20 years on: Is Cup of Excellence still relevant?

by Juan Cano, Mercanta Colombia

As of this year, The Cup of Excellence (COE) competition has been running for two  decades. The Alliance for Coffee Excellence (ACE) will celebrate this benchmark anniversary in Brazil in November. Mercanta will surely be present: after all, we’ve been supporting the competition since the beginning! Its first competition as a vicenarian was hosted in Colombia from 26-30 March, earlier this year, and we thought that Juan Cano (our man in Colombia) should start the year off right by participating in this historic Colombia North jury.

2019’s Colombia North COE was the first of 12 competitions that will be held in various coffee-growing countries this year. Fittingly, the competition was record-breaking. The separate North and South competitions were reincorporated into the event after a 3 year hiatus, an important move for including more producers from different harvest regions into the contest. Plus, the highest score (92.71) ever received by a Natural coffee placed first. Not only is the score impressive, it is also the first time a Natural has taken the top place in Colombia. Last year’s Colombian Competition in September 2018 saw equally amazing results, with nine coffees scoring 90+. COE hit additional records last year, including the highest price ever paid for a coffee in COE: $300.09 per pound for the top Costa Rican lot.

This is exciting and potentially great news for roasters, consumers and producers alike. But underlying these ‘wins’ for the competition and the aims of ACE is a potential contradiction with wider trends, in particular current near-record-low prices on the coffee market.

It is without a doubt that the COE winning coffees are stunning, and they keep getting better and better. However, considering the near record low prices currently being experienced in the market, it could seem counter intuitive that these special coffees would be commanding such disproportionately record-breaking prices.

Furthermore, while it seems that for producers this is a no-brainer, keep in mind that the exceptional quality of these lots comes with a significant increase in cost of production. Small lot, high price – but for producers, these lots represent a tiny proportion of their crop, so why would they put in all this effort  if it isn’t converting financially across the board?

Ultimately: Is investing in COE worth it for producers? Is it worth it for Mercanta?

Yes. It is.

Mercanta has long sought to de-commoditise the coffee business. We share the same core values as the  COE: integrity, transparency, quality and fairness, ultimately ensuring value for our customers and livelihood sustainability for the producers we work with.

This is why we have supported the COE program from the very beginning and we continue to do so, not in spite of, but especially because of the current, depressing commodity price.

Of course, this isn’t to say the system is perfect.

Juan, fresh from the Colombia North jury, wanted to pick Stephen Hurst’s brain on the matter. As founder of Mercanta and someone who, himself, sat at the board of COE for 8 years, he has a unique perspective on why we should continue to strongly believe in the Cup of Excellence program.

JC: Why is COE important in the coffee industry in general?

SH: All product groups in food and beverage sectors, as well as so many other products, like to have a reference point for “Best Of”: usually an annual award suitably fairly-judged as to be relevant and recognised. COE is such. COE is important in that it allows producers and buyers to state, without much doubt of reply, that they produced / bought the best of something at that particular time …… and perhaps will enter into an ongoing relationship.

It gives producers a production goal that can prove very beneficial (financially and reputationally), and it gives buyers a confident vehicle to purchase such coffees.

Mercanta participated in the first ever COE auction. The appeal of a reliable programme / protocol to select ‘Best of Harvest’ beans, scored and adjudged by a neutral team of experts, is as valid today as in 2000.

JC: What do you think is the reason for the longevity of COE?

SH: COE has stayed true to its core concepts, as Mercanta has over a similar period of decades.

A programme designed to find ‘Best Of’ anything and rewarding producers transparently and fairly for superlative efforts should gain longevity.

JC: How does COE resonate with Mercanta’s core values and philosophy?

SH: In matching producer remuneration with quality, COE and Mercanta are tightly matched.

Given the basis that the minimum price (the reserve price) at the auction is many times the production cost and a huge premium to the commodity coffee price, the ethics or fairness of price to the producer is not in doubt.

There is no commodity market linkage at COE (as with Mercanta), and in these ways COE sits finely within our global product portfolio.

JC: Why does Mercanta still participate every year in COE after so many years of doing so?

SH: For us, as a global merchant of fine coffees, it makes as much sense to stock Best of Harvest COE beans as part of our portfolio now as it did in 2000.

JC: What do you think is the general understanding of the public or what they think when they see a COE label on a coffee in consuming countries?

SH: This, I regret, is a fundamental shortcoming of Cup of Excellence. COE is a trade programme, a business-to-business or non-profit-to-business undertaking. I feel, and have felt for a long, long time, that COE has relatively little consumer appreciation, not least in a world awash with “We Have the Best” claims.

COE has not been able to come in any way close, in any sense, to the consumer understanding and awareness of things like Fair Trade or RFA (Rainforest Alliance) or Organic, for example. Efforts to explain and promote and engender awareness at consumer level of COE have fallen upon the very buyers of these premium products themselves.

In so buying expensive lines of raw materials at many multiples of the commodity price, the buyers themselves must bear the risk to sell them. There is very little consumer pull to create demand that flows back into COE auctions. It’s all push. This is outside of Asia, to be clear.

One Norwegian cafe chain (Kaffeebrennerit) with 30+ cafes in Norway (population 5 million) buys more Cup of Excellence coffee than the USA, with 300 million people and 5,000 coffee roasting companies.

Kaffeebrennerit has engaged with their customers in an intimate and intelligent way and created a steady, reliable and commercially-viable demand for COE products, unlike most other non-Asian buyers.

The consumer-facing efforts of COE lay in the hands of the buyers. COE resource allocation is skewed considerably toward producer support and awareness and not toward the end user, coffee consumer market. This makes it difficult to ‘sell’ the programme, both literally and figuratively.

Nonetheless, we continue to strongly believe in the programme.

The Cup of Excellence truly works for the producer, and it also works for the roasters, as it has allowed the discovery of exemplary coffees that may have remained undiscovered and unrewarded if the Cup of Excellence would not have existed.

The competition rewards farmers who put a great deal of attention and care in their coffees with a price they will not achieve in any other way in the market. The financial rewards those coffees achieve at the auction are life changing for the farmers, their families and the communities they live in.

Some deets about COE

• COE started in 1999 with the first competition in Brazil.
• Cup of Excellence Competitions are held in 11 producing countries: Colombia (North and South competitions), El Salvador, Honduras, Nicaragua, Costa Rica, Guatemala, Mexico, Rwanda, Burundi, Peru, Brazil. It identifies and awards the best coffees produced in those countries. 2020 will see the first COE competition in Ethiopia, and Indonesia hosted a pilot this year, which illustrates how the organisation is growing every year.
• The program is run by a non-profit organization, the Alliance for Coffee Excellence (ACE).
• Coffee undergoes multiple layers of quality assessment, and, during the course of the competition, top coffees will be tasted and assessed up to 5 times by different panels of expert judges. Coffees are submitted by the farmer her/himself, then are collected and organised by in-country specialty coffee organisations. The coffees are then cupped blindly by an in-country jury, who assess and score each coffee over the course of several rounds. The highest scoring lots (87+) will eventually move on to the final competition, which entails an international jurors’ panel, made up of coffee experts from all over the world.
• Out of the about 300 different coffees that are submitted for review in each country, only around 35 make it to the final round. Only the top ten will make it to the final. What that means during the competition in each country there will be about 9000 cups of coffee that will be analyzed.
• The final winners are then awarded the Cup of Excellence and the coffee is sold through an internet auction to the highest bidder. The coffee growers will get more than 80% of the final auction price and the entire process if fully transparent to the farmers.
• Since the COE’s first year, they have raised $60,385,449 in auction revenue. They have held 140 auctions in over 12 countries.
• In Brazil in 1999, the top price paid for the #1 winning lot was $2.60 a pound. In 2018 the highest price paid (the highest ever paid for a COE lot) was in Costa Rica for $300.09 a pound.