Bewley’s and Ramacafe: Direct trade at its best

Bewley’s Coffee Buying Director Paul O’Toole likens the company’s 10-year partnership with Nicaraguan coffee producer Henry Hueck to that of a long distance friendship, “at times challenging” but “very rewarding”. After 22 years working at Bewley’s, O’Toole more than most has seen the development of the coffee business in the largely tea-drinking nation.
“Thirty years ago in Ireland, coffee came out of a jar,” says O’Toole. “Back then Bewley’s was principally just a bunch of cafés in town. Patrick Bewley (current CEO) was roasting the coffee on the neighbour’s floorboards. We may be a tea-drinking nation, but coffee consumption has undoubtedly grown here at astronomical rates over the last 30 years.” At the height of the coffee price crisis in 2002, O’Toole travelled to Nicaragua as a Cup of Excellence judge. It was here he first met Ramacafe’s Hueck, and was impressed by his passion for the trade. “I have always shared the view that happy people make better coffee. I could see what Hueck was trying to do with his workforce and I believed in it. Most impressively, Hueck had a 10-year plan for his business, infrastructure and social enterprise, not just a plan for the next coffee season,” O’Toole says.  A year later, O’Toole travelled with Irish Aid to Honduras and Nicaragua where he was told: “What the people need are customers so they can produce coffee and continue to make a livelihood,” O’Toole recalls. “So that’s what [Bewley’s] did.” In 2003 O’Toole initiated trading with Hueck and his two farms in Northern Nicaragua to not only help establish a quality life for his coffee workers but to developed a program that would see quality coffee transported to Ireland in a “win-win” situation for both parties. “We agreed on a sustainable price rather than the market price at the time,” says O’Toole. “We agreed to purchase three containers from Hueck for three years. That was at a time when the market was paying about US$0.65 per pound. But we agreed on $0.97 a pound. Our purchase represented about one third of Henry’s production at the time.” For Hueck, the support from Bewley’s during the height of the coffee crisis was a sign that he was dealing with a company that valued its relationships. “In the tough times, Bewley’s stuck by me and helped secure my business and build my company’s corporate social responsibility,” says Hueck.  “When coffee prices were low, Paul said to me, ‘Quality will always be the price of entry’. They understood my position when the price of coffee was lower than that of production. They knew quality would succeed in the end and we worked together on a business model that would reflect that.” Since 2003, when Bewley’s bought their first shipment from Hueck’s farms, O’Toole says they have continued to develop their relationship by meeting every three years to renew the contract and discuss the challenges and prospects for the years ahead. O’Toole says it’s no secret the market’s fluctuating prices have caused anxiety over the years, but an open platform of communication have allowed both businesses to look for ways to maintain security.  “Even though the world is scheduled to produce 148 million bags (of coffee) this year, the prices are volatile and are subject to supply and demand,” says O’Toole. “Because of this, one of the things I identified with Hueck six years ago was that eventually there will be a shortage of really good high grown quality Arabica coffee. The world won’t be growing enough to meet demand. For this reason, we’ve encouraged Hueck to reinvest and look for ways to expand his business potential.” The development of Hueck’s successful annual Ramacafe conference, and the introduction of home stays on Hueck’s farms, are just some of these business developments. When O’Toole first came into coffee trade, he recalls the entire coffee world hiding behind New York coffee prices. “[Coffee] became so commoditised. I think the crisis caught out a lot of buyers because it was coming to a stage where coffee was becoming unsustainable for producers,” O’Toole says. “Thankfully for a lot of good companies, I think the buyers got off their backsides and accepted the price challenges they were going to face. The producers have now turned a corner in my view, particularly in the last three years.” Over the years, O’Toole says the partnership developed from two companies separated by distance, to two companies bound by passion and loyalty. “When we started doing business, we began sharing information and growing our partnership. We shared cupping information, product evaluations – everything, even photographs of coffee imagery,” says O’Toole. “We believed in the partnership so much that we started sending board members, Irish ministers and staff there each year to do external examinations, for baristas to practice their skills and to understand where the coffee process begins.” O’Toole points to the assistance of technology and its place in modern day business communication. “If you look at the whole transparency of information in this modern era, the baristas and trainers can get in contact with Henry at any time to answer any questions they might have – via the internet, phone, Facebook or Skype,” says O’Toole. “It’s definitely a benefit of the relationship and a fantastic marketing tool as a company.” O’Toole says understanding the role of the producer and roaster has been vital to the longevity of the 10-year partnership with Hueck.
“We wanted our staff to understand that it all starts with the producer and we wanted [Hueck] to understand that it ends with the customer,” O’Toole says. “If we receive quality coffee, you’re probably about 20 per cent of the way. But then we have to roast it perfectly and produce a good cup of coffee on either side of the counter – there’s many challenges and demands involved in that.” Hueck has travelled to Ireland four times, and O’Toole and other Bewley’s members to Nicaragua eight times, to understand each other’s position and participate in the Ramacafe conference. “The world is changing and the specialty coffee market is growing rapidly,” says Hueck.  “It’s so important that suppliers work directly with their roasters and understand each other’s role in the process. It’s a lesson I’ve learnt and should be a lesson for others.” For Hueck, the fact that Bewley’s is a family-owned and operated business has been a strong driving force in their partnership. “Bewley’s are true to what they do. We share the same love and passion for the industry and a strong passion for corporate social responsibility in our lives,” he says. “It’s not always about money, but about what you can achieve together.” Hueck’s coffee farming operations support 100 families directly, 46 of which live on the farm. As part of its commitment to corporate social responsibility, Hueck provides school and medical services to the families. Back in Ireland, Bewley’s raised over US$2.2 million in 2009 for the Irish Hospice Foundation and is committed to Bewley’s Access Scholarship Program to provide talented students with the opportunity of tertiary education. Social commitments aside, to survive another 10 years in a volatile market, the next step for Hueck will be to follow in Bewley’s footsteps towards being carbon neutral. “We want to be the first carbon neutral farm in Nicaragua,” says Hueck. “I’ve learned many lessons from [O
’Toole] and Bewley’s, but particularly about their mission to reduce the carbon footprint in the world, and we want to take an active role in this also.” A far cry from the three-container shipment from Nicaragua to Dublin back in 2003, today Bewley’s orders 12 containers from Hueck at an estimated US$1.1 million. “We are very proud of our growth and we’re very proud of our relationship with Henry. Many companies in Ireland have faced a tough recession over the last three years, but the businesses who have remained consistent with their coffee products, are those who have managed to survive,” O’Toole says. “As long as everyone evolves, from the producer to the roaster, the barista to the machine technician, then to the consumer, we’ll continue a healthy business model and long lasting partnerships.” GCR