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The practice of coffee drinking began more than one thousand years ago in Ethiopia. According to legend, a shepherd tried eating coffee cherries after observing that his goats didn’t sleep when they ate the wild fruit. 
One of the first written records mentioning coffee tells the story of Sheik Omar, who brought coffee to the city of Mocha in 1258. This city, now called Al Mukha, is in modern day Yemen. For hundreds of years, coffee from Yemen has been blended with coffee from Indonesia (Java), to create the classic Mocha Java.
The world’s first coffeehouses were opened in Mecca in the early 15th century. They were comfortable places, where men relaxed and discussed politics over a cup of coffee. During this time, coffee was brewed by boiling the beans in water. The practice of pulping and roasting coffee began in Turkey, about 100 years later.  Istanbul was famous for having hundreds of coffee houses.   
It is thought that Muslim pilgrims returning from the Middle East brought coffee seeds with them to India in the early 1600s. Written records show that the Dutch governor in Malabar (India) sent a Yemeni or Arabica coffee (Coffea arabica) seedling to the Dutch governor of Batavia (now Jakarta) in 1696. This first seedlings sent was failed to grow due to flooding in Batavia. The second shipment of coffee seedlings to Batavia was reported in 1699. The plants grew, and in 1711, the first exports were sent from Java to Europe by the Dutch East Indies Trading Company, known by its Dutch initials VOC (Verininging Oogst-Indies Company), which was established in 1602. Within 10 years, exports rose to 60 tons per year. Indonesia was the first place outside of Arabia and Ethiopia, where coffee was widely cultivated. VOC monopolized coffee trading in 1725 to 1780.
The coffee was shipped to Europe from the port of Batavia. There has been a port at the mouth of Ciliwung River since 397 AD, when King Purnawarman established the city he called Sunda Kelapa. Today, in the Kota area of Jakarta, one can find echoes of the sea-going legacy that built the city. Sail driven ships still load cargo in the old port. The Bahari museum occupies a former warehouse of the VOC, which was used to store spices and coffee.  Menara Syahbandar (or Lookout Tower) was built in 1839 to replace the flag pole that stood at the head of wharves, where the VOC ships docked to load their cargos. 
In the 1700s, coffee shipped from Batavia sold for 3 Guilders per kilogram in Amsterdam. Since annual incomes in Holland in the 1700s were between 200 to 400 Guilders, this was equivalent of several hundred dollars per kilogram today. By the end of the 18th century, the price had dropped to 0.6 Guilders per kilogram and coffee drinking spread from the elite to the general population.
The coffee trade was very profitable for the VOC, but less so for the Indonesian farmers who were forced to grow it by the colonial government. In theory, production of export crops was meant to provide cash for Javanese villagers to pay their taxes. This was in Dutch known as the Cultuurstelsel (Cultivation system), and it covered spices and a wide range of other tropical cash crops. Cultuur stelsel was initiated for coffee in the Preanger region of West Java. In practice however, the prices set for the cash crops by the government were too low and they diverted labor from rice production, causing great hardship for farmers.
By mid of 1970s the VOC expanded Arabica coffee growing areas in Sumatra, Bali, Sulawesi and Timor.  In Sulawesi the coffee was first planted in 1750. In North Suamatra highlands coffee was first grown near Toba Lake in 1888, followed by the Gayo highlands (Aceh) near Laut Tawar Lake in 1924.
In 1860, a Dutch colonial official, Eduard Douwes Dekker, wrote a book called “Max Havelaar and the Coffee Auctions of the Dutch Trading Company”, which exposed the oppression of villagers by corrupt and greedy officials. This book helped to change Dutch public opinion about the “Cultivation System” and colonialism in general. More recently, the name Max Havelaar was adopted by one of the first fair trade organizations.
In the late eighteen hundreds, Dutch colonialists established large coffee plantations on the Ijen Plateau in eastern Java.   However, disaster struck in the 1876, when the coffee rust disease swept through Indonesia, wiping out most of Typica cultivar. Robusta coffee (C. canephor var. robusta) was introduced to East Java in 1900 as a substitute especially at lower altitudes, where the rust was particularly devastating. 
In the 1920s, smallholders throughout Indonesia began to grow coffee as a cash crop. The plantations on Java were nationalized at independence and revitalized with new varieties of Coffea arabica in the 1950s. These varieties were also adopted by smallholders through the government and various development programs. Today, more than 90% of Indonesia’s Arabica coffee is grown by smallholders mainly in Northern Sumatra, on farms of one hectare or less in average. Annual Arabica production is about 75,000 tons and 90 % of which for export. Arabica coffee from the country mostly goes to specialty market segment.