SEATTLE COFFEE WORKS 2021 AUTHENTICITY REPORT

Statement of Authenticity

At 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.

We believe the purpose of business is to improve the lives of the people involved – whether they are employees, suppliers, customers, or neighbors. As with other tropical products like chocolate, sugar, bananas, worldwide coffee consumption is deeply rooted in colonialism. Exploitation continues today, ranging from wage theft to inhumane working conditions.

Seattle Coffee Works actively works to identify and undo such practices through our core business operations. Our approach aims at quality, equity, sustainability and transparency.

Our Team

We closed all four of our cafes in March 2020, and two remain closed even in early 2022, but our team didn’t sit on their heels. We’ve used the unique opportunity of the pandemic to change our management paradigm, in what we believe is a first for our industry – we call it the “self-managed team.” Unlike many companies in our industry, we no longer have managers who “babysit” baristas. Instead, our highly capable team members help and support each other to troubleshoot, tapping into each other’s strengths, stepping up or stepping back as needed.

This paradigm shift required significant investments into coaching, mentoring, and innovating a whole new leadership model. We made the unprecedented decision to close all our cafes for one afternoon every week, so that our entire café-based team can meet in person (or online when covid precautions demanded it). We are grateful for the insights of the Entrepreneurial Operating System, which helped make this transition possible.

Our company went tipless in 2017, in order to provide our team members with a predictable and equitable wage. This was a prerequisite to becoming a self-managed team, since the structure of tipping pits team members against each other, vying for the most lucrative shifts, and making schedule-writing untenably political.

Our tips-free approach was especially valuable in 2020, when team members were able to access federal unemployment and state SharedWork benefits based on their actual wages. (It also benefited the company as a whole, because the federally-funded Payroll Protection Program initially based grants on payroll without including tips. This funding was critical in the early stages of the pandemic, when all our cafes were closed and we needed to invest in our manufacturing capacity in order to pivot to a mail-order-only business.)

Our Farmers

The uncertainty of pandemic restrictions made it difficult to continue purchasing and importing green coffee at our prior pace. Thanks to strong long-term relationships, our farmer partners were able to lower their prices temporarily, and help us secure transport. Due to the lack of shipping containers worldwide, it took up to four times longer and cost three times as much as usual to ship coffee to Seattle.

Green Coffee Buyer Oscar Garcia was able to visit just 12 coffee farms before the lockdowns took effect in 2020, but has continuously kept in touch with farmers. Fortunately, there have been just a few reported cases of covid on the farms.

We’ve pushed ourselves and others in the coffee industry to take direct trade and price transparency seriously. We co-wrote the Transparency Coffee Pledge, which has been signed by 77 roasters and coffee companies worldwide.

In 2020, we hit an all-time high of 97% of our coffees being direct-trade. Unfortunately, due to the pandemic, the average price we paid to farmers decreased compared to the previous year. We hope to get back on track soon, resuming our annual farm visits and bringing more resources to the people who do the high-skilled, strenuous, and risky work to grow, harvest, and dry the coffee.

Unlike the vast majority of roasters, we pay our farmers for the coffee as soon as it’s on the boat. This gets funding to them months earlier, usually in time for them to invest in growing the next year’s crop. Despite our own covid cash crunch, we are proud to have continued this practice, because it helps growers build resiliency and focus on quality.

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.

Seattle Coffee Works Green Coffee Purchasing Season: 2020

Country / Farm	Trade Type	Since	SCA Score	Total Pounds	Farmer’s Net Proceed	Farmgate to FOB	FINAL FOB to Farmer	Estimated FOB to Landed USA	USA Landed
Central America
Guatemala Rosma Nativa Washed 2020	Direct	2015	89.75	9,127	2.75	0.65	3.40	0.12	3.52
Guatemala Rosma Nativa Natural 2020	Direct	2015	90.0	761	4.12	0.88	5.00	0.12	5.12
Guatemala La Esperanza Nativa Washed 2020	Direct	2013	89.5	9,888	2.75	0.65	3.40	0.12	3.52
Guatemala La Esperanza Nativa Natural 2020	Direct	2013	89.0	761	4.12	0.88	5.00	0.12	5.12
Guatemala La Esperanza Pacamara Washed 2020	Direct	2013	91.5	761	4.12	0.88	5.00	0.12	5.12
Honduras La Pila Catuai/Parainema Washed 2019	Direct	2018	88.0	761	3.04	0.61	3.65	0.35	4.00
East Africa
Kenya Rukira AA 2020	Relationship	2015	92.0	794	n/a	n/a	5.08	0.58	5.66
Kenya Gatuyaini AA 2020	Relationship	2015	91.0	794	n/a	n/a	4.90	0.58	4.48
Kenya Mahiga AA 2020	Relationship	2019	90.0	794	n/a	n/a	4.72	0.58	5.30
Kenya Maganjo PB 2020	Relationship	2018	91.25	662	n/a	n/a	3.99	0.58	4.57
Ethiopia Yirgacheffe Dumerso Natural 2020	Relationship	2015	89.0	4,630	2.90	0.50	3.40	0.25	3.65
Ethiopia Limmu Wabe Sombo Natural 2020	Direct	2018	91.0	4,630	2.90	0.50	3.40	0.25	3.65
Ethiopia Yirgacheffee Geremwe Addisu Natural 2020	Relationship	2019	89.75	3,968	2.90	0.50	3.40	0.25	3.65
Ethiopia Yirgacheffe Dumerso Washed 2020	Relationship	2015	91.0	794	2.90	0.50	3.40	0.25	3.65
Asia Pacific
Bali Kintamani 2020	Conventional	2013	88.5	794	n/a	n/a	3.60	0.24	3.84
Our Best Decaf (lot 1)	Conventional	n/a	88.0	529	n/a	n/a	n/a	n/a	3.84
Our Best Decaf (lot 2)	Conventional	n/a	88.0	794	n/a	n/a	n/a	n/a	4.00
TOTALS, AVERAGES & PERCENTAGES				Total in pounds	% of total pounds	Total in $ (FOB)	Weighted Average $/lb (FOB)
DIRECT				26,687	66%	$94,578	3.54
RELATIONSHIP				12,434	31%	$46,238	3.72
Total Direct and Relationship				39,121	97%	$140,816	3.60
CONVENTIONAL				1,323	3%	$4,889	3.70
TOTAL ALL				40,444		$145,705	3.60

For the 2019-20 growing season, we averaged $3.60 per pound Free On Board (FOB) for the 97% of the coffee we purchased directly from farmers and cooperatives. The minimum direct-trade price we paid was $3.40 FOB.

For the two coffees we buy conventionally, Bali Kintamani and Swiss-water Decaf, we know only 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.

Our Customers

We are more grateful than ever for our customers who take the time to understand our unusual way of doing business and support it.

Already, our customers invested in our quixotic quest to reach 100% ethical direct-trade coffee purchasing within ten years. They took another leap of faith when we eliminated tips in 2017. After five years, it’s clear that our team members have benefitted from more fair, predictable, and consistent wages. We hope it’s also made our real costs more transparent to customers. No longer do you have to wonder if the person on the other side of the counter is smiling at you because she needs you to open your wallet a little wider.

When the lockdowns came, we called for help, and you responded! In April 2020, we shipped ten times as many mail-order coffees as the previous April. With the constant changes of the past coupe of years, online orders and coffee subscriptions have been crucial to our very survival. So far, 600 of you have joined the Coffee Works Club or started a subscription, providing a sound footing for our business. We hope many more will join in this convenient and cost-effective option as you navigate your way toward hybrid work.

We are relieved to report that over the past two years, only one team member contracted covid (at a family gathering) and recovered. To our knowledge, no customers contracted the disease, nor did it spread via our cafes or roastery. We take health and safety as our highest priority, and we hope everyone will stay safe and healthy!

Our thanks go to the dozens of people who have helped us navigate two extremely stressful years: our families, friends, customers, coaches, team, partners, and community. We’ve grown in small and significant ways, and even though Seattle Coffee Works continues to run at about 50% of our pre-pandemic level, we are truly better than ever before, with more focus on our purpose and more grounding in our values. Life has shown us, values matter even more in hard times.

Our Values

• Honesty and Integrity - We do what we say with honesty and integrity
• Curiosity - We learn with curiosity.
• Compassion - We treat others with compassion, always.
• Responsibility - We take responsibility for figuring things out, together

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.

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. 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 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 Professional certified. While visiting farms he can 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?

For most of our coffee, together with our farm partners, we’ve taken complete control of the entire supply chain. That means, our farmer partners prepare the coffee for export, using pay-for-service third-party vendors in the country of origin, and we import the coffee directly to the port of Seattle, also using third-party logistics services, most importantly a directly booked shipping line and an import broker to help us with the intensive paper work of importation.
On occasion, for small lots, we continue to rely on our US-based importer friends, including: Royal Coffee (Oakland, CA), Olam Specialty Coffee (Healdsburg, CA), LIST + BEISLER (New York), Tusa Specialty Coffee (Baltimore, MD), InterAmerican (Houston, TX), Sustainable Harvest (Portland, OR), on a fee-for-service basis.

Has green coffee purchasing improved over the years?

The percentage of coffee we purchase through Direct and Relationship trade has grown from 88% in 2018 to 97% in 2021.

Thank You

As coffee professionals at Seattle Coffee Works, we aim 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.

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Contributors: Oscar Garcia, Green Coffee Buyer; Pipo Bui, Editor
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, see https://www.transparency.coffe...

© Seattle Coffee Works • 2021 Authenticity Report