Whether you're striving to achieve sustainability goals or looking to reduce costs by increasing competition, control, and transparency in your supply chain, direct sourcing of coffee presents a myriad of complex questions that arise for both small roasters and large volume importers. With the growing trend towards direct-sourced coffee, every actor in the industry is in a race to win and solidify customer trust. A study conducted by Deloitte revealed that 42% of consumers have changed their coffee consumption habits due to their environmental and ethical concerns.
Sustainability, transparency, cost, and ethics have become common themes used to describe sourcing objectives. One effective way to achieve these objectives is through direct sourcing, which involves buying coffee directly from the producers.
Developing an effective sourcing strategy can be challenging, whether you're a small roaster or a large importer. The coffee supply chain is complex, and it can be difficult to trust counterparts in producing countries when you don't have a reliable partner in the local market to vouch for you or the quality of the coffee. However, the growing demand for ethically sourced coffee has led to the emergence of direct coffee sourcing platforms and startups that specialize in verifying local producers and listing them on a coffee marketplace. These platforms enable buyers to connect with and purchase coffee directly from producers, without the need for a middleman.
How is coffee usually sourced & bought?
It's important to distinguish between commercial coffee and specialty coffee. Commercial coffee is a commodity traded on the commodities exchange, while specialty coffee is produced using various processing methods to enhance the quality of the green coffee beans and achieve a score of 80 points or higher on the SCA score. By focusing on quality and flavor, specialty coffee has become a sought-after product for coffee enthusiasts who appreciate the unique characteristics of each coffee origin and the care taken in its production.
Sourcing commercial coffee is typically done by large-volume coffee importers who often have offices, brokers, and sourcing agents in coffee-producing countries who handle trading and secure coffee lots prior to the end of the harvesting season. By the time the coffee harvest is complete and ready to be shipped, major industry players and importers typically hold a majority of the available coffee, which they then resell to supply local roasters and brands. These roasters and brands, in turn, may also resell the coffee to other brands and local cafes. As a result, commercial coffee often passes through multiple hands and undergoes various levels of processing and packaging before reaching the end consumer.
The sourcing process for specialty coffee is similar to that of commercial coffee, with specialty coffee companies and importers typically using local sourcing agents to connect with coffee estates that specialize in producing high-quality coffee. However, the process does not end once a partner coffee estate is found. Coffee samples are typically sent to the company's office for testing and Q grading to ensure that the coffee being sourced scores above 80 on the SCA scale and meets other quality criteria. Despite efforts to minimize middle layers in the supply chain, specialty coffee still often passes through multiple intermediaries before reaching the end consumer. This can result in higher prices for the end consumer and make it difficult for small roasters to access high-quality specialty coffees.
This never ending supply-chain might seem like an ideal plan when you are a small business trying to source coffee locally but the cons outweigh the pros especially when you are looking at it through the lens of sustainability and ethics. In both scenarios many middlemen are clogging the supply-chain, each wanting their share of the cake leaving the producers and coffee workers with the short end of the stick.
When buying coffee from a third party, there is little room for improvement in sustainability, transparency, and ethics. Importers often hesitate to disclose the names and locations of the coffee estates they source from, leading to a lack of transparency for buyers to improve their ESG metrics. Moreover, purchasing from an importer typically involves setting up annual contracts and minimum purchase quantities, leaving little room for testing or experimenting with different origins and having a direct impact on the lives of producers and workers. Relying on a third-party supplier also means a lack of control and transparency over prices.
What is direct sourcing ?
Direct sourcing can solve the issues of transparency, sustainability and ethics by enabling direct trade with the producers, creating a better balance between buyers and sellers. This allows for greater transparency and control over the sourcing process, as well as the opportunity to develop more meaningful and sustainable relationships with producers.
Direct sourcing, also known as direct trade, is a business model that involves establishing a direct relationship between buyers and producers, with buyers placing orders directly with the producers who then act as exporters. While this model is ideal, it can be challenging to implement in practice. One major challenge is when producers do not have an exporting license, which can make it difficult for buyers to engage in direct trade. Additionally, it may be challenging for buyers to visit the coffee estates and personally verify the quality and practices of the producers. Despite these challenges, direct trade remains an important model for buyers who prioritize transparency and ethical sourcing practices.
When engaging in direct sourcing, having a reliable partner in the producing country is essential to bridge the gap between buyers and producers. This approach is favored by many roasters and coffee buyers who value the ease of discovery, transparency and trust. Eteakol, a platform based in India, has adopted this approach to seamlessly connect buyers and producers. Their discovery team vets sustainable Indian coffee producers and cooperatives of all sizes, providing them access to global markets and connecting them with buyers from all over the world. Eteakol takes on the responsibility of vouching for the producers and handling all the logistical and customs clearance hassles associated with international trade. This hassle-free experience has made Eteakol a popular choice for coffee buyers who prioritize ethical and sustainable sourcing practices.
What are the pros of direct coffee sourcing?
Switching to direct sourcing means having full control over your supply-chain and knowing exactly where the coffee you are buying comes from, who produced it and how it was produced. This increases traceability in the supply-chain giving you the transparency you need to make better decisions for your business. It also allows you to switch between forward buying and spot buying. Price transparency is also a major factor weighing in for the pros of direct trade as you pay the price FOB set directly by the producers themselves.
2. Improved ESG metrics and direct impact on the producer’s and worker’s lives.
Direct sourcing allows you to improve your ESG performance. When you source coffee directly from the producers you help remove the unnecessary middlemen clogging the supply-chain, pushing for a more fair and sustainable model, where the price of coffee goes directly to the producers and the workers.
3. Build long-lasting relationships with the producers
Direct trade with the producers helps you build long-lasting relationships with the producers, ensuring that the coffee you buy from them is of higher quality with potential special collaboration where producers might produce special micro-lots for your business when possible. This also allows you to secure coffee lots before the harvest season.
4. Stock control and better warehouse management
Buying directly from the producers helps you manage your stock and warehouse space in a more efficient way allowing you to plan your next spot purchase.
How does direct coffee sourcing work on Eteakol
Whether you are looking to buy commercial or specialty coffee, Eteakol acts as your trusted partner to help you source coffee directly from verified Indian coffee producers.
Sourcing coffee from a platform like Eteakol, helps buyers achieve their ESG goals and have a direct impact on the producers and workers lives, as prices are set by the producers themselves.
Eteakol gives the buyers a fully transparent price breakdown starting from the price of the coffee ex-factory and FOB to the logistics and customs clearance costs, allowing buyers to know exactly how much they are paying for their coffee and improve their supply-chain costs.
Eteakol is the only direct sourcing platform that allows for easy online discovery of different Indian coffee estates and coffee cooperatives. Our open coffee marketplace allows any buyer from any country to freely browse and discover our listed coffee partner producers without the need to create a customer account and interact with a sales team.
Once you find the coffee you want and the producer you wish to source from, Eteakol directly connects you to them allowing you to discuss details such as sample testing, prices, volume and preferred payment terms. When you are ready to make a purchase our logistics team will then step in and take care of all the exporting formalities such as shipping and customs clearance as well as quality control.
Each coffee producer listed on Eteakol is strictly evaluated using the UNSDG17 framework to assess their sustainability to give buyers the reassurance they need when sourcing coffee online.
By sourcing coffee on Eteakol, buyers have the flexibility to purchase as little as one bag or an entire container of coffee. This freedom enables them to manage their inventory more efficiently and ensures that they don't have to worry about coffee aging in their warehouse. With this approach, buyers can tailor their purchases to meet their specific needs, avoiding waste and maximizing freshness.
In other words…
When it comes to coffee, direct sourcing is the way to go and Eteakol is here to partner with you to help with discovery and global fulfillment for a completely hassle free experience.
Not only is direct sourcing better for sustainability, it also improves the lives of coffee producers allowing them to retain most of the value of the coffee price and improve wages of coffee estate workers such as pickers and processors. With direct sourcing, you also get to have full control over your supply chain and improve your costs, manage your stock and warehouse space.
For more information on how to start sourcing coffee directly on Eteakol check out our resources and FAQ.