How to Master Coffee Procurement: Best Practices for Specialty Roasters
You need to learn the rules like a pro so you can break them like an artist. Know the dos and don’ts of this old school process and discover Algrano’s new way of doing it. Nail it and you’ll be able to access more green coffee in less time.
- Because of direct trade.
- Because producers are used to this language and respond to it fast.
- Because the industry is facing a shortage of coffee in certain countries.
- And not to be pessimistic, but because climate change is making the coffee supply more unpredictable.
Algrano Trends Report: Read About Climate Change and Other Challenges Faced by Coffee Producers and Roasters [Free Download].
The Ultimate Coffee Offer List At Your Fingertips
But wait. Are they not already listing their best coffees online?
The reality is that, without having certainty about demand (and therefore what’s more likely to sell), producers can only offer some of their best coffees. But their online inventory is far from the total. In the context of a marketplace, listing all coffees would also cannibalise their offers.
Digital Curation Tech for the Fourth Coffee Wave
Yes, better than traders. And better than the Algrano team too.
But whenever there is new technology and whenever there is a change in the industry, people need to change with it. Now, roasters need to learn how to use new coffee technology and adapt to a different context.
The coffee industry is transitioning to the Fourth Wave and specialty coffee is becoming mainstream. We’re moving from an age of romanticising the beans to an age of professionalisation.
“Many third-wave actors are coming to accept that economy of scale is needed for success. For them, it means moving away from the ‘passion project’ characteristic of the third wave and towards a more commercial focus that can yield long-term profit,” writes the International Trade Centre in the latest Coffee Guide.
This means that coffee roasters must embrace the role of green coffee buyers. And they need to do it as professionally as they can.
Algrano's Direct Sourcing Guide: How to Communicate With Producers, Plan Your Inventory and Build Direct Relationships [Free Download].
Stop Beanscrolling. Do It the Algrano Way.
A tool like Coffee Requests holds incredible potential for overstretched roasters to find the best coffees for their specific needs without wasting time scrolling through offer lists.
There is no need to learn ins and outs of coffee contract specs or to write a formal green purchase program.
Because producers won’t understand you otherwise. Or worse. They’ll ignore you.
"Sometimes, roasters make a request that covers too many countries. But prices are very different from one country to the next. It would be good if roasters could know, for example, the NY market price and the differentials for conventional coffees. At a minimum, those price levels should be respected." - Jonathan Duran, International Sales Manager of Coopeagri in Costa Rica
"To give you an idea, that would be US$2.27/lb. We just sold a Hard Bean Quality (78 points) at US$2.90/lb. So US$2.27 for Guatemala would maybe be a Washed Robusta? When we received that, we didn’t reply because there was no way we could offer that." - Adrian Cabrera, Commercial Manager at San Miguel Coffees, Guatemala
Learn the Rules Like a Pro, So You Can Break Them Like an Artist
Because commodity coffee is about standardisation. And specifying standards makes coffee procurement smooth.
At the same time, this makes it even more important to detail the coffee you are looking for. The saying goes: “Learn the rules like a pro, so you can break them like an artist”.
Small batch roasting to find the sweet spot allows specialty roasters to switch the gas off mid-roast or change the airflow settings to smoothen heat absorption. Roasting machines got a lot better as well!
This means specialty coffee roasters are free to experiment with different screen sizes. Bigger beans are prized, so buying smaller ones can even reduce the coffee price. The main thing is: everything has to be clearly stated in the request/procurement form.
After speaking to many coffee suppliers on Algrano, we came up with a list of criteria to specify as well as some dos and don’ts to consider.
Coffee Procurement Best Practices
- Narrow Down Your Origin Target.
- Provide a Small Cup Score Range.
- Write the Post-Harvest Method, Even if It's Not Your Priority.
- Certifications and Volume: Set in Stone or Flexible?
- Price Etiquette: Know what the Bare Minimum Is.
- Have Realistic Delivery Expectations.
- List the Desired Green Coffee Grading Specs. At Least Partially.
- Ask About Green Coffee Preparation and Defect Count.
- Take Your Pick: Packing Options for Green Coffee Beans.
- Specify Your Preferred Quality Approval Term.
1- Narrow Down Your Origin Target.
Check the Origins Offered on Algrano.
- They don’t have a clear idea of what they are looking for.
- They are trying to maximise the offers they receive.
For espresso with more fruit, try:
2 - Provide a Small Cup Score Range.
And it’s incredibly confusing from a producer’s perspective! It covers all of their coffees and gives them zero guidance on what to offer.
- Group the quality score by two (for example, 80-82 points or 82-84 points). This gives suppliers a clear idea of what your expectations are. It also allows for variation in cupping results between you and the supplier, which is likely to happen if you’re not calibrated.
- Use the main quality "jump scores" as a guide. For example, at 85 points a producer will know you are looking for a micro-lot. At 87 points they know you need something unique, potentially a special process.
Write the Post-Harvest, Even if It's Not Your Priority.
Not All Roasters Source Coffee Based on Quality Alone. Read the Story of Blum Kaffee in Switzerland and Boledu Coffee in Ethiopia.
Certifications and Volume: Set in Stone or Flexible?
You can source pretty much any size of micro-lot for a limited-edition coffee. And some roasters want to buy green coffee sustainably from certified producers even if they’re not certified themselves.
- Try to specify your volume as a range with an MOQ (Minimum order quantity).
That is because following the strict standards imposed by certifying bodies increases the overall costs of production.
- Make your need (or not) for certification crystal clear. Some producers farm organically but are not organic certified, for example. Others can only sell the coffee certified if the transaction goes through a cooperative.
Price Etiquette: Know What the Bare Minimum Is.
Blog: Why Roasters Should Negotiate Prices With Growers
To have an idea of what the minimum price should be, look at the ICO’s flat prices. ICO tracks the real price paid for coffee contracts close to the delivery and makes for a relevant price discovery tool.
- Step 1: As procurement involves delivery at a future date, get the c-price for the current date and subtract that value from the latest ICO flat price. Consider the quality you want to source: if it’s a Colombian Mild, Other Milds, etc.*
- Step 2: The subtraction will give you an approximate differential that you can apply to the futures price at your expected delivery month (or the month closest to that as possible).
Look at the current c-price for March (US$2.1575/lb on the 4th of October) and then at the ICO price for Other Milds on the closest day (US$2.5448/lb on the 3rd of October).
- Step 3: Now, the current futures price for March delivery is US$2.0925/lb. Add the differential to that. You’ll get US$2.4798/lb. That’s your minimum.**
Minimum price = c-price at delivery month + differential
This is not to say that you should be using commodity prices as a guide for specialty coffee. Use this as a guide. That’s the bare minimum a producer will entertain.
The guide only shows retrospective data and might not account for the most recent market fluctuations. But the price of specialty coffee tends to vary less.
Have Realistic Delivery Expectations.
In rough terms, three months is the quickest turnaround when you buy coffee FOB. That is when you buy a full container.
If you need a small volume to be added to a shared shipment, order to delivery will likely take at least four to five months.
- The stage of the harvest at the origin.
- The post-harvest time.
- The green coffee resting period.
- Dry-milling and sorting.
- Time preparing to export.
- Transit times.
- Custom clearance.
- Movements between warehouses.
Before the harvest: Best for sourcing blends or big volume lots and beating the competition. On the downside, producers might not have a good overview of what they can offer.
- The harvest itself can last more than five months depending on the country.
- Usually, there is a good amount of coffee being processed by the end of the first month.
- You might want to wait until mid-harvest though. Cup quality is usually better when cherries are selected during peak season.
Drying can take anything from 10 to 40 days.
- Washed coffees dry faster than naturals and mechanical drying is quicker than solar.
- Resting usually takes around 2 weeks. In this period, coffee is stored in parchment so that moisture levels inside the beans can stabilise.
In Summary: Minimum waiting time: around 6 months (custom shipments) to 8 months (shared shipments).
What Are the Estimated Transit Times to Algrano’s Main Ports in Europe?
Early in the harvest: You are still ahead of the competition and producers have a better idea of their volumes.
- The harvest is underway and the coffee is being processed, so you wait a bit less.
- The turnaround will be of around 4 months (custom shipments) to 6 months (shared shipments).
Mid-harvest: There will be some coffee ready here but probably from the early crop, which might not be the best in quality.
- If you get a sample and you are happy with the quality, you’ll only have to wait for dry-milling, shipping and transit.
- You’ll be waiting at least around 3-4 months (custom shipments) to 5-6 months (shared shipments).
- This is also a great time to enquire about micro-lots and high-altitude coffees, which take longer to mature.
- Producers will have a better idea of which processes are yielding good results. They will have been cupping the coffees and will have a grasp of the final cup quality.
Late in the harvest or after the season: Turnaround time is shorter.
- You can get your coffee delivered from 3 months onwards (custom shipments) to 4 months (shared shipments). This is assuming there are no problems with the documentation, container availability, etc.
- The problem here is that a lot of coffee will be sold out. Procurement at this stage is usually less successful, especially for big-volume coffees.
List the Desired Green Coffee Grading Specs. At Least Partially.
There is no exhaustive list currently online and standards change over time, as you can see in this article.
- If in doubt, list partial characteristics such as altitude, screen size and cup quality to give suppliers the necessary information.
Ask About Green Coffee Preparation and Defect Count.
And what’s more: you can still get great cup quality with a higher number of secondary defects!
Are there different or alternative standards? Damn right there are!
- If you are unsure, ask the supplier how they prepare their green coffee and their defect allowance for different qualities.
Remember: Primary (or type 1) defects have a significant impact on the cup. Secondary (or type 2) defects have a minor impact on the cup.
Take Your Pick: Packing Options for Green Coffee Beans.
- If you don’t specify your choice of packaging, you will receive coffee with the standard high-barrier bags as Algrano ensures that as a minimum.
But as the sector develops, more options are available.
- You can request the coffee to be bagged in 30kg bags, with a vacuum inner liner or in newly developed paper bags. There are companies making bags for 3kg, 5kg, and 10kg of green coffee too!
Specify Your Preferred Quality Approval Term.
- SAS PSS: If the Pre-Shipment is approved, the contract moves forward.
- SAS Arrival: The contract goes through only if the Arrival Sample is approved. This is not commonly used in specialty as the risk to the exporter is disproportionate.
- SAS, NANS or “No approval, no sale”. A rigid approval term (yes less than SAS Arrival). It implies that the contract will be cancelled if the quality of the PSS is different from the one of the offer sample.
- SAS, Replace or Repeat: This is producers’ favourite approval term (Algrano favours this too!). It implies that if the PSS isn’t approved, the producer has the responsibility of providing a different coffee that satisfies the buyer’s requirement.
Luiza Furquim is the Head of Content at Algrano, the world’s leading direct trade platform for green coffee. Originally from Brazil, she worked as a reporter in Sāo Paulo until 2016. Then, she embraced coffee as a career, working for an organic coffee farm and roastery. She started as a barista and began roasting when she moved to Manchester, UK, where she is currently based. Having visited coffee producers in Africa and Latin America, Luiza is passionate about sharing their stories and bringing them into the spotlight.
Keep Learning About How to Source Coffee and Become a Better Green Buyer!
How to Master Coffee Procurement
Learn the best practices of this ancient process and discover Algrano’s new way of doing it. Nail it and you’ll be able to access more green coffee in less time.
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