CoE, ACE and the NCA

coffee competitions, auctions, best of panama, etc

CoE, ACE and the NCA

Postby Steve on Wed Jul 26, 2006 5:18 am

Sorry if this isn't the right selection of forum, but don't know where else to put it.

Like most COE members I received an email this morning saying ACE (The Alliance for Coffee Excellence, Inc) had joined forces with the NCA (The National Coffee Association).

Who are they and should I be worried :). I guess the biggest question I have is why not the scaa / scae ?

I was also a bit worried to read
NCA who's mission statement is to foster positive relationships between coffee producers and the US industry, the Cup of Excellence program will be able to strengthen the bridge between quality producers and US roasters and help create higher volume sales and often longer term relationships for producers recognized by the Cup of Excellence program. The two organizations will work together to enhance Cup of Excellence benefits to the coffee industry, find creative solutions for the program logistics and utilize the NCA Fall educational conference to offer the latest in quality selection techniques to US roasters.


Does not read as friendly for the rest of the world. Before any one else says I have pointed my question at the COE but just wanted your opinions on who they are and the general feeling is it a good idea?

PS just wanted to say that I dont feel anything either way about it just interested to find out more.
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Postby Aleco on Wed Jul 26, 2006 9:57 am

Steve,

I found it to be somewhat worrying. It seems as if CoE may be straying of course a bit. As I have to come to know it, CoE is an organization that commits itself to finding the exceptional lots of each particular harvest. Undoubtedly this changes from farm to farm in the majority of instances. Long term relationships? Are they planning to auction off larger sized lots out over 2-3 year spreads? They won't see the same prices they see now. I have confidence in the CoE system. It's one of the most innovative concepts the coffee industry has seen in the past decade BUT, I question if this kind of growth will flatten out the quality. Will the farmer ideal change from the focus of producing the best quality possible to selling the most coffee they can at the best price possible? Or will the ideal still be on absolute quality? Why am I smelling Starbucks in the fray?

I'm confused. Somebody show me the light.

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Postby Mark Prince on Wed Jul 26, 2006 10:41 am

Mighty confused by the email I got as well.

Maybe it's time to put a call into Susie. But the crux is, I don't even know what questions to ask her :(

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Postby Steve on Wed Jul 26, 2006 10:46 am

so who are the NCA?
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Postby Aleco on Wed Jul 26, 2006 10:56 am

National Coffee Association of the USA. The trade association where the big boys play.

http://www.ncausa.org
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Postby Steve on Wed Jul 26, 2006 10:58 am

Thats what I was thinking, ok strange one then. surely the SCAA would have been a better partnership.
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Postby Aleco on Wed Jul 26, 2006 11:13 am

"Calling Thompson Owen to podium..." I know you have an opinion about this.
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Postby coffeetaster on Wed Jul 26, 2006 1:38 pm

FULL TEXT OF CoE Communication


We are pleased to announce that The Alliance for Coffee
Excellence, Inc, (ACE) and The National Coffee Association (NCA)
have entered into a formal strategic alliance devoted to the
advancement of high quality coffee through The Cup of
Excellence® program. Our two organizations share a love and
appreciation of coffee and an understanding that a greater
knowledge of the variables that affect quality, and a focus on
creating consumer appreciation of differing flavor profiles will
benefit the industry as a whole.

Cup of Excellence has grown immensely from a single experimental
project in 1999 and is now the premier competition and auction
program in the world- it is on the cutting edge of quality
selection, it supports the development of an enhanced
infrastructure, assists cuppers and quality control technicians
to fine tune their existing skills and provides an opportunity
to excite roasters and their customers in their own coffee
discovery process. The Cup of Excellence program has enjoyed
strong support from specialty roasters worldwide due to its
strict focus on quality and the fair and transparent financial
reward it has provided to the winning farmers.

The National Coffee Association created in 1911 is the oldest
coffee trade association in the US and represents the US coffee
industry with a significant focus on government relations
(domestic and international), public relations, market and
scientific research and education. The NCA's positive media
campaigns have resulted in the good news about coffee and health
being publicized worldwide. The majority of its members are
small and mid size companies. Log on to http://www.ncausa.org for more
information.

Working with the producer committee of the NCA who's mission
statement is to foster positive relationships between coffee
producers and the US industry, the Cup of Excellence program
will be able to strengthen the bridge between quality producers
and US roasters and help create higher volume sales and often
longer term relationships for producers recognized by the Cup of
Excellence program. The two organizations will work together to
enhance Cup of Excellence benefits to the coffee industry, find
creative solutions for the program logistics and utilize the NCA
Fall educational conference to offer the latest in quality
selection techniques to US roasters.

We are excited about this opportunity to strengthen the Cup of
Excellence program and its benefits and wish to thank you for
your continued support.
Spencer Turer

Specialty coffee is a matter of choice; not a beverage of chance!"
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Postby Mark Prince on Wed Jul 26, 2006 6:56 pm

Steve wrote:Thats what I was thinking, ok strange one then. surely the SCAA would have been a better partnership.


There's an uneasy history between the SCAA and CoE... and Q Auctions.

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Postby malachi on Wed Jul 26, 2006 9:11 pm

Why would the SCAA be "better"?
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Postby Jason Haeger on Wed Jul 26, 2006 10:07 pm

malachi wrote:Why would the SCAA be "better"?

Because it's something we're all familiar with? :?
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Postby JavaJ on Wed Jul 26, 2006 11:00 pm

coffeetaster wrote:...help create higher volume sales and often
longer term relationships for producers...


Hmmm...these things, while admirable in the proper context, seem somewhat counter to the COE mission. At least the way I'm reading between the lines.

From the COE web site:
The Cup of Excellence is the most esteemed award given out for top coffees. These awards come from a strict competition that selects the very best coffee produced in that country for that particular year.


Like Aleco, I am worried about what higher volume and longer term relationships mean in this instance. There is no way in my mind to achieve this, at least for the top competitors, without compromising quality.

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Postby nick on Thu Jul 27, 2006 6:14 am

Be it through this NCA-thing, or whatever, my main concern is that the wider the scope of Cup of Excellence, the brand of "Cup of Excellence" will become weaker. There are ways to grow it, and ways NOT to grow it.

The press release doesn't mention anything about changing or adapting the CoE itself, just more of a US presence via the NCA. Like it or not, it is and has been inevitable that more and more companies will be competing for the same CoE auction lots. It's likely that some day, and some day soon, you'll see Starbucks and other national chains bidding directly for these coffees. Like it or not.
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Postby Robert Goble on Thu Jul 27, 2006 7:10 am

nick wrote:...Like it or not, it is and has been inevitable that more and more companies will be competing for the same CoE auction lots. It's likely that some day, and some day soon, you'll see Starbucks and other national chains bidding directly for these coffees. Like it or not.

It was mentioned earlier in another thread, and I think nick is right on here -- the growing specialty coffee movement could easily find itself "shut-out" from access to premium quality beans. The big guys have the buying power to squeeze us all out by strangling our access to supply. (They don't even need to use it, as long as they buy it and either dump it, or warehouse it, or slip it into their commercial grade products the net result would be scarcity).

Perhaps relationships like direct trade are one answer to this, but I am somewhat skeptical here having come from an industry where we built relationship based direct trade models and in the end learned that despite hard work, time, effort, and having what we considered awesome relationships, they were easily compromised by interlopers with more money or more aggressive buying techniques.

Trade alliances like smallaxe might be another way to go after supply, but even small axe would be a small dog at the bowl competing against some of the big doggies.

That said -- I'm not entirely sure that the future holds these outcomes, but I do take note that the SCAA just doesn't seem to be able to make it happen and it begs the question: What is the specialty coffee industry going to do about this under performing organization that purports to, or desires to represent it?
Big questions and concerns indeed.
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Postby td on Thu Jul 27, 2006 9:45 am

Robert's ending comment about the performance of the SCAA seems to me to be the most likely culprit in this new development. The "crisis" at the SCAA did not end when the financial crisis ended, it has I believe, just started.

Why would the COE whose mission it is to grow their model bet their future on an organization such as the SCAA that is currently so unstable and has such severely damaged credibility?

I know many mid-career coffee professionals running young, dynamic, growing companies that are fed up with the mismanagement of the SCAA and the politics that allow it to continue. Unfortunately, we currently have nowhere else to go; have devoted too much time and money to the association; feel as if we would be deserting a just cause; or all the above.
Obviously ACE and the COE had other options and chose to exercise those options.

We will have to wait to see if this COE development is an isolated incident that has nothing to do with the troubles at the SCAA, or is in fact, the beginning of a run on the bank.
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Postby geoff watts on Thu Jul 27, 2006 10:09 am

I do not think the new alliance between CoE and NCA is something to be worried about--it is likely a very positive development. The mission is unchanged--to identify and bring to the market the top coffees a country can produce each year, to help bridge the gap between farmer and roaster/consumer (by making farm information public and accessible, and facilitatng introductions at origin competitions), and to reward great coffee quality with tangible premiums that make it all the way to the farmgate.
The success or failure of CoE to harness the top quality in a given country each year depends upon:


1. the skill of the cuppers, both national and international.
2. the strict control of standards at the competition (ie roasting/water pouring/sample prep, etc) so that the best coffees indeed make it through
3. the ability of CoE and its partners in the origin country to outreach and stimulate farmer participation. More participation = greater likelihood of finding excellence.
4. the participation of the buyers who demonstrate willingness to pay great prices for top quality . Without this, the program falls apart.

It's a very farmer-centric program, meant to shine the spotlight on great achievement in coffee production and generate revenue for the producer. That said, it is only a small handful of producers who benefit each year. If the CoE is able to grow in its reach and bring in more buyers, more coffee organizations, more importers and exporters, then there will be more opportunity for the farmer. A secondary goal of the program is that competition success leads to long term sales opportunity for the farmer--he has emerged from anonymity, recognized for his ability to do great work, and rewarded with a high premium. Next step is build a relationship with buyers that will in the end be much more important than the auction success because such relationships can provide long term economic stability and guaranteed income. The CoE is as much about what happens AFTER auction as it is the auction itself.
One thing that has always been a challenge is that there are anywhere from 200-1,000 coffee entered but only 20 or so that make it to auction. The rest of the coffee then must be returned to the farmer and sold--which can be problematic because the farmer has been essentially 'sitting' on the coffee for a couple months instead of selling it, and by the time he gets it back there may have been a few opportunities lost--not to mention any outstanding debts are continuing to rack up interest (often at ridiculous rates) because the farmer has not sold the coffee. The CoE standards are very strict--and in fact are becoming MORE strict as time goes on! At one point 80 points was the cut-off for auction entry. That has moved up to 84, and will quite likely be moved up yet again in the near future. Roasting and preparation standards have gotten tighter. The skills of the national cuppers have grown measurably due to participation in historical CoE competitions. So the whole CoE mechanism is actually getting better at isolating the great coffees. And there is ongoing discussion about actually LOWERING the minimum lot size to allow even more participation by very small-scale individual farmers.
But as the standards rise, what happens to all those coffees in the 80-84 (or 80-86) range? Right now they just get returned and sold at market price. But what if there is a second window--where coffees that didn't quite make auction but are still far better than average, and indisputably specialty caliber can be sold off in a secondary auction or bulked and sold at, say, a pre-determined differential that guarantees the farmer a good return?
For CoE to have maximum impact in the coffee world it needs to grow in stature and reach. The bigger it gets, the more farmers stand to gain.
What happens if Starbucks and other multinationals get involved? Well, it likely drives prices up. So what? Isn't that the goal? It would be quite funny to see Maxwell House put out a $40 /lb. can of an award winning CoE coffee.
One of the biggest challenges CoE has always faced is funding--it takes significant money to operate, and has historically struggled with securing the necessary capital. If through alliance with NCA some financing doors open up, that is great--the program will not survive unless it can get some more funding support or become big enough that it can be self-sustaining.
In any case, looking at a farmer who is faced with the options of producing the best quality possible versus producing more volume of average quality--this is an age-old question that depends much more on the evolution of the whole specialty industry than it does a single program like CoE. If Joe Farmer produces 70 bags and 15 of them go to auction and fetch $5.00, but the other
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Postby geoff watts on Thu Jul 27, 2006 10:38 am

oops, got cut off there, anyhow, my point was only that the CoE standards are so exacting that few farms have managed to repeat their success in consecutive years, and it is quite likely in most cases that the best decision a farmer can make is to take auction success and parlay it into longer term relationships that provide stability. Look at Aida Batle and Kilimanjaro--that's one example, but there are many. The example I was going to make is take the 70 bags, 15 get 5 bucks, the rest get $1.00--that's $19,760 (if my math is OK). The next year the farmer enters coffee again, but doesn't make it. So all the coffee sells at $1.00--that's $10,640. Grand total for two years: $30,040.
Look at the other scenario: a direct relationship where the 70 bags fetch an average of $1.50--over two years that's $31,920. In five years the gap becomes huge.
One thing that gets under my skin sometimes is when roasters, importers, exporters, or cooperatives get paternalistic and want to decide what's best for the farmer. I'll tell you the one thing that will solve the "is quality or volume the best farmer option" question--that's when roasters and importers step up to the plate and start paying great prices for quality. If an 88+ cup can fetch an average of $2.00 per lb on the specialty market, it becomes a very easy choice for the farmer-pursue the 88+ cup at all costs! But if it is going to get $1.20 (as opposed to the 81 cup that gets $1.00), the pursuit of volume becomes a very attractive economic decision for the grower.
The continued production of exceptional quality coffee is entirely dependent on us-- the roasters and the retailers--who can educate and grow a consumer base who appreciates, desires, and is willing to pay for excellence. CoE is only going to be as successful as those companies who support it--so if we as roasters and retailers desire a powerful and ever-improving CoE, its on us to get out there and help it grow.
The NCA has no directive power over CoE, no seat on the board--and the main reason CoE is partnered with them is because the SCAA has not been very receptive. That's a shame--a real shame. But life goes on. Someday the two will become better companions, I'm certain of that, but there are old conflicts that need a bit more time to heal.
The NCA / CoE strategic alliance will bring a CoE presence to a forum that normally lacks any real focus on quality--its a good thing, in my opinion, that CoE folks will be out there beating the drum in front of another audience and potentially picking up a few new supporters in the process.

g
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Postby barry on Thu Jul 27, 2006 10:42 am

nick wrote:Like it or not, it is and has been inevitable that more and more companies will be competing for the same CoE auction lots. It's likely that some day, and some day soon, you'll see Starbucks and other national chains bidding directly for these coffees. Like it or not.


i think more likely is the appearance on cans of a 4pt "supporter of:" and a big "COE" logo.

:cry:
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Postby Aleco on Thu Jul 27, 2006 10:53 am

Geoff,

Is that what the plan is? To seperate the top quality bags from the remainder of the lots? Or will it all be bulked together and sold as 1 single lot? That was my question from the beginning. I have no problem with sbux buying COE coffees but I certainly don't see them being able to buy 10 bag lots either. I don't see them being able to get involved unless lot sizes are much larger which, in mind, may flatten the level of quality.

I am in total agreement with your point about higher scoring coffees needing to receive much larger premiums. It's the only way to create the necessary change.

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Postby geoff watts on Thu Jul 27, 2006 11:00 am

Again, put it this way--the only way CoE would ever become co-opted or let standards slip is if the roaster and retailer constituency fails to support it. If we are not out there buying and promoting these coffees, a new audience would need to be found.
If Maxwell house wants to throw in a few hundred grand to fund competitions and gets to put "supporter of CoE" on it's can, that's perfectly fine by me. That's another gigantic audience who will now be looking on the CoE website and learning about coffee. That's another couple of competitions that can be executed because of the funding and another big group of farmers who will reap the financial benefits of the auction.
The specialty roasters in my opinion should not get in the in the business of marketing programs--we should be marketing great coffees based on their intrinsic value and sensory traits. That is substantial--and no clever marketing campaign can compete with a great coffee. Our job is to teach consumers how to tell the difference using their minds and their tongues. CoE's job is to help farmers get paid and get great lots of coffee into the marketplace. If we get concerned about the marketing efforts of Sara Lee or P&G and start whining about their attempts to co-opt specialty--well, my opinion is that we've taken our eye off the ball.
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Postby Mark Prince on Thu Jul 27, 2006 11:07 am

barry wrote:
nick wrote:Like it or not, it is and has been inevitable that more and more companies will be competing for the same CoE auction lots. It's likely that some day, and some day soon, you'll see Starbucks and other national chains bidding directly for these coffees. Like it or not.


i think more likely is the appearance on cans of a 4pt "supporter of:" and a big "COE" logo.

:cry:


I agree with Barry here - my main worry is a dilution of the CoE brand. CoE will have to do a major clamp down on their logo and brand's use, which will end up affecting all roasters - even current ones who are doign well by (and for) the program.

For eg, many roasters who are in the CoE program and have bought coffee often list themselves as a CoE roaster, often labelling other bags with that fact or doing advertisements or in store signage. Not so much a problem right now.

But imagine, as Geoff says, Maxwell House buys one CoE lot, then slaps the CoE logo on every single packaging they pump out, saying, as Barry says, supporter of, yada yada. Bad, bad stuff.

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Postby Aleco on Thu Jul 27, 2006 11:12 am

As ALWAYS, my focus is on not sacrificing end quality, its not on the buyers and marketers of the coffees.
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Postby sarahdelilah on Thu Jul 27, 2006 11:17 am

Could someone from the SCAA or SCAA board speak as to why the SCAA didn't want/didn't get this partnership? I think we're all curious.
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Postby Steve on Thu Jul 27, 2006 1:20 pm

sarahdelilah wrote:Could someone from the SCAA or SCAA board speak as to why the SCAA didn't want/didn't get this partnership? I think we're all curious.


I guess my main point of this thread, would be interesting when the SCAE is involved.

FYI: I found out the SCAE is a partner after posting the thread.
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Postby geoff watts on Thu Jul 27, 2006 2:03 pm

Mark, one of the great things about CoE is the built in transparency/accountability. There is only one such thing as a CoE coffee: It is a specific coffee lot, from a specific producer, that has passed through the pre-selection, national jury, and international jury stages and emerged with an average of 84+ points.

Nothing else is a CoE, and A.C.E. does indeed pursue those who would try to abuse the name by, for example, calling a coffee Cup of Excellence because it came from the same farm that produced a CoE winner. There have been 'cease and desist' letters in the past.

Any bloke with access to the internet can go online and see who purchased what. If someone wants to try to falsely capitalize on the CoE name, it is quite easy to expose them. Litigation is another matter, and I think this would only happen in the most extreme of circumstances.

But look at what you are saying: If Maxwell house decides to go try to gain marketing advantage by contributing to CoE and putting the words 'supporter of CoE' on their can, this means the Cup of Excellence has established a mainstream reputation and reached a level of consumer penetration/awareness where there is significant and demonstrable value to being affiliated with the program. That alone I would consider a great accomplishment, and if CoE someday gets to that point then everyone of us in the Specialty Coffee field will have benefitted--because that means even the commercial consumers are paying attention to specialty and the idea of quality. Once we have their attention, well...half the battle has already been won.

I do not share the fears that some of you have voiced--the consumer who reads Maxwell House's marketing propaganda as a way of getting their information what about quality means is already in need of some help and is not the target audience for specialty..not yet anyway--they are phase 3, a little down the line in my opinion.

The incidence of roasters referring to themselves as "CoE Roasters" on various packaging and marketing material is a bit odd, I haven't actually seen that, but would be quite curious. I do agree with you that as the program grows in popularity the need for ACE to be more proactive/vigorous with logo and brand enforcement will grow--no doubt about that. It can be done--even now, one must be a paid member in order to bid on coffees and be listed on the website, and having each member sign a legal agreement about logo use would not be that difficult.

And yeah, Aleco, CoE will always continue to be about small lots and purity--definitely. Someone is free to enter a 100 bag lot, and perhaps someday it could be 250. But that coffee stands a very small chance of finishing high in the competition and getting the big bucks. If it does--wow, then that's great, congratulations to the farmer or exporter who can put together a 250 bag lot that cups out over 90 and blows away the jury of 25 cuppers. That would be commendable, and I would be the first one knocking on his door asking him to share the secret of his success and perhaps forge some business in the future. The only discussion I've ever heard about bulking has been speculative and related only to coffees that Do Not qualify for CoE status--the under 84 group, and the coffees that get ejected in the national jury stage. I think it's safe to say that there is not a whole lot of reason to keep separate a 20 bag lot of 80-point coffee...and the purpose of bulking would be to make this 'ok/decent/good' coffee available to be purchased in container sized quantities at at decent price--more or less a "Q" type proposition--instead of being given back to the farmer who then must find a way to move 20 bags of 'ok' to 'good' coffee in May, after many buyers have already long since made all their purchases. Who knows, maybe CQI and ACE might even collaborate someday. HaHa. That's worth a good chuckle, yea? But you never know.
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