Appendix E-J

Each week, we get The Nod – the e-mail newsletter from our roaster, Intelligentsia Coffee and Tea. Usually, the content of said Nod is rather interesting, and worth passing on to you.

Last week, the Nod arrived in my inbox and I opened it and it was long. Real long. Perusing it, I could tell it would be interesting. Geoff Watts – author of The Nod & Intelligentsia’s VP of Coffee – knows quite a bit about many things, and perhaps the primary thing is coffee. In this latest edition, he explains the rising cost of Kenyan beans…an explanation that can, for the most part, be translated to many coffees and probably many of the other things Mr. Watts knows quite a bit about.

So, in order to assist you in your navigation of this explanation, a handy little summary is below (and is also offered at the end of Mr. Watt’s essay). Click on a point of interest and you can read the expanded version. I do, however, recommend reading the entire thing in context. Just start below the summary if that is your desire.

The Summary:

• Big rises in costs of production at the farms in Kenya.

• A shortfall of volume and of quality coffee in the recent harvest, leading to greater competition over top quality lots.

• Our movement towards Direct Trade in Kenya and investment in the farming societies and in building relationships.

• The falling value of the dollar.

• Greater costs of production here in the US with the costs of everything from roasting, packaging, and transporting having gone up.

• A reworking of the quality pricing model to better estimate real costs of production and attribute appropriate value to exemplary/exceptional quality coffees

• And of course the coffee is among the best harvested the entire year in Kenya, so you know it is worth it, my brethren.

The Nod:

Hola:

Last Friday saw the release of one of our favorite, and in my humble opinion, best coffees. A question that we have been asked since this time is: What’s up with the Kenya prices? Why have they risen so sharply this season? There are a lot of things that have contributed. I’ll try to explain as clearly and concisely as I can, knowing full well that the latter has never been one of my strong suits. Let’s break it down into a couple categories:

1.) The rising production costs at origin.

This is not just occurring in Kenya. EVERY coffee producer I know has seen coffee production costs rise dramatically over the last two years. It is a worldwide phenomenon. What has gone up?

A.) Fertilizer and Transport costs. This is directly related to the rising prices of fuel worldwide. We’ve felt it here in the US, but man….many developing countries feel it even harder because they do not have any buffer whatsoever. Their governments do not have the kind of reserves we’ve got or the ability to subsidize prices for farmers. So while fuel costs have risen profoundly here, they’ve gone up at an even faster rate in many coffee producing countries. As a result, everything that requires energy to produce (fertilizer is just one example) is also more expensive now. I was recently examining fertilizer costs in Guatemala and found that in many cases it has more than DOUBLED over the last two years. So the farmers are paying more for inputs than they ever have. Transporting the coffees overland (farm to wet mill, wet mill to dry mill, dry mill to exporter, exporter to port) has gotten way more expensive as well, due once again to fuel costs.

B.) Labor costs. Labor is often the number 1 or 2 most significant cost of production on a coffee farm. It keeps getting more expensive as the labor force dries out. This is especially true in Central America where there has been (and continues to be) mass emigration to urban areas and to the United States. In Africa it is not quite as big a deal as labor is still abundant in many places, but they are still facing the problem of the “aging farmer”. Most coffee farmers are in the latter third of their lives and increasingly find it more difficult to put in the work needed to manage a coffee farm to its top potential. Younger generations have not shown an interest in being coffee farmers. Why would they? They look at how their parents and grandparents have fared and they see the poverty and depressing commodity cycles and mercilessly rising costs and intense climate impacts and the sheer unpredictability of it all and they say “no way!” Why would they want to follow in their father’s footsteps when the path has failed to take them anywhere?

C.) Cost of Production per hectare has gone way up due to falling productivity. There is always a chain reaction that takes place when coffee farmers aren’t making enough money for their crops. First they stop making inputs (they use less fertilizer, spend less on husbandry, stop pruning, and stop planting new trees) and then they cut costs during harvest. This means fewer cherries per tree and more disease and fungus problems as trees become old and weak. It means less care taken in selecting cherries for ripeness. It means the per-hectare cost of production is higher than ever while the quality has gotten worse! Trees growing in poorly managed and nutrient deficient soil get quickly debilitated. They don’t produce as much coffee and they struggle to bring the fruits to full maturity. The reality is that today the costs of production on most coffee farms (and other agricultural products too) are WAY higher than they were even two years ago, sometimes by as much as 50%. The market is going to need to adjust to this somehow, or a lot of farmers are going to be in big trouble over the next couple of years.

2.) The Kenyan Auction system dictates market price.

The Kenyan Auction system was the model on which the Cup of Excellence was founded. It has consistently been the world leader when it comes to delivering the BEST price per pound for coffee of quality. Every year there are a handful of coffees that crack through into the $4.00+ range and sometimes quite a few. It is a great system for finding “market value”, as there are close to 20 exporters who compete at auction to purchase the best coffees. Each exporter receives an “auction book” and accompanying set of samples every week, and each Tuesday there is a live auction during which all those coffees get put on the block. There can be ferocious competition sometimes, especially whenever a true 90+ coffee passes through.

This season was a low crop and the general quality was not very great. When that happens, the prices for the best coffees get even higher than usual since everyone is scrambling to get a piece. That’s the nice thing about the auction from a farmer’s perspective. It also rewards scarcity, so when there is a down year in volume or quality, it drives prices for the good stuff even higher than expected because various buyers are fighting over a smaller number of available coffees.

Unfortunately, the individual farmers are not always beneficiaries of these nice prices. The link from farmgate to auction is not as clean and direct as it should be, and layers of organizational inefficiency (and outright corruption as Kenya as a nation has managed to institutionalize corruption like no country I’ve ever seen!) eat away at the profit until there is next to nothing left for the farmer. Banking is screwed up there, with interest on debts overwhelming any income.

So while the auction has yielded many clear benefits, there is still a lot of work to be done to make the system sustainable, meaning making it viable for the farmer.

This is the first year that Intelligentsia has begun to purchase some Kenyan coffee using our Direct Trade model. It is super-freaking-exciting to me, because I’ve wanted to work more closely with farmers in Kenya for almost a decade. It is my favorite coffee year-in and year-out, and it has always been profoundly saddening that the farmers, despite great auction prices, never seemed to really be able to move forward.

About half of what we purchased this year was purchased under Direct Trade principles with prices negotiated directly with the farming communities, full transparency in the chain, and quality rewarded with premiums. It is a significant step for us and for Kenyan farmers as it was not permitted under law to deal directly with farmers until about 22 months ago, and today the huge majority of coffee is still passing through the auctions.

We WANT TO BE AN EXAMPLE. We want to show Kenyan farmers what is possible and participate as leaders in the effort to re-engage farmers and introduce new expectations about transparency and commitment at the farm level. We want to earn the trust of the farmers and prove to them that pursuing a long-term, Direct Trade relationship with Intelligentsia is a great option for them. Based on lots of experience buying coffee in Kenya, it is my opinion that we’ve partnered with some of the best cooperative groups in the country, in the heart of what I consider to be the top growing region in Kenya.

I’m hoping that next year all of our Kenyan coffee will qualify as Direct Trade and that we will be able to sell it that way. For now it should be considered “Direct Trade in Transition”. This season we purchased some coffee in the auction and some directly, all from the same cooperatives whose coffees we’ve been buying in the auctions for several years. For any DT system to work in Kenya it is vital that the farmers are able to see a true benefit by selling direct versus selling through the auction. So the auction will continue to function as a sort of “market regulator”, at least on the high end, and at least until Direct Trade takes hold and farmers begin to really understand the value of working closely with roasters and establishing reliable, long-term markets for their coffees.

3.) The Falling Value of the Dollar

We feel this pretty hard-core in many countries. The problem is that farmers pay everything in the local currency, pesos, shillings, quetzales, francs, cordobas, lempiras, but they get paid in dollars. So labor, fertilizer, bags, boots, everything has gotten more expensive for the farmer due to the fact that the local currency is worth far more versus the dollar than it used to be. If this continues, at some point the industry at large will need to decide whether or not the coffee market can continue to be tied to the dollar since another 5-10% drop in value will make the equations completely untenable for the farmer. Even without adjusting for inflation, most farmers are making LESS today than their parents did…in real dollars per pound. That is not acceptable.

4.) The rising costs of production here at home.

As you know, Intelligentsia is a company that believes in constant research, development and innovation. We’re freaks about quality, and we spend money, time, and energy to make sure we get it right. That’s why we’ve invested in roasting locally in LA, that’s why we keep hiring staff for Quality Control and Roasting, and that’s why we invest so much in our Baristas. We’re always doing things to try to make our coffees even better, and there is a price that comes with that. I would hazard a guess that we have one of the deepest teams in the industry when it comes to coffee expertise and knowledge.

But beyond the costs of innovation and intense quality control operations, our raw materials costs have risen sharply. Fuel costs are high, and we depend on fuel to roast and deliver coffee. It runs our roaster’s afterburners, which clean the exhaust to ensure that we are good stewards of the local environment, but those suckers eat up gas like it was candy. We will probably need to invest in alterative technology soon.

5.) Coffee has always been very under-valued and under-priced.

There is another point that must be made, one that is to me more important than everything I’ve just mentioned: The fact is that coffee has never been valued correctly to begin with, dating back to well before all of the recent economic downturns. The only coffees that have succeeded on a large scale over the last 20 years in getting the value they should have been a handful of well-known brands from Jamaica and Hawaii (Kona). And as we all know, those coffees usually cannot even hold their own in the cup when compared to the best coffees from places like Kenya, Ethiopia, Rwanda, Guatemala, Bolivia, and so forth. They get smacked up and down and exposed for being very well cultivated, very clean, very well-handled but altogether too mild and, for lack of a better word, just boring.

When I say “the value they should” what I mean is this: valuation based on actual costs of production and real intrinsic/material quality. Just like any other business, coffee farmers ought to have the opportunity to sell their coffees at a price that nets them a profit, and that is tied to measurable quality. The better the quality, the more a coffee farmer can stand to earn in a competitive market.

Let’s select a couple of industries for comparison. The wine, spirits and beer industries all have some obvious similarities with coffee. Wine has a lot in common with coffee with regard to the way it is produced (fruits produced under specific environmental conditions and then processed into liquid goodness) and in the way it is talked about. The language of tasting is nearly identical between them, although coffee is actually the more chemically complex of the two beverages and has a greater range of potential flavor. When we talk about beer and spirits, there is similarity with coffee because these are considered “luxury goods” and they are consumed as liquids.

Now consider the range of prices you might find when shopping for a nice bottle of Scotch whiskey. You can probably find a fairly cheap bottle at your local supermarket, something that is kinda nasty going down and even worse once it has had time to soak in. You can find something mid-range, a decently distilled blend of decently produced malts. And if you go to specialty importers or big-time liquor stores you’ll find a huge variety of small-batch, limited production single malts that have been aged for many years to improve the texture, perceived sweetness, and complexity. The prices will range from $10/750 ml for true swill that will surely pummel you into joyless submission by the next morning to perhaps $150 for the finest commercially available single-malts. Most Scotch drinkers likely find their place of comfort somewhere in between, happy to pay $30-$40 for a nice bottle of Glenlivet or Macallan.

With beer it is the same…your basic six-pack of aluminum Milwaukee’s Best cans can be had for a couple of bucks, while you could easily pay $12.00/16 oz bottle for a nice Belgian small-batch.

Surely wine has been the best explored by most consumers when it comes to “tasting the range” and learning about what the low-end (frighteningly astringent and sour and ethanol-like with big-time headache power) and the high-end (ah, kill me now while I am floating on this cloud of sweet and savory bliss) can deliver on the pleasure scale. Most wine people, like beer or scotch drinkers, settle somewhere in the upper-middle of the range. No cheap stuff, but save the tip-top-barely-out-of reach shelf for those who have made a lifestyle out of sipping priceless delicacies. The $10-$40 range seems to serve people quite well when it comes to measuring out a nice pleasure-to-value ratio.

Then we could even expand the discussion to cheese, where the scale takes us from Velveeta all the way to the nicest 15-year old hard cheese with more taste per square millimeter than there are bad jokes in Marc Johnson’s arsenal. (Marc is our Marketing Director, he tells lots of bad jokes, and my comment means infinite taste, for those keeping track at home.) One costs $1.50/lb, the other costs $50.00/lb. One makes you fart and weep and rot away from the inside, the other one makes you want to high-five the cheese guy.

My point is that consumers have learned how to differentiate value pretty well for most products out there in the world today. They, of course, sometimes attribute value to certain things due to reasons of fashion or trend. And sometimes clever marketing combined with gullible consumers can lead to freaky pricing for what are really low-quality goods. But most of the time people come pretty close to getting it right, over time.

When you consider coffee, one thing to realize is that there is a very small amount of truly high-quality coffee available in the world. Just isn’t produced very much. Why? One reason is that it is very hard to accomplish. Really, really hard. The second is that the world has rarely been willing to pay farmers what it actually costs to produce this kind of quality. Instead of being priced according to actual costs of production, with better coffees getting additional premiums as a result of their better taste, coffee is priced like corn, cotton, soybeans, petroleum, or other commodities out there. It is a futures market that has always determined value.

Much has been written about the “coffee crisis” of 1999-2004, which put hundreds of thousands of coffee farmers out of business because the prices people were paying were below even the most basic, rawest costs of production. One thing that was exposed was that we as consumers (and those of us working in the coffee business as roasters, retailers, baristas, restaurant owners) really need to re-think the way we understand value as it applies to things like Specialty Coffee, and coffee in general, which is not actually a traditional “commodity” in any practical way. The range of different qualities, different production costs, and different cultural traditions behind the coffee are huge and diverse.

The reality is that we fight nearly a century of history during which coffee was bought and sold as a commodity and where the idea of the “bottomless” cup became entrenched in the minds of most consumers. Coffee has usually been a loss-leader for most restaurants and shops, given away for free or for next-to-nothing. Cheap coffee is far-and-away the norm.

Our objective is to try to get things right. We want to pay farmers what these coffees are really worth. When someone purchases Intelligentsia coffee, they are getting an amazing deal. Some of the best coffee produced on the planet for what still amounts to very little compared to what one might expect to pay for any other consumable the sits at the top end of the quality spectrum. That’s not to say we over-pay. We’re not a charity, and I do not have much faith in development models that show up in Africa or anywhere else and give money away without building anything that can last. That model has proven over the last 30 years that it simply doesn’t work, and in many instances has even made the problem of poverty WORSE.

We pay what both we and the farmers agree to be the right price, call it whatever you like: fair, just, honorable…those are just adjectives. The whole nature of this business, as I see it, is to figure out what farmers need to earn in order to produce extraordinarily great coffee. That’s what I do; I work with them to figure out how much everything costs, to quantify those things, and make sure that the farmer, who shoulders so much responsibility and so much risk in this whole deal, is profiting from his/her work and is in a position to grow and evolve. We want to contribute to building a coffee industry where growing coffee is an attractive career choice. Where the children of coffee farmers will decide they DO want to continue the family tradition, and can make that choice without needing to be certifiably insane.

That might have been a bit too long winded, a bit too lengthy to divine the key points. In acknowledgement that this is likely true, here is a summary. In short, the prices we paid this year for our Kenyan coffees reflect:

- Big rises in costs of production at the farms in Kenya.
- A shortfall of volume and of quality coffee in the recent harvest, leading to greater competition over top quality lots.
- Our movement towards Direct Trade in Kenya and investment in the farming societies and in building relationships.
- The falling value of the dollar.
- Greater costs of production here in the US with the costs of everything from roasting, packaging, and transporting having gone up.
- A reworking of the quality pricing model to better estimate real costs of production and attribute appropriate value to exemplary/exceptional quality coffees
- And of course the coffee is among the best harvested the entire year in Kenya, so you know it is worth it, my brethren.

And with that, read even a bit more about Kenyan coffee, the subject of this week’s Nod.

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Best,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Further:

• Intelligentsia Official Site
• Kenya- Gaturiri Auction Lot Fact Sheet

Popularity: 29% [?]

Ladies & gentlemen- the Nod. A weekly note from Intelligentsia Coffee’s VP of Coffee, Geoff Watts. It is e-mailed to Everyday Joe’s (because we use the beans roasted by our friends in Chicago), and then we post it here for you, because we love you. Enjoy.

A Nod or two ago I started reflecting on how my relationship with traveling has changed over the years and especially how some things that never before had seemed burdensome were now beginning to feel a bit wearying. That’s to be expected, I suppose…most things are more exciting when they are new, and it is easy to disregard small drawbacks when one is so entertained and occupied with assimilating fresh experience. It strikes me that somehow this condition must sit at the epicenter of the Happiness equation—the ability to continuously experience the world and its sensory delights with fresh eyes, the ability to soak it all up and never get saturated. Wasn’t there a film about that? “The Eternal Sunshine of the Spotless Mind,” I think it was. It might be interesting to watch that in a double-feature with “Groundhog Day” and juxtapose those two scenarios.

Regardless of the fact that some things in life seem destined to become mildly less stimulating after much routine and repetition, there are, fortunately, always surprises. And every year there are trips that end up being particularly inspiring, stretches of days or weeks that leave me feeling renewed with the kind of silly but invigorating and intoxicating optimism that you can almost bathe in.

This last trip was that way. I spent the weekend in Cali, Colombia doing some roasting and cupping at Café Palo Alto, a small coffee company that I help run there. Often when I’m working there, I feel as though I’ve stepped into the way-back machine, remembering the days when Intelligentsia was just a tiny retail outfit with a 12-kg roaster in the store. It’s a lot of fun. The challenges that come with operating a start-up business are of course all too real, and I suspect relatively similar for all new business owners regardless of location, but I enjoy the simplicity of dealing with a compact and immediate universe where most decisions feel comfortably free of weight.

After a couple of days I was joined by Mary and Neil Smith, two Chicagoans who had bid on and won a “coffee origin trip” that we had sponsored in a charity fundraiser last summer. Before the trip started, I must admit that I was a little less than enthused about the prospect of chaperoning a trip with two complete strangers. People are strange, that we all know very well. Some nice, some not so nice, some happy-go-lucky, some just plain unhappy, some frivolous, some cynical and some defeated. But this was a blast. These two new friends, one of them a professional in the high-quality fresh fish industry and the other a now full-time musician, went with me to Cajibio (about two hours from Cali, close to the old colonial city Popayan) to visit a farm called Santuario. You’ll be hearing a lot about this farm in the coming months and years—it is a breathtaking example of what can be done with resources and intention, and I hope that it may serve as a model for future generations of coffee farmers.

What makes it so inspiring? Part of it has to do with providence. I can’t shake this feeling that for some reason I’ve met this farmer at precisely the right moment in time, the right point of convergence in the coffee world, a time when both of us are ready to take the tools we’ve developed and map out what the future of coffee can look like. Coffee 2000. The new deal. You see, this farm is the farm of dreamers. It was started in 2001 at a time when investing in growing coffee seemed like a patently ludicrous proposition. The market was in the gutter, the planet was oversupplied with poor quality coffees, and the immediate future seemed pretty bleak for most growers around the world. Farms were going out of business left and right, and would continue to do so for the next four years. Many economists probably would have recommended gambling on NBA games or selling typewriters as more promising career moves. Milk-based drinks were dominating the landscape in the US and overseas retail markets, new “energy drinks” were capturing the attention of the sugar-addicted youth population, and coffee beans themselves had somehow become the least expensive part of most “coffee” beverages.

Still, Camilo Merizalde decided he wanted to grow coffee. Wow. I’m quite certain more than a few trusted friends were suspicious that someone must have slipped something into Camilo’s aguardiente. Coffee? The same crop that has bankrupted thousands of farmers and held millions more in a state of perpetual uncertainty and debt? Where production costs are rising at a pace that far exceeds rising values? Where small changes in world climate could throw the whole formula out of whack? Yes, that one. A fool’s pursuit.

I’m sure he heard a lot of that, but he was driven. He apparently caught what I myself am afflicted with, and what many a friend has experienced in the past—coffee has a seductive power. It gets in your system and won’t leave. It offers incredible intrigue, much like wine but far more complex. More fascinating than a yellow submarine and with more potential to impact human lives in a positive way than perhaps any crop in existence. But it can be an unpredictable and capricious companion, elusive and frustratingly impermanent.

So Camilo planted coffee. He took what was at the time nothing but pasture land, nearly barren, and created a farm. And he did it as dreamer and a perfectionist would, taking nearly two years to consult with farmers, agronomists, environmental engineers, coffee roasters and exporters before getting it up and running. The result is a coffee lover’s fantasy, a perfect marriage of exceptional environmental advantages and an engineer’s sense of orchestrated harmony. Most of the farm sits at close to 2000 meters, a glorious altitude for the best types of coffee tree. It is partitioned in a sensible fashion, divided into lots of Typica, Bourbon, and other heirloom varieties of coffee that are revered for the cup characteristics of their seeds. Each section was planned out meticulously based on advice from field-leading agronomists, with a big variety of different shade tree species and other plants spaced appropriately to promote the symbiotic ecosystem interactivity and minimize the need for additional inputs to keep the coffee healthy.

Having the farm organized as such will allow Camilo to identify specific niches on the farm that produce unusual quality and provides for the harvesting of coffees by variety—something many farms lack since varieties tend to be interspersed in such a way as to make them impossible to isolate. Currently, Camilo has nearly 20 additional varieties growing in a test garden, soldiers preparing even now for a time in the distant future. Over the next several years we will work together to classify the quality traits and potential of all of these experimental coffee types, looking to identify some treasures. And knowing Camilo, we’ll be experimenting together every single year as we try to fine-tune the processing methodologies in order to get maximum sensory expression in the coffees.

It’s a little paradise there, and I’m extremely excited to be working with a farmer who shares our vision and is just crazy enough to be willing to take necessary risks that would cause most others to balk. That’s how progress is made, and while it is surely premature to make any grand proclamations about how together we will redefine the model for both coffee grower and coffee roaster, there is nothing wrong with dreaming.

I’ll share more about Santuario and the rest of the trip to Colombia in next week’s Nod. For now, get yourselves ready for an impending onslaught of new crop coffees from Central America and East Africa. Port strikes and unexpected rains have collaborated to delay shipment of many of the coffees we normally expect to have ready for sale in June, but the tide is about to come in. Over the next weeks expect to see new Direct Trade coffees from Kenya, Tanzania, El Salvador, Honduras, Costa Rica, and Guatemala showing up on the offering sheet. In the meantime, we are proud to launch the 2008 edition of Los Delirios our Organic Direct Trade offering from Nicaragua. Enjoy!

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Onward,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Further:

• Intelligentsia Official Site
• National Geographic Coffee Map

Popularity: 19% [?]

The Nod.

It is the newsletter sent out each week by Mr. Geoff Watts. Mr. Watts is the VP of Coffee for Intelligentsia. Intelligentsia is a mighty fine coffee roaster. We serve the beans they roast. Their passion, however, extends far beyond coffee. That passion is palatable in this week’s letter from Mr. Watts. Parts of it remind me of when Everyday Joe’s first opened 5 years ago, and Suzanne worked without pay just so it could get going because she believed in what could happen. Enjoy.

Hola:

To recap last week’s message, I spent a lot of time talking about, well, time. Having just returned from a trip to Africa, I also discussed our work in Rwanda and the challenges for cooperatives there: a lack of strong leadership, interference from both the government and private companies, and even electrical power outages. This week, I feel good talking about some of the positive things happening in Rwanda.

This year at Nyakizu the dozens of workers at the cooperative washing station have not yet been paid. Farmers delivering cherry are forsaking immediate cash to support the efforts of their group, tendering the coffee without any payment whatsoever. It is a staggering display of commitment and loyalty. They have new leadership in place, starting with President Emmanuel Hibamukiza, a relatively young and very charismatic guy who also works as a schoolteacher in the local village. One of the farmers, an old gentleman named Narzon Muharinkya, has been there since the beginning and recounted the leadership problems they’d experienced in the past. For the first time since Nyakizu was founded, he feels good about the group and has a renewed optimism that they will be able to move forward from here. I cannot begin to explain how his sentiments touched me as we sat together in a grove of trees just beside the station, talking about how to fix the problems and what must be done to build stability within the group and ensure that the cooperative can grow and thrive as it moves forward.

Still nothing is certain. I wrote a letter of intent last month to help the group secure pre-financing through Root Capital, a micro-finance organization. RWASHOSSCO, led by the very capable and sympathetic Gilbert Gatali, took out a loan in order to bail out the coop this year and prevent the bank from taking the washing station. This season is critical. If anything goes wrong, it will mean the end of the cooperative. But I feel good about what lies ahead. They’ve pushed through incredibly difficult times and have grown smarter for it. The stage to succeed is set in a way it has never been in the past, and we are going to do everything in our power to make this thing work. The coffee here is incredible, and it was easily the best of the Rwandan coffees we purchased last season and the real potential has not yet been touched.

From Nyakizu we drove to Kibuye, a small town on the edge of Lake Kivu in the western part of the country. Kivu is a gorgeous lake separating Rwanda from the Congo, filled with delicious little fish called Sambaza. They are just about the only fish in there as the lake is full of natural methane that rises up from the bottom and makes it nearly uninhabitable.

After a night’s sleep we took off for Nyabumera, one of the washing stations we are buying from in the region. Previously there had been four mini-stations under one umbrella of management, collectively known as Rusenyi, but large geographic distance separates the stations (nearly an hour and a half drive over bumpy roads to get from one to another) and the coop leadership proved unable to keep things together. A bad accountant was removed from office last year and a decision was made to split the coop into two groups based on geography. Nyabumera and Ruvumbu now fall under one roof, independent of the others, and just as with Nyakizu they’ve got a new set of leaders and a new lease on life. The same issues apply here—motivating membership to deliver cherry despite the immediate appeal of the competing stations that are luring away farmers who have lost faith in the cooperative and are pursuing short-term fixes rather than trying to build strength through solidarity with the group.

Rusenyi is an enchanting place. It is one of the lushest regions in Rwanda, with softly rolling hills and gorgeous views of the lake. It also stands out as one of the only areas in the country that mounted a strong resistance to the interahamwe militias that catalyzed the genocide in 1994. They are a strong and impressively fearless people.

When we got there, I went immediately to the drying tables to have a look at the parchment. I was surprised as I reached out to grab a handful—one of the women sorting defects out stopped me, and told me I could not touch the coffee until I washed my hands. Never in 7 years of prolific origin work in well over a dozen countries have I ever experienced this! It was an inspiring moment. Touching the parchment with unwashed hands really shouldn’t make any difference (provided the hands in question were not covered in oil or paint or something), but they were taking no chances! They were protecting the quality with astounding vigilance. I went and washed my hands and then headed back to check out the coffee and talk with the women working on the parchment.

We met with the group for a couple of hours, discussing both the past and the future and strategizing on ways to push this thing forward. More communication, more pre-financing, more outreach in the fields, and more technical assistance form the backbone of the prescription. They thanked us for solar flashlights that they’d received last season and asked quietly whether or not they might be able to get more since the farmers really loved them and there were many who hadn’t gotten one. There will be more flashlights coming, we will see to that, one way or another.

When we finished our meeting we headed down to Kibuye again to stop in at the cupping lab and taste some coffees with Emerthe and Rose, two of the young cuppers who I had helped train years ago. It was great to see them again. They still have a lot of work to do to continue developing their skills, but it will come with time. After we cupped, I took a quick ride on one of the Yamaha bikes sitting around and was having a grand old time until I rounded a corner with a little too much speed and went crashing to the ground. Ayyy! I couldn’t restart the bike and ended up walking it back to the lab, feeling more than a little embarrassed.

From there it was a three-hour drive back to Kigali and an early end to the day, due mostly to the fatigue from lots of driving and lots of talking. After a somewhat refreshing sleep, we moved on to Humure, another coop we’ve worked with for the last couple years. It’s way up in the North, approaching Tanzania. Along the way you pass a lake where Paul Kagame, president of Rwanda and a captivating figure who I am still dying to meet, has a home. It takes just under three hours to get there, and when we arrived, we were greeted by the whole crew: Claude Sebamana (the new President), Veniranda Mukankusi (VP), Eustache Inite (Secretary), Principe (GM), Eugenie Mana (Acctounting), Jean de Dieu (Maintenance.), Gasana Gideon (Production Officer), John Bavumire (Security), along with Emmanuel Getera (Technician) and about 20 other farmers. Things looked much, much, much better than the last time I’d been there. Clearly they’d taken the advice from last year to heart, and across the board the systems for controlling quality were improved.

Humure started as a group in 1999, but back then it was a different ballgame altogether. I’m amazed they’ve stayed together, given the abysmal value that Rwandan coffee had in those days. Now they’ve got 372 members. They are still paying off their 2004 BRD loans that were taken out to pay for the washing station construction. But they are advancing. Of the three coops we visited, Humure is the strongest and best organized and accordingly are the furthest along in getting square with the bank. They’re also trying to diversify; many of the women have been weaving baskets and asked us if there was a way we could sell them in the States. I’m going to get that worked out…the baskets are gorgeous, very well-made, each one requiring about 30 hours to complete. I have lots of them at home, some that I’ve bought and many that were given to me as gifts over the last five years. You should have one too!

After a long and very productive meeting with the group in which we discussed plans for the current season and ideas about how to keep this thing moving forward, we drove back to Kigali once again. I have some friends there who run a media company, and they’ve just recently opened a cool bar attached to a cool Italian restaurant called Papyrus. I went up there with Peter Giuliano and Clara, a girl from Portland who directs a program called Bikes to Rwanda. The food was delicious, especially the cheese that comes from a nearby farm. The wine was cheap and gave me a headache, but at least it tasted OK. Still, I’ll give the place thress stars. One of the best food options in Rwanda, where one cannot be especially picky.

Right now I’m in Heathrow airport, sitting, and waiting. I’ll be happy to get back to Chicago tomorrow morning, or this morning, or however you want to reckon it. But the stay at home will be a short one…I leave the following morning for Colombia.

This week we are proud to announce the release of one of our newest Direct Trade Offerings: El Machete, Panama. Since this is a new coffee for us, I am happy that it is coming out now before all our old favorites from Central America are back in season. El Machete gets a couple weeks in the spotlight, and it will really shine. Sarah Kluth, our Chicago-based Director of Quality Control, says that you can expect “a mouth-watering syrupy body full of blackberry, caramel, fudge, and hints of citrus.” Sounds good to me!

As always, find our Nods at:

http://www.intelligentsiacoffee.com/origin/offerings.

Onward,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Popularity: 22% [?]

Summer is the time for blockbuster films. Blockbuster films are the time for blockbuster previews…previews that cost more to produce than I make in a year.

Intelligentsia Coffee & Tea is our blockbuster roaster of choice here at Everyday Joe’s, and they have released their blockbuster previews. Often, I find myself looking at Intelligentsia as our very cool and hip older sibling…and they’re kind enough to let us tag along and wear their hand-me-downs.Thankfully, the hand-me-downs are really, really good coffees.

This week, Intelligentsia’s “Nod” comes from Marc Johnson, their director of marketing. He has some exciting things to tell you about, so keep reading.

Greetings:

Geoff Watts (Intelligentsia’s Green Coffee Guru) is the usual author here, but even when he is in Chicago, he’s getting pulled in a million and one directions. It was really difficult to get him to do this on a weekly basis when we started this email three years ago (can you believe it’s been that long?), but he is pretty good about it when he is around. Today, sadly is not one of those days. Geoff is now in Rwanda and as hard as he works when he is there and as spotty as internet connections can be, I know not to expect anything. Of course, on the positive side, we’ll get lots of good information on African coffees when he returns.

Second choice? Doug Zell (Intelligentsia’s CEO) is always good for a post or two, but seeing how he just posted last week and was in New York working on a super-secret project for a while this week (we’ll tell you more when we know more), he gets a pass as well.

Third choice? Hmmmm, maybe KC O’Keefe? KC is our West Coast Director of Operations and he also does a lot of work sourcing coffee in Latin America and so always has something interesting to say about coffee. Well, I called LA this morning on another topic and was on hold for like 10 minutes, so I am going to assume our friends in LA are busy roasting coffee for both our Silver Lake coffeebar and the Wholesale Accounts on the West Coast.

Fourth choice, fifth, sixth? Kyle Glanville (winner of the United States Barista Competition and Manager of Espresso Research & Development) has written pages for me already this week. Sarah Kluth (Director of Quality Control) has also written a ton this week. Chris Hallien (our new Director of Roasting) does tons of work with coffee, but since this is first week, I am going to give him more time before I hit him up.

Where does that leave us? You’re hearing from the Marketing Guy.

Hey, don’t stop reading yet because we have a large number of really cool things coming up:

Intelligentsia In Season – I am not going to give away too much here, but let’s just say that no one is going to be able to offer any fresher, better tasting coffees than Intelligentsia. Keep checking www.inseasoncoffee.com for updates.

The Black Cat Project – Intelligentsia espresso is moving to a new and exciting place. Here again, details will be coming, but you should check www.blackcatcoffee.com for updates on our Black Cat Espresso and Kyle Glanville’s training for the World Barista Competition in June in Copenhagen.

New Crop Centrals – Today Sarah Kluth gave us the news that some old favorites will be returning to our coffee line-up in early June. Woo-woo.

El Machete, Panama – This coffee is a new Direct Trade offering that will be available in a week or so.

New Coffee Releases this week – Black Cat, Single Origin Espresso: Anjilanaka, Organic Bolivia; Los Inmortales, El Salvador Micro-Lot: Finca Matalapa; Fazenda do Sertão, Brazil. When one week gives you a Single Origin Espresso, a Micro-Lot from El Salvador, and a Reserve Offering from Brazil, you consider yourself lucky.

And lastly, the focus of this Nod…

This week, we are proud to release our Black Cat, Single Origin Espresso: Matalapa, El Salvador – United States Barista Competition, 1st Place. This is the coffee that Kyle Glanville used en route to his victory at the USBC. It is now available to pre-order, it will be offered web-only and we will only roast it once: Monday, May 26th. Get it while you can!

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Cheers,

Marc Johnson
Director of Marketing
Intelligentsia Coffee & Tea

Popularity: 21% [?]

At Everyday Joe’s, we brew the beans roasted by THE Intelligentsia Coffee & Tea out of Chicago.This past weekend, the United States Barista Championships took place in Minneapolis. Two baristas from Intelligentsia competed in the final 6, with Kyle Glanville from Intelligentsia’s L.A. office taking all the marbles. Word to his unborn child.

You can watch Kyle’s performance in the finals below. The coffee he serves to kick it off (El Salvador Matalapa) is the same bean we carried in the shop this week. So, if you come in and get a cup you can pretend you were in Minneapolis, cheering Kyle on to his place upon the throne of awesomeness.

Behold:

[vodpod id=ExternalVideo.535213&w=425&h=350&fv=autoplay%3Dfalse]from www.ustream.tv posted with vodpod

Further:

• More videos from the USBC
• Official USBC/Specialty Coffee Association of America Blog
• Tasting Notes & Info for Finca Matalapa, El Salvador

Popularity: 27% [?]

Each week, Intelligentsia (whose beans you drink when sitting inside of Everyday Joe’s) sends out it’s Nod, penned by VP of Coffee Geoff Watts. For some reason, I found this latest Nod quite fascinating…enough to make me stop reading halfway through, go brew a fresh french press of our house bean of the week (Rwanda Zirkana), and then finish reading whilst sipping. For some reason this makes me feel like I can better understand what Mr. Watts is saying, when really I think I just want to be him. Read on…you’ll understand.

Hola:I have the rhythmic whirr of the sample roasting machine in my head right now. The repetitive sound of beans spinning around in the barrel of the roaster punctuated by the staccato clicks of the fan belt as it revolves, round and round and round… It’s a comforting noise, grounded and consistent, the kind that drifts subtly into the background and eventually escapes notice as the mind pushes it aside to make room for other thoughts and activities that require full attention.

The green coffee samples themselves are here for their audition. This is a make or break time for most of them as the majority will get only one shot at making it into one of our flagship Direct Trade Intelligentsia marks like Los Inmortales, Flecha Roja, or Flor Azul. They’ve been prepped in advance by their handlers, and each sample has been meticulously hand-sorted to remove defects, screened to eliminate undersized beans, and packed in a small bag for the flight to Chicago.

Once here, they must first pass their physical. Our QC team inspects each one, sorting them to identify any visible traits that might give us insight into how uniformly they were fermented and dried. Imperfect beans are counted and tallied. Then they get screened to determine the distribution of bean size and the internal humidity is measured to ensure they fall within the 10.5% to 12.0% range where they have the best stability and greatest shot at longevity. Every sample is logged into our database for future reference.

If all goes well with the physical, the coffee gets in line to be roasted. These days it is a long line. We are receiving hundreds of samples from Central America and East Africa right now because the harvests have either just finished or are in their final weeks. But, like the Postal Service, the Intelligentsia QC Team pushes through. Lately we’ve been evaluating between 25 and 30 samples each day, a tremendous pace when one considers that on average it takes nearly 45 minutes for a single sample to get through the entire process.

The roasting process itself takes between 10-12 minutes per sample with a goal of absolute uniformity. It is of the utmost importance that we take every necessary step to make sure that when we taste the coffee we are judging strictly its intrinsic merits, mostly free of any roast-related flavors that can obscure or modify natural characteristics of the coffee itself. That would be unfair, thus the mantra: “While all coffees may not be created equal, each shall be treated as equal.” Until proven otherwise, of course.

For this reason we insist on blind cupping. Immediately after arrival each coffee sample is assigned a coded reference number that we’ll use to identify it. Over the years we’ve gotten to be very good friends with a lot of the farmers we work with and that can certainly influence the way in which a coffee is perceived. If I know, for example, that a particular Colombian sample came from Jair Garcia, I will have formed great expectations well before I ever dip my spoon into the cup. So to avoid bias or the possibility of being persuaded by something other than the taste of the coffee itself, we keep ourselves in the dark until we’ve finished the evaluation process.

Once the roasts are completed, we grind a sample of each and lay them out on a whiteboard. This allows us to visually compare the colors of the grounds and identify any roasts that have strayed from the target. The subtlest of changes in roast degree can have a profound impact in the cup characteristics, so we maintain a very strict approach to dealing with variation. If a roast is visibly lighter or darker than the control sample, or if we even suspect that the roast has somehow interfered with the essential character of the coffee, we’ll put it back in line for a re-roast.

After one day of rest (to allow the beans to settle down and de-gas) we prepare the cupping: eight to twelve coffees per table, three cups of each. Every sample is weighed out on a digital scale, accurate to 0.02 grams. The grinder is flushed between samples to clear out any residual grounds that could infiltrate the next coffee in line. Water is boiled and allowed to cool to between 97-98 degrees C as measured by a digital thermometer. Then the pouring commences and a timer is set so that we can allow each coffee its 4 minute steeping time before agitating the brew (“breaking the crust”) and evaluating the aromatic traits.

The cupping lasts about an hour. The first ten minutes are all about aromatics, both the dry fragrance and the wet aroma. Then comes the tasting, the moment of truth or, more truthfully, a “series of moments taking place over time, combined and compressed into a single score that reflects the relative quality of the sample.” That is to say, no snap judgments allowed. First impressions are nice, and certainly valuable, but they do not tell the whole story. By tasting the coffee over a period of about 30 minutes we can study it, see how it evolves as it cools, see what characteristics hold steady and which fall apart. Oftentimes there are a few sleepers in the mix, coffees that don’t impress all that much initially but yield gorgeous and delicate flavors as they cool that allow them to rise above the pack. And there are of course plenty that seem quite delicious at first, only to reveal subtle flaws later on that weren’t noticeable on the first look.

It is critical that we have at least two Intelligentsia-certified tasters at every cupping, so that we have a balance of opinion and some checks and balances that can help overcome human error. Every coffee cupper, no matter how experienced, is fallible and likely to get overly excited once in a while about a coffee that may contain a slight imperfection or to overlook a great coffee that got lost in the shuffle. So we cup together as a group, and once everyone has finished scoring, we engage in a discussion, coffee by coffee, to compare notes and argue the merits or failings of each. Most of the time we are all very well calibrated and close in our scores, within two points of one another, which comes from having spent so much time tasting together. But now and then there is some disagreement, and when that happens we take the time to revisit the coffee, discuss it, and try to come to consensus about how we ought to score it.

By the end of this process, we’ve landed on a score (out of 100 points), which reflects our collective opinion about the real quality of the coffee. The best are selected to be sold as our Direct Trade Intelligentsia marks, and they are indeed the cream of the crop.

Once a coffee is fully put together, we then discuss the results with the farmers, looking to establish some cause-and-effect relationships between things that happened at the farm or mill that may have led to particular tastes in the coffee. It’s not enough to know that a given sample is Good or Bad or Great; the farmer is looking to know WHY, and we share a responsibility to try to understand the variables and figure out how to replicate successes and avoid failures for future harvests.

Then comes the wait. Even though we’ve already identified these great coffees, it will be at least two months, perhaps three, before the coffees arrive in Chicago after milling, export preparation, shipping, and customs clearance.

It’s a detailed and exhaustive process, but it is worth it. At the end, we are able to sell coffees that really sing in the cup and are examples of what coffee can be when grown, processed, and sorted with the highest level of care.

At the moment we are chin-deep in Central American coffees: Los Inmortales, La Tortuga, El Cuervo, Flor Azul. All of these are in the final weeks of the construction stage and will be making their way to our Roasting Works sometime in late May or early June, ready to impress. During this part of the year, the QC team is usually working long days in order to make sure every coffee sample gets thoroughly tested. Sometimes the massive amount of effort that gets put into the selection of our coffee goes unrecognized, and I’d like to take this opportunity to give a big-time shout out to Sarah Kluth and Chris Kornman, the two QC staff who make it all work. You are superstars!

And since I did mention Jair Garcia earlier, let’s revisit Tres Santos, our Direct Trade offering from Colombia. Also be looking for two new coffee releases next week: a spring blend (name TBD) and Finca Matalapa, El Salvador. More information coming soon.

As always, find our Nods at:
http://www.intelligentsiacoffee.com/origin/offerings.

Good luck to all of us,

Geoff Watts
VP of Coffee
Intelligentsia Coffee & Tea

Further:

• Intelligentsia Direct Trade explained
• Intelligentsia official site

Popularity: 13% [?]

From Intelligentsia, the coffee roaster who’s beans we proudly brew.  

Greetings:

This week’s Nod is something just a bit different. Since there are probably many of you have never met Geoff Watts or Sarah Kluth (Intelligentsia’s Vice President of Coffee and Director of Quality Control, respectively), we thought that it might be interesting to see them live and in action.

On Wednesday, Geoff and Sarah were invited to ABC 7 here in Chicago to talk about cupping and we invite you to follow the link:

ABC 7 News

Popularity: 16% [?]

In 2007, Intelligentsia Coffee & Tea was named the Roaster Of The Year. That was what originally caught our eye about our friends from Chicago. The more we looked into them, the more we realized we wanted to work with them…if they would have us.

Fortunately, the more they heard about us the more they wanted to work with us. That was quite exciting.

In August, Intelligentsia opened another shop on the left coast in a town known to locals as “L.A.” You may or may not have heard of it. I hear it’s a bit larger than Fort Collins and the traffic is horrible.

The New York Times has decided that Intelligentsia opening a shop in L.A. was a good idea. Enough of one, in fact, to say it’s the best coffee in the City of Angels. Not bad, considering a quick Yellow Pages search returns 111 results.

Read the full article here.

Popularity: 11% [?]

More from Geoff Watts, the roastmaster and green bean buyer for Intelligentsia Coffee & Tea, whose beans we brew with pride and love. Read more about Zirikana, Rwanda here.

Hola:

Just back to Chicago after a quick trip to Uganda and Kenya. My backyard is covered by a sheet of ice, reminding me that the equator is a long ways from here.

On the plane ride home I learned how to say “the president of the soy sauce factory is President Kang and the president of the bean-paste factory is President Kong” in Korean. Here goes: Kan-jang-kong-jang kong-jang-jang-eun kang kong-jang-jang-ee-go, dwen-jang-kong-jang kong-jang-jang-eun kong kong-jang-jang-ee-da. Now that is just plain great and a sure contender in the tongue-twisting Olympics.

The 5th Annual East African Fine Coffee Association Conference took place this past weekend. Kampala, Uganda hosted the conference this year, and it rotates annually among the member countries. Last year it was Ethiopia and in ’09 it will move to Rwanda, to my great delight. (Kigali has started to feel like a second home after all the time I’ve spent there in the last four years.) The organization is an important one, for the simple reason that it is the first multinational institution focused on improving coffee quality and disseminating knowledge about Specialty Coffees in Africa.

Africa holds the future of Specialty Coffee, no doubt about it. Ethiopia, the birthplace of Arabica coffee, is home to a treasure trove of genetic diversity within the species. CIRAD, a French agro-science group, has been working at the Djimma research station (western Ethiopia, Kaffa area, probably the origin of the now famous Geisha coffee) to collect and begin to catalog as many different varieties as possible for future consideration. Who knows what might be discovered? No one has ever done a thorough enough investigation, and there is a great chance that some previously unheralded coffee types with unique and thrilling tastes and aromas will be identified. It will likely be decades before we see any real commercialization result from these efforts, but it is comforting to know that there is some effort underway to preserve these wild species that are disappearing at an alarming rate along with the forests.

In Latin America, rising land values that are a natural result of economic development and urbanization are making coffee farming less viable every year. Costa Rica is the best example of this as there are new shopping malls and residential communities now sitting on land that just three years ago was filled with coffee plants. Farmers in Panama are selling off parts of their coffee farms left and right to developers who are building condominiums and resorts. Labor is getting difficult to find as people emigrate to the cities and abroad.

These trends look to continue and accelerate, which bodes well for investment in coffee in other parts of the world. As the Specialty market keeps growing and becoming a larger and more meaningful percentage of overall coffee consumption, the efforts to find new coffee varieties and new sources for quality will get more intense.

Africa already grows a lot of Arabica coffee, but most of it goes into the commercial market because the quality is poor. It doesn’t need to be this way. There are just a few ingredients missing in the quality recipe, most importantly transportation infrastructure and access to technical assistance and capital resources… not to mention political stability. Very little can grow in the face of corrupt governments and ongoing civil unrest. Growers need more information about quality practices, they need sources of affordable credit, and they need reliable delivery systems in place. These things will improve and coffee may well become an important catalyst in East African economic development as both local businesses and governments recognize the potential that exists to transform their crippled coffee industries into major players in the increasingly attractive Specialty market.

I’m super-excited about what the future holds for African producers. It won’t be easy to reshape the coffee industries there, but necessity is a fairly reliable and time-tested driver of change. And reform there is most definitely necessary, more so each passing day.

We released it last week, and I am again asking you to read up on Zirikana, our Direct Trade offering from Rwanda. Truly an African success story.

Popularity: 22% [?]

Everyday Joe’s is very proud to serve beans roasted by Intelligentsia Coffee & Tea out of Chicago, IL. They are good people, as is made evident by their Flor Azul Project. Learn more about the project by reading below. Learn more about Intelligentsia and their Direct Trade model at www.intelligentsiacoffee.com or www.directtradecoffee.com. This sort of thing goes to show that by drinking coffee at Everyday Joe’s, you’re helping build community and spread justice all over the world. Thanks.

The Flor Azul Project
In 2002, Intelligentsia Coffee started the Flor Azul Project with the Las Brumas Cooperative in Nicaragua. Las brumas is located high in a wet, cool mountain range, which prevents coffee from drying easily. Last year Intelligentsia organized and funded a solar dryer project to help the farmers work through this problem. We provided tarps to the cooperative and partnered with the Brumas farmers to construct the dryers. This effort was a first of its kind in the region. After the project was completed, the farmers who used the dryers saw their coffee quality improve dramatically. Intelligentsia and the cooperative sign contracts before the harvest that guarantee high prices for exceptional coffees. This year’s Flor Azul tasted great, and as a result the farmers earned an amount larger than they had ever received and considerably above Fair Trade prices. Ultimately, the Flor Azul Project resulted in more income for these farmers’ families.

The Flor Azul Project is Intelligentsia Direct Trade.

Popularity: 7% [?]