Third Wavers, Decommodification of Coffee

November 11, 2007

posted by Jody Treter

There is a new generation of specialty coffee roasters, baristas and enthusiasts who are undeniably leading the revolution of the coffee industry these days. This culture of coffee afficianados is often referred to as the “Third Wave of Coffee”. The notion of the “Third Wave of Coffee” was coined by Trish Skeie in March of 2005 during an interview on NPR’s All Things Considered, which aired from the United States National Barista Championships in Seattle.

Trish has been a student of the coffee industry for twenty years and currently serves in the industry as ‘Director of Coffee’ at Zoka Coffee Roaster & Tea Co. based in Seattle, Washington. (note – Zoka was just named “Macro Roaster of the Year” by Roast Magazine).

Her theory goes like this. The “First Wave of Coffee” was the post-World War II era, a time when coffee was simply consumed, not enjoyed. The war forced the production of quick, easy foods and instant coffee reigned supreme. The “Second Wave of Coffee” started in the late 1960’s with the birth of companies like Pete’s and then Starbucks. Specialty grade Arabica coffees began replacing lower grade Robustas as cutting-edge roasters and baristas gained appreciation for the nuances of different roasts and origins.

Fast forward to 2007 and we find ourselves here in the “Third Wave of Coffee”. According to Trish, it’s the evolution of coffee drinkers toward a deeper appreciation for the uniqueness of different coffees. Today it is quite common for customers to ask for a certain country of origin (Ethiopian, Sumtran, etc) when ordering their coffee. Here at our Coffee Bar, many of our customers know the name of the farming co-op that grows their favorite coffee along with the roast profile and other unique attributes of the bean.

Speciatly roasters around the country have become skilled at evoking favorable characteristics of beans and bartistas have become artists at pouring and brewing. These are “The Third Wavers”.

But, what has the “Third Wave” done for small-scale coffee producers and the trading of coffee as a whole? This question gets at the very essence of why we (Higher Grounds Trading Co.) are in business today.

When we started Higher Grounds TC we didn’t know anything about this theory of the “Third Wave of Coffee”. What we knew, after spending many months in Chiapas, Mexico in 2001 and 2002 witnessing one of the most dramatic falls of world coffee prices ever, is that the small scale coffee farmers weren’t making it. In the third quarter of 2001, Starbucks celebrated a remarkable increase in profits to the tune of 34%. In Chiapas Mexico, some 30,000 people (mostly of indigenous decent) were preparing to leave their homes in search of work in Mexico City or the United States. A study by Luis Navarro from the Interhemispheric Resource Center indicates that the coffee crisis was driving this mass emigration.

Whether or not you buy into Trish’s theory of the “Third Wave” of coffee, the Specialty coffee industry is in a process of change. In terms of trading practices, one laudable step in this evolution has been the “decommodification” of coffee. Rather than pegging prices to a wildly fluctuating world market, buyers are going direct to the source (farming co-ops and/or plantations) and setting prices based on quality of coffee, cost of living, etc .

It is clear that many farmers are finally getting the respect and dignity they deserve; roasters are getting the excellent beans and knowledge they seek; consumers are reaping the benefits in the final cup. In terms of impact, there is much to be learned about (and from) the players in the burgeoning Specialty Coffee industry. With regard to trade practice and company policy, what benchmarks are worth emulating that will benefit the farmers over the long term?

If you want to delve a bit deeper into coffee pricing, check out the New York Board of Trade Coffee Price Charts (data from 1970 – today). It’s based on one hundred pounds so simply divide the number you see to the right by 10. For example, 120.00 is actually $1.20/lb. Remember, these prices are the market rates. These are not the prices coffee farmers are receiving. Note that the real prices in the 70s reached almost $3.00/lb. A good price these days is $1.20.


Bean Activist

April 28, 2007

Chris O’Brien and Chris and Jody Treter are working on a new book about coffee, justice, and sustainability. This will soon be our blog.