Business World

When Coffee Speaks
Tea & Coffee's Business Classifieds!
Free Ukers Guide!
Festival Kawi
Coffee Tea Business Mag


Brazil Internet Auction:
The Grand Experiment

by Susie Spindler

The date December 15, 1999 marked a revolutionary moment for Brazil’s specialty coffee farmers, as well as for the gourmet coffee industry in general. No longer might Brazil’s exemplary coffee disappear into the mountains of commercial grade coffee to be shipped throughout the world with prices at or below the C contract. No longer might a buyer who appreciates true Brazil quality face the difficult task of locating the individual farmer who was producing it.

Appropriately enough, this idea traveled the internet, linking up those of like-mind. The ensuing “Let’s do it” call-to-action started a long and sometimes wild two-day ride which ended with fast and furious bidding for award-winning specialty coffee from Brazil during the first international internet auction.

On December 17, 1999, bids in the last few minutes of trading, nano-seconds apart, flew through cyberspace and drove prices for these superior coffees to levels otherwise unimaginable. Only as bidders paced their office floors did the planning team finally begin to realize the importance of the event that was unfolding and the process that had been born.

Now that this particular event is over and congratulations have been dispensed like New Year’s Eve champagne, it is worth the effort to take a closer look at the auction. How did it happen and could these results be duplicated?

First and foremost, the higher prices received by the farmers at this auction came with the recognition that the 10 coffees being auctioned were of exceptional quality. Anything less would have rightfully garnered a lukewarm reaction and a feeling that this new technology was simply a marketing ploy to raise the price on an otherwise common product.

These 10 coffees were winners from the “Best of Brazil” international competition held in Lavras, Brazil during October 13-16, 1999. Coffee holds such an important place in Brazil that the University of Lavras has a full coffee lab, equipped with sample roasters, scientific equipment, and teaching material. The donation of staff who relabeled the samples to create impartiality and space for the final cuppings proved to be indispensable.

Twelve coffee experts from the U.S., Europe, Japan, and Brazil dug into their own pockets to join George Howell and Silvio Leite, both quality consultants for this event. They were extremely curious. George Howell had been on a ”Holy Grail” quest for two years promising that not only would he find fine coffees, but that these coffees would prove to be far better than many of the Brazils presently sold as specialty. In addition, he was promising that higher quality would bring higher prices.

Being an observer in Lavras was an adventure. Each member of the jury had his own signature slurp, much like whales have songs. One sounded like a tornado, another broke the silence with a shrill whistle. Common vocabulary took on new meaning as “warm,” “woody,” “clean,” “fruity,” and “sweet” were given out as judgements on quality. All were intent on the task at hand: to pick the top coffees and to pick them with a common understanding of the criteria, which may seem simple but didn’t turn out that way. With spoons in hand, what began as a three-day search for a flawless espresso uncovered fascinating coffees that could be positioned as a single origin.

These jurors were passionate, but they certainly didn’t always agree. In several discussions, it became quite clear that while there was consensus on general standards for quality, the preferences for subtle differences were very much determined by cultural expectations. The acidity score was deliberately left out of the tabulations. They did not unanimously vote as a group for or against any of the final coffees, but were in agreement about the surprising consistency of quality in all of the coffees. By the end of the competition, it was apparent that, indeed, Brazil could produce the fine coffee that had been promised. In the end the jurors found Brazil’s coffees to reveal their strength to the jurors through understated elegance rather than by coming across as thunderbolts.

The promise of a premium for the top quality coffee had attracted 315 samples from six different regions to the competition. In addition, the winners were presented with the “Cup of Excellence,” a graphic quality certification that will be trademarked and used again in future competitions. The logo is an excellent brand marketing tool and can follow the coffee from farm to consumer to add awareness and value.

The premium award money was made available as part of the Gourmet Project, which is primarily funded by The International Coffee Organization (ICO) and the Common Fund for Commodities, and which the International Trade Centre (WTO UNCTAD) manages. Partial funding is also made available through the Brazil Specialty Coffee Association. The Specialty Coffee Association of America (SCAA) has remained an active partner for all of the Gourmet Project activities, but was especially critical for the auction. Brazil is one of five countries chosen to participate in the project; Burundi, Ethiopia, Papua New Guinea and Uganda are the other four.

While the ICO is active in many worldwide projects for the benefit of the coffee industry, the Gourmet Project has been somewhat different in scope. The goal of this unique project is to help generate and market high quality coffee with sufficient quantity and consistency that the countries will enjoy the increased premiums and, therefore, share in the higher revenue awarded to specialty coffee.

Obviously the competition fit these goals perfectly. Yet the subsequent Internet auction of the winners was a trip into uncharted waters, and at planning time, was the first of its kind in the world. After thorough examination, the ICO decided to support its planning and execution. The ITC agreed to allocate staff and financial resources even though technically the auction was outside the original Gourmet Project scope.

The ICO’s reasoning was that one of the biggest detrimental factors to valuing specialty coffee fairly is the widely accepted practice of setting prices based on the futures (C) contract. Prices may be too low to compensate the farmer’s hard work when the contract is trading at the bottom of its range and may create havoc and unrealistic expectations when the contract is at the high end of the range.

Continued on next page...


Tea & Coffee's Business Classifieds!

Tea & Coffee Trade Journal is published monthly by Lockwood Publications, Inc., 3743 Crescent St., 2nd Floor, Long Island City, NY 11101 U.S.A., Tel: (212) 391-2060. Fax: (1)(212) 827-0945. HTML production and Copyright © 2000 - 2013 by Keys Technologies and Tea & Coffee Trade Journal.

Terms and Conditions of Website Use.         Privacy Policy.

HTML Copyright © 2000 by Keys Technologies and Tea & Coffee Trade Journal. All rights reserved.