The rush for coffee: why is best to pre-contract your favourite lots in the early days of the harvest

One of the jobs of green buyers is to win the race for coffee to make sure their roastery has the coffees loved by their customers year after year. Get ahead of the sourcing game and support your suppliers by pre-contracting! You know the saying: the early roaster catches the beans...

Pre-contract Ethiopia & Central America

Summary

Consistent qualities from Ethiopia and Central America can already be contracted.
Pre-contracts are available for rebuys only: pre-order now and confirm the purchase after approving the PSS.
Contracts will be sent to buyers after the price is confirmed with the seller.
The approval term for all contracts will be SAS Replace.
Fresh crop samples will be available to approve from early February.

Make sure you have the coffees you need
When coffee farmers are picking their first cherries, like in this photo on the right, green buyers should be contracting their coffees - or at least the key ones they wish to have every year. “Why not just wait for fresh crop samples?” - you might ask. Fair's fair. Most roasters have been buying like this until now. But what is best: securing stock of your favourite coffees in time or finding out next year that they are not available or that you have to wait for a new batch to be processed and shipped?

The race for coffee is competitive

Right now, shipping delays are forcing buyers to forward orders to keep deliveries on time (hopefully avoiding future higher logistics costs) and there is more pressure to fulfil orders as production is estimated to be reduced in many countries including Colombia, Ethiopia and Brazil - the three key origins for European roasters. The race for coffee hasn't been this competitive for a long time ...

Early bird offers are ready
As the first cherries are being picked in the South of Ethiopia and across Central America, Algrano decided to list offers from these countries for early bird contracts. Normally, these coffees would be up for grabs only in January, when we receive offer samples. But this is an exceptional year. Our team contacted our partners at origin and requested outright prices which could be listed on the marketplace for roasters who want to be ahead of the game. We will do the same for all other origins.

Only resales with PSS approval
As pre-contracting is a new practice for many roasters, we are only making it available for rebuys - that is, when a roaster buys a coffee he or she already bought in the past. We know these lots pretty well too. So even if we can't know exactly how the new crop will taste at this stage, we can have a good idea based on previous samples of the qualities available and the overall consistency of the sellers.

Unlike regular contracts on the platform, which are signed under "no approval no sale" terms, pre-contracts will be SAS (Subject to Approval of Sample) Replace. This means that when a roaster receives the pre-shipment sample they can't simply reject it. New PSS from different batches will be sent until the buyer is happy. SAS Replace keeps risks low for everyone.

If you don't read anything else, remember this:

The stakes are low

The approval term for pre-contracts is SAS Replace. If the quality doesn't match your expectations, new samples will be sent to substitute the rejected batch until you're happy.

Your coffees are secured

Don't be last in the race for coffee. Many countries expect to produce less in 2022 and you can jump the queue before other buyers reserve their (& your) favourite lots.

You build up relationships

Reserving your regular coffees is good for you and your suppliers, as it brings security & access to credit. Help provide stability for farmers by showing up early!

The early roaster catches the beans

Not all coffees are available to pre-contract. Producers are quoting prices only for the larger consistent lots, either regional or washing station blends, which are more predictable in terms of production and demand. When you click “Pre-contract” on a lot page, you will be redirected to your inbox to start chatting with the seller. This is only the first step. You will also need to get in touch with Algrano so we can confirm the price. The platform is not set up for roasters to do this autonomously because all FOB quotes need to be validated.

You can request samples of these coffees but you have probably tried them already. What we have in stock is from the previous harvest. If a particular lot is new to you and you wish to pre-contract, we can assure you that we have worked with these coffees for a number of years and have a good track record for them. We can also provide the profile analysis for all years in which that coffee was listed upon request.

Is pre-contracting available for new sellers & first-time buyers?
No. An existing relationship between the green buyer, Algrano and the seller is important to ensure consistency and accountability. This doesn't mean roasters shouldn't start searching for coffee earlier. From the producer's perspective, it's hard to deny that most small and medium buyers order coffee late. Both late in the harvest and when compared to traders, importers and commercial roasters. This has been the norm for an industry built around Spot and became a habit. Now that roasters are sourcing directly more and more, this habit needs to change.

Roasters who are new to sourcing tend to think about an origin only its harvest is well underway. But as green buyers, they can do with exploring all options available to secure the coffees they need. To get ahead of the sourcing game, they need to plan before the harvest and order at the prime time for producers to sell. And timing is not only a matter of habit for farmers: they need credit to finance their production crops and banks will grant them credit based on contracts.

In Costa Rica, for example, 50% of all forecasted production is sold months before samples are ready for cupping. This year the percentage is even higher. This is the case for commodity coffee but we often see it for specialty too. In seasons of smaller production such as this, good quality producers sell out quickly. The roasters who did pre-contract also usually get to choose micro-lots first. If you haven’t even started thinking about it you get to choose from what is left, if it’s left.