2020, a year that will never be forgotten
2020 will never be forgotten for the challenges that society faced, also individuals and the specialty coffee business that provides a living for so many.
I suppose people had become accustomed to hearing of challenges, natural disasters, and humanitarian problems in coffee-producing countries. But without doubt, every corner of the globe has been affected by COVID in a personal, economical and societal way.
When the COVID crisis struck the UK in March 2020, I had to find a way to restructure everything that we were committed to at origin, without cancelling or abandoning a single purchase contract, and even moving ahead with business that had been agreed only on a ”good faith” basis. Meanwhile, we heard numerous stories of people, frequently whose social media stream is full of good works, cancelling origin purchase contracts. The COVID crisis exposed a moment in time when the power of commitments and long-standing came to mean something. I DID have to reorganise and restructure many shipments, to plan product flow and inventory build-up. April 2020 sales were the worst in Mercanta’s recent history – and it was crucial to reposition incoming coffees to match the virtual halt of outgoing orders, at least for 4-6 weeks. But nothing at origin was cancelled, just reorganised.
This brings to mind a story from another time when the commodity coffee price was very high. We had a long-standing purchase contract at origin with a family we had been dealing with successfully for years. The family told us that they would not honour a long-standing purchase we had because the commodity price was (by then) so high, despite our fair price purchases for years previously. The producer family suggested a renegotiation of the price. I said please ship the coffee as agreed, or default and do not ship as contracted. There would be no re-negotiation to a fairly agreed price any more than I would ask a lower than agreed contracts price if the commodity market was terribly low at the time of shipment. Eventually, Mercanta received our shipment as contracted and planned. Some time later, the family, somehow embarrassed and regretful, told me that all our competitors had agreed to renegotiate their purchase contracts, and the producer family simply thought that was the way of things, which took me to the whole idea that genuine de-commoditisation of the specialty coffee business has not taken place and many participants simply pay lip service to the concept.
On a positive note, Alda suggested promoting specialty roaster customer products via the Mercanta Instagram channel. We purchased and ordered many coffees from roaster clients websites, to illustrate how easy it was, and how to access fine coffees even when the HORECA out of home sector was closed. Many more customers then contacted us and sent in their roasted coffees, which we featured over 25 different episodes and continued for many more months with coffees that eventually came in from all over the world.
With a commodity coffee price hovering around US$1/lb, I felt our commitment to buying Arabica coffee at origin never less than $1.80/lb FOB was even more important/relevant. But this policy (in place for many years) continued to attract as much criticism as plaudits. Some origins themselves told us our Minimum Price guarantee was too high, others said too low. Our policy is simple, fair, understandable, and based on a thoughtful consideration that US$1.50/lb production cost and adding 20% to that. Of course, US$1.80/lb is NOT our average purchase price. This average we track every year and in 2019 it was 30% over the minimum guarantee price. Mercanta also sends all our purchase contract data to the Specialty Coffee Transaction Guide by Emory University.
Many people buy unsustainably priced coffee, but the fascinating thing is nobody sells it. I actually have no problem with the reality of the world that a great deal of coffee is transacted at unsustainable prices, but I am yet to see any coffee sold as cheap and unsustainable. Another key point to the Mercanta Minimum Price guarantee is that we apply it to EVERY single arabica coffee purchase from origin (we conclude one robusta contract a year). So many other companies buy some coffees at decent prices and but not all of them. Our policy is applied to 100% of Mercanta arabica coffee purchases at origin.
Principles and ethics need to be long-standing and durable in all weathers. And no challenge has arisen more complicated and visceral than COVID in 2020.
Mercanta celebrates 25 years in 2021. I am at once pleased, surprised, and rather proud at the resilience and fortitude of the specialty coffee business, whose doom was announced earlier this year. I hope vaccines can eventually bring about a return to ”normality” – some of the positive developments, even unexpected developments, over the past months may continue. Genuine quality ON ARRIVAL will never go out of fashion, ethics in purchasing is not only socially responsible but good business as well, to guarantee and sustain the supply line of quality coffee for future years.
I founded Mercanta 25 years ago. We are a small business of only 22 people in 7 offices/coffee labs on three Continents. This New Years wish goes out to that hand-picked team, as well as the plentitude of specialty coffee suppliers partners, so many of them personal friends, and other stakeholders in the specialty coffee supply chain that moves fine quality beans from 15 producing countries to fine quality buyers in 42 countries.
2021 has the potential to be a very special year for many reasons, and I have every hope for the future of our business and the wider specialty coffee world. We are nothing without our customers, and I offer a special thanks to them for not only surviving but, in some cases, thriving, in these uncertain times.
As long as fine quality, sustainably sourced, traceable, raw coffee beans are needed virtually anywhere in the world, Mercanta will be here to supply them
Stephen L Hurst
2 Jan 2021