A Guide to Sourcing and Selling Green Coffee Directly
Access to information and technology means that roasters and producers are more prepared than ever to take control of their supply chains.
Sponsored content from Algrano.
Producers: learn about buyers’ needs and how to make offers they can’t resist. Roasters: find out how to communicate and plan, build direct relationships, and access the best lots that never make it to the offer lists.
Over the last five years, an increasing number of coffee roasters have been sourcing green coffee directly and building relationships with producers. These roasters-turned-green-buyers get to cup the most exciting coffees, have first dibs on micro-lots to build unique portfolios, learn about the supply chain in-depth, and lead the industry’s discussions on prices, transparency, and sustainability.
We lack a comprehensive industry overview of direct sourcing practices. However, the growth of Algrano, a marketplace launched in 2015 to facilitate direct sourcing, is proof that direct sourcing is here to stay. Every year, the number of orders placed on the platform more than doubles. In 2020, 70 producers sold coffee for the first time and 111 roasters bought for the first time despite COVID-19. The biggest driver of growth has been recurrent businesses or, as they’ve become known in the industry, “relationship coffees.”
Maurício Hervaz of APAS Cooperative in the South of Minas Gerais, Brazil, preparing to stuff a container (Photo: APAS)
Earlier this year, Algrano published a survey with roasters in 15 European countries. The “European Roaster Trends 2021” report presented key findings that back the direct relationship trend. The majority of the study’s respondents had already met coffee producers (69% digitally, 57% at a trade show and 64% on a visit to origin). Traceability—broadly defined by participants as a category that encompasses price transparency and storytelling—was the second most important buying criteria for roasters, after quality and before price.
Despite many roasters being attracted to direct sourcing due to a romanticised narrative (one of the big issues in today’s specialty coffee industry), we notice that they tend to romanticize the supply chain less the closer they become to their partners at origin. By being exposed to the realities of trade, roasters are forced to see partnerships with the origin less as loose friendships and more as commercial operations that must balance human connection and professionalism.
At this point, both ends of the supply chain have a number of questions about doing business directly. Few producers and exporters specialize in selling direct and most roasters are still learning the trade. In the spirit of Ryan Brown’s Dear Coffee Buyer (“A world with more proficient buyers is a world with greater availability of excellent, varied, coffee options”), we collected key insights from our users in both origin and destination countries and put together a short guide with best practices for selling and sourcing green coffee directly.
For Producers
Do Market Research
Algrano’s European Roaster Trends 2021 report, produced in partnership with consultant Stuart Ritson
Historically, proximity to the buying market has been traders’ main competitive advantage as knowing buyers is key to defining what to sell and for how much. These days there are many resources available online to help producers access the market—this Green Coffee Summit library being one of them. Algrano’s “European Roaster Trends 2021” report is free to download here. You can also log in and find out how producers price various qualities in different countries. For an overview of European demand, trends and legal requirements, check CBI’s (Centre for the Promotion of Imports) website. The Specialty Coffee Transaction Guide is a great reference for higher quality lots and Intracen’s (International Trade Centre) catalogue has a list of publications to download.
Go Bold (in Quality) or Go Home
Loyalty to importers and exporters is one of the main barriers faced by new producers accessing the market for the first time—and so it should be. The best way to put your foot on the door is by offering your top qualities and setting up a cupping table buyers can’t resist. After all, quality is still the first purchasing criteria for roasters. Buyers will test the waters by contracting small volumes to begin with, but this is key to establishing trust and breaking into a roaster’s pattern of purchasing.
Know Your Unique Selling Point
Having clear business values and unique offerings helps point you towards like-minded buyers, and paves the way to long term relationships. Are you focused on environmentally-friendly production or carbon neutrality? Do you strive to create work opportunities for women? Are you trying to improve the life of your community? Whatever your values, make them an integral part of the story you tell roasters and communicate them in all your channels. Joining associations such as the IWCA (International Women’s Coffee Alliance) or embracing new certifications such as B Corp are good indicators of your practices.
Algrano is an open communication channel to coffee producers
Be Prepared to Answer Lots of Questions
Knowledge inspires confidence. Coffee producers are expected to be experts in their field and to answer quality and post-harvest related questions in detail. This is especially true in the early days of a relationship when the buyer still doesn’t know a lot about you. Answering questions also helps to communicate passion and shows you care about that customer. Finally, don’t underestimate the importance of being proactive and reaching out to a large number of potential buyers even if you don’t hear back from all of them.
Do the Salesperson Homework
The biggest part of a roaster’s portfolio is listed on their website and a quick Google search will help you find previous offers. Knowing which coffees they sell, the core components of their blends, and their buying philosophy can go a long way. When it’s time to make an offer, you will have a better understanding of the roaster’s needs and can make tailored suggestions based on specific product lines rather than generic recommendations.
Rethink the 85-Point Coffee
There used to be a time when roasters would be happy to use an 85-point coffee as part of their limited-edition drip offers. For better or worse, the overall quality of coffee has improved a lot and the bar for micro-lots is higher. Coffee qualities are generally divided into 80-84 points and 86+. This leaves the 85-point coffee, which is already an amazing quality, lost in the middle. Some exporters are even choosing to blend these coffees with their lower qualities to make for a better high commercial that they are more likely to sell well than a lower grade micro-lot that can’t fetch a premium price.
Algrano X FairTrade virtual tour to Honduras with Cafesmo coop
Organize Virtual Origin Trips as Part of Your Post-sales
Though most roasters have plans to visit producing countries as soon as travel restrictions end, COVID-19 has popularized digital forms of interaction. In our survey, virtual farm trips were mentioned as one of the preferred ways to make contact with new partners and roasters will remain open to this way of “travelling.” A great way to do it is to organise a Zoom call for your buyers as part of your post-sales process. It is something exclusive and allows them to know each other and build a community around your coffees.
Understand the Basic Principles of Roasting
No one expects a producer to tell a roaster how to do his job (and vice versa) but knowing the basics of roasting, and how your coffee tastes when roasted commercially, helps you to highlight the qualities of your beans, creates a common language around your coffees and puts you in a better position to discuss quality concerns. This is especially useful for experimental coffees as some processing methods alter the physical structure of the beans and thus the application of heat in the drum. Knowing how a client gets the best out of a coffee can help you guide another client that might be struggling with the roast.
On My Sales, producers have an overview of all their shipments, contracts and clients on the same place
Centralize Your Customer Data
One of the big difficulties of selling to roasters is the sheer number of clients you have; most don’t buy full containers. It is important to store data on samples and contracts for each client to build a knowledge base and to be able to better forecast future sales. Though a good spreadsheet will do, the Algrano dashboard offers producers a great way to store this data by recording all samples sent, feedback received, orders, and contracts.
Embrace Traceability
With traceability being so high on roasters’ priority list when it comes to purchasing, it is important to be able to offer detailed pricing and provenance information. We’ve seen a cooperative develop a spreadsheet where roasters could play with quality premiums to find out how much of a given fee would add up to the farmers. There are also great apps that allow producers to share information through QR codes such as Sourcemap and Cropster Origin. On this topic, roasters are eager to learn about farm gate prices and costs of production. The producers that manage to share that information first will stand out.
For Buyers
Go to My Orders to find all your sample requests and feedback all suppliers easily (Photo: Algrano)
Feedback, Feedback, Feedback
The three golden rules for a coffee buyer are feedback, feedback, and feedback. Algrano has been talking a lot about this recently in response to demands from the producers offering on the marketplace. We also built a feedback tool on roasters’ dashboards so they can do it quickly. Communicating your take on the quality of a coffee and your intention of buying (or not) is essential for producers to assess the sales potential and the performance of a given coffee. Some roasters avoid doing so because they feel they can’t offer any constructive advice, but these are different things. You don’t need to tell a producer what to do, just whether you want their coffee or not.
Communicate Fast and Clearly
In the commodities market, sales happen early and fast. While producers that want to sell to roasters need a shift in mentality and financial resources to hold coffee, the best thing roasters can do is to act quickly. Cup samples as soon as possible and communicate your timelines to farmers so that they know what to expect. Brief producers on the profiles you are looking for and your price range early in the harvest season. Purchase uncertainty is a key producer concern, and the longer it takes them to sell, the more costs they have in warehousing and insurance. Slow and unresponsive buyers will miss out on the best coffees and won’t be prioritized. Put your suppliers first and they will do the same for you.
Share Marketing Material and Customer Feedback
Transparency is still very one-sided in coffee, with most information flowing from the origin to buying countries but not the other way around. Send photos and marketing materials you create about a coffee back to its producer. You probably have more resources to dedicate to marketing than he/she does and by sharing you help your partner’s promotion and cement your relationship. Customer opinions are not just enjoyable to read but also offer further insight into the market that will allow producers to make better decisions in the future.
From Brazil to Ireland: Belfast Coffee Roasters share photos of SanCoffee’s landed bags (Photo: Belfast Coffee Roasters)
Explore the Potential of Collaboration
Long-term partnerships are the best route to unique coffees. The more you know about a coffee and the more a producer knows about your approach to roasting, the more possibilities you can unlock together. Relationships are the starting point to experimentation, planting of new varieties, quality improvements, and securing those rare gems that never make it to the offer lists. It’s also a great way to add variety to your coffee portfolio without hopping from supplier to supplier every year. And don’t underestimate end consumers! They are becoming more informed, inclined towards ethically sourced coffee, and they want the real deal. Sourcing relationships show that you walk the walk.
Plan Months Ahead of Roasting
The sourcing planner, an end-to-end planning tool where you find shipping dates, ETAs for contracts that are afloat, bags remaining in the warehouse and more
As coffee needs to be prepared to export and shipped, sourcing from the origin naturally involves more planning than buying SPOT. As a general rule, you’ll need at least three to four months from the time of contract to receive your coffee. Ryan Brown’s “3-6-12” approach (have access to three months’ worth of coffee, a clear overview of your stock for the next six months, plan with suppliers the coffees you want in the coming twelve months) is still a good rule of thumb. Algrano’s sourcing planner and inventory management tools help you just that quickly and with full visibility 24/7. See everything from shipping dates, ETAs for contracts that are afloat, and how long your stock at the warehouse is expected to last.
Consider Working with Approval Based on PSS Replacement
The standard term for quality approval on most contracts is SAS PSS. It means the coffee is approved based on the quality of the PSS (pre-shipment sample). However, this leaves producers more vulnerable as any sale can be called off. Consider the possibility of SAS Replace, which stands for approval based on PSS replacement. This means that if a roaster is not happy with the PSS they receive, the producer has to find another coffee to replace it—either from the same farm or a different one if the client agrees. This gives roasters the security that they will receive the quality they want and producers that will make the sale that was agreed. In African countries, some exporters also request letters of intent to give them an intention of purchasing. These are not binding and help to secure financing.
Make Yourself Attractive
Selling to traders is easier due to the large volumes involved but the margins are thin. For producers, the main benefit of trading with roasters is the price, followed by stability over time and connection. However, a good price doesn’t have to be crazy high. It simply has to be above what brokers are paying, which is usually based on differentials added to the C-price. Agreeing on quality in advance and adding a premium in case the coffee cups better than expected on landing is also a great incentive. Partnering with a neutral third party such as Algrano can help you make that happen without any added stress.
Learn more about sourcing directly on Algrano.com.
