April 27, 2021

Scaling up your green coffee sourcing

Green coffee sourcing is a key part of the business of coffee roasting. Discovering and buying quality green beans is the first step in the long process of bringing great-tasting coffee to your customers, whether they are retail or wholesale.

However, as roasters become more successful and grow, their green coffee sourcing operation will naturally need to change. Higher sales will require larger volumes of green coffee; in addition, more customers will mean a greater demand for a broader range of origins, processing methods, and more.

But even for established roasters, scaling up your green coffee sourcing can be challenging. To learn more about where you should start, I spoke with a green coffee trader and a roaster. Read on to find out what they told me.

You may also like our article on how much green coffee you should order for your roastery.

Why would you need to change your coffee sourcing operation?

The simplest answer to this question is to meet changing customer needs. Whether for wholesale or retail, more success equals greater demand. And more demand means roasters will need both greater volumes of coffee and a wider range to sell.

Mark Stell is the co-founder and Managing Partner at Portland Coffee Roasters in Portland, Oregon. “Green coffee sourcing is a mix of finding the best coffee for customers, while maintaining a commitment to responsible business practices,” he explains.

In short, a good sourcing programme will balance the needs of your customers with responsible actions at origin. Roasters can support producers by committing to buy large volumes, offering fair prices, and paying promptly.

However, this is unfortunately easier said than done. While direct trade is popular in the modern specialty coffee sector for a number of reasons, “true” direct trade is a complex process which comes with a variety of logistical barriers. 

This is why many roasters, especially those working at scale, choose to work with importers. Importers are more experienced in managing the logistics of green coffee sourcing, including shipping paperwork and quality control during cargo loading, for instance.

Juan Lizano is a senior green coffee trader at The Coffee Source. The Coffee Source is a green coffee producer and trader based in Costa Rica. The business has more than 100 years of experience in coffee production, and over 25 years of experience in trading. It offers coffee from more than 12 different origins, working with partners in the US, Europe, and further afield.

“[The Coffee Source] are importers, but we are based at origin,” Juan explains. “What makes us different is that we’re closer to the farmer,” 

He goes on to explain that this allows The Coffee Source’s team to handle everything throughout the process from farm to roaster, with a focus on providing a “no-hassle” service for the roaster.

“We source our coffees [through] close relationships with our suppliers,” Juan adds. “We live in Latin America; we know the language, we know the culture… so there’s more communication, and more transparency.”

How do you start scaling up your sourcing?

If you’re planning to change your sourcing operation, a good place to start is outlining which personnel will be involved. Juan suggests that if you already have a green coffee buyer, it should remain their responsibility.

“If you’re buying half a container from a specific farm and you now want to buy one full container, then you’re talking to the same person,” he says. “[You should have] the same payment terms [and] the same quality description, just that instead of 125 bags, [it’s] 250 bags.”

However, Mark notes that at larger companies, more people will naturally be involved. “The day-to-day work of sourcing coffee goes to our Director of Coffee, but there is often input and collaboration from many levels of the company,” he explains.

You should also check sales figures or liaise with the sales team. Outline which coffees are the most popular by looking at sales volumes and how quickly certain beans sell. This will help you develop an understanding of the “core” coffees that customers gravitate towards.

At the same time, you might want to scale up more unique or unusual coffees to attract a different demographic. “A roaster could decide [to] scale up a specific origin because it has [desirable] characteristics or a different cup profile, for instance,” Juan says.

However, at the end of the day, Mark says that the key thing is relationships. Coffee is a business focused around people, and strong partnerships with suppliers, producers, and importers will go a long way in making your sourcing operation more manageable.

“We have some relationships where we buy multiple containers, some where we buy single containers, and many where we buy anywhere from 5 bags to 100 bags,” he says.

“If there comes a time when we need to scale up, having options from companies that have strong ties to many regions helps [us to] quickly and easily find [the coffees] we need.”

Maintaining consistency and quality

Once you have the foundations in place, the next step is to think about when you’re going to source different coffees from different regions. Harvest seasons vary all around the world, so you will need to think about when you want to buy from certain origins.

“The way to maintain freshness is by working around the harvest worldwide,” Juan explains. “The first half of the year, you have fresh coffees coming out of Central America. In the second half of the year, you’ve got fresh coffees coming out of South America.

“Brazil, Peru, Colombia – they have harvests in the middle of the year. Mexico, Costa Rica, Honduras, and Guatemala, for example, have harvests at the end of the year.”

Coffee-producing countries generally have one harvest season per year lasting for just a few months, but some origins will have harvest seasons that differ from region to region.

For green coffee buyers, it’s important to know when each harvest season is, and account for how long shipments may take to arrive. For example, Ethiopia’s harvest takes place from November to February, but cargo shipments typically arrive in Europe between May and August. Shipments to the US can take even longer.

Mark says the key to maintaining manageable levels of stock is to “come up with a buying strategy and stick to it”. 

He adds: “[At Portland], we buy 80% of expected usage, with the rest bought as spot lots if needed.” Spot buying is the practice of purchasing coffee on demand, rather than agreeing a contract ahead of time. These, Mark explains, can be necessary when there are gaps in stock levels caused by fluctuations in demand.

Mark adds: “Most of our coffee is purchased under contract [directly] from groups like The Coffee Source; they help us book out [most of] what we need for the year… we have had a long term relationship with them for over 25 years.”

Challenges to keep in mind when scaling your sourcing

Broadening your coffee portfolio as a roaster can be rewarding, but it’s also important not to be overwhelmed by buying from too many origins.

“Sometimes having fewer [options] is better, allowing you to focus on quality,” Juan explains. “[This also helps avoid] inventory issues as not all coffees [sell] at the same speed.”

In addition, keep in mind that unexpected events, be they unpredictable tropical weather or global issues like Covid-19, can disrupt the coffee supply chain and cause shipping delays.

To counteract this, Mark says: “We purchase conservatively. That has helped us not get stuck with ageing coffee, like when the pandemic hit and demand dropped in certain areas.

“Since all our contracted coffee [comprised] 20% below our expected demand, we were never long on any offering… so all our green stayed fresh during this difficult time.”

Mark also notes that storage space can be a physical challenge. “Having enough space to grow is one of the biggest challenges that often isn’t easy to overcome,” he says. “Grow vertically, maximise every square foot [you] can.”

In addition, make sure you’re storing green coffee correctly. Keep bags in a cool dry place with some airflow, out of the sunlight, and not in direct contact with the floor.

Make sure your changes are sustainable

Although scaling up is likely to increase your sales, you need to make sure that any changes you make are sustainable in the long term. 

“Being wary of overbooking is a huge part of being a green coffee buyer,” Mark says. “Just because you get a new account and see an initial spike in demand doesn’t mean that trend will continue.”

In addition, by monitoring any additions to your portfolio over a longer timeframe (six months or more), you can assess how successful they are and remove them if they aren’t hitting the right margins.

Juan also notes that larger, less frequent shipments can actually be more efficient than smaller shipments in greater frequency. “The more green coffee you have in one container, the more you dilute the price of it,” he explains. “[In addition], the greater the volume you move, the more efficient you are with your space and transportation.”

Sustainable sourcing practices at origin are also important to keep in mind. Traceability, ethical sourcing, and transparency are as high on the agenda as ever in today’s specialty coffee sector.

“The consumer wants to be as informed as possible about environmental [and] social [responsibility], best practices, ethical sourcing, and so on,” Juan says. “The roaster [must] give more information to consumers.”

This is reflected in consumer purchasing behaviour. Customers, particularly millennials, are more willing to pay premium prices for sustainable products, and also expect more corporate social responsibility from the companies they purchase from. 

According to the 2015 Global Corporate Sustainability Report, some 66% of surveyed consumers said they were willing to pay more for products from sustainable companies.

“For us, the main way of ensuring [sustainability] is being closer to origin [and] being closer to where we’re buying the coffee from,” Juan adds. “Because of this, The Coffee Source can help; all our coffees are traceable to farm level.”

Currently, 59% of all The Coffee Source coffees are third-party certified, with specific certifications including Fairtrade, Rainforest Alliance, and USDA Organic. The company also operates 16 active sustainability projects across seven different origins.

Juan notes that each programme is tailored to real needs at origin, working across three main “impact areas” to drive lasting change: social, environmental, and production. 

As roasters become more successful, they will naturally have to make key decisions about their green coffee sourcing operations. And while direct trade might work for some, partnering with an importer may be a wiser decision as your business scales.

Sourcing is a complex process. There are plenty of things to consider from sales and demand to storage, transparency, traceability, harvest timings, freshness, and consistency. So, to get started, figure out what your customers want and go from there. Make sure you have a market for the coffees you want to buy. That’s the best way to make sustainable changes to your green coffee sourcing.

Enjoyed this? Then read our article on the five questions roasters should ask their green coffee importer.

Photo credits: The Coffee Source, Portland Coffee Roasters, Amie Leeking

Perfect Daily Grind

Please note: The Coffee Source is a sponsor of Perfect Daily Grind.

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