SCA 2021 Issue by CoffeeTalk Magazine

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SCA 2021 | Vol. XXXIV No.6

v Power of { }

Survival

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CONTENTS SEPTEMBER / SCA ISSUE 2021

06 07

THE VIEW: COFFEE CONNECTIONS

KERRI GOODMAN & JAKE LEONTI

THE POWER TO SURVIVE

v Redding Roasters, Bethel, CT v Bower Café, Philadelphia, PA v Birch Coffee, New York, NY JAKE LEONTI

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2021 | SEPTEMBER / SCA ISSUE

LIGHTING THE WAY FOR FAIRER TRADE

JAKE LEONTI

COFFEETALK MAGAZINE

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THE VIEW

{ Coffee Connections Continued }

s I write this, I have been experiencing a time of intense ref lection. I have just entered my sixth decade on the planet and 28th year in coffee. As much as I am craving the connections of my coffee family, I made the difficult decision to not attend the SCA in New Orleans. COVID has changed business, and it has changed life. I am honestly questioning if the world will ever be the same. However, as I began that slow, dangerous journey down the pity party path, I reflected on quarter-century I have experienced in coffee, and it hit me. Every moment of this journey has been all about change. The changes have come constantly from the day I

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s Autumn approaches and we turn the corner on another season living in a pandemic, we must seek joy and turn towards the light. There was a great glimmer of optimism in the Spring, and it was slowly sapped over the summer with the rise of new variants and more uncertainties. Investors started to sinch their purses again, and the challenges for getting goods, hiring, and opening new businesses became unpalatable. 2021 | SEPTEMBER / SCA ISSUE

KERRI GOODMAN & JAKE LEONTI

CoffeTal k Magazine

-41.2710849,173.2836756

entered as the young, energetic, and naïve rebel who wanted to help make a difference. Trade shows have changed, the internet has changed the way we do things, the SCAA is no longer, the SCA has emerged, and the world has become smaller. And though I "thought" I knew so much in my 30s, every day, I realize how much more I don't know and simply cannot know as things simply do not stay the same. And then it hit me: It shouldn't be such a surprise. Every one of us has constantly been adapting from the moment we were born. The difference is that the journey through the years is at a pace where we do not notice the subtle, constant minute changes happening at every moment. It is only when our circumstances change drastically in a brief time, the shock is overwhelming.

Success is the ability and, more importantly, the willingness to constantly adapt. If we want to thrive, rather than just survive, we must embrace the opportunity to explore new ways of doing things. Our mission has not changed, but our methods will continue to adapt to new challenges constantly. Today our role at CoffeeTalk is more crucial than ever: to provide continuity and connection to the coffee community and keep the lines of communication open between buyers and sellers, learners and mentors, friends and our coffee family.

Therefore, it is essential to remember what challenges we have already faced and how far we have come. March of 2020 was the worst of it for many as the ominous and mysterious terms of the pandemic were at their heaviest. In this issue, we share stories of inspiration, creativity, and survival, the likes we have not witnessed, as a society, in many decades. There are stories from business owners with the scrap and gumption to refuse to roll over and yield to the exhausting challenges of lockdowns, limited supplies, and personal health concerns. There are

stories of compassion and vulnerability and the strengthening of communities through shared struggles and support.

In this issue, we are proud to present stories of coffee retailers who have embraced the challenges and continue to change. In addition, we explore new technology with hopes it can increase equity in the coffee value chain.

On the other side, we share the story of an inspiring new product that may very well lead to the democratization of green coffee pricing and an unprecedented shift in leverage toward the coffee farmer. All these stories remind us how far we have come and how things have improved over the past eighteen months. COFFEETALK MAGAZINE

THE POWER TO SURVIVE JAKE LEONTI | EDITOR-IN-CHIEF, COFFEETALK / CEO F+B THERAPY

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arch of 2020 hit the economy like an earthquake and shook every industry to a halt. Businesses were forced to scramble, shift gears or completely reinvent themselves. As a result, many companies closed for a time, and many never reopened. However, some managed to position themselves in a way to f lourish rather than f lounder. The extreme pressure and immediacy of the situation forced leadership to crystallize their priorities and understand what was truly essential to their success. Terrible times like this can offer a silver lining to businesses that can survive. We connected with three

small businesses of slightly different sizes and business models to see how we can adapt or anticipate what will insulate our companies in the future. REDDING ROASTERS, BETHEL, CT

Redding Roasters is a small owner-operator business in Bethel, CT. Kaitlyn O'Keefe is an energetic owner that faced every challenge a business owner could face. She has a small storefront for retail bags and merchandise and a healthy wholesale offering for local cafes and specialty markets. Kaitlyn abruptly took over Redding Roasters in 2012 when her father, the founder, passed away unexpectedly. Ms O'Keefe dove into her work and the business on every level, from taking roasting classes to learning QuickBooks; she

is primarily self-taught in all aspects and has managed to keep the company afloat for nearly a decade. This grit and positive attitude would serve her well when the next unexpected challenge would arise, a global pandemic. "My immediate reaction was panic. Then I started looking at ways to keep the overhead down while making sure my staff were taken care of. But, of course, we all thought this was only going to be a month-long hiccup, "Kaitlyn shares. "My wholesale customers have been ordering like clockwork every week for the past eight years and then suddenly, nothing." >>

Kaitlyn O'Keefe, Owner / Roaster Redding Roasters in Bethel, CT @reddingroasters

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THE POWER TO SURVIVE Continued from page 7

The loss of wholesale was devastating, as Kaitlyn describes, "Mostly all my eggs were in the wholesale basket. I was about 80% wholesale and 20% retail and barely any e-commerce." Ms O'Keefe and her staff returned to work to create a safe and sanitary scenario to work and for customers to pick up coffee. For a while, nothing happened, and all they did was cleaned and prepared. Then one day, the phone rang, and it didn't stop ringing for weeks. The phone rang so often that the first thing Kaitlyn did was purchase a hands-free headset to work and talk simultaneously. Redding Roasters had survived their first significant hurdle with massive support from the local community rallying behind Kaitlyn. Again, the community responded by reaching out through the telephone, and Kaitlyn embraced this connection and used it to provide the excellent service and support she had always offered in person. "We were on the phone constantly. All the people we never met before that used to go to the cafes we roasted for were reaching out directly. We weren't just making recommendations. We were telling them how to brew, time and temperature and practices for keeping coffee fresh. We were teaching people that had never made their coffee before how to make a balanced espresso extraction so customers could have the same drink they were used to picking up on their daily commute." Kaitlyn continues, "Everything went from one basket into another almost immediately." Call in and curbside pick-up became the volume driver for the business as restaurants continued to stall opening. "The next thing was to change our internet presence and eCommerce completely." Kaitlyn recalls, "I found a user-friendly system to modify and update the website myself. Working on the website myself every day for {8}

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a month, I created product pages for each item and integrated online payment and delivery settings. I should have changed it years ago, but the issue was never more urgent than my daily work. Focusing on the website resulted from those long conversations with all my customers sharing their needs and preferences." Flash forward to 2021, and Redding Roasters has levelled off from the retail surge of 2020; however, the business remains changed. The revenue split is 60% wholesale and 40% retail which is a drastic shift from 2019. However, over the last three months, Kaitlyn is pleased to share those sales have finally reached what they were in 2019 and are climbing. BOWER CAFÉ, PHILADELPHIA, PA

In Philadelphia, we checked in with owner-operator Thane Wright of Bower Café, a coffee shop in the Washington Square West neighborhood. Thane has been working in coffee since 2001 and opened Bower 3 years ago. Inspired by his father's love of cured meats, Mr Wright placed them prominently on the glass storefront next to coffee. Bower is a destination location considering it is in the middle of a block rather than a corner. When Bower was starting, Mr Wright ran into an array of challenges, including construction on their street every weekend preventing foot traffic, competing businesses calling the DOH to slow them down and even an exploding toilet. In spite of these challenges and a lack of funding to deal with them, Thane persevered and solved each issue as it came, continuing to push forward. On top of these issues, Thane explains, "No one knows who you are, and you're still building your brand and making the usual mistakes." Opening and operating was so challenging in the beginning that the pandemic seemed easier to Bower. First, COFFEETALK MAGAZINE

the month and a half they were closed, starting in March 2020, Mr Wright took the time to rethink his business model. Bower was selling specialty coffee and cured meats by the pound; however, people were only coming in for coffee, so the daily totals were low. He addressed this by building up the food menu with a toast program that included the meats. Adding food brought the average ticket up and got people interested in the meat program.

Next, Bower engaged with the local community using Instagram as a critical point of contact. "We would buy local products to sell in our shop and promote them through Instagram. They would promote us to their audience, and we would keep each other going." Thane continues about the choice to use Instagram, "People always loved our space and loved taking pictures. Between our customers and our local partners, we got in front of people, and they can order our menu directly through Instagram, which has been huge. The more Instagrammable you are, the better off you are."

Thane explains, "Then we put the menu online for the first time and updated the website. Surprisingly the protests (Black Lives Matter protests in 2020) actually helped our café because people wanted to support black-owned businesses. That was a trend for a month or two and then died off. Now it has come back but now its people just supporting a good business."

In September of 2021, Bower Café has grown their daily revenues by 45% above what they were doing pre-pandemic in 2020. Mr Wright explains the key to the café's success, "Small shops have to fight to survive.

Thane Wright, Owner of Bower Cafe, pours a latte with skill. @bowercafe

Everyone uses the word pivot, but if you pivot, you still have one food stationary. So we just made our changes and fought every day." BIRCH COFFEE, NEW YORK, NY

Meanwhile, in New York City, Birch Coffee was engaged in their fight for survival. I connected with Founder and Co-Owner Paul Schlader to >>

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THE POWER TO SURVIVE Continued from page 9

hear how a multi-unit specialty café company made it through the Corona storm. Birch Coffee has twelve locations throughout Manhattan in New York City. They were founded in 2009 with a single café and started roasting soon after in 2010. Before the pandemic hit, Birch's business was 70% retail and 30% wholesale. Wholesale and eCommerce were never the focus of the business. Instead, they were collateral revenue streams that formed organically. The in-store experience was always the core of what Birch does. When retail businesses were shut down, Paul and his founding partner, Jeremy, had to make some hard decisions. "I hope I never forget the conversations I had to have laying people off. The most challenging conversations I have had to have in the eleven years doing this. We didn't know what was happening or how long we would have to lay people off. Being responsible for taking away someone's paycheck was horrible," Paul Schlader shares. They cut staff down to Jeremy and Paul and their head roaster Jason who is also a partner. Paul continues, "We were doing everything at that time. Roasting, packaging, and shipping coffee to our customers. That was the primary revenue at the time."

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As Paul tells me, the foundation of Birch Coffee is service and being of service, especially in times of crisis or need. "It's at the core of who we are." Paul tells me the next thing they do is ask, "How can we be of service right now?" And for them, the answer was supporting the hospital workers that were helping to keep everyone safe. So Birch started setting up coffee carts at local hospitals and handing out free coffee to doctors, nurses, and administrators. They set up a program where Birch customers could purchase a cup of coffee to pay forward to hospital staff and, "The response to hospital workers from our regulars was profound. We set up a coffee bar in the hospital and gave away coffee for hours, all from our regular customers. Seeing our community response in the most tragic of times was inspiring." Birch did not take the pivot path of e-commerce and updating the website. Instead, they cut costs and reached out to the community however they could and kept everyone engaged while building goodwill. Paul explains, "We did not change the website much. We knew e-comm was not going to be the future for us. We believe in the in-person experience and focused on how we can create the safest environment for our team and customers so people will enjoy coming back into our spaces."

Birch Coffee hands out free coffee to hospital workers in New York City. @birchcoffee

In June, the stores began to reopen. The most significant changes were lessons learned from looking deeply at the business and its spending. Birch learned to be leaner and operate with fewer personnel. They also adjusted store hours to be 7 am-4:30 pm rather than staying open until 8:30 pm. Their coffee consumption changed as well. Significant growth in wholesale made the split 50/50% between wholesale and retail. We share these success stories to remind us of what innovation and motivation can make together. There are millions of stories just like these and many that didn't end so positively. All we can do is learn from our past and try to do better in the future. The resilience, creativity and determination of these business owners is an example for us all.

COFFEETALK MAGAZINE

LIGHTING THE WAY FOR FAIRER TRADE

{

JAKE LEONTI | EDITOR-IN-CHIEF, COFFEETALK / CEO F+B THERAPY

offee is a one-hundred-two-billion-dollar industry (Business Wire – Global Coffee Market (2020 to 2026) Laura Wood, Senior Press Manager) that supports as many as one hundred twenty-five million people worldwide according to Fair Trade Foundation. About twenty-five million of those people are the farmers that cultivate the land, harvest the cherries, and process the fruit into a stable shippable form.

the 3rd largest producer of coffee in the world at its peak. Eventually, the value of coffee was too low, and farmers slashed their crops and burned them to make charcoal. As a result, 98% of Haiti has suffered deforestation. Recently, we have seen similar displays in Guatemala as the "C" Market price drops, the farmers' revolted by slashing crops. Go to San José, Costa Rica, and you will see thousands of acres of land that once grew coffee, now developed for industry and housing.

Production and cultivation of coffee have been declining for years for a variety of reasons. Research supports that by 2050 half of land used for coffee cultivation will be unproductive. Climate change often takes the majority of the credit for this decline. The other major contributing factors are the inherited social, economic vices that have plagued the coffee industry for centuries. Trading coffees on the Commodities Exchange has priced the products using elements out of the farmer's control no matter how much effort they put into their work. As the longest link of the value chain that spends the most time with the actual coffee and is responsible for two of its significant transformations (cultivation and fermentation), it seems out of balance that the farmer would also be the least profitable most underpaid link.

While the amount of coffee production shrinks, the demand continues to rise. According to Sustainablecoffee. org, the coffee industry will need to double or triple its current output by 2050 to keep up with growing demand. The ICO reports demand is expected to exceed production this year by just under a million bags.

This unbalanced predicament does not go unnoticed. Every year we see increasingly young people in coffee-producing countries leaving the farm to work in cities or other industries. We see farmers changing their crops to more profitable cultivars or simply abandoning their farms altogether. This loss of value in the land was felt by coffee farmers in Haiti in the 1980s. The small island country of Haiti was

The search for a sustainable solution for coffee is the constant topic of all coffee trade shows and summits, yet no one has cracked the code or even made a dent. The coffee industry has historically maintained a veil of secrecy around its cultivation, transport, and pricing. Unfortunately, it has always been at the expense of the farmers and the profit of the merchants. Despite this cyclical scenario that has perpetuated itself for generations, no one has genuinely changed it. How can the playing field be leveled? How can we add value to the land and allow farmers to earn more? The answer may be in technology. Through numerous examples such as social media, Yelp, YouTube, etc, we have witnessed technology's role in the democratization of many industries allowing innovation and evolving >>

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business models. Coffee is about to get its first big taste of what this can mean. Introducing the most powerful piece of technology to enter the coffee world since the invention of the espresso machine, Demetria. Demetria is a simple diagnostic tool that leverages AI and cloud-based technology and puts it in the hand of the coffee farmer at an affordable price. It sounds like a grand description, but what does it actually do? Basically, it functions with two parts, software, and hardware. The hardware is a small handheld device about the size and shape of a garage door opener. This hardware shines a light on green coffee and can deconstruct its chemical composition. That's step one. Step two is the software, and this is where all the difference is made. The software uses AI technology combined with human input to analyze a green coffee and tell you if it fits your desired flavor profile for a coffee. It's a little mind-blowing to consider at first, so to understand this a little more, I spoke with the CEO and Co-Founder of Demetria, Felipe Ayerbe. "The machine does not have the coffee cuppers full capacity. So, we work with the cupper and codify the cuppers sensorial experience." Felipe can see that I am still not quite comprehending what he is telling me, so he continues, "An example would be work we are doing with Vol Café. We are prospecting for specific profiles for them. We work with their cuppers to codify their palates and specific categories they are looking for, like, molasses for example. Then, we can train our AI to detect that profile by shining this light on it." To paraphrase, they take the cuppers' sensorial experience and correlate it to the chemical composition of the coffee they are tasting. This is how the codifying works. The more coffees tasted, and the more correlations are drawn, the more accurate it becomes. Then, they can use the device to

measure the composition of other samples and tell you if they would meet the same sensorial criteria based on their chemical composition. "What the device is doing is measuring the spectral fingerprint of the coffee. It shines a light onto the green beans. This reads the beans' chemical fingerprint. Since each coffee is unique, you can create a very accurate fingerprint." Mr. Ayerbe tells me. I continue to digest the information, and ideas start to bubble up immediately. If coffee has a fingerprint, then this cancels the need for pre-ship samples and landing samples. Armed with this device, the exporter can simply scan a sample of the coffee and see if it matches the purchasers' coffee fingerprint. The coffee can then be scanned again at the port of entry. Since results are analyzed on a chemical level, there is no real way to falsify the results. This ability to register a coffee's spectral fingerprint changes the game on numerous levels. First, it is the ultimate tool in traceability, verification, and risk mitigation. Second, you can use these tools to avoid arbitration over discrepancies on quality. Third, this tool provides a level of control and power to the farmer and exporter that did not previously exist. Finally, it also provides assurances and helps build trust between the producer and purchaser. Since Specialty coffee has existed and coffee was purchased at prices outside the "C" market, most farmers were still unable to take advantage of these opportunities because they could not evaluate the quality of their own product. It is difficult and expensive to have a coffee roaster and cupping equipment at farm level. Farmers are at the mercy of the exporter or outside graders to find out what their coffee is worth. With the Demetria tool, farmers will evaluate their coffee and provide a cupping score with the simple swipe of their magic wand. >>

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Providing a cupping score empowers the farmer to price their coffee outside the "C" market when the quality is present and earn its actual value. The ancillary benefit to the roaster and consumer is that the farmer will be incentivized to produce higher quality, knowing their efforts will be rewarded. The Demetria device is not available in the United States yet. It was

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launched in the Spring of 2021 by a group of tech experts in Israel and agricultural and business experts in Colombia. New infrared technology sensors have been around for a while; however, no one has combined them with software in this way. It is this unique integration that has created a new pocket within agriculture that is certain to grow. Nestlé has already started working with Demetria by using

their technology to determine seed viability before even planting them. Through this traceability and connectivity, I see direct trade relationships between the farmer and the consumer on the horizon. Finally, for the first time, the consumer may pay what their coffee is worth, and the farmer may receive what the fruits of their labor are worth.

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