SEATTLE COFFEE WORKS AUTHENTICITY REPORT

Statement of Authenticity

At Seattle Coffee Works, producing premium coffee requires collaboration with our team in Seattle and on an international scale. At home, we value our talented team members by providing living wages and educational pathways for those looking to pursue careers in coffee. Abroad, our farmers are our business partners and friends. When they provide premium green coffee, we feel their wages should reflect that. Full price transparency is important for farmers. It improves the quality of their coffee and quality of life for their employees. It allows our customers to see how direct and relationship trade compare with other trade methods. Our peers in the coffee community appreciate the value of revealing the inner workings of our business in Seattle and at origin. This report shows what we pay for each pound of green coffee and what percent of that coffee is purchased directly from farmers.


Part I: Transparency in Coffee Buying

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 such as 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: 2016-2017

Download Chart

REGION

ORIGIN

TRADE TYPE

SCA SCORE

INITIAL FOB ($/lb)

FOB 2nd PAY
($/lb)

FOB TOTAL
($/lb)

Total LBS PURCHASED

TOTAL $

Central America

Costa Rica Lajas Perla Negra Natural 2016

Relationship

90.0

5.50

-

5.50

1,521

8,367

Central America

Guatemala Armenia Los Abuelos 2016

Direct

87.5

3.40

-

3.40

5,933

20,171

Central America

Guatemala Rosma Nativa 2016

Direct

89.5

3.40

0.475

3.88

6,085

23,579

Central America

Guatemala La Esperanza Nativa 2016

Direct

89.5

3.40

0.475

3.88

8,367

32,421

Central America

Guatemala La Esperanza Pacamara 2016

Direct

91.0

6.00

-

6.00

761

4,564

Central America

Panama Suarez Washed 2016

Direct

88.0

3.40

-

3.40

4,498

15,292

Central America

Panama Suarez Natural 2016

Direct

88.0

3.75

-

3.75

794

2,976

Central America

Panama Suarez GEISHA Washed 2016

Direct

89.0

20.00

-

20.00

132

2,646

Central America

Panama Carmen Washed 2016

Direct

89.0

4.00

-

4.00

661

2,646

Central America

Panama Carmen Natural 2016

Direct

89.5

4.50

-

4.50

661

2,976

Central America

El Salvador Divisadero Pacamara 2016

Direct

90.0

5.00

-

5.00

1,217

6,085

Central America

El Salvador Alaska Bourbon 2016

Direct

NA

3.75

-

3.75

1,065

3,993

Central America

El Salvador Roxanita Pacas Natural 2016

Direct

87.5

3.40

-

3.40

761

2,586

Central America

Panama Teresa Nativa 2016

Direct

90.0

4.00

-

4.00

1,191

4,762

Central America

Panama Teresa GEISHA Honey 2016

Direct

92.0

25.00

-

25.00

132

3,307

South America

Colombia Villa Laura Washed 2016

Direct

89.0

3.40

0.35

3.75

3,241

12,153

East Africa

Kenya Kiriga Estate AA 2016

Direct

91.0

4.25

-

4.25

1,323

5,622

East Africa

Kenya Kiamaina PB 2016

Relationship

91.5

4.00

-

4.00

1,058

4,233

East Africa

Kenya Rukira PB 2016

Relationship

93.0

4.00

-

4.00

1,323

5,291

Total Direct & Relationship Coffees

Direct & Relationship

4.02

40,724

163,670

Total Conventional Coffee (Ethiopia & Indonesia)

Conventional

3.80

11,112

42,197

TOTAL

3.97

51,836

205,867

It is difficult to determine a good baseline to which to compare what we pay farmers for their best coffee. Here are some data points to give some background:

  • At the New York Mercantile Exchange, the coffee price per pound of Grade 3 coffee ranged between $1.31 and $1.90 in 2016[1]
  • The Fair Trade minimum for 2016 was $1.35 per pound, and at its highest point, Fair Trade coffee traded for a minimum of $2.10 per pound[2]
  • One especially socially conscious US based importer advertised an average price of $2.30 per pound of raw coffee paid in 2014-2015[3]
  • A Specialty Coffee industry publication thought it noteworthy to celebrate a minimum $2.75 per pound paid for Free On Board (FOB, the price of coffee prior to export outside of country of origin) one roaster is guaranteeing to its coffee farming partners[4]
  • Lastly, a group of roasters similar in values to us reported an average FOB price paid of $3.96-$3.97 per pound in 2015[5]

Here at Seattle Coffee Works, for the 2015-16 growing season (the coffee being sold in our stores 2016-17) we averaged $4.02/lb FOB for the 78% of the coffee we purchased directly from farmers or coops. The minimum direct-trade price we pay is $3.40 FOB per pound.[6]

Free On Board Price

Free On Board (FOB) is the designation for the price of coffee prior to export from its origin country. Although FOB does not account for the small margin taken by exporters and dry milling at origin, this is a 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. By comparing FOB prices, we can see that Seattle Coffee Works often pays 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.[7]

Direct Versus 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 our farmers. 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. There are also countries of origin where farmers only have a few acres, sometimes less, and are members of cooperatives that are responsible for processing coffee and negotiating the price (i.e. Ethiopia, Kenya, and Indonesia). When we visit cooperatives and negotiate price with cooperative leaders, we also define this as ‘Relationship Trade’.

Initial FOB Price & Quality Premiums

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 from 80-100. (Anything receiving a score below 80 is not considered ‘specialty’). These scores determine the baseline price of how much we pay per pound of green coffee.

88.0 points: $3.40/lb. FOB

89.0 points: $3.75/lb. FOB (or a $0.35 premium)

90.0 points: $4.00/lb. FOB (or a $0.60 premium)

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

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.

Improving Quality by additional means

In addition to our initial FOB prices and Second Pay, we also invest in our farmers to help them improve their crop. This makes our coffee better, and assists farmers in selling to other buyers in the specialty market. For example, we have helped several farms in Kenya acquire new drying beds to improve processing.

Our full-time green coffee buyer for Central and South America, Oscar Garcia, was raised in a family of coffee pickers, and has spent more time on coffee farms than many coffee farm owners. While spending a few months a year in our Seattle cafes, Oscar spends most of the year traveling Central and South America collaborating with our farmers and using his deep knowledge of agriculture and agronomy to improve both growing and processing methods.

Sebastian Simsch, Seattle Coffee Works’ founder currently serves as sole interim buyer for East Africa. Making annual visits to Ethiopia and Kenya, Sebastian negotiates prices directly with several of our farmers as well as exchanging information on agriculture and processing.

We have yet to expand Direct Trade to every farm in East Africa, and have not established any direct trade programs in East Asia and the South Pacific (i.e. Indonesia, Papua New Guinea, East Timor).

For the time being, we are still concentrating the majority of our resources on building Guatemala, El Salvador, Costa Rica, Panama, Colombia, Ecuador (as of the 2016-2017 season), Ethiopia, and Kenya as Direct Trade countries of origin.

Our Intention

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 wages, and through a mutual collaboration, both will continue to grow. We are happy to share this information with our consumers and competitors, and we urge those in the coffee community as well as anyone involved in international trade to consider Direct Trade.

Part II: Living Wages and Opportunities for Seattle Based Team Members

We are proud of our team here at Seattle Coffee Works, and we strive to ensure that all team members are happy and healthy both at work and at home. By providing health benefits and ongoing opportunities for professional and personal growth, we aim to be a positive, comfortable, and exciting workplace for all Seattle-based team members.

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 6-9 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 team of skilled barista trainers from within the company.

In addition to the barista training program, we invite employees to take initiative in leading and participating in workshops and events. These workshops include topics such as:

  • Cupping & scoring coffee
  • Sample roasting & Coffee Roasting Fundamentals
  • Total Dissolved Solids & Optimal Coffee Extraction
  • Latte Art
  • Direct Trade Mechanisms

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 Guatemala

Since 2014, we have sent three groups of team members (18 team members in all) for a week-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.

When needed, we’re also committed to supporting team members’ learning by offering reimbursement for courses related to their work in the coffee industry. These opportunities have included language, Excel, train-the-trainer, and even SCAA classes and certifications. All interested team members have unlimited access to a third-party online library of 3,000+ business-relevant videos.

We encourage team members to contribute the skills and knowledge acquired through these educational opportunities by pursuing growth within the company. We are proud to have hired our General Manager, Roastery Operations Manager, Head Roaster and Assistant Roaster, and two Assistant Store Managers from within our existing team. As our company grows, we aim to continue hiring and promoting from within the company whenever possible.

Starting in May 2017: True Living Wage and No More Tips

As of May 2017, we’re one of the first companies in our industry to eliminate tips. Instead, we’re paying our fully certified current Team Members $20 per hour. The starting wage for full-time coffee apprentices is $15 per hour. In their first year, new members of our team can expect at least $35,000 in annual income.

Open Book Accounting and Profit Sharing

We’re also in the process of making all of our business data available for use by every team member. As part of this, we are introducing a profit-sharing plan which will further enhance our team members’ income and help us continuously make coffee better here and at our partner coffee farms.

Health Benefits, Compensation, and Time Off

We offer a number of additional benefits to all of our team members:

Paid Time Off (PTO) – All team members receive 0.025 hours PTO per hour worked. (~6.5 days/year)

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

Health Insurance – We offer company health insurance and a group dental plan to all full-time team members after at least 60 days on the Seattle Coffee works team. 70% of the health insurance cost is covered by the company.

Unlimited Free Public Transportation – All full-time team members receive unlimited access to all public transportation in the Seattle Metropolitan Area. Team members contribute $10 per month for this benefit, valued at $99 per month.

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

And now, what?

We’re proud of our leadership in our industry of Specialty Coffee. We will provide an update on our practices in the spring of 2018. We’re especially excited to share what we’re learning about a much higher base wage, and we hope to be providing an additional section on our extensive focus on environmentally sustainable practices and a significant reduction in the CO2 footprint of our entire supply chain.

In the meantime, please do send any questions or comments about our first Authenticity Report to authenticy@seattlecoffeeworks.com.



[1] Data based on Coffee Contracts (Cash) throughout 2016, source: https://www.barchart.com/futures/quotes/KCY00/interactive-chart; 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.

[2] Source: https://www.fairtrade.net/standards/price-and-premium-info.html -- numbers based on published minimum prices and the $0.20 Fair Trade differential for Fair Trade coffee

[3] Sustainable Harvest email newsletter on March 17, 2016; Seattle Coffee Works archive

[4] http://dailycoffeenews.com/2017/02/27/kickapoo-coffee-offering-unprecedented-minimum-price-guarantee-to-farmers/

[5] http://transparenttradecoffee.org/insights/gathering-green-specialty-coffee-prices-into-another-industry-benchmark

[6] We do not buy coffee we score lower than 88 points on the SCAA coffee scoring scale; and we pay at least $3.40 per pound for such coffee.

[7] We enter Direct Trade Agreements with our grower partners and each contract specifies the costs the farmer has to bear: the highest such costs we have accounted for is $0.2725 for exportation of coffee from Finca La Esperanza in Guatemala. The initial price of $3.40 FOB per pound minus the exportation cost resulted in a net payment to the farmer of $3.1275 per pound. This particular farm received a second payment of net $0.475 per pound in December 2016.