SEATTLE COFFEE WORKS 2019 AUTHENTICITY REPORT

Authenticity

Statement of Authenticity

AccomplishmentsAt Seattle Coffee Works, we recognize that producing premium coffee requires talented and passionate people along the entire supply chain. In order to sustain thriving relationships with coffee farmers and maintain a consistent team of coffee professionals in Seattle, we do our best to ensure that everyone’s wage reflects the quality of the final product, your coffee.

Full price transparency holds us accountable, tracks our progress, and serves as a valuable metric for farmers, consumers, and fellow members of the coffee community. Farmers can use price transparency to incentivize improvements in coffee quality and the quality of life for their employees. Consumers can use this report to see how their purchasing power impacts the livelihoods of coffee workers worldwide.

We appreciate our peers in the coffee community who operate transparently, and we hope to contribute to the effort of increasing equity in the coffee industry by revealing how we manage our business.

This report shows how much we pay for each pound of green coffee and what percent of that coffee is purchased directly from farmers. It also details how we provide living wages to our coffee professionals in Seattle.


Transparency

Part I: Transparency at the Farm

International trade is complex. For conventionally traded coffee, the task of determining what portion of the profit returns to the producer is arduous at best. With the multitude of parties involved including importers, exporters, cooperatives, and auctions, this task can even be impossible.

Through direct trade, we negotiate prices directly with our farmers. This often means substantially more money in the pockets of farmers, and more collaboration between our producers and us. It is a relationship that permits more room to experiment with and improve growing and processing methods, ultimately advancing the quality and value of the coffee we serve to the greater Seattle community.

Seattle Coffee Works Green Coffee Purchasing
Season: 2018-19

REGION

COUNTRY & LOT NAME

TRADE TYPE

SINCE

SCAA SCORE

TOTAL POUNDS

FOB/est. FOB per lb

FOB 2nd PAY per lb

FINAL FOB

Est. FOB-TO-FOT

LANDED PRICE
(final)


Central America








Central America

Guatemala Huehuetenango Nueva Armenia Gemelos Washed 2018

Direct

2013

87.5

1,521

3.00

-

3.00

0.16

3.16

Central America

Guatemala Huehuetenango Rosma Nativa Washed 2018

Direct

2015

89.5

9,127

3.50

0.48

3.98

0.16

4.13

Central America

Guatemala Huehuetenango Rosma Nativa Honey 2018

Direct

2015

88.0

761

3.50

-

3.50

0.16

3.66

Central America

Guatemala Huehuetenango Rosma Nativa Natural 2018

Direct

2015

90.0

761

5.50

-

5.50

0.16

5.66

Central America

Guatemala Huehuetenango La Esperanza Nativa Washed 2018

Direct

2013

89.0

10,648

3.50

0.35

3.85

0.16

4.01

Central America

Guatemala Huehuetenango La Esperanza Nativa Natural 2018

Direct

2013

90.0

761

5.50

-

5.50

0.16

5.66

Central America

Guatemala Huehuetenango La Esperanza Pacamara Washed 2018

Direct

2013

90.5

761

5.25

-

5.25

0.16

5.41

Central America

Honduras La Paz Emilia Washed 2018

Direct

2018

90.0

1,521

3.50

0.60

4.10

0.45

4.55

Central America

Honduras La Paz La Pila Washed 2018

Direct

2018

90.0

1,217

3.50

0.60

4.10

0.45

4.55

Central America

Panama Volcan Carmen Natural 2018

Relationship

2014

89.0

1,323

4.50

-

4.50

0.38

4.88

Central America

El Salvador Divisadero Pacamara Natural 2018

Direct

2016

89.5

1,217

5.00

-

5.00

0.40

5.40

Central  America

El Salvador Divisadero Pacamara Honey 2018

Direct

2016

89.5

1,217

5.00

-

5.00

0.40

5.40

Central  America

El Salvador El Cocal Yellow Bourbon Washed 2018

Direct

2018

88.0

1,521

3.50

-

3.50

0.40

3.90


South America








South America

Colombia Antioquia Villa Laura Washed 2018

Direct

2016

89.0

6,946

3.50

0.35

3.85

0.27

4.12

South America

Colombia Antioquia Santa Isabel Washed 2018

Direct

2017

89.5

4,631

3.50

0.48

3.98

0.27

4.25

South America

Colombia Hulia La Esperanza Washed 2018

Direct

2018

89.00

1,544

3.50

0.35

3.85

0.38

4.23

South America

Colombia Huila Buena Vista Washed 2018

Direct

2018

89.0

1,544

3.50

-

3.50

0.38

3.88

South America

Ecuador Palanda Agua Dulce Washed 2018

Direct

2017

88.5

1,650

3.50

0.18

3.68

0.25

3.93

South America

Ecuador Palanda El Manantial Washed 2018

Direct

2018

89.0

1,320

3.50

0.35

3.85

0.25

4.10


East Africa








East Africa

Kenya Thika Kiriga AA Washed 2018

Direct

2015

91.5

926

5.00

-

5.00

0.43

5.43

East Africa

Kenya Thika Kiriga AB Washed 2018

Direct

2015

88.5

2,116

4.25

-

4.25

0.43

4.68

East Africa

Kenya Nyeri Mahiga AA Washed2018

Relationship

2018

90.0

661

5.30

-

5.30

0.43

5.73

East Africa

Kenya Nyeri Gatuyaini AA Washed 2018

Relationship

2018

92.0

1,191

5.30

-

5.30

0.43

5.73

East Africa

Kenya Nyeri Karuthi AA Washed 2018

Relationship

2018

91.5

1,323

5.30

-

5.30

0.43

5.73

East Africa

Kenya Nyeri Thageini AA Washed 2018

Relationship

2018

92.0

1,323

5.30

-

5.30

0.43

5.73

East Africa

Ethiopia Guji Bochesi Natural 2018

Relationship

2018

89.5

6,614

3.90

-

3.90

0.40

4.30

East Africa

Ethiopia Yirgacheffe Dumerso Washed 2018

Relationship

2015

89.0

1.058

3.45

-

3.45

0.40

3.85

East Africa

Ethiopia Limmu Wabe Sombo Natural 2018

Relationship

2018

91.0

3.960

3.00

-

3.00

0.40

3.40


Conventional Coffees








East Africa

Kenya Nyeri Othaya Mahiga AB Washed 2018

Conventional

n/a

88.0

1,191

3.21

n/a

3.21

0.40

3.61

Asia Pacific

Indonesia Bali Kintamani Natural 2018

Conventional

n/a

89.5

1,323

2.83

n/a

2.83

0.43

3.26

East Africa

Ethiopia Yirgacheffe Bedhatu Jibicho Natural 2018

Conventional

n/a

90.0

2,646

4.09

n/a

4.09

0.40

4.49


Decaf








Blend

Our Best Decaf Blend 5/23/2018

Conventional

n/a

88.0

1,323

3.60

n/a

3.60

0.30

3.90

Blend

Our Best Decaf Blend 11/19/2018

Conventional

n/a

88.0

1.058

3.34

n/a

3.34

0.30

3.64













TOTALS, AVERAGES & PERCENTAGES



AVERAGE

LBs

$

WEIGHT %

$%

AVERAGE $/lb FOB



DIRECT



89.2

51,708

206,845

67.4%

67.9%

4.00



RELATIONSHIP



90.3

17,453

71,115

22.8%

23.3%

4.07



Total Direct




69,161

277,960

90.2%

91.2%

4.02



CONVENTIONAL



89.0

7,540

26,682

9.8%

8.8%

3.54



Total All




76,701

304,643

100.0%

100.0%

3.97














SCORE

2nd PAY

FINAL









88.00

0.00

3.50









88.50

0.18

3.68









89.00

0.35

3.85









89.50

0.48

3.98









90.00

0.60

4.10









For the 2018-19 growing season, we averaged $4.02 per pound Free On Board (FOB) for the 90.2% of the coffee we purchased directly from farmers and cooperatives. The minimum direct-trade price we paid was $3.50 per pound FOB.

*For coffees we buy conventionally, i.e. not directly from farmers or cooperatives, we only have knowledge of the price we pay for “Free on Truck” (FOT), i.e. a price that includes all import costs into the United States. We conservatively estimate that the typical differential between FOB and FOT is at least $0.25 per pound. It is likely higher, making the difference between what we pay for our direct-trade lots and for our conventional lots greater.
 

Minimum Coffee prices per pound in 2017 Our Direct Trade - $3.40 Peer Roasters - $2.00 Fairtrade - $1.35 NYME - $1.20

Price Benchmarks

Determining an industry standard to benchmark what we pay farmers for their coffee can be challenging. Below are commonly referenced prices for conventionally purchased and direct/relationship traded coffees:

  • At the New York Mercantile Exchange in 2018, Grade 3 coffee prices ranged from $1.14 to $1.44 per pound.1
  • The 2018 Fairtrade price of coffee fluctuated between $1.35 and $1.70 per pound.2


Living Wage

Part 2: Transparency for Customers

Seattle Coffee Works is a small, independent company with no outside investors. Our business structure allows team members to grow into new roles and responsibilities within the company.In order to provide outstanding and enjoyable experiences for coffee drinkers, we hire talented individuals with diverse skill sets, and support personal and professional development.

True Living Wage

As team members grow and develop, so do their wages. As of May 2017, we eliminated the practice of tipping, allowing full-time senior coffee bar professionals (CBO) to earn consistent wages up to $24.00 dollars an hour (effective July 1, 2019), while full-time apprentices earn $17.00 an hour. The average CBP on our team earns base wages of $44,000 per year.

Benefits Beyond Wages

Seattle Coffee Works offer benefits to our team members including:

Commitment to Coffee Education – Employment at Seattle Coffee Works promises ongoing opportunities for team members to develop coffee mastery. Becoming a certified barista with Seattle Coffee Works requires participation in a 6-month training program covering topics from hospitality to espresso to Slow Bar preparation.

Trainees learn espresso theory, milk steaming, drink assembly, double-bar training, and Slow Bar preparation before they are certified to prepare drinks on the floor. During this intense period of training, we offer our trainees unlimited access to the training lab and provide support from a skilled team of baristas within the company.

In addition to the barista training program, we invite team members to take initiative in leading and participating in workshops and events. These workshops cover cupping and scoring, sample roasting and coffee roasting fundamentals, total dissolved solids and optimal coffee extraction, Latte art, and direct trade practices. All team members can develop their cupping skills with our head roaster by attending weekly cuppings.

All training, workshops, and cuppings are paid time.

Annual Trip to Coffee Farms – Since 2014, we have sent 5 groups of team members (23 team members in all) for a ten-day-long trip to Guatemala to visit Direct Trade partner farms, a dry mill and coffee exporter, and other coffee trading partners in Guatemala. Participation in the trip is considered paid work, and the company covers all transportation, lodging, and per diem costs.

Health Insurance – We offer company health insurance and a group dental plan to all full-time team members after 60 days on the Seattle Coffee Works team. The company covers 70% of the health insurance cost.

Paid Time off (PTO) – All team members receive 6.5 days of PTO per year during their first 18 months on the team. Then ten days (or two work weeks) of PTO during the second 18 months at the company. Once team members have been with the company for 3 years, they receive 15 days (or three work weeks) of PTO per year.

Profit-Sharing – 10% of profits are shared among team members. All members learn to analyze the company’s Profit & Loss Statements and contribute to business decisions.

Request Off Policy – In an effort to maintain work-life balance for our team members, we honor requests for time off whenever possible.

Team Discounts – All team members receive 40% off food and bottled beverages, and 20% off merchandise. Coffee drinks are complimentary (including days off), as well as one bag of coffee beans per week.

Unlimited Public Transportation – All full-time team members receive unlimited access to public transportation in the Seattle Metropolitan Area. Team members contribute $20 per month for this benefit, valued at over $99 per month.

Looking Forward

Part 3: Looking Forward

As our team members’ and business partners’ livelihoods have improved, so has the quality of the coffee we serve. Our experience shows that it is possible to grow our business and improve quality of life for coffee professionals at the same time. Our goals for the coming years are:

  • gradually increase the average we pay for green coffee to $5.50/lb by 2022
  • gradually increase the average annual pay to our Coffee Bar Professionals to $55,000 by 2022
  • further improve the long-term sustainability of a career as a CBP by offering a 401k plan for our eligible team members (effective August 1, 2019)

We look forward to cultivating coffee professionals working in our Seattle cafes and roastery, assisting coffee professionals abroad through our green coffee purchasing, and collaborating more closely across the coffee supply chain.

Frequently Asked Questions

Why does Direct Trade Matter?

Direct Trade has provided us the opportunity to establish meaningful relationships with people across the globe, and is a business model that has benefited everyone involved. We are not a charity. We have high standards, and the premiums we pay our farmers are well deserved, commensurate with the quality of their product.

As quality improves, so do prices, and through a mutual collaboration, both will continue to grow.

We believe that when incentives are aligned and businesses are well managed, it is possible for farmers, pickers, roasters, and baristas to live well – while providing customers an affordable price for an excellent drink. We have seen that it is possible to pay farmers $4 per pound and still offer a cup of coffee for under $3.

What is the difference between Direct & Relationship Trade?

Ideally, when purchasing green coffee, we visit each farm at least once per year, arriving at a fair price in a personal discussion with each farmer. This is what we define as ‘Direct Trade’. We use the term ‘Relationship Trade’ when we only have the means to visit a farm every couple of years and we rely on email to negotiate a price. In some regions, farmers typically have small plots of a few acres or less, so they form cooperatives that are collectively responsible for processing coffee and negotiating a price (i.e. in Ethiopia, Kenya, and Indonesia). When we visit cooperatives and negotiate prices with their representatives, we consider this to be ‘Relationship Trade’ because we do not have the opportunity to meet each of the farmers.

What Determines Each Coffee’s Price?

Price depends on quality and quantity. To determine quality, we adhere to a coffee grading system set by the Specialty Coffee Association (SCA), an international nonprofit that sets and maintains quality standards for the specialty coffee industry. Prior to and after purchase, our green coffee buying team holds cuppings scoring each coffee on a scale up to 100. These scores determine the baseline price of how much we pay per pound of green coffee.

88.0 points: $3.50/lb. FOB

89.0 points: $3.85/lb. FOB (or a $0.35 premium)

90.0 points: $4.10/lb. FOB (or a $0.60 premium)

For coffees we have previously purchased that consistently exceed a score of 90+ points, we typically pay higher prices, e.g. our Kenyan coffees generally start at $4.00 or higher.

What is Second Pay?

Occasionally, and most often when purchasing from new lots, our initial coffee score prior to purchase may be slightly different from the score after purchase. In the event our expectations are exceeded, and the coffee scores higher, we pay our farmers a second time (i.e. Second Pay). If a coffee scores lower subsequent to purchase, that is our mistake. The price remains what was previously negotiated. By following this pricing system, and engaging in direct trade payments to the farmers, we far exceed the prices paid by most other roasters, while providing incentive to producers to continue improving their coffee.

What Does FOB Stand For?

Free On Board (FOB) is the designation for the price of coffee prior to export from its country of origin. Although FOB does not account for the small margin taken by exporters and dry milling at origin, this is fairly good measure of how much money reaches the coffee farmer. It provides a standard baseline for price comparison across direct, fair, and conventional methods. Comparing FOB prices, we often pay farmers three, four, or even more times the amount of money that they would have received if they sold their coffee through the conventional coffee auction.

How does Seattle Coffee Works collaborate with farmers?

Our green coffee buyer, Oscar Garcia, is both a Q-Grader and Q-Processing certified. While visiting farms he is able to roast and taste coffee on-site, consulting farmers on how to adjust processing methods to improve quality. Oscar also introduces new methods of washing and drying coffee that may be better suited to climate conditions or can add diversity to the flavor profiles of each farm’s coffee.

Who provides your import services?

To transport our coffees from ports around the world we work with a few excellent importers, including Royal Coffee (Oakland, CA), Tusa Specialty Coffee (Baltimore, MD), InterAmerican (Houston, TX), and others, on a fee-for-service basis.

Has green coffee purchasing improved over the years?

While maintaining an average FOB of $4.02 per pound, the percentage of coffee we purchase through Direct and Relationship trade has grown from 88% in 2018 to 90.2% in 2019. The overall volume of coffee purchased has grown by 29%.

Thank You

As coffee professionals at Seattle Coffee Works, our vision is to make coffee better in terms of quality, equity, sustainability, and transparency. This Authenticity Report represents a step toward increasing transparency and equity in the specialty coffee industry.

Special thanks to our partners and friends at:
Finca La Esperanza, Guatemala
Finca Rosma, Guatemala
Finca Divisadero, El Salvador
Kangunu Factory, Kenya

…for your contributions to this report.


[1] https://www.barchart.com/futur... 6/22/2019
Grade 3 or exchange coffee has to score at least 60 points on the 100-point scale of the Specialty Coffee Association (SCA). Seattle Coffee Works only buys coffee scoring 88 points or more. Barchart.com is a Chicago-based online platform that offers information on stocks, options, and futures.

[2] https://www.fairtrade.net/stan... 6/22/2019
Numbers based on published minimum prices and the $0.20 and $0.30 (Organic) Fair Trade differential for Fair Trade Coffee. FairTrade International, a nonprofit based in Bonn, Germany, develops and reviews Fairtrade Standards.

Contributors: Jake Donaghy, Trainer, Author; Oscar Garcia and Sebastian Simsch, Green Coffee Buyers; Pipo Bui, Editor; Photographers: Alan Alabastro, Dara Foti, Oscar Garcia, Devin Kahle

We strive to make this report as accurate as possible. We apologize for any omissions or errors. For more information, or to learn about how your business can participate in authenticity reporting, please contact us at service@seattlecoffeeworks.com

Symbol drawings credit: Ship - BomSymbols/NounProject; Globe - David/NounProject; Travel Symbol - Tom Walsh/NounProject; Seattle tower - Joni Trythall/NounProject; Education - Dinosoft Labs/NounProject

All photos are used with the active consent of the people depicted.
© Seattle Coffee Works • June 2019 • 2018 Authenticity Report