DIRECT TRADE: SOURCING IDENTITY

STATUS QUO

Touted as a more viable and transparent alternative to Fair Trade certification, direct trade sourcing keeps a solid reputation for equity, sustainability, care, and quality in regard to its impact in origin countries. The stories of impact often embellish the bags, posters, and websites of coffee roasting companies. Customers encounter stories of new schools in Nicaragua, new clinics in El Salvador, and better farming techniques in Costa Rica, while the actual impact of direct trade on the coffee roaster itself tends to receive far less air-time. This conversation remains to be had due in large part to an abounding polarity of disposition within specialty coffee.

The external messaging from specialty coffee companies centers almost entirely around “the other”. Coffee companies communicate in terms of experience, which is fitting. The morning (or afternoon) cup of coffee truly is an experience. If a company can align itself with the nostalgia, need, and ecstasy already present in a consumer’s mind around their coffee habit, then they have potential appeal. Therefore, thousands of coffee companies crowd the social media sphere with pictures of reclaimed wood and leather bathed in natural light. For the time being, this marketing methodology holds appeal with a growing number of quality focused consumers.

DIRECT TRADE’S PROBLEM

What about tomorrow? Industries grow. They become more saturated. They eventually consolidate from thousands of small entities into a limited, more regulated series of conglomerates. The mood changes from Kumbaya camaraderie to one of brutal competition. As supply grows and the market becomes less driven by demand, messaging necessarily shifts to focus on the differentiating factors, those things that make one company “better” or “worse” than another company. As competition grows and the commercialization of specialty coffee ascends, small coffee companies will need to bring something else to the table.

THE NEED FOR VALUE

For some coffee companies, they’ve identified their essential differentiator as direct trade. Their “unique” value proposition rests on their ability to build and utilize relationships in origin countries to source their coffee. This is not news to the specialty coffee professional. If you work in specialty coffee, odds are pretty good you accept direct trade sourcing as a creator of value for a company. However, your level of conviction probably decreases when it comes to articulating exactly how direct trade creates value.

To clarify, “value” is being used in reference to dollars on a balance sheet, whether they are present in top line revenue or cost of goods sold control. It is assumed that decent levels of societal and emotional value are created through direct trade. However, what must be equally assumed is that societal and emotional value are not sustainable if a company fails to appropriately emphasize its own tangible value creation. To summarize, direct trade does not last if the companies sourcing that way are not making money. Therefore, a dedicated coffee professional must diligently assess how sourcing directly creates, or does not create, value for their organization.

VALUE MISNOMERS

Speaking from experience, coffee professionals tend to adhere to three beliefs as to how direct trade creates value: increased transparency around a product, increased product quality, and the presence of human connection. Wise, ethical, caring people value transparency, quality, and relationships. As a supplier of a good or service, we would very much like the thing that we personally value to be the thing that creates value for our business. However, the fickle nature of humankind stands in the way of realizing this utopia.

We do not consistently spend our money in line with our personal convictions and values. Example: As a #CoffeeGeek, I am very concerned with the “how”, “why”, and “what” of the coffee I buy. I want to know where it’s from, who grew it, what kind of manure they used in fertilization, how long it fermented for before drying, etc. Then I start to get hungry. I crave a bratwurst. I go to the grocery store on my way home, refusing to go 5 minutes out of the way to hit my local butcher. I pick up the “Folgers” of bratwurst because I value convenience more than transparency in that moment. The vast majority of humanity mirrors this type of buying. Our societal context changes from home to work to Church to bowling. The expression of our values changes with change in context. As a business owner/manager/mascot, you have to look beyond your ideal scenario to see what your customers actually value. You do not even have to ask them. They take a poll every day, and they vote with the dollar.

We have assumed that direct trade creates value (dollars for the business) because of increased transparency, quality, and personal connection. We have assumed that these things make customers come to us. Let us take a minute and examine this assumption, thinking critically to ascertain the root cause behind behavioral phenomena. Keep in mind, we are not striving to debunk direct trade. We are striving to think well about its actual impact on a business.

1. Product Transparency.

How many times per day do your baristas get asked about the general terroir of Huehuetenango? How many of your baristas actually know where Huehuetenango is? We assume that customers want to know the Spanish names of the regions/farms/departments/co-ops that their coffee comes from, but they actually don’t. If they did, they would say to you, “Hey, I see this big word on my coffee…Ha-Hawee-wee-tin-ongo…and, uh… no one in the world knows what that’s referring to. So, could maybe you actually tell me something about this coffee?” You never hear that. Not to say they do not care about transparency. They probably like that you and your large, hard to pronounce, Spanish words seem to have a clue what is going on, but it’s not enough to interrupt their buying habits.

It is as simple as: They see Guatemala. They like Guatemala. They buy Guatemala.

2. Product Quality.

For all of our self-assertion and quality mongering as an industry, the neighborhood Starbucks is busier than our cafés, even though we have homemade biscuits. We could stop there, assuming the point has been made, but then you might say, “I don’t want Starbucks customers.” Yes, you do. Of course, you do. Every one of your customers used to be a patron of the ‘bucks.

For conversation’s sake, let’s say you actually didn’t want their customer. There is still a very wide range of quality between “specialty coffee” companies. Some companies are really good at roasting to bring out some seriously dope flavor compounds. Others under-roast. Some leave their lights baked. Some buy over-fermented coffees. Bottom line: coffee quality is in the eye of consumer. Seriously.

We have the SCAA, and Q-graders and whatever, but my Dad still likes it dark and over-extracted. My father-in-law likes the “earthiness” of that Sumatran wet-hull. Even the most loyal adherents to the impositions of quality from the powers-that-be will disagree quite vehemently. Read the judge’s score sheets from a barista/brewer’s competition: the soul-scorching let down after months of prep and one 15-minute routine. Does the trip to El Salvador and 2 extra points on the Q scale actually create value for the customer? Are the vast majority of customers happy with something that says “House Blend” and tastes like they want it to taste like?

3. Personal Connection.

The promise of genuine relationships stands at the forefront of a #CoffeeGeek’s mind as they dive into coffee as a profession. So often, we are tired of business as usual. We are done with the aristocratic, for-profit, “grow at all costs” business environment. We come to coffee looking for something different. We want a place where we can band together with others in pursuit of a common goal. This posse might include baristas, owners, customers, producers, and little three-legged dogs. This camaraderie holds first place in the minds of many who summon hell fire to consume anything and anyone that threatens it. It is human nature to assume that something that is so dear to us must hold equal value in the affections of others. It is also human nature to be wrong.

The vast majority of customers do not care about the details of your story touring the Chirripó region of Costa Rica. They do not care that you gave a farmer some advice to make their coffee better, and they do not care that you have a three year contract that will guarantee some economic viability to the village you visited. Remember, people will say they care about each of these things, but true care will impact people’s buying habits. The strength of your squad game does very little on its own to redirect the customer’s dollar. At this point, hopefully we are willing to own the fact that direct trade for the sake of ethereal, intangible benefits is not enough to lure customers. It may be the mode of working preferred by a particular proprietor, but this preference does not create competitive advantage on its own. Marketing the poetic side of coffee sourcing lacks sustainability in a volatile economy. So what then? How can sourcing coffee directly create value for a company?

DIRECT TRADE’S POTENTIAL

The direct trade method of coffee sourcing brings many opportunities for the small to mid-sized coffee roaster to increase their financial performance and bolster their culture. The methods for accomplishing these goals require an understanding of how to utilize the social, emotional, and sometimes intangible benefits to create a wedge into the popular coffee market. I recommend the following three steps:

1. Leverage Emotion into an Engaged, Amiable Workforce.

Very rarely will someone tell you they prefer to keep their work and personal interests separate. The dream is to make a living from your affections, which is easy for someone working in specialty coffee. We get all excited and emotional about coffee, obscure fruit tasting notes, and the stories that take place from Farm to Cup. This is a wonderful thing, but it is not valuable to the customer by itself.

Take your inner passion and direct it to the customer’s needs. View coffee as your forum for winning fans. Coffee is the vehicle by which you are delivering the customer’s need of speedy caffeinating. Use all of the energy you and your baristas have about coffee and channel that to deliver what the customer wants, not just what you want.

You can go bonkers crazy over some malolactic fermentation coming out of La Palma, but your customer might simply need some roasty-toasty goodness. Channel your fermented panache into an experience that blows this customer away. Start sensitively teaching them about what makes this cup of dark elixir different from the next one.

Put the same amount of care into that #PumpkinSpice latte that you would put into a legit macchiato. That customer is dropping some serious dough for that piece of autumn. They deserve the finest PSL out there, as sure as the Bears still suck. Make a syrup from scratch, weight it out in grams, pull a dope shot, and pour some sick latte art. Put all of your #CoffeeGeek power into that drink. Or you could quit, because I will bet against your sustainability if you do not take care of your customers.

Hire baristas that care enough about people and coffee to deliver a wonderful experience to every kind of customer who might come through your door. Fire the jerks. Fire the snobs. They are actually costing you money.

2. Leverage Relationships for Financial Sustainability.

Coffee companies market direct trade sourcing as a benefit to the producer. At times, they will take steps to try to articulate how this is a benefit to the customer. Rarely will they own up to the reality that direct trade sourcing benefits them. This may be out of pure naiveté, or it may be the result of incompetence, but when a company sources well, they can remarkably improve their financial sustainability.

Even as I write this, I can feel the objections rise from many “purists” at the notion of mentioning the financial well-being of an American company. However, if a coffee company fails to produce green numbers at the end of the year, then it’s just a matter of time before all of their farm support and latte art gets swallowed up by hungry monsters of inconsequentiality. If you want to matter, then make sure you are around for more than 10 years. Sourcing directly can save a company a great deal compared to working exclusively with importers. This savings gives the flexibility to add staff, to pay more, to expand, to buy more coffee, to do good things. It is about making sure you can keep the lights on.

We tout the growth of the specialty market. We are proud of the awareness we have created about origin countries. But we all know, it is hard to make a buck, and it’s going to get harder when the coffee investment market heads up and the more successful specialty companies get bought up by conglomerates. Buckle up, folks. Plan well.

3. Actually Deliver Quality.

We have all seen, far too often, the technically excellent barista who cannot win a fan for the life of them. At the end of the day, your skill at pulling espresso or pouring milk does not mean anything if you fail to make the customer like you. That is the key to success as a café, company, or barista. The customers need to appreciate what you do and how you do it. This rests in your hands. It’s not dependent on where your coffee comes from.

Instead, use all of the blood, sweat, and tears that have gone into coffee production, of which you are keenly aware since you source directly, to push you to represent that swag like a baller. Share the courtesy of the producers and their families, the crew in Costa Rica who fed you like you were a celebrity. Leave your customers wondering why you like them so much. Share smiles of coffee pickers who laughed at your incompetence as you tried to filter through ripes and underripes. Be joyful and open. Leave pretention and class for the restaurant industry. Deliver quality in your interaction. Nobody is going to come get great coffee day by day from a total jag.

NEVER STOP LEARNING

At the end of the day, direct trade only impacts the customer in a unique way when it changes the mode of operation of your team. Direct trade does not mean jack for a company who fails to see how and why it can influence your business and your people. The work ethic, business sense, and general care for humanity have to be baked into your culture. These things need to be intentionally propagated to the point where they become a part of your corporate identity.

Progress. Learn. Separate yourself your preconceptions in order to see what is actually happening. Armed with factual data and a mind for sustainability, a coffee company can carve out a secure place in an evolving market.

At Stone Creek Coffee, social responsibility is a foundational element of our identity. We believe that a commitment to the environment must coexist with other elements of social responsibility for a holistic approach to doing our best for the world and others.

Stone Creek Coffee will regularly audit and identify areas of environmental strength and weakness within the overall operations of the organization.  We will attempt to reduce any negative impacts to air, surface water, ground water, public health, community quality of life, and employee health while producing coffee that is sweet, clean, and juicy. Stone Creek Coffee will strive for continual improvement in pollution prevention while meeting or exceeding all regulations.

Jessica Sheridan, Director of Coffee 
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As a mission-driven company, at Stone Creek Coffee, we believe in serving and enhancing the local communities we live and work in.

We believe that the socially responsible practices we apply daily in our internal operations can proliferate with the involvement of our stakeholders, customers, and our communities. In each community where our employees work and live, we — as Stone Creek Coffee and individual members of the community — actively create opportunities to play a positive role through various initiatives. These initiatives include support of important charitable organizations through monetary and/or material donations, promoting volunteerism, and more.

In line with our mission to be socially responsible, we also commit to the following: 

Serving Local Customers
  • We commit to serve at least 75% local and independent clients or customers. 
  • Local Hiring - As a company that is committed to its local community, at Stone Creek Coffee, we are also committed to local hiring.
  • Local Suppliers - We are committed to using local suppliers when possible.

Jessica Sheridan, Director of Coffee 
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SUPPLIER CODE OF CONDUCT

At Stone Creek Coffee, social responsibility is a foundational aspect of our identity. As such, we expect our partners and suppliers to conduct themselves and their business in an ethical, legal, and socially responsible manner including, but not limited to, their commitment to the environment, their employees, and the community. 

Legal Requirements

We expect that all suppliers know and follow the laws that apply to them and their business, as well as to treat the law as the minimum standard. 

Ethical Requirements - Integrity

At Stone Creek Coffee, we believe in conducting business with integrity and as a force for good. We expect our suppliers to operate fairly and ethically. Bribes, kickbacks, inappropriate gifts or hospitality, or other improper incentives in connection with Stone Creek Coffee are not tolerated. Suppliers are expected to avoid any conflict of interest relating to financial interests or other arrangements with our employees that may be considered inappropriate, and are to work with their own suppliers to promote business conduct consistent with the principles in this Code.

Labor Requirements 

Child Labor and Slavery - We do not tolerate child labor or slavery in our supply chain. Consistent with the United Nations Global compact principles, suppliers should avoid any sort of child labor in the business operations. 

Identification of Concerns - Suppliers are required to provide means for their employees to report concerns or potentially unlawful activities in the workplace. Any report should be treated in a confidential manner. Suppliers will investigate such reports and take corrective action if needed.

Wages and Working Conditions

Working Hours, Wages and Benefits - Working hours for suppliers’ employees will not exceed the maximum set by the applicable national law. Compensation paid to employees will comply with applicable national wage laws and ensure an adequate standard of living. Suppliers are expected to provide their employees with fair and competitive compensation and benefits. Compensation and benefits should aim at providing an adequate standard of living for employees and their families. Suppliers’ employees will be paid in a timely manner. It is recommended that suppliers offer their employees ample training and educational opportunities.

Diversity and Inclusion - Fair and equal treatment of all employees is expected to be a fundamental principle of all of our supplier’s corporate policies. Typical discriminatory treatment takes into consideration – consciously or unconsciously – irrelevant characteristics of an employee such as race, national origin, gender, age, physical characteristics, social origin, disability, religion, family status, pregnancy, sexual orientation, gender identity, gender expression or any unlawful criterion under applicable law. Suppliers will ensure that their employees are not harassed in any way. Stone Creek Coffee encourages its suppliers to provide an inclusive and supportive working environment while exercising diversity when it comes to their employees as well as in their decisions to select subcontractors.

Health, Safety, Quality, and Security

Health and Safety - In order to provide dignity and respect, we expect all of our suppliers to protect workers’ rights and provide safe and healthy working conditions. We encourage our supplier partners to foster an environment that is inclusive, and free of harassment and discrimination. 

Emergency Preparedness, Risk Information, and Training - Suppliers will make available safety information on identified workplace risks and suppliers’ employees will be correspondingly trained to ensure they are adequately protected. Suppliers will identify and assess likely and potential emergency situations in the workplace and minimize their impact by implementing emergency plans and response procedures.

Quality and Security - Suppliers are expected to have good security practices across their supply chains. Suppliers will maintain processes and standards that are designed to assure the integrity of each shipment to Stone Creek Coffee from its origin through to its destination and all points in between. Suppliers are expected to implement the necessary and appropriate measures in their area of responsibility to ensure that Stone Creek Coffee products, their workable components or raw materials as well as the corresponding know-how do not end up in the hands of counterfeiters or third parties and do not leave the legal supply chain.

Environmental Awareness 

Waste and Emissions - Suppliers will have systems in place to ensure the safe handling, movement, storage, recycling, reuse and management of waste, air emissions and wastewater discharges. Any of these activities that have the potential to adversely impact human or environmental health will be appropriately managed, measured, controlled and handled prior to release of any substance into the environment. Suppliers will have systems in place to prevent or mitigate accidental spills and releases into the environment.

Resource Conservation and Climate Protection - Suppliers are expected to use natural resources (e.g. water, sources of energy, raw materials) n an economical way. Negative impacts on the environment and climate will be minimized or eliminated at their source or by practices such as the modification of production, maintenance and facility processes, material substitution, conservation, recycling and material reutilization. Suppliers will engage in the development and use of climate-friendly products and processes to reduce power consumption and greenhouse gas emissions.

Preference to Purchase from Local Suppliers and Suppliers with Ownership from Underrepresented Populations - At Stone Creek Coffee, we are committed to our community and the environment. As such, we have a preference to purchase from local suppliers when possible, as well as to purchase from suppliers who support other local suppliers. We also give preferences to suppliers with ownership from underrepresented populations.

Supplier Audits and Record Keeping - In order to make responsible, well-informed business decisions and disclose truthful and timely information to our stakeholders, we expect our supplier partners to maintain accurate and honest records.  In line with this, we expect our supplier partners to do the following: maintain books and records that reflect all transactions in an accurate, honest, and timely way; employ appropriate quality audit and compliance processes for matters such as product and food safety, worker health and safety, and labor and employment; to enable traceability, disclose the location of facilities and known origins of materials upon request/audit.

When screening potential suppliers, we screen for the following:
  1. Compliance with all local laws and regulations, including those related to social and environmental performance
  2. Good governance, including policies related to ethics and corruption, as well as diversity and inclusion
  3. Positive practices beyond what is required by regulations (e.g. environmentally-friendly manufacturing process, excellent labor practices, performance to the Core Commitments, etc.)
  4. Third-party certifications related to positive social and/or environmental performance (B Corp certification, Bird Friendly, etc.)
  5. Local suppliers should be given preference (within 250 miles of Factory)
  6. Suppliers owned by underrepresented populations should be given preference

Jessica Sheridan, Director of Coffee 

SUPPLIER LIST:
Aeropress
Ally Coffee
Alto Cold Brew
Amazon Business
American Solutions for Business
Ascentives
Atlas Coffee
AUI Fine Foods
Badger Distributing of Milwaukee LLC
Bodum USA
Boelter Companies
Britevision Media
BUNN
Cafe Imports
Caravela Coffee
Carmo Coffee
Champaign Coffee Company
Chemex Corporation
Clover Distribution
Complete Office of WIsconsin
Component Design
DWC Specialties
Economy Lamp Co
Englehardt Dairy
Espresso Parts
Evolve Snacking
Exclusive Coffees
FETCO
Flair Flexible Packaging Corp
Genuine Origin Coffee
Good Land Supply Co
Gordon Food Service
Grandstand
Gravity Marketing
Great American Spice Company
Greco & Sons
Green Bay Packaging
Halo Soap LLC
InterAmerican Coffee
Kallas Honey Farm
La Marzocco USA
Long Miles Coffee Int Ltd
Magellan Promotions, LLC
Marich Confectionery
Meadowlark Organics
Milwaukee Candle Company
Natures Flavors
NKG (Neumann Kaffee Gruppe)
notNuetral
Occhetti Foods
Olam Specialty Coffee
Omanhene Cocoa Bean Co.
Online Labels
Orchard Street Press
PBFY Flexible Packaging
Plant Guru
Polaris Specialty Coffee
Premium Water
Rishi Tea
Rockline
Royal Coffee
San Miguel Single Origin Coffees (Green Power Trade Inc.)
Sassy Cow Creamery
Shared Source Coffee
Sleeve A Message
Spice House
Sysco East Wisconsin
Tapped Maple Syrup
Terra Spice
The Chai Company
The Chef's Warehouse
Tony Machi Fruits & Vegetables
Uline
UNFI
V. Marchese
Valley Bakers
Volcafe
 
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