Traditionally, many coffee producers didn't differentiate
between high-quality and standard coffee, meaning they didn't
benefit from higher prices for good coffee. In the late 1990s, ITC
market analysis revealed that coffee producers could earn more
money by selling their better coffee to niche, "gourmet" markets.
It set up a Gourmet Coffee Project to develop exports of quality
coffees that could potentially be sold for higher prices. Investing
in quality was not a new concept.
What made ITC's export development strategy stand out was taking
the - then uncommon - step of integrating information and
communications technologies (ICTs).
Brazilians pilot Internet auction
In October 1999, ITC held a "Best of Brazil" coffee contest under
its Gourmet Coffee Project, which included 315 of the country's
coffee growers.
In the Best of Brazil contest, experienced coffee tasters, known as
"cuppers", selected the ten best coffees, which were then offered
for sale at the world's first Internet coffee auction. In December,
900 60-kg bags were available for the 23 bidders from four
continents who joined a 48-hour online auction.
The experiment was a success. Not only did the auction technology
work, but the prices were high, sometimes double what had been
expected.
That experiment has grown into the Cup of Excellence
®
programme, which helps coffee growers in several countries. Brazil,
which has hosted the Cup of Excellence
® auction every
year since 1999, has been joined by Bolivia, Colombia, El Salvador,
Honduras and Nicaragua.
Organizers have made a number of changes to make sure the Internet
auction mirrors the pressures of a traditional auction. For
example, they raised the number of coffees per auction to more than
30 and cut the online bidding period to a few hours. At the end of
the bidding period, the auction is kept open only while there are
less than three minutes between bids.
Auctions help coffee trade
Do these auctions help? The Cup of Excellence
® programme
believes the answer is yes, saying that it concentrates on
recognizing and rewarding farmers who grow the best coffee, and
that coffee-producing countries use the programme for quality
education, sustainable development and promotion.
"There is no other programme that offers more of its finances
directly back to the farms. There is no better programme to
identify high-quality farmers and help build long-term
relationships, especially for smaller roasters," it says.
The Cup of Excellence
® contests and auctions are a
strong marketing tool for small producers who can escape anonymity
to gain fame and be rewarded for producing high-quality
products.
Winning farmers not only get awards, but 85% of the record prices
at auction goes back to them. Winning farms, and often their
regions, can expect future visits and buyer enquiries.
This programme and its elements build "the bridge between the high
quality farmer, the high quality trade and eventually the
consumer", according to the Cup of Excellence
® web
site.
It also helps the coffee trade in a number of ways: it makes it
easier to source and identify high-quality coffees and farms;
brings new regions into the business; helps producers to recognize
different market niches and needs; helps develop an infrastructure
and distribution system; encourages cooperation within the industry
in producing countries; provides access to farmers; builds
relationships with buyers of high-quality coffee around the world;
and allows producing countries to make better land use
decisions.
Internet auctions spread
Other countries and organizations have taken up Internet coffee
auctions in recent years.
The Coffee Quality Institute (
http://www.coffeeinstitute.org),
associated with the Specialty Coffee Association of America, last
year created the "Q Auction" - Q stands for quality. This programme
is designed for larger quantities (full container-loads) of
specialty coffees. There have been 11 Q Auctions in five Central
American countries since April 2004. These auctions allow buyers to
review coffees that have received "cupping scores" above a minimum
on a recognized scale. The Q Auction's logo is not used on retail
packaging, unlike the Cup of Excellence
® logo, which
buyers use on packaging and elsewhere.
Some countries have organized their own Internet auctions, with
names such as the Costa Rica Crop of Gold, Guatemala Exceptional
Cup and Best of Panama. In July, Ethiopia became the first African
country to offer a full-scale auction called Ethiopian Gold 2005. A
total of 26 coffees, selected among those of 126 cooperatives, were
sold at very encouraging prices. This auction was arranged in
cooperation with eCafé Foundation (
http://www.ecafe
foundation.org), which has partners in the Netherlands and the
United States.
Today, annual world coffee production is 115 million bags or 7
million tonnes. Only a fraction is sold through Internet auctions,
but the quantity is growing and more countries are likely to use
this avenue to promote high-quality coffee and get better prices
for them.
Online Coffee Guide reaches out to a wide
audience
Another innovative use of ICTs for trade development is the web
version of ITC's 330-page
Coffee: An exporter's guide
(available at
http://www.thecoffeeguide.org).
The site is designed for coffee growers, processors, traders,
exporters and associations, as well as those involved in coffee
transport, finance, quality control, certification and related
sectors in producing countries. The web site offers information on
all aspects of the trade, including mainstream and niche coffee
markets, contracts, logistics, supply chain management and risk,
quality and legal matters. One of the 12 chapters covers e-trade in
the coffee sector.
The web site also includes a question-and-answer section. Users can
submit questions and a panel of experts provides answers, typically
within a week. Answers are stored in an archive for use by other
visitors. The site also contains a page offering advice on how to
buy and sell coffee. Use of the web site is free of charge.
The site is also available in French (
http://www.leguideducafe.org)
and Spanish (
http://www.laguiadelcafe.org).