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Saffron comes from the fall-flowering saffron crocus, a mauve or purple flower that bears three red stigmas in the middle of each blossom. The stigmas, which we call threads, are harvested by hand, dried quickly and sealed in airtight containers.
The history of saffron cultivation reaches back more than 3,000 years. Ancient Persians steeped saffron tea to cure bouts of melancholy, and Buddhist monks throughout the world wear saffron-colored robes [though today those robes are dyed with less-costly turmeric]. Muslims brought saffron [along with rice and sugar] with them when they conquered Spain in the 8th century. Though saffron is native to Western Asia, it is now strongly associated with Spain and Spanish cuisine.
Here's why saffron is so expensive: a pound of saffron requires 50 - 75,000 flowers, or 225,000 threads [a football field-sized area of cultivation, and twenty hours' worth of work to pick that many flowers!]. Luckily, saffron is not so expensive in terms of amount of use. Just a few threads can color an entire dish.
Spanish Coupe [or "cut"] Grade Saffron is the finest saffron available, comprised of exclusively deep-red saffron threads, with virtually all the yellow style bits removed from the stamen. Just a few threads, steeped in water, will color an entire batch of paella, 1 lb of rice, or a whole pot of bouillabaisse.