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May 2015 Newsletter

We're back. Two weeks mostly spent rattling around Britain's major
tourist spots and we've returned and managed to get rid of the worst
of the jetlag. There was a reasonable amount of work to do at the
same time, of course, and while we were travelling the length and
breadth of the U.K. I was closely observing the local coffee scene.

My observations were pretty much in line with what I saw the last
time I was in Europe. Capsule coffees are taking over the
"commercial convenience" world. 4 years ago when I was in the U.K.
in-room hotel coffee was a "stick" of instant coffee and an electric
kettle. This time around over half the places we stayed at had
Nespresso machines and capsules. Those that did also used commercial
Nespresso machines in bars and dining rooms.

The rapid uptake of capsule brewing, and more importantly the
increasing commercialisation of what was originally a domestic
brewing process is producing fundamental changes in the coffee
market. We don't see it so much in Australia yet, because we are
less willing to pay $4.00 for a shot of Nespresso. We expect to see
a decent grinder and a high end machine, serviced by a well trained
barista, for that sort of money.
However, several of the places we stayed advertised "Nespresso" as a
premium feature, compared to the somewhat stale and weak filter or
urn brews they also offered. There is no doubt it is an improvement,
but at what cost?

In most coffee brewing systems to date, the cost of the packaging is
a tiny fraction of the overall cost of putting a cup in front of a
customer. Espresso in particular has a cost hierarchy of consumables
(coffee, milk, sugar), labour, then machine, maintenance and other
overheads built into the total price. The packaging the coffee
arrives in would be far less than 1% of this overall cost. Capsule
systems are disrupting this hierarchy, with packaging suddenly
costing more than the coffee it contains. There is a very close
analogy here with bottled water, where packaging, distribution and
advertising represent 99% of the manufacturer's costs.

There's a flow on effect in the domestic machine industry as well.
Once upon a time people would decide to buy a beginner espresso
machine, and start with a little Sunbeam, Breville, Saeco or Krups
machine. Then they'd progress to a grinder, a Silvia or similar
machine, and then later on a heat exchanger type.

Talking with some old industry friends, this progression has been
totally disrupted. Like me they have seen domestic machine sales
decline steeply, and a total halt in new "beginner" models coming to
market. There is still a market for higher end HX and Dual Boiler
machines but even sales of these are decreasing. I'm glad that I'm
still able to make a living by concentrating on the very best beans
available rather than worrying about machines.

This month's special is a microlot processed at the Cafex washing
station in Burundi.

Burundi Cafex Microlot

First of all, as soon as you grind it you get a distinct tropical
fruit aroma, easily identifiable even by someone not trained in
coffee evaluation (i.e. a tea drinker.) The tropical fruit follows
through into the flavour, with a sweet pineapple acidity. The body
is relatively heavy, and the coffee finishes on almost a fruit mince
note, raisins with those little bits of orange peel mixed in. This
is one fruity coffee.

Until next month


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