Green coffee purchase planning may not be the most exciting or glamorous task in your roastery, but it’s certainly one of the core tasks needed to keep your operation running smoothly and ready to serve your customers. With thoughtful data collection, informed forecasting, and good communication with your Ally Coffee account manager, you can ensure that you have access to the right coffees for your program in the right moments despite the challenges and inconsistencies that can come with working with an agricultural product like coffee.
In part one of this series, we discussed how coffee roasters can begin to create an effective purchase plan of their own, how to identify the key components in your coffee program, and the importance of understanding seasonality in coffee buying. In this final installment we spoke with Filip Odeholm, Nordic Account Manager, Merisa Mangano, Northeast US Account Manager, and Sandy Infante, US Logistics Coordinator, to learn more about defining your plan’s timeline, what to know about how coffee gets from origin to the warehouse to your roastery, the different ways to contract and purchase coffee, and using samples to select coffees and execute your plan.
Making decisions and executing your plan
Timing your purchases: Transit times and potential logistics delays
Once you’ve defined your green coffee purchase plan and you’re ready to begin contracting coffee, one of the first considerations you’ll need to make is how quickly you need a green coffee available in your roastery. One factor that can be overlooked when considering this question is the transit time needed for a coffee to move from origin to its destination warehouse, and then from the destination warehouse to your roastery. Though both international and domestic logistics are historically fairly reliable, each stage in the logistics process carries its own opportunities for delay. So, what should you know about logistics when it comes to timing your purchases?
A dock and crane for unloading container ships in Charleston, South Carolina
The first potential delays that can interrupt a coffee’s shipment timeline happen usually at the port of origin or once the coffee is afloat to its destination warehouse. “For the coffee coming to the US, the main reasons for delays are: booking cancellations due to port congestion, price fluctuations of ocean freight, customs exams needed, warehouses over capacity, [and truck] chassis shortages,” says Sandy Infante, US Logistics Coordinator. The number of potential issues that could arise at this stage is important to consider if you need green coffee on a short time table. “To help roasters prepare, [their time table] is something that they need to talk to their account manager about so that we can have everything ready in time.”
Once a coffee is available for release to your roastery, there are still possibilities for delay to occur. “When we are releasing coffee to a client… the first delay that could happen is that the warehouse may not have the pallet ready for pick up,” explains Sandy. “That could be one or two days [of delay], or even more depending on the warehouse and how busy they are.” Other delays could arise due to issues with the truck or trucker assigned to deliver the order as well, like arriving after pick up hours at the warehouse, hazardous material concerns with other cargo, or inclement weather or traffic restricting them from arriving on schedule. Luckily, under most usual circumstances, these problems tend to be infrequent, as Sandy tells us. “It’s not bad for the most part—if it’s not a holiday or those dates that are busier, we get the deliveries on time.”
Learn more: Prepare for your coffee’s arrival in our blog Receiving Green Coffee Deliveries!
Green coffee contracts: What works for your roastery?
After determining how quickly you need a coffee delivery, you can begin considering the different options available to you for contracting a purchase. Most green coffee contracts can be broken into two groups: spot and forward sales. These sale types come with their own benefits and challenges, making each purchase type better suited for certain kinds of purchases and for different roastery business plans.
Bags of coffee ready to shipped at the Aromas del Sur mill in Huila, Colombia
If you need coffee urgently, a spot purchase is almost always the best choice. Spot coffee refers to coffee that is in-store and available in a warehouse, ready to be released to your roastery immediately. However, the immediate availability of spot coffee can cause its own potential issues. “Spot coffee is free game,” explains Merisa Mangano, noting that spot coffee is available to all buyers for as long as the inventory lasts. “Spot coffee that’s in the warehouse now, it could be gone in 10 minutes. It could be gone tomorrow. It could be here until next year, you never know.”
When forecasting a green coffee need in advance, you have the opportunity to consider many more coffee options. While you still can find the right green coffee in spot inventory, planning at least a quarter ahead gives you the opportunity to consider forward sales as well. Forward sales include any coffee contracted before it arrives at its destination warehouse. The benefits of contracting forward sales can be great for businesses who are looking to guarantee their supply of a particular coffee, secure a large volume purchase, or want to lock in a favorable price based on the level of the C Market. “If you’re looking for a really important product, or a coffee from a particular farm or particular region, then getting it contracted will make sure that coffee will be there for you,” says Filip. Merisa expands on this, explaining how you and your partners in the industry can gain from using forward sales for larger volume purchases. “If it’s a client who I know is going to need 50 bags or more of a coffee, that’s generally where I start to really get ahead of things. So, if Brazils land in December or January, I’ll start having those conversations in September or October. This way, I can make sure to secure that interest and let our team at origin know what your needs are.”
Pulped coffee being spread onto raised beds to be dried at Loma La Gloria in El Bálsamo Quetzaltepec, El Salvador
Another consideration roasters will need to make when buying green coffee is whether they can or need to receive the whole purchase at once, or if they need to add carry into the contract terms. Carry is the amount of time, typically expressed in a number of months, that you plan to store your contracted green coffee in its warehouse. Carry can be added to any purchase, either spot or forward, and can be an especially useful tool for roasters who are contracting coffee to use over the course of several months or a full year, or who have limited storage space in their facility. For example: a roaster forecasts that they will need 20 bags of a Brazilian coffee for their espresso blend this year and found the right lot at the right price. They want to lock in a spot purchase, but they can store only half of that volume in their roastery. With a six month carry added to the contract, they can release 10 bags now, and agree to release the remaining 10 bags by the end of their 6 month carry term when they have more storage space available.
Most roasters’ business plans won’t rely exclusively on one type of purchase or another, which makes communicating with your account manager a useful way to begin deciding which sale type is right for the many needs of your business.
Green coffee samples: Finding the right lots to contract
After defining the coffees that fit your program, determining your timeline for needing them in your roastery, and knowing your options for contracts and carry, sampling and selecting coffees is the last major step in purchase planning. Green coffee sample roasting and evaluation is not only a crucial component in determining the quality and flavor profile of different lots, but is also a key way to work with others in the supply chain.
Sample roasting in the Ally Coffee US quality lab
In order to make the most of any green coffee sample you receive, it’s important to have a formalized and consistent green coffee sample roasting program. Establishing standards for your roasting and evaluation steps will help give you a clear picture of how any given coffee may perform in your coffee program as you compare it to other options. Beyond that however, green coffee samples act as a critical communication opportunity for you to connect with your account manager, any producers you might be working with, and others throughout the industry. “A sample is a tool for communicating. If you're not communicating back to your importer—the quality of the sample, what you're thinking about that sample, if that sample is fitting your needs or not—there's a broken link. That's why communication is so important,” explains Ricardo Pereira, Ally Coffee COO. As you share your feedback, this gives others like your account manager or importing partner a better understanding of your needs, strengthening your partnership and streamlining the process of finding the right lots for your roastery in the future.
Learn more: The Comprehensive Coffee Sample Roasting Course featuring Mark Michaelson at Ally Open
No two green coffee purchase plans are the same, and your strategy will grow and evolve as your coffee program and business do. However, with the knowledge collected here we hope that you feel empowered to start planning, experimenting, and discovering the right strategy for your roastery. As you move forward, we hope that you take some key points away from this two-part series:
- Start with identifying the major parts of your coffee program. Consider origin, volume needs, and price point.
- Remember coffee is seasonal, getting acquainted with each origin’s usual harvest cycle will help you to plan ahead.
- Always remember to account for logistics in your timeline.
- There’s more than one way to contract coffee.
- Organization and documentation are critical to effective planning.
- Your Ally Coffee account manager is here to help—communicate with them regularly to give them the chance to help you succeed!