Michigan coffee company making changes post-tariffs
ST.JOSEPH, Mich. -- According to Reuters, Brazil is the world’s largest exporter of coffee, and the United States is the world's largest consumer. In early August, the 50 percent tariffs on Brazilian goods, including coffee, took effect.
Brian Maynard is the owner of Forté coffee, which has three locations in Michigan. Maynard started Forté coffee almost 7 years ago.
Forté uses specialty coffee, which Maynard explained is arabica coffee beans grown at a high elevation, typically within 1500 miles of the equator. He says all the coffee they use is graded by a quality grader at 80 or better on a scale of 100.
Forté sources its coffee almost exclusively through Theta Ridge Coffee in South Bend, which gets its coffee from growers around the world.
Maynard says any coffee consumers may be getting from Brazil was likely here before the tariffs. He says right now, it doesn't make sense to retail that coffee with that high of a tariff.
Maynard says Brazil produces some fantastic coffee, which Forté typically uses a lot of in its blends. 50% of their best-selling Forté coffee blend used to be made up of Brazilian coffee. Now, they’re substituting it with another coffee from Honduras.
“When the Brazilian coffee became unavailable to us, we had to try to figure out something to substitute, something that was similarly priced, similar quality and similar taste,” said Maynard.
He says he wants his coffee to taste the same every day, and that’s why they create blends in the coffee business. He says coffee can change over time.
“So we know what the profile of Forté blend is, and so we'll begin to experiment with adding a little more of this, a little less of that,” said Maynard. “So, the original Forté blend from six years ago is the coffee that goes in is slightly different. The flavor profile, though, is the same.”
Maynard says in addition to the 50% tariffs on Brazilian coffee, many coffees they source from other countries have a 10% tariff. He says that adds a price increase. Forté has raised its coffee prices approximately 20% in the past 6 to 8 months for whole bean coffee.
“As much as I would desire not to raise prices for our customers, the reality is that I didn't start this business as a hobby. This is something that I make my living doing, and so when my costs go up. Unfortunately, I have to raise the price to the customer,” said Maynard.
Maynard also discussed the impacts of tariffs on decaf coffee, because, as he says, the Swiss Water Process Decaf coffee is the only kind they use, and the plant is in Vancouver, Canada. He says they also face the impacts of tariffs when importing that coffee. As a result, their decaffeinated coffee went up about 25% in its retail price six months ago.
Maynard says tariffs can make it hard to plan ahead. Overall, he’d like to see things become a bit more stable and predictable so they can know what's going on and communicate that to customers ahead of time.
“We’re really seeing almost this perfect storm of climate change driving pricing, labor costs are going up, just general inflation, and then you have all of these tariffs that are really affecting the business. And it starts to affect a cost of one cup of coffee or your latte as well,” said Maynard.
Maynard describes the climate impacts in Brazil, for example, which, according to The Associated Press, (hyperlink: Brazil drought punishes coffee farms and threatens to push prices even higher | AP News), experienced drought and higher-than-average temperatures this time last year.
“Brazil, as an example, has lost a significant amount of their production due to climate change over the past several years. And coffee, in general, at the green level, or the wholesale level, has gone up about 100% over the last 18 months. So, we've already tried to absorb some of that, but now we just simply cannot sustain that anymore,” said Maynard.
He also explained the American coffee-growing industry and how it differs from other global growers.
“The other issue here, from a business perspective, honestly, is we're not protecting any sort of homegrown coffee suppliers. There really are three places in the United States that grow coffee, Kona, in Hawaii. In Hawaii, Kona is the best known. There's not a lot of land there, so there's not going to be significant production. There's a little bit of coffee grown around Santa Barbara tends to be lower elevations, which means you're not going to get the same high quality. And Puerto Rico.And in Puerto Rico, there is the same issue. You're not getting that same level of quality,” said Maynard.
Maynard also sources matcha from a supplier in Kansas City that imports the ceremonial-grade matcha from Japan. He says he just received an increase from their supplier as well.
He says that unless tariffs get dropped in the next several weeks, he foresees potentially permanent changes in trade relationships, which could impact the future availability of Brazilian coffee in the US. Maynard says he hopes he's wrong about that.