I'd say co-ops, hands down. This is true for black peppercorns especially. A few years ago I tried all the different Penzey's black peppercorns (from their Minneapolis store), and none of them packed the kick I was looking for. It was weird that they were all tame compared to what I remembered from years past. Then I went to Linden Hills and bought just a small amount (in case they also sucked). Yowza! I could use half the amount of the co-op peppercorns and get the same result as the thrice the price Penzey's peppercorns.
I was just at the co-op buying some chili powder and garlic powder and a young fellow was complaining that you had to buy too much, "The scale should weigh grams. I hafta buy like dime bags worth of stuff when I only need enough for one recipe." Made me laugh that he was complaining about having to spend a whole dollar when it'd easily be over $5 had he bought a jar elsewhere.
It depends upon which spices you want. Penzey's is good for basic often-used American spices. The co-ops are good for those also, as well as for more exotic spices, such as star anise. I would go to a co-op that has a faster turnover, such as the Wedge, for the best freshness.For really unusual ethnic spices, go to the appropriate ethnic grocer.
Check out Wayzata Bay, too. They are a local distributor of bottled spices sold at Lunds, Kitchen Window and according to their site, Coastal Seafood. I have found my few purchases pretty fresh. Lately, I have not been as lucky at the co-op--especially on some of those lesser used spices and herbs.
Though, co-ops are certainly a much less expensive way to go. A recent purchase of bulk rosemary cost me $.79 at the coop, would have been at least 5 bucks for the same amount at Penzey's or grocery store in a bottle.
74 Snelling Ave S, St Paul, MN 55105
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One good thing about buying at the coop is that you know what you are getting.
You can open the jar and (discreetly) sniff to see if the spices smell fresh. I've never found them lacking. But you can at least check. The other day the smell of the fennel seeds was so strong it could almost knock you out.