In this article:
- Why spot coffee stops being convenient once your roastery grows
- What is forward-buying and benefits for your roastery
- Finding the right partner to get started
- When samples become available and the best time to contract
- The importance of keeping retention samples
- Why you should always speak to the producer
- Receiving fresh coffee: benefits and considerations
- Tracking roast and sales data to build a forecast
Spot coffee: the fallacy of convenience
It’s easy to buy spot coffee when you’re a startup roaster. The bags are in a warehouse nearby and can be delivered in a few days. In the early days, roasteries also don’t have sales data to help them forecast how much coffee they’ll need in the future. So the warehouse works as a convenience store.
But convenience stores have a limited offer and higher prices. When roasteries grow and gain more wholesale accounts, they need consistent and cost-efficient menus. That’s when the convenience of spot coffee starts to fade. Ever got an email saying the coffee you wanted was sold out? We’ve all been there.
When you source spot coffee, it’s hard to tell if the offer list is up-to-date. The coffee you want might not be there after you cup all your samples. The same coffee might not be available next year either. The final price is fixed, with little to zero flexibility on carry, logistics, currency, etc. And there’s more. Price changes from one harvest to the next always come as a surprise. So how can you budget properly?
What’s forward-buying?
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Forward-buying is a forecasting tool for roasters that helps you build a consistent and varied coffee menu.
To forward-buy is to order your coffee before it reaches the final warehouse. It usually happens during a country’s harvest season or before it starts. Some companies also let you forward-buy when the coffee is being shipped. If this is the case, the importer is also the primary coffee buyer.
At Algrano, forward-buying refers to orders made during the harvest, when the coffee is still at origin. When a roaster buys a coffee before the harvest even starts, a common practice in long-term relationships, we call it pre-contracting.
Forward-buying is a great forecasting tool for roasters. You know which coffees you’ll have on the menu and your costs months ahead of delivery. You can budget future purchases, plan your coffee launches, and get marketing information.
Carry costs are not baked into the final price of the coffee either. At Algrano, you pay as you go for warehousing and financing. This price transparency lets you control carry costs by planning your release patterns. And you can opt out of financing if you can get a better rate with your bank.
Moving from spot to forward
If you’re new to forward-buying, getting advice from people with more experience is incredibly valuable. In this article, we’ll share the insights of two green buyers who have been where you are now. Dario Stoop is the co-founder of Coffee Architects in Switzerland and former Head of Coffee at Henauer Kaffee. Matthew Orchard is the Green Buyer & SCA Educator at UK’s Plot Roasting.
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Find a coffee, and a partner, to get started
The first thing you need to build a direct sourcing plan is a shipping calendar. Knowing when the harvest happens is a great starting point, but you also need to know when the coffee can be shipped and when it will be available at the warehouse. Algrano has an 18-month calendar you can download here. <<add link>>
Dario of Coffee Architects also recommends starting with one coffee to understand the process before moving all your spot coffee to forward-buying. “If you are new to forecasting and have been used to buying spot, start slow. Forecast one coffee at a time until you get used to it.”
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Going slow doesn’t mean forward-buying small volumes. Choosing a high-volume coffee instead of a micro-lot will give you a better overview of how to build a relationship, from finding the right partner at origin to understanding the potential of that association for the roastery.
Get your samples early
There are always more coffees to choose from at the beginning of the harvest than at the end. For one, many lots haven’t been contracted yet, so producers’ inventory is more diverse. And the supply of sample material is less limited too.
Typically, producers on Algrano stock their inventories with 2kg or 3kg of coffee to be distributed. Once that’s gone, it takes a while to get a refill - and the lot might be sold out by then. The first month of the sales window, indicated on our digital sourcing calendar, tells you when new samples are ready. We also share a monthly newsletter with what’s new to all platform users.
New crop samples usually become available in the middle of the coffee season. Typically, coffees of up to 84 points get ready to cup faster than higher-end coffees. There are three reasons: early-crop cherries might come from lower altitudes, the cherries stay on the trees for a shorter period, and the processing is faster. Some coffees are mechanically dried and that speeds things up.
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But what about micro-lots? We know that cooperatives offer coffees produced at different altitudes, and that high-altitude coffees take longer to ripen. Experimental processing methods are also longer, with extended fermentations and prolonged drying periods. That’s why producers don’t always have all samples ready at once. Is that a problem? Not really.
In his time at Henauer, Dario and his buying team always contracted large volumes early. Many coffees were contracted a year before the harvest based on type samples. That’s a common practice for standard, consistent coffee lots sold to wholesale customers.
“Knowing harvest times is critical,” Dario starts. “After a while, you know what’s due and when. We also used the Algrano calendar. Listen and breathe the market, understand what’s happening daily and what might be about to affect things.”
As you gain experience, you’ll learn that samples from producers from the same country get ready at different times because of altitude and processing. The weather might also affect the season, delaying or speeding up the harvest.
“I’ve built my own harvest calendar based on my experiences and contacts,” says Matthew of Plot Roasting. “We plan our coffee menu to know what we want and when we need it.”
Keep retention samples
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Managing quality risk when you buy directly is about protocol. Let’s say the cup profile of the landed coffee suffered a significant change compared to the offer sample. This is rare. But if it happens, you can make a quality claim or cancel the order. But how will you be sure? By keeping a retention sample.
“If we receive a 100g sample, we use 50g to cup and store the other half. If we buy that coffee, we will use the final 50g to compare the pre-shipment and the landed samples. It’s a great way to look for consistency,” Dario explains.
You can keep some of the offer sample, the pre-shipment sample (PSS), or both. Algrano’s quality lab always keeps both to check the consistency throughout the shipping process. We cup for uniformity and assess the number of quakers to know if the coffee was well sorted.
Our lab runs a complete physical analysis of every PSS. We look for broken and unripe beans, insect damage and other defects. Then we cup the offer and the PSS side by side. Finally, the landed sample always gets a moisture level check before cupping.
“Some PSS can even be overly bright, even astringent when first cupped. All this you learn with experience. It’s not a complete representation of the final product,” Matthew warns.
Talk to the producer, even if you’re not buying a full container
Imagine knowing the coffee you want will be there for you every year. That piece of mind is reserved for roasters who build relationships with producers. When a farmer knows who their customers are, they also forecast their sales expecting your business to return. You can reserve your lot and get your samples when spot buyers are still excited about the past crop.
As a green buyer, Matthew sees his role at Plot as forming “long-term purchasing relationships with producers who align with our values and to purchase their coffee”. He explains “the bulk of my job is developing and maintaining relationships and finding more direct ways to get that coffee to us.”
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Many producers with long-term partnerships that started on Algrano send samples directly to roasters. These include volume coffees and special micro-lots. When there’s enough trust in the relationship, the roasters might not need Algrano to provide quality assurance and save money on importing. We call this a shipping service.
You might not receive exclusive samples the first time you forward-buy. But direct trade has the potential to open doors to new and exciting coffees for your roastery. You’ll also get authentic origin information to help you tell a compelling story to customers. Read Niko’s story at Bell Lane for more.
Plan your sales for peak freshness
With spot coffee, you don’t know how long the bags have been sitting in the warehouse. So you have to take ageing into account. With forward-buying, it’s the other way around. You receive your coffee fresh. Sometimes, roasters let their coffees rest for a few weeks or even a month before they start roasting.
A fresh arrival sample might have greenish or herbal notes, for example. These tend to fade when the green develops. Experience will give you the confidence you need to cup early crop samples and become an efficient buyer. You’ll also know when to add a buffer to your product launch calendar to account for freshness.
“We cup pre-shipment and landed samples of each lot and know we’ll encounter some change. Be mindful of this and understand that it’s normal. It doesn’t necessarily indicate that the producer has done something wrong”, Matthew guides.
The peak freshness of each coffee depends on how it was processed, the altitude, and the density. Fully Washed Ethiopian coffees are known for a shelf-life of well over one year after landing. While fermentation can help prolong a coffee’s longevity, very long fermentations can make the bean structure less robust, giving it a shorter shelf-life.
Track your data
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Dario and Matthew use Cropster to profile roasts and as a forecasting tool. “We track volumes easily and compare pre-shipment samples to landed samples,” Dario explains. “Even if you don’t want to invest in roasting software, you should log data in a spreadsheet. And if you’re not Excel-savvy, get help”, Matthew recommends.
The roasters also keep sales records to know the roastery’s monthly, quarterly and yearly performance. Because looking back is the first step to forecasting. “We usually allow for around 5% to 10% growth [in volume] depending on the coffee line”, Matthew says.
The second step is talking to the roastery’s sales team before making green buying decisions. Before Dario commits to an order volume, he feels the “mood” of his customers. Your team might be in the process of closing new wholesale accounts, selling more retail, etc. All of this should be taken into account.
Your dashboard calculates the burn rate of a coffee based on how often you release bags from the warehouse. It shows you when you’re expected to run out of coffee and is really useful for large orders.
