Despite the COVID-19 pandemic, the Cup of Excellence competition is having its strongest auctions and seeing the highest prices in its 20-year history. GCR discovers why.
The year 2020 has been full of surprises. Very few would have predicted the many twists and turns the coffee industry, and the world at large, would take thanks to the coronavirus. Coffee shop service changed, borders closed, and those who could, found themselves working from home.
But some surprises were better than others. Despite a rapid change to how the Cup of Excellence is held and questions over buyer’s ability to purchase expensive lots, the coffee quality competition has had a booming year.
The inaugural Ethiopia Cup of Excellence, held in late-March/early-April, received a record 1459 samples from producers. The Cup of Excellence auction in May achieved a record-high average price of US$28 per pound. The top-scoring coffee sold at US$185.10 per pound to producer Negussie Gemeda Mude. The Alliance for Coffee Excellence (ACE) says this is the highest price ever recorded for an Ethiopian coffee.
Including the National Winner auction in June, the Ethiopia Cup of Excellence raised more than US$1.5 million for participating producers, another record.
Cup of Excellence’s winning streak didn’t end there. The subsequent four Cup of Excellence auctions – in Nicaragua, Guatemala, El Salvador, and Costa Rica – held across July and August all broke in-country records for the average price paid per pound at the competitions.
The Guatemala auction even broke a record for the highest price paid at US$180.20 per pound for the winning lot. ACE Executive Director Darrin Daniel tells Global Coffee Report he could never have predicted the Cup of Excellence’s fantastic 2020 run.
“You’d think with all this uncertainty, people would be less willing to put down this much money on coffees that just might not sell, but we’re having the best auctions in our overall history,” Daniel says.
“Farmers have been overjoyed that we’ve been able to pull it off. They have to get their micro lots ready and commit time well in advance, so they were very happy we were committed to backing them in a really tough year.”
For the Ethiopia Cup of Excellence, judging was quickly relocated from the country’s capital of Addis Ababa to ACE’s headquarters in Portland, United States, when borders were restricted. For future competitions, ACE established five more Global Coffee Centers (GCC) with long-term Cup of Excellence jurors and buyers – Campos Coffee in Australia, Maruyama Coffee and Wataru & Co in Japan, Kaffebrenneriet in Norway, and Terarosa Coffee in South Korea – to judge the coffees.
Daniel says there were concerns that decentralising to Cup of Excellence would “erode” the competition’s standards. However, he argues the isolation actually led to more stringent judging.
“There were fewer Presidential Winners – coffees that scored 90 or above – than usual. Looking at the data, we can see overall the GCCs scored slightly lower than in-person judging. There were fewer judges than with a normal 24- to 32-person jury, and when we don’t have as many cuppers, we see a statistically lower attachment to those coffees,” Daniel says.
“There is also less correlation with a group of two or three people, even if it is all aggregated in the end, but the slightly lower scores still didn’t impact pricing.”
For the auctions, the ACE made several changes it thought would help accommodate more buyers. This included smaller lot sizes and a lowered floor price for bidding.
“We thought the floor price might entice people to join, but that would’ve meant a lower end price when they gave up bidding. Instead, we found the auctions just tended to last an hour or two longer because we started so low,” Daniel says.
“The lot size was a big win in terms of getting higher prices, especially when we had buyer groups willing to share a box or two with eight or nine other companies. People weren’t committing to the entire lot, so they felt like that was something they could really digest or sell, and not over-forecast.”
Daniel says since the Ethiopian auction, the Cup of Excellence has seen some new and returning buyers, but largely, the lots are being bought by the same companies that have supported the competitions over the years.
Maruyama Coffee has been involved with the Cup of Excellence for almost 20 years, first buying from the Guatemala auction in 2001 and judging in the Nicaragua competition in 2002. The roaster continues to buy from Cup of Excellence auctions, often securing winning lots, including in every auction so far in 2020.
Founder Kentaro Maruyama says while Cup of Excellence coffees now make up a small part of the roaster’s overall business, the competition has helped him form direct trade relationships with many producers, marks the roaster as a market leader, and holds a special place in his heart.
“Somebody once said to me: ‘Cup of Excellence is a search engine for top specialty coffee producers’, and I agree,” Maruyama says.
Japan, Taiwan, South Korea, and recently China, are well represented by Cup of Excellence buyers, despite having smaller coffee industries than other countries. Maruyama believes this is due to the competitiveness of the market, desire to be the best, and auctions already being a normal part of Japanese culture and business.
“In Tokyo, there are 30 to 50 high-end sushi restaurants that are always looking for the best tuna, because the rank of tuna they handle shows the rank of their sushi restaurant. They send brokers into the fish market and there’s always news or discussion about who bought the best tuna, particularly in the very first market of the year on 3 or 4 January. The price goes up, up, and up, because the restaurants want it to be a fact that they are the very first buyer this year of the number one tuna,” Maruyama explains.
“For me, the Cup of Excellence auction is like the tuna market in Tokyo. In an auction, not only are you paying the practical price, saying ‘this coffee is worth this much’, you are adding value to that. Sometimes, it goes up and up – it’s fun and often costly – but it’s a very good ‘spice’ that gives energy to the market.”
In a year where events have been cancelled and face-to-face interaction limited, Maruyama says it has been difficult for roasters to market coffees or generate buzz. As well as providing a product to sell, the Cup of Excellence has given Maruyama Coffee news to promote.
By taking part in the judging and auction, Maruyama is also able to still feel connected to the global coffee community.
“We do communicate through the internet, emails, and Facetime, but we miss that feeling of connection with producers,” he says. “I didn’t use that ‘energy’ or enthusiasm for buying, so I’ve put it towards bidding, and I think others are the same.”
Despite experiencing a drop in sales in-line with other business due to COVID-19, Maruyama Coffee has been able to continue buying winning lots by working in buying groups with other roasters around the world.
Maruyama says while it can be difficult to form these groups, especially with international partners, it significantly lowers the bar to attaining these premium coffees.
“Lot sizes are getting smaller and smaller, but they’re still kind of big for one roaster to be able to sell with such a high premium. I’m sharing those coffees with many other buyers, so it’s crazily expensive per pound, but I can handle it because the amount is very small,” he says.
“You all have certain budgets, and once it goes above that for someone, they withdraw, so it’s a little bit complicated and takes trust. But the Cup of Excellence has a certain sense of family. Many buyers I know personally through judging. We are all competitors in a sense, but we work in different markets, so we can share the same coffees.”
Goodboybob coffee in the US is a frequent buying group partner of Maruyama Coffee, and likewise, has secured a share of each winning lot in the first five Cup of Excellence auctions of 2020. Goodboybob Manager Ryan Fisher says it’s important to the roaster it makes these premium coffees available in America, and like Maruyama Coffee, find the small lots easier to work with.
“The way we’re built as a company, there’s no way I could sell 1000 pounds of US$187 Ethiopia. By breaking it down into smaller chunks, it allows me to spend more per pound and get an amount I can actually work with,” Fisher says.
“We haven’t seen our demand for higher-end coffee go down [because of COVID-19]. People don’t show up in the café for pour overs as much, but we’re selling more of these coffees online. People are looking for ways to treat themselves, and we’ve seen a lot more people buying these coffees for other people as gifts.”
The pandemic has, however, forced goodboybob to alter its green coffee buying in 2020. In particular, Fisher says the roaster imported less coffee from many Central American countries, like Guatemala, which incentivised it to go in big in that auction.
“I knew I wasn’t purchasing much from Guatemala this year, so it was a chance to go after the best from that country. I didn’t expect the prices to go as high, but I think other people who couldn’t buy pallets of Guatemalan coffee this year still wanted to be involved too,” he says.
Despite the benefits to buyers like goodboybob, Fisher says the true value of the Cup of Excellence is how it gives back to producers.
“A lot of the attention is always at the top and I’m guilty there too. If you’ve ever been to one of the award ceremonies where the winners are revealed and met farmers that have placed even in the top 20, it can be life changing for them,” he says.
“If we look at the Ethiopia auction this year, these are farmers whose coffee has primarily been on the Ethiopia Commodity Exchange. It’s an opportunity for them to present themselves to the world, and that doesn’t stop at first, second, or third place. If they’re above the 86-point cut off, it’s something that can make a real difference in their lives for years to come.”
The Cup of Excellence has three more auctions scheduled for 2020, Colombia in November and Peru and Brazil in December. ACE’s Daniel is thankful for the support of the coffee community in this year’s auctions and in-country partners who made them possible.
“Some people only see the competitions as a marketing or promotional tool, but they’re really a driver of economic development. It builds areas outside of the competition and what producers can do beyond the Cup of Excellence,” Daniel says.
“We’re excited to finish out the year with our partners in South America and are already getting to work on 2021. We’re not stalling our efforts and are sitting in a really good spot.”
This article appears in the November/December 2020 edition of Global Coffee Report. Subscribe HERE.