyone who is involved in production and export.
And this is where the great opportunity for supermarket coffee lies to make things better
Let's imagine that a roastery that roasts 50,000 tons of coffee annually – i.e., an industrial roastery in Germany – imports about 3,000 shipping containers full of coffee per year. A container holds approx. 17 tons of green coffee.
A cooperative in Honduras might produce 5 containers a year, 1 of which goes to the aforementioned roastery.
That would then be 20% of the cooperative's volume, or 0.03% of the roastery's roasted volume. That is almost nothing for the roastery, and really a lot for the cooperative.
If the supermarket now decides to price, market, pay, etc., this coffee in this container differently with this cooperative, then that has a huge impact for the producers. And for the supermarket, it is a low-hanging fruit. In terms of volume, marketing ("our sustainability range" e.g.), and of course financially.
Now there are – albeit on a very small scale – supermarkets that choose exactly such approaches. And these projects must be supported. But inform yourselves, ask questions, be critical. How long-term the projects are – the name implies it already – remains to be seen.
You can find various examples on the net of supermarkets that are writing their own history in coffee. This often only applies to a fraction of their coffee assortment, but it is a start. And it would be proof that market power can also be used positively.
