a New Coffee Era? Record Auctions, Rising C-Market Explained

Are we venturing into a new era in coffee? Record Auctions and Rising C-Market Reflect Industry Growth

As an industry we’re in a fairly fascinating spot when it comes to pricing, as it seems that both the ceiling and the floor of coffee are being pushed upward simultaneously. With this upward trajectory happening, is this a signal of a broader transformation in the market dynamics, or a momentary spike in prices that just happens to be a coincidence?

Looking at the top-level, we’re clearly in coffee auction season, with extreme success in both the Best of Panama and Hacienda La Esmeralda auction, celebrating 20 years of Panama Geisha. The BOP had 50 coffees with an average price of $1383/kg, and the Hacienda La Esmeralda Auction topped that average with $1611/kg. Both of these auctions have gone and shattered pricing records, while across the producing World, there have recently been half a dozen Cup of Excellence auctions have seen a massive uptick in auction participation, aggregate pricing and overall action.

This is a clear indication that the top tier of the coffee market is thriving, perhaps driven by the competition scene, though likely more related to an overall push to develop service standards and experiences in coffee shops around the World.

On the other side of the industry, in the commodity sector, we watch the Arabica (NYSE) and the Robusta Market (LSE), which are both on a fascinating trajectory. These markets trade on news headlines, extreme climate events, global production reports, supply chain constraints and other global factors, such as the Suez Canal just a few years ago – very similar to other commodities such as wheat, oil and lumber. A global impact currently affecting both of these markets is the European Union Deforestation Regulation going into affect at the end of 2024.

Robusta coffee prices are currently at their highest levels ever recorded. As of this week, prices have reached approximately $2.14/lb ($4.70/kg), surpassing previous peaks. There are a few areas in Vietnam that are have struggled in 2024 with adverse climactic conditions, spanning the provinces of Gia Lai to Lam Dong in the Central Highlands. This area is responsible for 80% of Vietnam’s production of Robusta, and Vietnam is responsible for 40% of the World’s production of Robusta. Reports suggest it is possible and highly likely that we see a bounce back of supply in 2025 and prices begin to ease down.

Arabica coffee prices are not currently at ‘record’ levels – they’re sitting around 20% off of historic highs, currently ~$2.50/lb (~$5.50/kg) which is very much to do with worry related to Brazil’s harvest. The state of Minas Gerais is responsible for somewhere between 15% and 20% of the World’s Arabica production. So annually financial institutions and multi-national hold their breath, hoping for no frost or severe weather influence that may affect yields.

Dave’s Take;

• Why does this matter to specialty?: Have you heard the line, “a high tide raises all ships”, well in this context, what I’ve seen through different cycles is an overall lift in the pricing that specialty players are offering for volume coffee – often priced in a “differential formula” based off the current market price.

Cole’s Take;

• Keep a pulse: The commodity market is in a constant state of flow and is exhausting to keep an eye on daily. Checking in every now and then to see where the Arabica market sits could be beneficial for you when you’re making purchases for your specialty roasting business.

• Bottle sized brews: Remember when we converted the most expensive coffee in the World into the sizing of a 750mL bottle of wine, it was $588 cost per bottle for the business? Well the equivalent formula using the current commodity price ($5.50/kg) equates to ~$0.29 per bottle for the business. There’s a 2000x difference in these prices. How do you take these wildly different numbers into a final consumer price point? Note, One bottle of wine is equivalent to three cups. These numbers don’t include operating expenses a business would incur. .

• End Consumer Pricing: As an industry, specialty coffee needs to cost more. We’ll slowly see a shift in coffee pricing though likely nothing major or shocking. Specialty coffee companies are generally worried about being seen as “too expensive”, with many roasters choosing to keep their prices as comparable as possible to multi-national competitors. Don’t be too surprised if you see your favourite local coffee shop increase by 10% or more within the next year – many other factors will be pressuring this decision as well.

Reading: The UC Davis Coffee Center has reopened its 6,000-square-foot facility, reinforcing the importance of academic study in coffee. By fostering innovation and preparing the next generation of coffee professionals, the center is shaping the future of the industry. Maybe I can switch out my degree to one in coffee—hopefully, we’ll see degrees in the coffee industry soon!

Watching: a deeper dive on roast colour in coffee—something we referenced recently and think is incredibly important—highlighting some historical references and influences that have led to regional preference toward roasting style thanks to Lance Hedrick.

Listening: Need help navigating your finances? The Prof G Markets podcast delivers. In this episode, Ramit Sethi cuts through the noise with practical insights on buying versus renting a home, understanding the true value of money, and tackling financial challenges head-on. It’s a refreshing take in a space where so many others are cooking up something less substantial.

Brewing: My cup is currently filled with Rose Coffee. Based in Zurich, Switzerland and operated by Matt Winton, the 2021 World Brewers Cup Champion, we purchased some nice coffees and Matt threw some additional goodies in the big to try out. Really enjoying Finca Soledad Washed Geisha from Ecuador. If you can track down coffee from Finca Soledad, I love what Pepe is doing there.

thanks to Rylea from Rosso Coffee for submitting this weeks Dune-inspired coffee bar, rumour has it this is the first coffee shop on Arrakis – the planet where the most precious substance in the universe is the spice

Baron Harkonnen: “Who controls the pumpkin spice, controls the fall season!”

Paul Atreides: “The spice must flow… but not before my pumpkin spice latte.”

respond with a photo of your brew bar or get creative with an AI generated scene and we’ll feature and share in an upcoming week of BTD

Distance: a year ago neither of us were runners; this year, we’ve both clocked over 500km on our way to the 1000km goal.

Last week Cole just barely limped over 25km to hit seven weeks in a row of 25+ and Dave managed to top the distance this week at 27km.

“Consistency isn’t about being perfect; it’s about showing up, even when it’s hard.”

Want to join us as we hit the road? Let’s connect on Strava! or, join our Whoop group – just respond to the email and let’s grind together!