In brief praise of direct trade style models

September 24, 2007

I was talking to Lucas today at 21st Street about the Panama Esmeralda they were going to get from Intelligentsia and I was able to say the thing that I’ve been thinking and saying for the last couple of months:

The more consumers drink directly traded coffee, the more the market for directly traded coffee will grow; the direct trade model will then have the power to bring more farms or cooperatives under its umbrella, which is better for everybody. So more of that.

Lucas, however, brought up an interesting point regarding the fairness of award-winning coffee farms, farms with money and tools: they are almost bound to have better quality coffee because they have the tools to continue to make better quality coffee. This is not necessarily bad, as long as more farmers are given tools to sustain an excellent product from year to year.

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5 Responses to “In brief praise of direct trade style models”

  1. RichW said

    As long as the “direct traders” remain more transparent than the Transfair FTC all is well, but should there be issues with opacity, then all bets may be off.

    There is an interesting undercurrent we’ve been hearing about regarding how “direct trade” models can be disruptive in a negative way – as with countries where the agrarian communities have only coop models available to them. Working direct can be done, but it sets other wheels turning – and not necessarily for the betterment of all. Interesting questions on a macro-political level (but again, not related to Transfair or even suggesting Transfair as a better alternative). But that’s neither here nor there to your points.

    Peterson has done amazingly well with Hacienda Esmeralda to the point where he’s developed a strong brand value. However, we didn’t buy any of it this year. With last year’s amazing coffee – literally epiphanic for many of us – wholesaling at $51 and retailing for north of $100/lb. it’s hard for us to buy into this year’s coffee – at slightly more than twice the price – being any better. Certainly not twice the value. So far we haven’t been proven wrong on this.

    It’s great to support and applaud the astronomic auction prices of the Esmeralda, but at this price all you really have is a luxury for a few, not unlike a bottle of 1962 Petrus, which I guess is what many in the industry have been aiming for. We sold our Esmeralda for $5 for a 17oz press pot last year and lost money doing so, but the promotion of it brought more attention to the cafe, so can’t blame anyone for pursuing that angle.

    Where the value is, we believe, is in raising the ceiling of perceived values above where most are willing to pay, the other coffees that may not soar as high become a little more valuable – average prices for all lots available at CoE auctions inch up from $3 to $4 and $5… that’s all good.

    If we convince consumers of the value of better coffee, then demand for better coffee will spur investment in farms near where the best coffees are now cultivated. Not unlike the growth of Napa or Sonoma wine regions. It just takes time.

    Another benefit of Peterson’s work is that there’s been more attention paid to the Gesha varietal in both its country of origin through folks like Novo, and in Central America, where Gesha plants can now be found outside Panama.

    Exciting times.

  2. tmcclearinghouse said

    Whew.

    The whole transparency/opacity issue is really what’s important in this situation. When you have people using terms that are just words, you have a problem for consumers who lack the time to do their homework (and I do not necessarily find fault in this). If you use a term without believing it, you enervate all of the history and purpose behind that term/word/idea; then nobody knows whether or not you mean it. I will not buy organically certified foods at Wal-Mart, because I will not buy anything from Wal-Mart.

    I don’t have any particular beef with the Esmeralda price; seems to me the winning auction group wanted to do exactly what you said, and now coffee is a gourmet food item. And I wholeheartedly agree that CoE coffees should be raising the bar, setting prices just a little bit higher across the board so that more money gets spread around. The disheartening thing is that the mean price of the Best of Panama coffees went down this year because so much attention was focused on the winning lot. It’s not necessarily a question of priorities, but that’s what it looks like.

    All that to say: direct trade models are, I think, the best intra-systemic solution to the problems of the global coffee trade.

    These are, indeed, exciting times.

    I’m going to sit on the TransFair/political/coop discussion for a bit. I’ve been mulling that one over for a while now.

  3. meredith said

    Stumptown just opened.

    Holy crap.

  4. Rob-a-roni said

    Buying expensive, high quality coffee can be compared to purchasing any other luxury item.
    People buy a BMW or a Mercedes for a reason. The consumer is aware that they are purchasing this vehicle for a reason. As with most consumers their taste varies and so does there education of the product.

    In most cases it is up to the Retailer to provide the information valuable to the product. Especially when purchasing a product such as BMW or a great cup of coffee. The employees of 21st have always been able to provide great information about there product. They can always give great explanations of direct trade. We can surely always say that direct trade has its negative impacts, but we can also come up with explanation that us walking to work or biking to work has its negative impact on Port Authority. If all you wish to do is exploit the idea of the negative impact of something, simply don’t purchase it.

    Most importantly what people need to do is educate themselves and they can consider if they enjoy the product or not. If you like it you like it, thats whats important.

  5. tmcclearinghouse said

    Rob: hope work yesterday was alright. I think I saw you in 21st on my way to work. But maybe that was Monday. Regardless.

    In my mind, specialty coffee exists (conceptually) outside of luxury items. I’m not sure the parallel between luxury cars and specialty coffee is going to take with me, mainly because I see coffee as (for many, many people) a daily, relatively inexpensive habit. People purchase luxury cars for ostentation; less often do people purchase luxury cars for fuel efficiency or durable engineering. If that’s what you want in a car, buy a Civic. Coffee, even if it’s a CoE or directly traded, is not on par with the expense and ostentation of automobiles. There’s a longer discussion about this that I’m not ready to get into right now.

    I agree that people need to educate themselves, but I also firmly believe that any company, including coffee companies, should be as transparent as possible, letting customers see right through their sourcing without having to ask but without being overbearing. That’s an ideal, though, and I don’t have any concrete business models to compare that to off the top of my head, at least at a retail level.

    Education and enjoyment don’t always go hand in hand. I used to love bacon. Loved it, man; I mean, I burned the hell into it and I enjoyed it. But then I found out about (read: was educated regarding) the negative impacts of factory farms on the environment, workers, and animals, not to mention an unnecessary dependence on thousands of acres of corn to feed pigs/cows/chickens. Education does not necessarily go hand in hand with enjoyment. Seems like it’s usually the opposite, at least at first. But once you figure out that what you’ve been consuming is not-so-hot, then maybe you can find something that’s much better.

    -Phil

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