Terms and Credits
Wholesale coffee trade contract terms and credits are not dissimilar from those in other lines of commerce. The wholesaler helps the retailer finance his business to the extent of granting him thirty to sixty days in which to pay his bill, offering him a cash discount if the invoice is paid within ten days of date of sale. Until recent years, these terms were frequently abused, the customer demanding much longer credits and often taking a ten-day cash discount after thirty or more days had elapsed. This abuse was particularly prevalent from 1907 to 1913, when coffee prices were low and competition was especially keen.[335] In addition, the retailers often demanded special deliveries of supplies, which added to the wholesalers' costs; and some retailers refused to pay the cost of cartage from the cars to their stores.
With the coming of high prices after the close of the World War, the wholesalers showed a tendency to tighten up their credit and discount terms, the National Coffee Roasters Association especially recommending thirty days' credit, or at most sixty days, and a maximum cash discount rate of two percent.
Another trade abuse which has been corrected almost altogether was the practise of "selling coffee to be billed as shipped"; that is, the wholesaler held coffee on order, and billed only when delivered, even though several weeks or months had passed before shipment.
About Package Coffees
Since the beginning of the twentieth century, the sale of coffee in packages has increased steadily until now (1922) this form of distribution competes strongly with bulk coffee sales. While bulk coffee is still preferred in some eastern sections of the United States, coffee packers are making deep inroads there, to the extent that practically all high and medium grade retailers feature package coffees, either under their own brand name, or that of a coffee specialty house.
The prime requisite for success in any package coffee is the composition of the blend. One of the leaders in the field, which we will call Y, is said to be composed of Bogota, Bourbon Santos, and Mexican. In March, 1922, it was being sold at retail in New York for 42 cents. A competing brand, which we will call Z, is said to be a blend of Bogota and Bourbon Santos. It was being sold at retail in New York, at the same period for the same price. Simultaneously, in the retail stores of a well known chain system, a bulk blend composed of sixty percent Bourbon Santos and forty percent Bogota was to be had loose for 29 cents.
The second important factor that contributes to package coffee success is the container. It must be of such a character as will best preserve the freshness—the flavor and the aroma of the coffee—until it reaches the consumer.
Package coffee has not yet won universal favor. Some of the arguments used against it are: that the price is generally higher than the same grade in bulk; that it leads to price-cutting by stores that can afford to sell it at about cost as a leader for other articles; that the margin of profit is frequently too close for some retailers: that when the market advances, some packers change their blends to keep down cost and to maintain the advertised price; and that, when packed ground, there is a rapid loss of flavor, aroma, and strength.