[tetrep]

Are you saying that supply can't scale to demand? Because what you've described, a limited supply and increasing demand, is commonly solved by increasing supply. Unless we're at 100% coffee output for the Earth, which I don't think we currently are.

[ovao]

We aren't. Like with any other plant, there's a relatively hard limit on the availability of land suitable for arabica's growth (premium coffee is almost exclusively arabica), which will shift in one direction or the other as climate changes.

Today there is still difficulty in generating enough incentive to get farmers into arabica, but that changes with different practices, which Blue Bottle has historically practiced (direct trade and direct investment in farms, etc.). This model seems to be very sustainable for the time being.

On the buying end, the roasting end, distribution, etc., the challenges in scaling are similar or the same as scaling any other business as far as I can tell.

My intuition is that consumer demand for genuinely premium coffee would run out before the land or the farmers do, but I know the market far less well than I'm sure others here do.

[cwkoss]

I'm saying that supply of highest-quality coffee may be less elastic than demand.

Certainly we could grow more coffee, and that would likely increase net output of high quality coffee. However, if a company is buying the 'best 10%' of coffee and need to double their output, it is more likely that they buy 80th-90th percentile coffee than reinvest their profits into increase the quality that tranche of coffee to meet that of the top 10%. Even if a company chose to do this, the amount of time it takes to deploy capital in agriculture (~1yr+) is likely much less than the amount of time it takes to deploy capital in manufacturing (months), which effectively would cap growth rate.

[ovao]

An interesting argument I hadn't considered. I wonder, though, how genuinely impactful bean quality is for the end product. It's well understood that it's impactful to some degree, but do premium roasters need the top 10%, or is, say, the better half of arabica produced sufficient to yield effectively the same brewed product?

Said another way, is the slope of quality distribution that severe?

[cwkoss]

Good question, I'd also be interested in the answer.

I'd guess its a long-tailed distribution something like this (https://qph.ec.quoracdn.net/main-qimg-3b21f991d3f0446ce30b9b...) (quality on x axis, volume on y-axis) However, I know little about the complexities of coffee agricultural and manufacturing process, mostly just speaking in abstract armchair economics terms.