Why specialty third wave roasters are moving away from microlots

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  • For many, microlots are synonymous with specialty coffee
  • The C price peaked at $2.45/lb in April 2024, with inflation and other factors squeezing roasters’ budgets
  • Many roasters are moving away from microlots in favour of more financially viable options, though a niche market remains

FOR A long time, microlots were synonymous with the third wave and specialty coffee, offering higher quality and traceability to roasters seeking to offer a more premium product. 

Now, a changing market and financial pressures are triggering a move away from microlots as many roasters seek more viable alternatives. 

The term ‘microlot’ became a popular term during the third wave as a means of differentiating smaller and more boutique lots of coffee from the rest. It could mean smaller lots of higher quality that are separated from larger lots on farms, or simply lots produced by smallholder and small-scale farmers. 

Against a background of pricing crises in the last decade, microlots gained particular prominence. In April 2019, the coffee C price fell to $0.86/lb, the lowest price since 2004 and a 35% decrease since prices began falling in early 2017. 

Many roasters and producers turned to microlots as a response to these tumultuous prices with the aim of not only obtaining better prices, but differentiating themselves. 

Third wave roasters’ attraction to microlots tie into specialty coffee’s obsession with innovation, differentiation, and “the undiscovered.” Small, bespoke or unusual microlots have provided an exciting tasting menu for roasters and a way to bulk out the offerings’ list for wholesale customers and end consumers.

However, things have changed in the last few years. A steady climb in the C price since the lows of 2019 – peaking at an average of $2.45/lb in April 2024 – combined with additional inflationary pressures, economic uncertainty and evolving consumer preferences is making way for new trends.

Many roasters have changed their approach to microlots, and are shifting towards more high-volume specialty lots as a way to stay competitive.

Consistency now trumps rarity

Microlots did their job in terms of capturing the attention of consumers by boasting rarity and unique attributes – and by doing so, helping producers capture more value and roasters stand out. But the winning formula no longer seems to work. Is it no longer affordable?

“Looking at retail pricing across specialty markets, it seems that many roasters – especially smaller ones – are leveraging higher quality and interesting farm stories to provide higher-priced coffees certain coffee customers,” says Peter Roberts, Professor of Organization and Management at Emory University and Academic Director for the Specialty Coffee Transaction Guide.

“Consider how, in 2023, the Specialty Coffee Retail Price Index data revealed an average retail price of more than $48 per roasted pound for coffees with named producers selling at the upper end of online store price ranges.” 

Today, microlots may not be as attractive as they once were. The repercussions of major events, like the global pandemic and the Brazil frost of 2021, sent prices skyrocketing. With additional logistical and inflationary issues, combined with lack of labour forces during lockdowns, investing in small microlots became too expensive for many roasters. 

Many roasters have gradually replaced the “microlot tasting menu” with more financially viable, higher-volume lots. Pricing isn’t the only motivation for this shift – providing a more consistent product at scale to consumers has also become a priority.

“Roasters want to avoid the variations that microlots bring,” says Douglas Cal, Specialty Coffee Manager at Minasul Cooperative. “Even if you have one or two micro batches, I think it’s important to also have high quality coffees at scale to ensure guaranteed supply,” he says.

To say that microlots have completely declined in popularity would be an oversimplification. Roasters are still attracted to boutique and specialised lots of coffee – however, purchasing these coffees in higher volumes, not just a few bags at a time, now makes more financial sense.

The Specialty Coffee Transaction Guide generates relevant pricing benchmarks as an alternative for reliance on C market pricing. Although its March 2021 report referenced declining sales of “fancy” coffees (84 points or above) and a shift towards more “regular” coffees, according to Peter this does not necessarily represent a decline in microlot sales overall.

“From 2020/21 to 2022/23, data from the Specialty Coffee Transaction Guide do not reveal a disproportionate reduction in the volumes of specialty coffees sold as microlots (i.e., less than 1,000 pounds) compared to containers (40,000+ pounds),” he says. 

“Additionally, despite a movement towards more ‘regular’ coffees, boutique, ‘fancy’ and higher-priced green coffees are still selling – and at increasing prices,” Peter adds. 

Are microlots over or will they regain popularity?

Small-scale roasters that buy through green importers are still able to maintain the illusion of a “microlot menu” via spot purchasing

For medium-to-large roasters, the attraction of small microlots may have waned – particularly as consumers seek more consistency and convenience in coffee products. For these roasters, purchasing higher volume lots is more reliable both in terms of price and consistency, especially if they are in a crunch.

At the same time, coffee prices have been relatively high – with the coffee C price fluctuating between $1.18 and $2.46/lb since the start of 2021 – meaning less incentive for producers to put in the extra work required by microlots.

According to current economic predictions, many countries will barely stave off a recession in the coming year, and the addition of ongoing conflicts and looming elections in many of the world’s strongest economies has fueled further economic uncertainty. Given these challenges – and with microlots meaning a higher risk-to-reward ratio – many roasters may not be willing to take risks for a while. 

Unless prices significantly drop again, or consumer preferences demand the presence of more  microlots, it’s unlikely that they will boom in popularity or fill up coffee shop shelves anytime soon. However, many will still remain a preference for the more niche specialty producers and roasters. 

“Looking at green and retail pricing for differentiated specialty coffees, it seems that producers that are able to offer high-quality microlots should be able to find buyers in global markets that want to roast and sell them,” Peter says. 

For a number of producers and roasters, it isn’t as simple as following a trend of whether microlots are popular, or if prices are high or low. Many smallholder farmers produce microlots by default – and for many small roasters, seeking out volumes of coffee larger than a microlot isn’t financially viable. 

“The higher the market, the less dedication to producing specialty coffees – however in some places, microlots are already part of the farms’ business model, so it is part of the DNA and they don’t change that much,” says Douglas.

As with most market trends, the reality is not binary. While there is an undeniable shift towards higher volumes of more affordable coffees, it is not a question of whether microlots are “in” or “out”. 

There is still a demand for them, and their value is still recognised, but roasters and producers need to find viable ways to scale up and remain competitive – which means shifting away from them for many, at least for a while.

Coffee Intelligence

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