Pricing and transparency
We will be able to provide our clients with a cost breakdown of all the coffees we purchase and sell.
We are currently working under a model where we want to make all parties benefit when a coffee is valued above the current market price based on the cup profile.
We believe in giving the farmers good incentives to work progressively towards higher quality standards. To do so they often have to invest in equipment or improved routines in cherry picking or cherry purchase, lot traceability and lot separation, improved and more time consuming processing, drying and so on.
At the same time we want to give our clients good value. Coffee is still an extremely cheap beverage for the consumers compared to most other things when you look at the price pr cup for home brewing. There is a huge amount of work and resources behind every kg of quality coffee produced. We believe it is easier for everyone to justify a higher price in their market when it’s noticeable in the flavor and therefore believe increased quality, together with price transparency, could contribute to a more sustainable trade.
Example of general cost breakdown and pricing on Ethiopia
Coffee: Kecho Tirtira Cooperative
Price to the coffee Cooperative Union: 7,49 USD/kg (3,40 USD/lb)
Local export services + 0,265 USD/kg
Shipping, trucking, taxes to Europe: + 0,50 USD/kg (baseline cost)
Landed cost at warehouse 8,255 USD/kg
Nordic Approach margin 40%: + 3,30 USD/kg
Nordic Approach spot price 11,55 USD/kg
Prices to the farmers’ Cooperative Union include bagging, milling, sorting and preparation for export.
The local export service fee is something we pay to a “Coffee Service Provider” to follow up and to make sure milling, trace ability, local export documents and trucking to port are taken care of. Approximately 85 % of our purchase price will go back to the cooperative and their members.
Nordic Approach is charging a fixed margin at 40% for the spot coffees. This is to cover our financing on purchase, handling and warehousing at our third party warehouse, travelling cost, work in origin, quality control, and the company’s overhead cost.