Export Impact For Good

Countries / Territories

QA 205

  • QA 205
    Are there any Internet auctions that market specialty coffee?
    Where can we find persons or organizations specializing in the electronic auctioning of specialty coffee (green bean)?
    Asked by:
    Association - Peru

    Yes and no. But commercially, no….

    Yes, in the sense that the well-known Cup of Excellence program  - see www.cupofexcellence.org - conducts regular Internet auctions to sell small amounts of coffee that have been selected on quality through annual in-country competitions.  However, these are promotional activities that serve to introduce award-winning coffees to the market in the expectation that small purchases, often as little as twenty bags shared between a number of buyers, will serve to generate regular commercial business in future. The organization of such competitions and auctions is both complex and costly, whereas advance samples are always provided. They involve huge publicity and do not offer a platform for the regular marketing of green (specialty) coffee. *

    No, in the sense that the only serious attempt at setting up an Internet-based specialty coffee auction system, Q-auctions initiated by the Coffee Quality Institute -  www.coffeeinstitute.org - in the end did not succeed. The initiative was based on the Institute's Q-grading system of quality assessment that offers buyers an indication of the quality on offer. Even so this did not achieve the intended results and the initiative has, at least for the time being, been discontinued.

    Why has the Internet not managed to attract coffee auctions other than the Cup ofExcellence program? There are a number of reasons…

    • Buyers want to test samples of the coffee on offer themselves. If this is not arranged then the only alternative is to sell 'on description'. This is not suitable for specialty coffee.
    • Most specialty roasters buy coffee 'delivered roasting plant' - this is difficult for a grower/exporter to accommodate, if not impossible. The reason why importers exist…
    • Most specialty roasters buy coffee 'subject to approval on receipt' - this is entirely impossible in an auction system that aims to bring producer and roaster together. Again, this is why importers exist…
    • Most specialty roasters buy coffee on (extended) credit terms - the importer again…
    • Many specialty roasters buy small lots, i.e. less than a container load. This complicates shipping and usually calls for the intervention of exporters/importers.

    The above reasons are specific to specialty coffee but, also for mainstream or 'commodity type' coffee no electronic auctions or even market places have evolved. Whereas electronic trading of contracts representing a standard type of coffee takes place on the futures markets of New York and London, roasters generally do not appear to be interested in going beyond the pricing of green coffee at a differential to those futures markets. This is one of the reasons why different and otherwise great initiatives have not succeeded to advance from electronic documentation into actual green coffee trading.

    Other initiatives, generally known as electronic market places, aim to bring sellers and buyers together and execute legally binding contracts. However, such market places require complex and demanding systems and, at least for coffee, still do not resolve the issues identified earlier. Electronic market places are as yet therefore not in active use in the coffee industry.

    This leaves one with what we would call electronic market platforms. These allow sellers and buyers to make contact and to exchange information, after which some might proceed to initiate actual transactions directly. See for example www.leatherline.org , www.greentrade.net or www.eFresh.com that operates a coffee portal.

    * The Cup of Excellence was originated by the Gourmet Coffee Project, a joint undertaking by the International Coffee Organization (ICO) and the International Trade Centre (ITC), operators of this website, with funding provided by the Common Fund for Commodities (CFC). To learn more about this go to www.tradeforum.org and search for Cup of Excellence. Obviously recent information is to be found at www.cupofexcellence.org but the articles in question provide a good background and overview. See also topic 06.02.01 of the Coffee Guide.

    Posted 23 October 2008

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    Q&A 169