A coffee trader is someone who sells bulk coffee commodity in an attempt to make a profit. The definition can loosely be applied to cover a number of specific key roles within the coffee production process.
There are many steps involved with taking coffee as a crop and turning it into a retail-ready packaged bag of beans at the local coffee house. Firstly, the coffee beans are grown by farmers in regions which support the successful growth of coffee beans. Next, the beans must be harvested and stored until they are mature enough to be roasted. The beans are then sold, usually on the wholesale green bean market, and bought by the roaster, who must transform the raw coffee product into its finished roasted form. This finished product is then sold on to the wholesaler, who will deal with the distribution to several retailers. Finally, the end coffee product is sold on to grocery stores and coffee shops, where it is sold either over-the-counter as a prepared beverage or in airtight bags for the consumer to prepare at home.
The coffee trader will typically occupy the role of go-between link, between the farmer and the roaster. The trader will establish a reasonable purchase price, either directly with the farmers or with other traders on the wholesale market where conditions mean a surplus of sellable bean stock is available. The trader in this circumstance would then sell to the roaster, who in turn passes on the coffee product for profit.
The coffee trader’s income is derived solely from the volume of product they sell and the margin factored in to the purchase and sell-on values, so there is not a typical income. The equation is made more difficult because different coffee-producing countries have their own local market conditions, so even though there is an average value-per-kg of coffee sold globally based on bean type, differing market values are encountered by territory and bean quality.
- Understand the mechanics of global coffee trading
- Understand coffee cultivation, packaging and retail
- Organise exporting and documentation
- Actively seek new buyers to drive demand
- Ensure that farmers are remunerated properly where Fair Trade certification is applicable
- Appoint local persons to deal with all aspects of tax, legislation and production logistics
There are no formal academic barriers to entry, although many entrants come from a background of food and beverage (F&B) wholesale or retail. It is essential that candidates have an understanding of how to sell commodity to global markets, and so where a formal qualification may be lacking, the important thing for the trader is to surround themselves with people who do understand and can drive demand externally. It is possible to study for an industry-specific accreditation with a variety of trade organisations globally. Also, some time spent studying the practice of being a skilled barista (coffee artisan) is highly recommended, as it gives an understanding of the retail end of the coffee production and retail supply chains.
- Ability to think on a global level
- Able to understand mathematical and illogical motivations behind changing commodity conditions
- Strong marketing ability and knowledge of domestic production and international retail markets
- Ability to forge strong relationships with domestic producers
- Ability to demonstrate product quality to roasters in other territories
- Understanding of local and international export requirements (INCOTERMS)
This job involves a great deal of travel, as the admin and export facets of the role demand the trader is based in a capital city which is not where the product is produced. Coffee grows best in warm, mountainous areas with high humidity, and these areas are often difficult to access because they lack the support of strong infrastructure. This is all part of the exotic adventure, though. Also, the roaster is normally based in the territory of distribution, and this may well be on the other side of the planet to the grower’s operation.
The respondent who chose to help with this interview entered the industry from a mining background, and admitted to knowing nothing about the coffee industry when he joined. It is possible to build a profitable coffee trading company with zero industry expertise, IF the candidate can surround themselves with talented people and work effectively on their own precise element of the coffee supply chain.
Career ProgressionBecause most coffee traders operate their own business, the ability for their firm to grow depends on domestic consumption volume, international demand for their regionally-produced commodity, and the quality of the resulting bean. The quality issue is an important one because it effectively sets the margin the trader can expect to achieve on each delivery sale.
When people think of large coffee retailers, they immediately think of Starbucks, Cafe Nero or Costa Coffee. It is important to understand that the retailer is a separate entity to the trader, who supplies the commodity which the retailer then sells. In the case of these three examples, these firms are large enough to operate as their own trading organisations, effectively removing the independent coffee trader from the supply chain. However, as consumers demand more niche-focused coffee products, large coffee buyers make significant efforts in sourcing and purchasing more gourmet coffees, which is the ideal operating remit for the independent trader.
John Darch is an entrepreneur coffee trader who established Doi Chaang Coffee Company in Canada. He works in partnership with farmers in the Doi Chaang village in Thailand, where he has developed the concept for Beyond Fair Trade: a system where coffee growers own 50% of the coffee retail operation.
What is the background of Doi Chaang Coffee Company?
Doi Chaang village is a small community in the North-west of Thailand; it is an area which lacked the support of government or even a basic infrastructure until recent years. In 1983, His Royal Highness the King of Thailand visited the remote village and gave the farmers some imported Arabica coffee plants. It was an attempt to lure the growers away from the lucrative but damaging profession of cultivating opiates. Today, opium growing in Thailand has all but been eradicated, yet the Doi Chaang village thrives under self-sufficiency. It is the result of tireless initial work on the part of Doi Chaang village representative, Khun Wicha Promyong, in partnership with myself.
How did you get involved with selling coffee?
I was developing Thailand’s first potash mine, so one day Sandra (Bunmusik, now General Manager at Doi Chaang) came to me and said, you must meet this gentleman; he is doing wonderful things for people who make coffee. I didn’t even know anything about coffee! I met with him out of politeness, but I was overwhelmed by the commitment that I saw. That’s how it started.
How does the partnership with the Doi Chaang villagers work?
Doi Chaang Village is located in the mountainous region of the Chang Rai Province of Northern Thailand. The village is home to the Akha hill tribe which cultivates and processes the coffee. The Doi Chaang Coffee Company is a unique partnership between the Akha hill tribe of Doi Chaang Village and my small Canadian coffee distributor, Doi Chaang Coffee Co. The Thai families cultivate and process the beans, while the Canadian firm finances, roasts, markets and distributes the coffee. The Thai farmers own 50% of the joint venture, so they not only receive a better-than-fair-trade price for their beans, but they also receive a significant share (50%) of the organisation’s overall profit. This is the essence of our company’s trademarked mantra: going ‘Beyond Fair Trade.
Is this different to having Fair Trade Certification?
We believe that The Fair Trade Organisation has done a wonderful job in terms of raising public awareness about the need for a decent and reasonable deal for growers. But the minimum prices specified to be paid for the coffee beans is essentially like specifying a basic living allowance; it does little to break the cycle of poverty for many coffee farmers. With a total volume of 1700 tonnes a year, we are both a high-end gourmet producer and a role model for sustainability. With annual improvements in cultivation and with more areas planted and developing, the Thai farmers are hoping to be able to build up to a gross of 5500 tonnes over the next half a decade.
What makes Thailand a good place to grow coffee?
Thailand is a good country for growing a great number of things. The growing altitude ranges from 1200 to 1600m above sea level, with the harvesting taking place between November and March. When we first tried to take the idea of gourmet Thai coffee to other territories, it was a tough sell. We presented the product to roasters in Canada, but they simply refused to believe that the high-quality bean we were showing them was from Thailand. Despite the difficulties, I pressed on because I believed in the concept and I supported the purpose; those were always the two key elements for me. So we looked at ways we could increase the quality of the product yet further, and consequently, increase the benefits the villagers enjoyed from the sale. It’s fairly simple to me. If the farmers make more money, then they work hard to improve the quality of their product, and then look at ways to increase net yields, so it is win-win. This is why we consider ourselves to be a leader in terms of establishing a viable, profitable and renewable model for sustainability.
What is your company’s most famous product?
Here in Thailand, the company is most famous for Doi Chaang Civet, or ‘Kopi Luwak’: a bean which has been passed through the digestive tract of wild civet. Ripe coffee cherries are consumed by the animals which roam freely through Doi Chaang village. The cherries are then fermented in the animal’s stomach, giving this coffee its distinctively intense taste. My son, also named John, or John Lek (Thai for ‘small’), playfully refers to it as "Crapachino!"
What does the future hold for Doi Chaang Coffee?
Once the demand for this coffee increases, the farmers will be very much part of that growth. Until you establish a brand which is recognised internationally, there is no demand other than for your green beans. So the surplus green beans are sold domestically. Right now, we have more demand for our Doi Chaang product than the green beans can support. In Thailand, our total sales are 200 tonnes of premium grade. This year, we have about 200 tonnes in Canada, and next year, we will sell 400-500 tonnes of premium coffee in Canada. We can only sell what we have. Korea asks us for 100 tonnes, but we can give them only 22 tonnes because we spare some for Japan, for Singapore, for Malaysia. We are waiting for the additional growing capacity to come on-line.
What is it like working in the coffee industry?
It was a painful process, learning about coffee for me! I don’t deal with the mechanics of coffee production, so I treat it like mining. I just believe in the purpose, and so I have people around me who are experts and specialists. Young John, for example, did the design of the bag and logo and we get a lot of compliments, so he deals with a lot of marketing and brand communication. We are incredibly proud of what we have achieved through working with the Doi Chaang community.