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The service providers making direct coffee sourcing easy

With the growth in relationship-based trade, intermediaries are called to reinvent themselves and give control to roasters and producers. This is where The Guat Lab and Algrano come in. With a service-provider approach, coffee buyers - like Hoppenworth & Ploch in Germany - can build relationships without taking new risks.

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A new type of trade calls for a new business model. To give roasters full control of their supply chain, intermediaries must embrace the role of facilitators. Learn how German roaster Hoppenworth & Ploch is making the best of it! 

Europe is the world’s largest consumer market for coffee and also a traditional one, at least when it comes to trade. The continent is well-served by a wide range of middlemen who make buying coffee easy. Many times, though, this comes at the expense of transparency and a relationship with the producer. In Guatemala, things are not all that different. The long-established supply chain relies on a series of intermediaries, from co-operatives, growers’ associations, local logistics teams, sales agents, exporters, importers etc, all of which have more decision-making power than farmers.

Though both roasters and producers can benefit from a shorter supply chain, it’s still difficult to find companies willing to provide services in quality control and logistics whilst waiving control of the coffee transaction itself. More often than not, middlemen want to be in charge of sourcing and negotiating themselves, leaving little room for roasters and producers to communicate beyond possible marketing needs and niceties. This is where Algrano and The Guat Lab, an exporting company based in Guatemala, stand out.

Both companies focus on providing services to support a direct relationship between roasters and producers with less of the associated risks of doing business alone. Algrano’s shipping service, for example, made it possible for forward-thinking Frankfurt roasters Hoppenworth & Ploch to keep full control of their partnership and communication with Mario Alarcon of fincas Monte de Oro and El Recuerdo in Acatenango - also the co-owner of The Guat Lab with producer Christian Starry, of Finca El Xalúm - whilst keeping shipping costs efficient, avoiding risks and managing quality assurance.

Christian Starry (left) and Mario Alarcon (Photo: Algrano)

Friedrich (above) checks in with Mario at least twice per season (Photo: Nico Freund)

Five years in trade

According to Friedrich Radi, Sourcing and QC at Hoppenworth & Ploch, the roastery’s co-founder Julian Ploch met Mario during an origin trip to Guatemala. Mario explains that this happened by chance and that the pair enjoyed each other’s company and maintained a friendship when Julian returned to Germany. Eventually, Mario sent samples to Julian and this led to a business relationship. 

Today, Hoppenworth & Ploch has been buying coffee from Mario every season for five years - the last two through Algrano - and Friedrich and Mario keep in touch via WhatsApp and Zoom, checking in with one another around two times every season. Friedrich prefers not to use the term “direct trade” to refer to this partnership because they haven’t been able to visit each other much. However, both agree that by working closely together they can focus more on quality, the bedrock of their work. 

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The new role of intermediaries

So what is it that makes Algrano and The Guat Lab different from middlemen? For starters, both companies only represent producers, buying and transporting the coffees that are contracted instead of buying in advance. Farmers are free to set prices and decide if and when they want to sell. Then there is quality control. Mario explains that a core part of their service is to cup and grade coffees for their producer-partners so they can share the results back with them to align on a sales strategy and ensure they keep standards high.  

“When roasters cup a coffee, they will do it within a certain range of origins, process etc. They are looking to buy a coffee that they know they can sell to their customers. When we cup a coffee, we’re more focussed on the production side of the coffee. Our cupping sessions allow us to see how each farm or region is standing against other Guatemalan farms. We want to give feedback on how the coffee is harvested and how it was processed so we can suggest changes and improvements, whether that’s our own farms or others that we work with”, Mario and Chris explain.

The exporters add that “by getting to know our roasters really well, we can send very focused samples. They tell us ‘We’re looking for more or less these types of coffee’ and we send samples that we know fit their range. We don’t have to send plenty of samples – a few really focused ones are best.” In doing so, they keep the costs of doing business low and customer satisfaction high. 

Knowing what a roaster likes is also what helps The Guat Lab stand out at Hoppenworth & Ploch’s blind cuppings. “We always cup our coffees blind, even with samples that arrive from Mario”, Friedrich says. “Cupping blind takes away all of our biases. Let’s say we start with a selection of 15 coffees on the table. We narrow it down to maybe two and only then do we consider the producer, the relationship and the story of the coffee. It’s important to us to taste blind, and we always end up buying a pallet or two from Mario each year.” 

Mario and Chris always visit partner farmers and support them in improving quality and production (Photos: Algrano)

Friedrich always cups blindly and yet samples sent by Mario always end up in the final selection (Photos: Nico Freund)

“Algrano helps us keep the focus on the things that matter to us, and also on reducing risks." (Photo: Nico Freund)

Making transactions safe

Though Algrano also provides quality assurance and shares cupping results back with The Guat Lab, this is not the service most used by Hoppenworth & Ploch. As they have strong trust in each other when it comes to quality, they need Algrano mainly for shipping and financing. “Algrano helps us keep the focus on the things that matter to us, and also on reducing risks.  With this safety net in place, we are able to work more closely with the producer”, Friedrich explains. 

For Mario and Christian at The Guat Lab, “Algrano plays the role of importer and allows us to consolidate shipping with the other coffees we have, enabling us to fill up containers so it’s more cost-effective to ship coffees. This helps us ensure that roasters receive the exact cost they ask for, and also that the producer can sell the coffee at the best possible price. We have a direct relationship with roasters in Europe, and Algrano is the link.”

As Algrano doesn’t interfere with relationships, Friedrich and Mario can develop their partnership as freely and deeply as they want, coming to the platform when they need to request shipments. Hoppenworth & Ploch require information regarding terroir, varieties, processing and about the producer before they commit plus a list of non-essential facts they like to know and pass on to their customers. “For us it’s a unique selling point, making the coffee more saleable, to be able to tell the story of the producer, the coffee, or any part of the journey. Because of how we work with Mario and The Guat Lab, if the marketing team has a question about something, I can just drop Mario a WhatsApp message and get an answer within hours,” the roaster says.

For Mario and Chris, Algrano is the link to their European clients, allowing them to ship coffees with lower costs (Photo: Algrano)

How new intermediaries add value

Christian of The Guat Lab believes that intermediaries are needed in the supply chain as long as they have the interest of both buyer and seller at heart. Talking from the perspective of an intermediary and farmer, he says that “being able to taste your coffee is one of the most valuable things as a producer. As exporters, we work with farmers to focus on their quality, but it is a common practice among bigger exporters to not let producers taste their coffee. It’s a tactic they use to drive down pricing, to say their coffee is not good quality”.  

Friedrich highlights that technology is what makes his exchanges with Mario and Christian possible as visiting farms every year involves a cost that can be prohibitive to the roastery. 

“It would be great to visit each farm we work with regularly but how would we afford it? The costs of each trip in either direction would have to be added to the price of a bag of coffee, we just can’t do it all. But if there were a trusted intermediary, they could visit many farms in one day, or the producer could come and visit several roasteries, or speak directly with consumers – it’s easier to justify the cost of that and a better way to work together.”

For roasters who don’t want to be passive actors in the supply chain, limited by how traders do business, it’s important to partner with like-minded companies that enable them to control their transactions. If it is or isn’t direct trade is secondary in the end, so long as there is transparency, respect and real value provided to all parties.

Written by Jess Palmer of Neon Content. Jess is a UK-based writer with expertise in specialty coffee, hospitality, and sustainability. She has spent time working as a barista, trainer and account manager in the coffee industry before making the jump to become a full-time writer.

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