Coffee from the supermarket 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 slightly better, that's a lot.
We are repeatedly asked whether we could test supermarket coffees. No, we don't do that, it would be far too easy. Because if small players simply point at large ones, that wouldn't be helpful for anyone. What we can do, however, is attempt to contextualize supermarket coffees. Why they are so often dirt cheap, why many taste the same, and whether anyone actually profits from them at all.
It is also important to clearly identify what opportunities supermarket coffee can offer – for consumers and producers alike. So we can now ask ourselves:
What is the purpose of supermarket coffee?
Why are the coffees often so cheap?
And what potential do supermarkets have that hardly anyone else has?
The Purpose of Supermarket Coffees
In many cases, the purpose of coffee in supermarkets is to lure people into supermarkets. Coffee in the supermarket often works like detergent – when there are promotions. Coffee is then often available in bulk packs and at fixed promotional times that have been planned long in advance.
Taste of Supermarket Coffees
It should come as little surprise that many supermarket coffees taste very similar. There are two main reasons for this: first, you need coffees in large quantities that always taste roughly the same. This limits the selection of countries of origin for the raw coffee. Second, and this is the reverse conclusion, coffees with more specialized flavors rarely make it to the supermarket because they are rarer and, above all, more expensive.
The larger a coffee brand is, the less distinctive its taste. Because a brand must keep its promise to always taste the same. And similar coffees in always similar compositions ensure this.
The cheaper the coffees become, the worse they become in quality. Coffee is one of the few products that actually tastes worse as the price drops. Expensive coffees don't have to, but can taste much better. This requires sensory analysis 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 except coffee. However, you shouldn't expect sensory heights with cheap coffees. Quality in coffee costs.
What's in Supermarket Coffees? Almost Always the Same.
While that sounds a bit bold – and I certainly haven't drunk nearly all supermarket coffees – why do I venture such a statement? Because of the price and the customer base that a supermarket targets.
Supermarket coffees are usually blends, or mixtures. Through these, sensory, price, and supply fluctuations can be smoothed out. It's not that many different raw coffees bring many different aromas to the supermarket blend; no, they bring stability. And they lower the price.
Supermarket coffees are stable in price and taste. So you need coffees that meet exactly these requirements. Therefore, many come from regions where a lot is produced, a large portion of production is mechanized, and post-harvest processes are extremely efficient.
These are – with exceptions – primarily Arabicas from Brazil, Honduras, Peru, and Mexico, as well as Robustas from Vietnam, West Africa, and increasingly from India.
The most commonly used raw coffees in supermarket coffee
In the countries mentioned, a lot of coffee is produced, partly at extremely low prices that, except in Brazil, have little to nothing to do with actual production costs.
Standard qualities from these origins are available in large volumes and meet most of the purposes that supermarket coffee wants to fulfill.
But Why Are Some Coffees in the Supermarket More Expensive?
It's mostly about brand strengthening, not drastic differences in raw coffee quality. A supermarket needs different segments to reach different customers. The good thing is that someone who buys the premium product rarely buys the budget line of the same product. The shopping cart rarely contains both the most expensive and the cheapest coffee at the same time.
And that's a huge advantage for a supermarket: the difference in the blend, or even in taste, doesn't necessarily have to exist; sometimes just a lighter or darker roasting style can help. And of course, the packages that come in different designs, names, and emotions are also at different heights.
Premium products at eye level, the middle segment at belly height, and discount goods at knee height. Next time you're at the supermarket, take a closer look at the coffee shelves – they're full of simple psychological tricks.
Why Are Coffees in the Supermarket So Cheap?
Mainly because supermarket coffees are produced in large quantities. Scale effects and efficiency in roasting, packaging, logistics, and storage result in lower prices that can be passed on to consumers. Large roasteries are always significantly more efficient than smaller and medium-sized ones when it comes to labor costs.
from our blog: https://kaffeemacher.ch/wer-roestet-wie-kaffee/
Lower prices are often, but of course not always, passed on, because a higher price for supermarket coffee doesn't necessarily reflect raw coffee quality, but appeals to the emotions a brand can evoke.
The raw coffee itself makes up a small part of the final cost structure of supermarket coffees. The overhead, that is, all the costs for operating the business, must be borne by the coffees. Of course, this isn't only the case for large roasteries, but for any business. However, the distribution is significantly larger for supermarket coffees because they can be produced so efficiently.
The Cheap Raw Coffees
Raw coffees for supermarket coffees are purchased in large quantities. This requires a roastery, and the roastery usually has a trader who sources 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 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 quantity goes away, admittedly at a smaller margin, but that gets recovered over the large volume.
That's purchasing power. Those who buy a lot are in demand.
Do Supermarkets and Their Associated Roasteries Pay Enough for Raw Coffee?
We can't answer this question, but we can speculate. Best to simply ask customer service what prices were paid for the raw coffees in a blend X at the supermarket. That should spark an interesting discussion – if supermarkets were to disclose their purchase prices.
But there is silence here – not only at the supermarkets, but among the vast majority of coffee roasteries. The Transparency Coffee is trying to counter this and invites people to disclose raw coffee prices. And does it hurt? No. It feels good. That's why we publish our purchase prices too. There needs to be more discussion here.
Do Cheap Coffee Prices Make Sense?
Counter question: for whom? For those who shop – yes. And for everyone else in the coffee chain? For those who produce coffee, deliver it, sort it, carry it, transport it, stock it on shelves? That remains to be answered.
Fundamentally, and this is true not just for coffee but especially for all food:
Someone pays when we don't.
The message that coffee must be cheap is therefore a false one. Coffee must cost something because all the work behind it costs something. If coffee costs little, then that's not a sustainable approach.
What Opportunities Does Supermarket Coffee Offer?
The greatest opportunities for change. Because do small players do everything better? Certainly not. Small might sometimes be beautiful, but to fulfill big promises, you also need big volumes. And where are they? With the supermarkets.
The market power of supermarket coffee is massive. The roasted coffee market is extremely consolidated, as this impressive graphic on the Hivos Coffee Barometer shows. The world's top 10 roasteries roast at least 35% of the coffee that is then primarily sold in supermarkets.
And what exactly does this power consist of, besides the ability to push prices down and make responsibilities hard 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 bring not only sensory but also financial stability. If one coffee becomes much more expensive due to crop failure or domestic prices rising as a result of social unrest, that coffee can be replaced with one that tastes sensory similar. That alone makes it barely worthwhile to put sensorily more interesting raw coffees in a supermarket blend.
So it's normal that entire blend components can be swapped out. That sounds logical, but the whole chain of consequences behind it is massive. All the effects are far away and not tangible here and, in this case, not tasting. If several containers of a coffee X are swapped out, that has an effect for everyone involved in production and export.
And Here Lies the Great Opportunity for Supermarket Coffee to Do Things Better
Let's imagine that a roastery that roasts 50,000 tons of coffee annually – that is, an industrial roastery in Germany – imports about 3,000 shipping containers full of coffee annually. Each container holds about 17 tons of raw coffee.
A cooperative in Honduras might do 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. That's almost nothing for the roastery, and quite a lot for the cooperative.
If the supermarket now decides to reprice, remarket, and repay this coffee from this cooperative in this container differently, etc., then that has a huge impact for producers. And for the supermarket, it's a low-hanging fruit. In terms of volume, marketing ("our sustainability range" for example), and of course financially.
Now there are – albeit on a very small scale – supermarkets that choose exactly such approaches. And these projects should be supported. But inform yourselves, ask questions, be critical. How long-term the projects – as the name suggests – are intended to be, remains to be seen.
You can find various examples on the web of supermarkets writing their own story in coffee. This usually applies to only a fraction of their coffee selection, but it is a start. And it would be proof that market power can also be used positively.
