2006 Best of Panama

[Steve]

But Aleco I cant smell it from here

[Aleco]

touche

[aaronblanco]

does anyone here contend that as/if the lower ranked coffees improve overall quality and fetch higher prices it will be at the expense of the top 10 ranked? or, as this board is fond of affirming, will the rising tide lift all boats?

someone please tell me there's enough money and smart buyers to go around to spread the love and that people aren't just buying the top ranked coffees because they're "top ranked" (the esmerelda especial excepted, because, by all accounts, it is a unique and brilliant creature on God's lovely earth).

i see evidence of smart buyers following their palates and not simply the rankings. sweet maria's is a prime example.

[Jimmy Oneschuk]

As far as equity vs. quality goes....

We must remember some basic economic principles:

1. as has been pointed out, in an auction situation (or any free market) price discovery relies on BOTH a willing buyer and a willing seller. If all parties were not happy with the price, it wouldn't have happened.

2. Quality is one factor in this coffee's stellar performance, but scarcity is probably a more important factor. There is only one Esmeralda Especial, and it has proven itself as a thouroughbred. It has dominated every cupping contest it has ever entered. All agree that it is absolutely unique in Central American coffee. And, there were only 5 bags in the auction...

yes, yes, yes!

I was hoping you'd have an opinion on this.

One thought on my mind is if Esmerelda was not sold at this auction, what would have the price been for bambito or carmen? This is pure speculation and conjecture - it's entirely possible they'd go for the exact same price. I guess most of my consternation around auctions is how well first place is rewarded compared to the rest.

The other thought I had was about the auction itself and how well it was promoted and made accessible to a wider range of potential buyers. I'm 100% sure there are interested roasters out there, which would increase the price paid, I'd hope, for those bottom lots.

On the whole, I'm pretty confident the year to year prices for auction coffees WILL improve across the board.

But I couldn't believe how little was paid for Mama Cata... ay-yiii!

[Chris Davidson]

This links a bit to the Growing Conditions thread, but it IS interesting how certain coffees were ranked based on how they cupped out after shipping to the prospective buyers. I mentioned that I was surprised that the 7th Place Coffee Zoka won (Thatcher's Reserve, Elida Estate) ONLY got 7th Place. It was a superb coffee. Mama Cata unfortunately didn't make it into our Top 12/31 Samples so maybe it was a poor representation of the coffee.
On the other hand, it's really cool to find out how certain farms are connected, even though they aren't advertised as such to the bidders. For example, I didn't know that Thatcher's Reserve was from the Elida Estate, though there were two other "Elida" coffees on the table that were advertised as such. A second example is that another of my fave's was the Casa Ruiz Great Mountain. Way to Go 49th Parallel! Come to find out, the second coffee Zoka won (12th Place La Mariana) is ALSO from Casa Ruiz, though not advertised as such. SO, even though I sadly wasn't able to win both of my favorites, it turned out that another one of my Top Six happened to be from the same Estate as my other Top Two. Crazy, eh?

[nick]

One thought on my mind is if Esmerelda was not sold at this auction, what would have the price been for bambito or carmen? This is pure speculation and conjecture - it's entirely possible they'd go for the exact same price. I guess most of my consternation around auctions is how well first place is rewarded compared to the rest.

I think that the answer to your question, speculation, and conjecture, ultimately hinges on this: Did the auction bidders bid on (mere) ranking, on the score, on brand-name/reputation of the farm, or on what they themselves cupped?

That being said, the way that auctions work, as you know, the price of a particular auction lot (be it antiques, coffees, or an Xbox360 on eBay) can be driven up into the stratosphere by as few as two bidders. The motivations that drive the bids up into uncharted territory can't usually be extrapolated out to something to be generalized.

Which leads to a theory: the top lots will, apparently, almost always get snapped up by a Small Axe or Maruyama type group, or, perhaps, a Mercanta or Volcafe type importer. The economics and 'buying power' that those entities represent change the aforementioned auction motivation-dynamics enough that they exist in their own category now. However, by that theory, the dudes who scored the big-$ CoE Brazil are already an anomaly. *shrug* Just a thought/theory.

The Detroit Pistons vs. the Miami Heat is an interesting and exciting matchup... The Detroit Pistons vs. The Western Conference All-Star Team = mismatch.

[nick]

Couldn't agree more peter, but is this to the detriment of the lots lower down the auction. If one company was buying one lot then the wealth may be shared all over the map. That 6k may have gone to five farmers.

That's only if these auctions are ultimately a zero-sum thing... I mean, like if the total amount "to be spent" is fixed in some way, and it's about distributing the wealth. That's not the case.

[trish]

Sitting here in Costa Rica with Maria Ruiz of Casa Ruiz. She is stoked that she has other fans at Zoka besides me!!

[geoff watts]

Hiya...

I have a few thoughts to share about the idea of buying groups as regards these auctions, and about the ability of the auctions to deliver prices to coffees in line with quality but modified by scarcity and other factors.

But first a big up to Steven Vick and to Pete for their excellent input on this topic. I couldn't agree more--educating one's customers about coffee quality and why it costs more to produce exceptional coffees and deliver them in pristine condition to the cup is the key to driving our industry towards real sustainability. It is a fact that there are many additional costs associated with producing truly great coffees as opposed to average or mediocre ones. It is not enough that a coffee is simply clean"excellence means finesse, detail, nuance and this is very hard to achieve at every level from farm to mill to roaster to cup preparation.

Rewarding great coffees with great premiums also means that the farm can keep moving forward (assuming there is true traceability and the $$ actually reaches the farmer) with quality and growth there is a huge difference between simple maintenance / subsistence and actual economic development. The idea is that the farmers who are working hard and producing excellent quality can continue to invest in their business, plant more trees, acquire more land, and grow. After ten years of high-quality production a farmer should have measurably improved living conditions, should be able to send the kids to university, be producing more and better coffee in my opinion most roasters underpay for their coffees, as do consumers. If this continues it means supply of top, top quality will decline in time and there will be greater separation between qualities"meaning the farmers who are getting paid will continue to improve and be producing coffees that can score in the 90's, while those who are not will do the minimum necessary to pass the muster and will steer towards an 80 score. The amount of very good coffee in the 84-88 range will drop off. Of course this is just my personal prediction.

All this means it is up to the roaster to drive prices upward in his/her local market, and invest in teaching customers to understand, recognize, and appreciate real quality. We cannot be scared of pushback from existing customers or hog-tied into submission by price-driven competition from other, lesser quality roasters. We must stand firm in our commitment to charging more, not less, and passing this additional revenue back to the farm so that it can tip from subsistence to prosperity. I get calls and emails all the time from customers who tell me that they 'know the world-wide price of coffee has declined� (perhaps they read a Wall Street journal article tracking coffee futures prices) and ask why is it that I have just raised their price? The explanation is simple"we don't buy commodities, we buy specific, unique, and exceptional caliber coffees based on their intrinsic qualities and our relationship with the individual producers. We invest in growth, and encourage further investment in quality on the part of the grower by adding significant premiums that reflect additional quality in the cup. I really don't care where the C is well, not entirely true"I do care, but even if it goes down to $0.30 I will not reduce the price I pay to the farm. I've made that commitment to the growers we work with and made it crystal clear"prices I pay them can only go up, never down.
Anyway, I've gotten off topic a bit. I really just wanted to address a few things that were written in this thread…

1. Regarding the viability of selling one bag of coffee, or the prospect of someday splitting apart bags---shit, I would buy and sell 15 lbs. of a killer coffee if that was all I could get my hands on. Lack of quantity should not be an issue"we as roasters are pursuing greatness in the cup, and anytime we encounter it we want to get it into our hands and our mouths. Doesn't matter if it is one bag, five bags, twenty bags, or twenty lbs. Would it be better if there was more? Sure. We all wish our favorite concert would last all night, with an endless series of encores. It would be great if an orgasm could last for 3 hours. And at 2 hours, that inspirational movie was just a bit too short, right? That's the way things go. Real Greatness is usually found in small quantities and provides temporary elation.

2. Regarding the idea that buying groups suppress prices well, that's just silly. Peter said it right"most of us could not afford a $30,000 outlay for 5 bags. But we can come up with $6k for one. If auctions were always single buyers the prices would actually be much lower. One piece of anecdotal evidence"the recent Brasilian coffee that raked in $49.75 would almost certainly have fetched far less had the Small Axe group not been involved in the chase. There were, as far as I know, three groups involved up to $30.00. At that point one dropped out, and then there were two. We stayed in it up until the bitter end, and finally conceded as our group began to atrophy. But from about $30.00 until the final close I believe there were just two groups bidding"us and the Australian/Canadian team. Had Small Axe not been involved that coffee would probably have settled as much as $19.00 lower than it actually did. That's a lot of money.

3. Regarding the idea that auction buyers chase the top lots for marketing value and fame rather than quality, or that group buying on particular coffee limits participation on other lots"again, it's off-base. I've served on 18 juries in the last 5 years, and in all but 2 I felt that the top two coffees deserved their place. They were really the best, and the jury made the right decisions. The best coffee should get the best price, and should come as no surprise that the #1 coffee usually garners a higher price than the rest. Is there added marketing value to having the #1 winner? Sure, of course there is. But I know most of the people who have purchased #1 over the years, and the huge majority did so because it was their favorite coffee. Sometimes, though, the coffees do shift position a bit during the 6 or 7 weeks between competition and auction. Have a look at the 2005 Nica results. There were indeed coffees better than the number one, and it was reflected in the prices. Number 5 got top price, and number twelve came very close to number one. How about 2004 El Sal? Number 3 was right behind one, and number 7 was hanging in there as well. Intelli participated in groups and also as solo buyers. Stumptown does it, Terroir does it, Sweet Marias does it This happens all the time. These are just a few examples, but if you take time to weed through all the auctions that have taken place over the last 5 years (CoE and others"Crop of Gold, Panama, etc..) you will find that buyers exert their taste preferences by bidding for their favorite coffees, not just the ones with the highest jury score.

4. Someone mentioned that we will not make money on the Esmeralda. I beg to differ. I do not plan to lose money on this coffee, unless of course I and my fellow colleagues decide we just cannot give it up and we end up drinking a lot of it ourselves. That might happen, and if so it is because we have decided to indulge ourselves and celebrate the coffee every morning on the front porch. However, it is quite possible to make money.
The figures presented in this thread are way off base for example, as Trish pointed out, it would be sacrilege to roast so dark that you lose 20% weight"the nuance and delicacy would get completely muffled. We will likely lose about 13% weight. If we sell 40% of the coffee at roughly $35.00/ half lb, drink 10% ourselves, and sell the remaining 40% via clover brews at between $6 - $7 / 12 ounce cup we will be above break-even.
That said, if we do lose money because we decide to treat our best customers to a free half-lb as a way of saying thank you for your continued support, I could live with that. And I still might drink most of it myself…

And Steve, I'm sure any one of us would sell you a few lbs of green to cuddle up with on a rainy English afternoon. There is a real comradery among those roasters who have devoted themselves uncompromisingly to coffee quality and the betterment of our industry...We are happy to share.

cheers,

geoff

[Steve]

Sh*t Geoff yes ! kick ass reply,!

[LiftOff]

Geoff, thank you for your extremely on-target, reply. I know for a fact I could not have said it any better myself!

Oh yeah, and Tim it was a pleasure teaming up with you for the coffee we were after!

[Robert Goble]

The figures presented in this thread are way off base for example, as Trish pointed out, it would be sacrilege to roast so dark that you lose 20% weight"the nuance and delicacy would get completely muffled. We will likely lose about 13% weight. If we sell 40% of the coffee at roughly $35.00/ half lb, drink 10% ourselves, and sell the remaining 40% via clover brews at between $6 - $7 / 12 ounce cup we will be above break-even.

I threw out real dirty numbers and based shrinkage on total shrinkage (through shipping, mishandling, loss, and theft as well as roasting, spillage, pulled samples for cupping etc...) but they are dirty numbers still. What really interests me is what you plan on doing with your clover. $6 to $7 buck a cup? Have you done this in your market already? Sounds exciting. What's the buzz when your customers see that?

[Marshall]

Record-setting COE auction prices could be a super-effective educational tool for specialty coffee, if someone were getting the word out to the general press. I just did a Google News (not newsgroup) search and came up with ZERO hits about the winning Esmeralda. [edited to reflect a broader News search after my confusion about COE and Panama was pointed out ]

The public is not going to appreciate the difference between COE and merely "good" coffee, unless the industry does more to get the word out that these beans are something really special. This would help farmers, importers, roasters and retailers alike.

It seems like such a naturally interesting story. "Someone paid $50/lb. for green beans in Panama. Why?" Until then, I would expect sticker shock for $7/cup coffee.

Marshall "has already reserved a seat at Groundwork when they serve it"

[Aleco]

Marshall,

Panama is not a part of the COE circuit. Google 'best of panama'.

Anywho, you are right about information disemination in our neighborhood to date. It has not been perfect. We are, however, working to improve that and quick.

We'll let you know when the clover's ready....

Aleco

[malachi]

I think that the answer to your question, speculation, and conjecture, ultimately hinges on this: Did the auction bidders bid on (mere) ranking, on the score, on brand-name/reputation of the farm, or on what they themselves cupped?

That being said, the way that auctions work, as you know, the price of a particular auction lot (be it antiques, coffees, or an Xbox360 on eBay) can be driven up into the stratosphere by as few as two bidders. The motivations that drive the bids up into uncharted territory can't usually be extrapolated out to something to be generalized.

Which leads to a theory: the top lots will, apparently, almost always get snapped up by a Small Axe or Maruyama type group, or, perhaps, a Mercanta or Volcafe type importer. The economics and 'buying power' that those entities represent change the aforementioned auction motivation-dynamics enough that they exist in their own category now. However, by that theory, the dudes who scored the big-$ CoE Brazil are already an anomaly. *shrug* Just a thought/theory.

The Detroit Pistons vs. the Miami Heat is an interesting and exciting matchup... The Detroit Pistons vs. The Western Conference All-Star Team = mismatch.

logic flaw.

the same people who are bidding on these coffees are also the judges who are scoring them.
thus - there is no such thing as bidding on "ranking" or on "score" as opposed to what they cupped.
it's all the same.

[Marshall]

Marshall,

Panama is not a part of the COE circuit. Google 'best of panama'.

Anywho, you are right about information disemination in our neighborhood to date. It has not been perfect. We are, however, working to improve that and quick.

We'll let you know when the clover's ready....

Aleco

Thank you for the correction, Aleco . Unfortunately, there were no News hits about this auction for ["best of panama"] or even [panama esmeralda], just some older news stories. Anyone have access to Nexis?

And I'm not really talking about local publicity for individual shops. I'm talking about well-orchestrated industry publicity.

Marshall

[Mark Prince]

I can't fault the SCAA on this one. They were very quick in getting the word out via a press release right after the auction. It's a much better effort than I've seen in the past.

Irony: this past seven days, I've done four press interviews: one involving Peets, one involving the "controversies" around the Cdn entrant in the WBC, one about the trend in espresso machines, and one about my always-down website .

In two of the interviews (the machines and wbc ones) I specifically brought up the Panama auction, and other than shock over the price, there didn't seem any interest.

In a way, I understand it. At that price, to some mainstream press person, it seems like just so much foolishness (remember, seeing it thru their eyes, not thru my own).... it's kinda like paying $200 for Kopi Luwak to them. An anomoly - a "freaks and their toys" kind of thing that they don't think has any serious story potential, except as a segment for the News of the Weird.

I admit I didn't really try to talk up where this is going or what the benefits are too much - perhaps I should have pitched the angle not necessarily about the winner, but about the middle guys and gals who see a big benefit from being part of these auctions. But, I also have to pick my battles - the WBC talk I was in damage control, and the espresso machine "kewl" talk I was trying to steer towards quality over convenience.

Mark

[Marshall]

I can't fault the SCAA on this one. They were very quick in getting the word out via a press release right after the auction. It's a much better effort than I've seen in the past.

Very glad to hear that!

Marshall

[geoff watts]

We're working on getting some mainstream press to cover this story...I'll let you know what comes of it. I think there will be some reporting quite soon.

Re: Clover pricing, the tentative plan right now is to sell by the cup at around $6.50, and we're excited to see how fast we can sell it out. Again, I'll report back about how it is going once we've got the coffee online...

g

[Robert Goble]

Thanks for the reply Geoff. You guys are on the cutting edge and your instincts have been amazing with regard to growing and educating the market (at large not just your own). It's going to be really exciting seeing what you (and others) do with these fine coffees.

[fleck]

http://www.flickr.com/photos/stephenstump/166743796/

[bradinvancouver]

To put the $6.50/12 oz clover into perspective -> Artigiano has proven this works. Mind you, that auction seemed to have garnered more press than this one (guess 50 bucks a pound for green is passe now) but the over-riding mentality amongst their customers (and I readily admit to sharing this mentality) is "wow! $5 for a cup of coffee - I HAVE to try it - it must be fantastic!" It's selling even faster than they anticipated.

Every time I pass some COE on to Alistair, he routinely sells it for a significant premium on the clover and it routinely sells faster than his usual offerings both BECAUSE it is more expensive and also due to the fact that he does a good job educating his customers with p.o.p. info on the clover offerings.

Old FB70 sold now, feeling the pull of the clover... if only I had enough electrical power for another 4500 watt heater. Sigh.