Last month my friend Hugh Gilmartin asked me to contribute a guest blog to the SCAE website. I know all of you were hoping for someone other than me to write the next one – but I am back by unpopular demand!
Where can I get the inspiration for this update? The Black Eyed Peas? Love the music but that is not going to help me develop a specialty coffee theme, so I think I will look to the recent World Coffee Congress event that Flori and I attended (together with Christian from Mercanta Central America) – held at the end of February in Guatemala. Mick Wheeler from the SCAE was also there and overall it was a great event. For a specialty coffee merchant such as Mercanta, there were few ‘customers’ there, yet we had the chance to meet virtually all the growers that we work with in Guatemala, who spent time at the booth with us, as well as a few other partner producers from neighbouring countries. In this sense alone, this event was well worth the time.
The fact that the Presidents of the Republic or Guatemala and Republic of El Salvador called at the booth on the final day and this photo ended up in the national Guatemala newspaper the following day was just a bonus –https://www.prensalibre.com/pl/2010/marzo/01/PDFs/PLMT01032010.pdf
But this article was inspired by a person unknown to me who visited the booth. This fellow was very well informed, sharp, intelligent and competent. I did not know who he was, or who he worked for. We started talking.
It transpired that he worked for a huge multinational trading company – one I must confess I had not heard of but since I have learned that they are the very definition of major players in many ‘commodities’ such as coffee – even if that is a world away from Mercanta’s business. I used to be a commodity trader myself for an investment bank – we were one of the five biggest coffee trading companies in the world. So I knew where this guy was coming from.
We got to talking about how many of the giants had bought out some of our competition – whether it is known or not to the coffee buying community at large, many of the green coffee importers are parts of far larger concerns, some obviously and openly so, and some much less evidently part of larger groups. All of these giant coffee trading companies also own substantial origin milling and exporting operations, where it must be said they have been very successful maintaining a distinct specialty coffee feel for their operations, which appeals to the buyers of differentiated products where variety, provenance and ethics are all a key part of the total sourcing package.
Yet, the same cannot be said of the multinational giant’s efforts when it comes to the importing, sales and distribution of specialty coffees. This statement may be highly controversial given the readership of this blog – but I stand by it and our visitor at the booth concurred. Our visitor used a great expression that I know I will shamelessly use myself in future. The ‘DNA’ of sales and marketing specialty coffees to artisan roasters is something that huge companies have not yet unlocked.
• 3 bags here, 26 cartons there
• Cup of Excellence
• Micro lots
• Varietal differentiation, processing differentiation
• Coffee pricing completely de-coupled from the commodity and Fair Trade price structure
• The treatment of unroasted coffee beans as a perishable product (in the quality sense if not the consumable sense)
• Dealing with high maintenance customers
• Success not defined by hundreds of thousands of bags traded
• Small scale deliveries to discerning roaster clientele all over the world where variety, quality of service, intimate product knowledge are essential
• Recognition of the fact that when customers know more about choices when it comes to specialty coffee – the vast majority of them make a much more informed (better) decision thus investment in education is rather more important than investment in sales and marketing
This list could go on forever, but it helps underline the fact that the commodity and genuine specialty coffee businesses are growing apart at an increasing pace and they are not going back together again.
I believe the future coffee world (probably like the vast majority of other products) will become one of successful giants and successful and dynamic niche specialists. Those in between may find the going tough.
Stephen Hurst
March 2010
