I have just returned from Brazil where I attended the 10th Brazil Cup of Excellence as one of the international jurors. I am not certain, but it may have also been my 10th Cup of Excellence jury and I must now have participated on 7 or 8 competitions in Brazil, 1 in Nicaragua, and 2 or 3 in Guatemala.
Mercanta purchased a lot from the very first Brazil Cup of Excellence auction in 1999. We paid $1.20/lb FOB for the coffee and lost plenty of money on that deal! But it was one of the cleverest things that we ever did. When Brazil commodity grade was trading at just $0.60/lb FOB, what fool would pay $1.20/lb? Someone even called us at the office the following day to ask us! Well, those fools would be us.
Now the Cup of Excellence Opening Bid is $2.50/lb, the average sale price at auction is over $6.00/lb and the top price is often over $20.00/lb.
But then, I guess a lot of people used to think the world was flat, too.
For these past 10 years, Cup of Excellence has supported countless coffee producers in the 9 participating countries with major cash prizes – not because they just happened to grow coffee but because they produced the pick of their country’s crop for that particular season.
This year, the international jury passed 26 lots through to the final Internet auction that will take place on January 19, 2010. The winning farm (plus 6 other farms) came from Bahia State, an excellent endorsement of the potential from that area and testimony to the fine work that the programme undertakes in putting lesser known regions on the specialty coffee map.
The members of international jury themselves are an indicator of the truly international flavour of the specialty coffee market. Judges from the USA, Canada, Japan, Taiwan, New Zealand, Australia, South Korea, UK, Sweden, Iceland, Lithuania, Norway, etc. Our business has become a truly global marketplace.
Moving on from Cup of Excellence to visit my farm in Pocos de Caldas with my good friend and customer Steve Leighton from Has Bean Coffee – one of only two buyers for Fazenda Toca da Onça (otherwise known as ‘Inglaterra’). The crop may be very small….but it is also very good! We also visited a great many friends and growers in the around around Poços de Caldas, Bothelos, and the Cachoeira da Grama valley just over the border in São Paulo State. Our friends, José Renato and his wife Ana Cecilia, from Fazenda Sertãozinho finished 14th at Cup of Excellence and it was a delight to visit them 72 hours after the awards ceremony.
A feature of the current Brazil crop (particularly from the key producing region of Sul de Minas) is the considerable damage to the crop as a result of the unseasonal rains during the harvest and drying time (see my June trip report from Brazil). These rains not only reduced the total volume of the crop but also the quality. The implication for the specialty coffee industry, however, is not particularly severe, since the quality producers and exporters can always select and mill to a quality benchmark. The main impact will be felt more in terms of available volume as much more care must be taken in the preparation of export lots.
For any commodity/commercial buyers reading this, however, beware! The age old ‘Santos’ coffee quality will simply get worse and worse (although the name never changes) all this rain damaged coffee will make its way into some export shipment or another. The result will be an increasing incidence of ‘rio’ cups. Even at Cup of Excellence, a number of lots were eliminated entirely from the competition for defective rio cups despite having been cupped hundreds of times – just one harsh rio cup will lead to elimination from Cup of Excellence. And, of course, no such parameter exists in the commodity/commercial market!
One way of avoiding some of the quality issues is to focus on coffees from areas less affected by the inclement weather at harvest times. For us, that would point to Bahia State and the Cerrado region of Minas Gerais State. Mercanta has already identified and purchased many fine Bahia coffees based on our own earlier quality evaluations.
For the new 2010/11 crop, early indications are for a very big 55 million bag crop with the resulting pressure on the commodity price of coffee from the first quarter of 2010. Despite the fact that Brazil is now consuming some 16 to 18m bags of coffee internally themselves, such a number will doubless put pressure on the commodity price for coffee. And since specialty preparation and harvest are a feature of the overall crop, then (at least at the moment) indicators are good for a fine quality and quantity harvest in Brazil next season.
The Cup of Excellence programme tells us that the price for fine coffee in small lots is many times the commodity pirce if we compare the current commodity price of $1.40/lb with the average Cup of Excellence price of over $6.00/lb. What exactly does expensive mean?
Quick Summary
- Cup of Excellence 26 lots confirmed for final auction
- Cup of Excellence winning lot from Bahia State (plus 6 more in the top 26)
- Brazil current crop suffering rain damage quality problems
- Brazil 2010 crop may be big / huge
It was a nice circle to be back in Brazil ten years after the first Cup of Excellence ever in 1999.
Such an anniversary is a good time to reflect on how far the Cup of Excellence programme has come in ten years.
Such an anniversary is also a good time to ponder where Cup of Excellence (and wider – specialty coffee the differentiated product) will go in the next ten years!
