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Where Does the
        Money Go?
A Look at the Consuming Side Economics of the
              Coffee Supply Chain
For this Example a
Milled Green Coffee
   Fair Trade and
 Organic Certified
Sells to an Importer
at $1.50 per pound
Importer Adds Costs and Margin
Green Coffee                      $1.50
Shipping and customs entry         .095
Warehouse a...
Coffee Ships to Roaster

Ex Warehouse Coffee Price       $1.89
Shipping Cost                      .12
Shrink Loss of 18%  ...
Roaster Sells a Pound of Roasted Coffee for
                       $7.25
Roasted Cost per Pound              $2.45
Packagi...
All Other Operating Expenses for Roaster
                    Wholesaler
Material Cost Total                            $3....
The Bottom Line
Sales Price from Roaster One Pound    $7.25
Total Cost To Roaster One Pound       $6.49
Pre-Tax Profit on ...
Coffee Retailer Buys One Pound of FTO
                  Coffee for $7.25
• Brews coffee using a ratio of 60 grams of coffe...
Retailer Revenue and Cost of Goods
Sale of 16 Cups               $28.00
Coffee Cost                      7.25
Cups        ...
Retailer Operating Costs
Gross Operating Profit           $17.57
Labor Cost      (20%)                5.60
Leasehold      ...
Net Profit Retail Operations
Net Operating Profit                   $3.71
Depreciation, Interest, Amortization       1.12
...
Contact the SCAA

  330 Golden Shore # 50
  Long Beach, CA 90802

      562.624.4100
     info@scaa.org
     www.scaa.org
...
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Where Does The Money Go Ric Nicaragua 2009pdf

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Where Does The Money Go Ric Nicaragua 2009pdf

  1. 1. Where Does the Money Go? A Look at the Consuming Side Economics of the Coffee Supply Chain
  2. 2. For this Example a Milled Green Coffee Fair Trade and Organic Certified Sells to an Importer at $1.50 per pound
  3. 3. Importer Adds Costs and Margin Green Coffee $1.50 Shipping and customs entry .095 Warehouse and logistics .05 Finance and Storage .095 Importer Margin .15 Total Importer Add .39 Cost to Roaster At Warehouse $1.89
  4. 4. Coffee Ships to Roaster Ex Warehouse Coffee Price $1.89 Shipping Cost .12 Shrink Loss of 18% .44 Roasted Cost per Pound $2.45
  5. 5. Roaster Sells a Pound of Roasted Coffee for $7.25 Roasted Cost per Pound $2.45 Packaging Cost .39 Direct Labor Cost .55 Transfair Fee .10 Material Cost Total $3.49
  6. 6. All Other Operating Expenses for Roaster Wholesaler Material Cost Total $3.49 Wages Excluding Direct Labor .94 Sales, General & Administrative (SG&A) 1.68 Interest, Depreciation, Amortization and Lease .38 Total Cost To Roaster One Pound $6.49
  7. 7. The Bottom Line Sales Price from Roaster One Pound $7.25 Total Cost To Roaster One Pound $6.49 Pre-Tax Profit on Sale of One Pound .76 State and Federal Taxes of 35% .27 Total Net Profit per Pound $ .49 (6.7%)
  8. 8. Coffee Retailer Buys One Pound of FTO Coffee for $7.25 • Brews coffee using a ratio of 60 grams of coffee per liter of water • One pound yields 7.5 liters of coffee beverage • Coffee is sold at $1.75 per 475 ml cup • Pound yields 16 cups or $28.00
  9. 9. Retailer Revenue and Cost of Goods Sale of 16 Cups $28.00 Coffee Cost 7.25 Cups 2.00 Lids .46 Stir Sticks .16 Condiment Cost .56 Gross Profit per Pound $17.57
  10. 10. Retailer Operating Costs Gross Operating Profit $17.57 Labor Cost (20%) 5.60 Leasehold ( 7%) 1.96 Utilities (2.5%) .70 Marketing ( 3%) .84 Repairs & Maint ( 2%) .56 G&A ( 15%) 4.20 Net Operating Profit per Pound $ 3.71
  11. 11. Net Profit Retail Operations Net Operating Profit $3.71 Depreciation, Interest, Amortization 1.12 State and Federal Taxes .91 Net Profit $1.68 ( 6%)
  12. 12. Contact the SCAA 330 Golden Shore # 50 Long Beach, CA 90802 562.624.4100 info@scaa.org www.scaa.org SCAA on Facebook SCAA on Twitter

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