Buying full bags of green coffee...

Some opinions on the coffee trade, a caution to home roasters, and perhaps some advice for those opening a roasting business.
Folks, this is a bit of a rant written in 2004, but I hope you find it is well-meaning op-ed. There are a few good points made here-in, with a thick layer of opinion as well - Tom

Okay, I'll get to the point. In this article I am going to tell you, as a home roaster, why you should not buy full bags of coffee from brokers. You are going to say to yourself; "Well, that is a very convenient opinion for him. He just doesn't want me to cut him out of the deal, and buy coffee at a lower price". In fact, I am going to tell you about the pitfalls of buying full bags of coffee, and if you still feel you should do it after reading this, then of course you should do it! I mean, we have no intention or desire to be everyone's green coffee supplier. Why would we want to?
There are a lot of online options for buying green coffee (some of dubious quality), much at cut-rate prices like eBay. If you have been on our homeroast list/forum a while or have spoken us, you know that we have the stated desire to be the turtle in this coffee race, slow and steady. We are not on a mission to grow, and if we do it is only in a sensible, organic way. We are happy now, we like what we do, and we do a good job at it. A lot of businesses grow, and either can't maintain the quality and focus of what they do, or the don't enjoy it, or both. We have no interest in that ... but I digress. My only point is, we have never wanted to be the only green coffee seller ... I think we became the most popular because of the amount of work we put into this, and the enjoyment we get from it, is obvious. We really like our jobs and feel lucky to have them.

Anyway ... back to the topic
Coffee is sold in 60 to 70 kg bags, 132 to 152 Lbs. roughly. Some origins like Colombia are standard at 70 kg. The most convenient way it is sold is through green coffee brokers. These are wholesale businesses who don't generally deal with one-bag buyers. They will make small sales in hopes that the account grows, but they really want to be selling 10 or 20+ bags at a time. Many specialize in selling full containers, which is 37,500 Lbs. of coffee contract. A lot of that is sold as a future delivery, based on pre-shipment samples (PSS) and then on the sample of the coffee as it arrives in port. The easier way to buy is Spot sales. This means that the coffee is in the broker's warehouse, and the sample is pulled directly from the available stocklot. This is nice because the sample is exactly what you will receive.

There are now quite a few brokers who actually are content to sell one or two bags of coffee. The problem with this is ... can you really use a full bag of coffee? Can you use it before it ages? When the cost of buying 1 Lbs is measured cents per cup, and the cost of buying a full bag is just less cents per cup, does this matter? (And doesn’t everyone who errantly buys 10 Lbs of mayonnaise at Costco wonder the same thing?)

I had a bad experience a long time ago. I had a customer interested in buying 2 full 69 kg bags of coffee. He insisted. I gave him a price and he said "great." I warned him, but he wanted to do it. Two years later, he asked if I would like to buy 200 Lbs of it back! At this point the coffee was old and baggy, and there's no way I would use it except for traction under the tires of my car. In the meantime, the poor guy had missed out on buying a pound or two of so many great lots that had since come in from the same origin.

This is not a problem for some people who can, in a sense, co-op buy with a few other home roasters. It is truly amazing how much coffee some people use! You e-mail and call a few brokers. You find someone who will sell a small amount. (BTW: Do not misrepresent yourself to a broker! Do not say you are bigger than you are, or that you are opening up a shop, if it is not true. This is really unethical, and yet people do this. Some brokers now require a business license and tax I.D. to avoid people scamming them out of samples.) You have their list of Spot offerings. They are willing to send a sample. The price is good. What could be wrong?


Quantity and Price of Green Coffee
If I bought green coffee for home roasting, I would probably be the guy buying a wide assortment of 1 lb. amounts, and maybe follow up on the ones that really strike me with a 2 lb. or 5 lb. bag. Even if I loved a coffee, why would I want 40, 60 or 120 lbs of it? Frankly, the best thing about a great Kenya lot or such, is the memory of it, and the hope to find something as interesting (not exactly the same) again. Having a full bag of that particular lot, drinking it all the time ... that just seems depressing to me. Coffee is a crop, it comes and goes. Even the best green coffees drop off in quality in a year (you can start to sense it sooner) - but there is an eternal renewal, always something else on the horizon. The second thought is that making price and issue does not make sense. Coffee is so cheap, far too cheap for the amount of enjoyment it delivers. The price of home roasted coffee at $5.00 per Lb is 7.8¢ per cup. At $4.10 per lb it is 6.3¢ . At $7.20 it is 11¢ . At $3 it is 4.6¢.

Think about it a second. 7¢, 4¢, 11¢? Isn't what matters is how the coffee tastes. If it is 4¢ and it is mediocre (4¢ is a price you can get green coffee for direct/eBay), would you pay 4¢ more to have a GREAT cup??? (7.6¢ would be an average price for the coffee at Sweet Maria's). When we buy coffee, we buy the quality of the cup. If the cup does not have quality, then price no longer matters because it is undesireable. But somehow when we add up the total for an order, the amount ends up mattering ... and it is the same in the coffee trade. Smaller roasters who write smaller checks for smaller lots of coffee, tend to be indifferent to price per Lb. What matters is the cup. When a big roaster buys 2 containers and the price jumps 8¢ per lb. that can seem like a lot when you write the total check. Big roasters in the trade tend to be the ones who complain most about price ... in my experience.

And another difference between that 4¢ cup and our 7.6¢ cup. We pay good, fair prices for all our coffee (Fair Trade certified or not). Our farmers make money selling coffee to us. We don't make a big issue of it, we don't force that on our customers. But it is a principle we operate by, and pracetice with every green coffee contract we sign.

Well, the first problem is one of perspective. Go to one of the public green coffee warehouses and look at the volume of coffee, countless rows and piles of bags. I would make a rough guess that 90% of those bags are commercial coffee, and that another 8% are good lots that are already sold, and simply being stored for a client. Seriously. I don't think that someone who is not in the trade can imagine how much mediocre coffee there is coming into the country. If not commercial coffee, some of what is called “Specialty” is far below acceptable standards. At best it is flat coffee with little character. It doesn't matter if the bag is pretty, if the origin is intriguing, if it is the same name as a coffee you have bought before and enjoyed. There is bad coffee from every origin, even in beautiful "Estate"-labeled bags, even Organic or Fair Trade. There are some brokers I can say offer nothing but non-Specialty coffees and yet their list is awesome-looking. There are some that have a few good relationships with quality coffee producers and a lot of other mediocre offerings. Even the best, most quality-minded brokers that sell much of what they import on forward contracts end up with a Spot list of coffees that didn’t work out for one reason or another, most on a “quality claim” by the intended buyer.

could go into infinite detail on why this is, but the main point is that quality coffee is very hard to find even though, as a coffee buyer, I am literally drowning in choices. In many trades, and with many products, this makes no sense. But the coffee trade is quite unique. There is an overabundance of coffee, the warehouses are loaded with bad lots, and in truly boggles the mind to know that eventually all that coffee is sold. Eventually it finds a home. It means that mediocre or defective lots of, for example, a Sumatra Grade 1 Mandheling, a Uganda Organic Bugisu, a Nicaragua Organic Segovia Fair Trade, a Kenya AA Auction Lot ... they are bought by someone and offered to the public. Newbie coffee roasters hear these names and might think they sound great ... after all, they are the same names used to describe the good lots. But that is not how coffee works: You cannot attach the name to the cup quality without a rigorous evaluation of the cup quality. It’s not a brand in that sense.


That is where things get tricky. Cup evaluation of coffee takes training. And by training I don't mean a degree on the wall ... I mean it takes a lot of time spent simply doing it, again and again and again. It takes a lot of experience and a lot of accumulated knowledge based not on some snobby and esoteric cupper’s language, or some exclusive connoisseur's ability. Rather, it simply takes a lot of work. For me, nothing in academics ever demonstrated as perfectly the truism "the more you learn, the less you know" than the very unassuming world of coffee. In the coffee trade as in the cup, each origin is approached as a discrete entity, as almost a separate field of study. What you learn about Costa Rica will hardly help you with neighboring Panama, let alone with Papua New Guinea. What you know of Yirga Cheffe will not apply to the Western or Eastern Ethiopia growing areas.

If a lot of coffee from an importer seems really special when I get the pre-ship sample, I reserve bags S.A.S. (Subject to Approval of Sample). I get a sample when the coffee lands. The coffee is never something I own, but I have the first right of refusal to buy. So there is a relationship you can cultivate with a broker that will have them looking for these lots, and calling you when they come in ... I mean literally they will head from the cupping table to the phone and within minutes of the first sip, the lot is reserved. It sounds almost unfair. But coffee is about relationships and not really about price. There are lots of expensive coffees that sit in warehouses, and they truly suck! There are great lots that sell at a pittance, and sell within a day of arriving in port.


There are quite a few coffees I buy "direct". But this term needs an asterisk because it is difficult to import coffee and do your own customs brokering and logistics. These are tricky matters, so what most roasters who buy this way do is use a broker to handle the transportation and importation details. Essentially, it is a coffee that either I found on a trip, or one that I have an ongoing relation to based on high cup quality. There are also a group of what I would call "micro-brokers". These are not brokers you will find easily, and they probably don't want you to find them easily! There are quite a few coffees we get from these people because they have deep contacts with specific farms or specific origin countries, and are highly specialized in their offerings.


As you probably know, there were quite a few coffees I would buy in competitive auctions, whether it is the large Kenya auctions or the Cup of Excellence auctions, or the specialized competitions like the Best of Panama auction. In all of these, even in the quality-based competitions, the cupping work to sort out the best lots from the rest is grueling! For example, in the Nicaragua CoE auction, there was only 3 lots out of 28 that I would have even considered bidding on. In Kenya, it is more extreme. There are many thousands of lots sold each year in the weekly cupping. But now we tend to avoid these formats, because while they might be good for marketing, and offer some motivation for farmers, I feel their benefit in most areas has now been realized, and we have moved on. CoE in particular helped chart the waters for analyzing small farmer lots and doing logistics on containers with many small lots. But we essentially do that ourselves, and we do indeed tip our hats to the various auctions of the past that showed farmers and exporters that separating micro-lots, selling them at great premiums that go back to the farmers, and exporting containers with many small lots is all possible.

Sweet Maria’s basically sources more than 80% of our coffee by our direct connections to our supply chain, with the remainder coming from importers of coffee they bought for their own position. We used to buy a lot more spot coffee, partly because exporters were not accustomed to working with smaller lots and smaller buyers, and partly because we could find good quality from importer’s spot offerings. That changed quite a bit in the last 10 years, and for a combination of reasons we don’t rely on spot buying that much. It’s not that there is something wrong with buying that way: Buying spot has a lot of advantages for a small roasting business, and to partly remedy the quality issues we were facing, we jumped the fence to start offering some of the Sweet Maria’s inventory to other roasting business via our Coffee Shrub endeavor.
Before we did direct sourcing to the current degree, I focused on traveling to origin to learn all about coffee, and doing pre-selection for what was still essentially Spot buying. My job was to know what was being offered out there, and to buy the best coffee I could find based solely on the cup. So when I looked at other people's offering lists, I know I have checked out those coffees, and there is a reason why we don't have that coffee (or if we do, the specific lot of the coffee they stock). It’s still true.


It can be confusing: For example, there may be a Kenya on another site that we offered a previous year. In fact, I regularly cup lots of Kenya from the small farms or co-ops that we previously bought and often chose to not buy them. Coffee varies greatly from year to year and because of all the variables, in environment, weather and processing, that result in a particular cup quality, the coffee from the same farm, from the same exact patch of earth, can be excellent one year and excellent-less the next year. In some cases a specific mark that originates at one mill or one exporter could be indicative of many, many containers of coffee with (possibly) many different separate lots. All bear the same name, but quality will vary from lot to lot. That range in quality from coffees that share the same name, the same pedigree, can vary a little or a lot, depending on the origin, the processing, and the time of harvest. Some can seem like completely different coffees.


I can look at roaster's offerings on the web (or all the green coffee sellers on eBay) and I know where their coffee comes from. I don't make a habit of doing this, because frankly it is too depressing. It's pretty quick work to size up the level of quality of a coffee seller, provided that they accurately describe their coffee --- even a lot of home roaster customers can spot the inconsistency and mistakes in coffee listings. I wouldn't trust a seller that can't spell the origin they are offering, that calls a Costa Rican a Terazzu, or a Mexican an SHB, that offer Mendheling, or commercial Vietnam coffee, or uses all the meaningless superlatives like "the finest" or "the rarest" or describes coffee as "rich and smooth" ... but that's me....

For each coffee on our list I go through this culling process to source a great cupping coffee: It is really a lot of work. For example, there are some farms, some origins, some regions, that I simply don't have to re-evaluate constantly since I feel they are (a the moment) incapable of producing great coffee. Even origins that capture the imagination (Haiti, Cuba, Malaysia, China, Nepal, Venezuela [sadly], for example) can be removed from consideration, at least until some future time. Regions like Coatepec and Veracruz in Mexico, San Marcos in Guatemala, East Valley or Atlantic coffees (ie Juan Vinas) in Costa Rica, are examples of areas that grow a lot of coffee but lack some factor to produce high caliber specialty coffee. I won't name specific farms here. But there is a huge list I would not even consider a sample from, as well as processing mills and exporter marks. (I still regret the terrible Tarrazu Papagayo brand I bought years ago! To all who purchased it and stored it for over 6 months, I apologize to you).

 

n general, my point is to make you aware how much coffee is out there, how readily available it is, and also how much work goes into finding the good stuff. It takes years of cupping, of really getting to know the potential of a specific cup type and origin, to develop a "flavor memory" of previous crops, and of other comparable coffees. Otherwise, how do you know what the difference is between mediocre, and good, and excellent? It's all just a shot in the dark. Another fact I will put forth (and I am sorry of this sounds proud for me to say this, but it is true); you cannot go out and buy the same lots of the same coffees that Sweet Maria's buys. I've just done this for too long, and built too many relationships that have become the pipelines for our coffee offerings. And it is because of a lot of 65 hour work weeks, a lot of early morning cuppings, a lot of long trips with some scary nights spent in some unpleasant places (and some wonderful nights spent of beautiful coffee farms) countless hours at the roaster testing, cupping, re-roasting, cupping,
So ... there's 2 reasons to proceed buying green coffee direct. One is if top-grade coffee is not your priority. The second reason is that cheaper price is most important to you. And if you can handle the quantity, then, my roaster friend, it is time for you to call up some coffee brokers! -Thompson

Tom, 7/05/04

This article was written in 2004! So much has changed, but there are still some solid points made here. I added new comments to reflect the fact we buy very little spot coffee any more, whereas in 2004 we bought quite a bit. - T.O. 2015

PS - Once again, this is all my opinion and should be read as that. More than anything, I hope that people who enjoy coffee will increasingly start to put the same amount of effort into learning about the origins, the process of growing and milling, and the people who make this possible. I worry that a sole focus on low price leads to a "Walmart Shopper" way of thinking, where in fact the consumer ends up having a negative economic effect on themselves, their community, and in an extended way, all the economies of those who sell goods to the U.S. A ruthless focus on coffee price means that farmers will not produce the quality of coffee we enjoy. It won't happen now*, it won't happen in a year ... but it will happen because they simply cannot afford the labor and equipment it takes to produce good coffee. Great coffee roasters do NOT buy on price, they buy on cup quality. But how many of us does it take to keep quality coffee going when there are Kraft's and Nestle and Sara Lee and P&G who each buy more coffee than all small roasters in the US combined. I don't think it is ridiculous to say that it is a war between those buying the best, and those who would take the best they can get and pay nothing for it, if they could. Even for the tiny roaster, from the start , there is a choice: whose side are you on? You can call up and get a facsimile of a coffee that the farmer was paid diddly-squat for, with mediocre cup quality, and you CAN sell it against your noble competitor - you can dress up the names equally well, by country, sub-region, grade, farm. It's a personal ethic and it starts at the very beginning. It's those who choose, every single day, to do the right thing, to buy the best and pay the best, and those who don't. Fair Trade is only an ethical band-aid placed over the larger issue.
*Well, it already has frankly.

 


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