5 Strategies for Optimized Green Coffee Buying

In Coffee Roasting, News & Research by DOTnueva0 Comments

Like in any relationship, they key to a roaster and an importer/green coffee source working well together is understanding each other and communicating. When we understand our counterpart’s goals and pain-points, we can look for ways to help each other for mutual benefit.

1.     Consolidate

Shipping from the green coffee warehouse to the roastery can represent a significant portion of the total landed cost, and usually significantly more per pound that ocean freight from the origin country port! LTL (less-than-truckload) shipping rates depend on several factors including distance and weight, both of which have high minimums and convex slopes, meaning as the quantity and distance increase, increase in price per pound diminishes. For example, today I sent 1 bag from Continental (NJ) to Pennsylvania for $100 (167lb, 177 miles, $.59/lb, $.0034/lb/mi) and 3 bags from NJ to California for $154 (478lb, 2795 miles, $.32/lb, $.0001/lb/mi).

Most warehouses have no problem consolidating pallets with several Delivery Orders on them, the request from the owner of the green coffee in the warehouse to release it to another party. If you needed 2 bags of Colombian from us, 2 bags of Burundi from Long Miles, and 2 bags of Thai from Beanspire, for example, as long as they are all coming from the same warehouse, you could have them all put on one pallet and either organize shipping yourself or have any one of those importers organize.

Or, conversely, if you have some roaster buds in your area that might like some coffees from the same source, split a pallet! I can’t speak for other importers, but we offer quantity-based pricing based on total number of bags sent to one address, since that’s how the warehouse charges us for load-out. If you don’t want to be roasting the same microlot as your neighbor, coordinate who will use which to avoid repeats. Wouldn’t it be better to save some cash and let them know your source than keep quiet and potentially buy the same one without knowing?

2.     Plan Ahead

If coffees are already in the warehouse, it’s usually pretty fast to get them out the door. However, LTL carriers can be unpredictable. Sometimes a driver shows up without proper documentation and we have to try again the next day. Sometimes they don’t want to wait for freight to be loaded. Sometimes there is congestion at a terminal and it ends up waiting around for several days to get reloaded on a different truck. Unless you want to spend double freight cost for guaranteed delivery date, you have no recourse if they take longer than expected.

If you know what you’re going to need a couple of weeks ahead of time, logistics can be set up in advance so as not to have to race the clock and get documents in before cutoff times, and potentially choose a slower, more economical carrier.

No one wants to carry inventory longer than necessary, but a few extra days will be better than having to use your prized microlot in a house blend or something highly regular on pourover should a logistical snag arise.

  3.     Look for Pre-Ship and Afloat Lots

If you work with vertically-integrated organizations that also export from the origin country, you can ask when their shipments are expected and try to get pre-ship samples for expected arrivals. Not only will you get first dibs on the new fresh crop, you may be able to get a discount! The importer may knock a few cents per pound off the price if they don’t have to pay warehousing, finance the inventory, and assume the risk of holding it and possibly not selling it and it going stale.

4.     Look for Discounts

There could also be a heavily discounted lots that have been in inventory for several months, but are still tasting just as good as the new arrivals. Everyone wants the freshest of the fresh, making it very difficult for importers to sell the less-fresh, and therefore motivating them to liquidate inventory and stop paying warehousing and financing on it, even selling it below cost in some cases. This is an opportunity for the roaster. Say you like the origin story and peace of mind of buying traceable single-farm microlots, but really can’t justify the cost for certain blends. Take a look at the bottom of some offer lists (top in our case) and you might find some equally traceable, interesting microlots for the price of a blender. There is one on our list now priced lower than what we advanced the farmer for parchment! Our loss is yours and the farmer’s gain.

5.     Forward book & look for quantity discounts

Commitment sure is scary, but it has its advantages. Forward booking green coffee can give you the stability of not having to scramble to find a replacement every month or two. You can also look for pricing based on quantity purchased and see if that could extend to the total quantity booked. This discount could very well be more significant than the carry charge, giving you stability fo’ free. It’s like getting the cow for free, and the milk for the same price as always, or a little cheaper.

If you have a direct line to a producer, booking a season’s worth could also give them significantly more stability to invest in the subsequent harvest, much more than a couple of bags, which likely represents less than 5% of their production.

Pair the savings of forward booking a season’s worth of each origin, and consolidating pallets more frequently, and you could see your overall green coffee cost go down as well as your overall inventory, strengthening your relationships with producers and freeing up cash for other important stuff like baller aprons and tampers!

 

We are happy to accommodate if you would like to employ any of these purchasing strategies, and outline our policies and give a few more tips unique to us on our Ordering Info page.

Leave a Comment