Adding Value

Adding Value to Specialty Coffee

Within the coffee industry, there are two primary market segments: commodity, currently representing about 85% of the quantity of coffee traded, and specialty (sometimes referred to as differentiated), the other 15%. This guide is intended for exporters pursuing the niche specialty segment. Although there may also be some benefits of marketing commodity coffees at trade shows (e.g., when introducing coffee to new markets or when seeking new commodity traders), much more will be gained by those dealing in specialty.

The ideology of specialty coffee is that every coffee is unique, making value addition possible. This new value comes from tangible changes like improvement in quality or flavor and availability of data or from intangible ones influenced by marketing. In addition to technical criteria, such as plant variety, origin location, and processing method, specialty coffee buyers want to know where their coffees come from, under what conditions they were farmed, and the people responsible for their production.

Commodity Specialty
Ideology Coffee is interchangeable Every coffee is unique
Sensory characteristics Simple “coffee flavor,” low acidity, sometimes inconsistent Complex, distinctive characteristics indicative of origin terror, plant genetics, farm practices, and processing
Defects Up to 10% by weight Low to zero, no primary defects producing off-cups
Trading Electronic futures exchanges or large-volume commodities traders, with little to no interaction between producer and end-user Relationship-based trade is conducted between parties in direct communication, often involving specialist importers/traders. Sometimes sold at auction
Traceability Often limited to the origin, cooperative, washing station, or exporter Potentially traceable to an individual producer or estate
Lot quantity Multiple shipping containers Typically less than a full 20t container, often micro-lots 100 60kg bags or less. Nano-lots may be a few kg
Packing Jute, 1t big bag, or full shipping container bladder Moisture barrier lining or hermetically sealed (Grainpro, Ecotact) various sizes, or 15k vacuum-sealed bricks, advanced recyclable technology
Price discovery Set by futures exchanges with strict premiums and discounts for origin and quality variation Varies: often set at price premiums above futures markets, sometimes including additional premiums for certification. Sometimes negotiated directly between producer and buyer
Value addition Low price, credit terms, storage options, shipping time Flavor, quality, exclusivity, rarity, authenticity, story, relationship, novelty, environmental and social sustainability, traceability, brand
Trade show goal Identify new customers, find new suppliers Identify new customers, find new suppliers, support existing relationships, add value with brand promotion and social interaction

Unlike in the larger commodity market, trading in specialty coffee requires detailed communication between buyer and seller throughout the season. Specialty trading partners may be in contact regularly by phone or email, and buyers may visit the farming areas of their suppliers seasonally. Relationships develop over time, developing loyalty and even friendships. These relationships enhance communication effectiveness and improve the ease of doing business.

Roasters Village WOC Amsterdam

Roasters’ Village at World of Coffee Amsterdam, a place for business and socializing

Trade shows play an important role in facilitating relationships:

  • Participation at events puts exporters in contact with hundreds of new potential customers. The exhibition floor, cupping rooms, social activities, and even meetings in a hotel lobby, elevator, or shared taxicab offer new opportunities. Always carry business cards and be prepared with a short description of your company’s offerings. (known as an “elevator pitch” for this reason!)
  • Business planning/support. After establishing trust, exporters can meet casually with buyers yearly at industry events to discuss ongoing business details. There may no longer be a need for one party to travel to the other’s location (at additional time and expense) specifically for that purpose.
  • Socializing. Remember to consider the value of social relationships within the coffee industry. Social relationships between buyer and seller help to build bonds that add to customer loyalty. Trust-based relationships allow for greater flexibility in times of trouble or when pursuing mutual goals.

Part 3: Event Selection