Why is coffee from Blue Mountain, Jamaica so expensive?
Simple demand, supply and the resultant price.
People are drawn to the balanced cup that real Jamaica Blue Mountain coffee offers. It’s chocolatey infused with spice and fruit without bitterness.
Additionally Japan demands it more than the rest of the world and buys 70% of total production. This results in 30% for the rest of world. Additionally the region that it’s grown in–the steep slopes of the Blue Mountains, limits cultivation in an is already limited zone. Its 8 hours of daily mist and fog crestes a natural green-house effect which slow ripens the beans.
Additionally the island offers a bespoke coffee made in traditions delevoped over hundreds of years. But that’s not to say farms aren’t investing in modern and new cultivation methods.
Some critics say that over the last 20years with the rise of Starbucks and specialty coffee, other regions have improved quality and now offer cups with similar quality to Jamaica Blue Mountain.
The truth is great coffee can come from anywhere but not all have same taste profile. In short, two handbags of the same size says nothing about the quality and style. A Louis Vuitton handbag will always maintain its value due to its quality and taste, so too with Jamaica Blue Mountain.
A respected local coffee brand SALADA Foods Jamaica Limited complained of Jamaica coffee price increases.
The increases slashed its gross margins by more than one-quarter, the company stated. It’s the latest processor to complain about the over 30 per cent price hike in one year, and 250 per cent hike over two years, towards $11,000 per box of coffee cherry. However the price rise is due to a severe supply shortage based on drought, disease, farm decay and now fire. Concurrently, large overseas buyers are demanding more coffee from Jamaica. On the micro-level farmers are demanding more per box due to the impact of currency depreciation on farm costs, and also the cost to protect the coffee against disease and theft. Two years ago processors paid roughly $3,000 for a box of coffee cherry to farmers.
“Profits continue to be adversely affected by the increases in price of coffee beans realised in the first quarter and the performance of its subsidiaries Mountain Peak Food Processors Ltd and Pimora Company Ltd,” stated Salada in a notice prefacing the financials signed jointly by Chairman Patrick Williams and Director Aubyn Hill. “The gross margin for the six months was 27.5 per cent, a reduction of 27 per cent when compared with the same period in the prior year. This resulted from the higher cost of coffee bean now being processed.”
Salada made $37-million profit before tax in the March quarter 2015 on $220 million in revenues, or 184 per cent higher profit year-on-year.
Just this week, large coffee processor Mavis Bank Coffee Factory Ltd makers of Jablum indicated that fire damaged at least $200 million worth of farms thus far. Last week US-based Marley Coffee cautioned its investors that the supply shortage of Jamaica Blue Mountain coffee could affect its sales going forward.
In recent times, Salada has faced increased local coffee competition in both the instant and brewed markets. Salada in its previous quarter hinted that it would seek to launch new coffee products this year. However, its latest March financials failed to add information on product development.
Last year, large coffee company Mavis Bank Coffee Factory Ltd launched True Brew, an instant coffee. It also launched Jablum Caribbean Blend, a mixture of beans from Jamaica and the Caribbean. In 2012, it also launched a high-end product called Jablum Gold.
Wallenford recently won the bid to supply global coffee chain Starbucks with single estate Jamaica Blue Mountain coffee in Japan stores for 2015.
It means that Starbucks will sell Wallenford single estate coffee exclusively in Japan.
Concurrently, Jamaicamocha understands that jamaica coffee from Amber Estate will continue to be sold in USA.
It’s Great news for Wallenford which last sold coffee to Starbucks about five years ago.