Have coffee auctions changed beyond recognition?

  • Cup of Excellence began in 1999, setting out to create lucrative market opportunities for coffee producers
  • Prices continue to skyrocket, with a Gesha selling for over US $6,000 per pound last year in a private auction
  • But coffee auctions have changed, and their role & definitions of “quality” may have become confused

THE AUCTION model rewards coffee farmers that grow exceptional quality with matching high prices.

They facilitate global exchanges of high-quality green coffee, as well as connecting producers, buyers, and traders. They also promote growers’ coffees, create market access, and enable price discovery mechanisms for various coffee origins.

The Cup of Excellence (CoE) is a renowned specialty coffee auction established in 1999. It aims to identify the best specialty coffees and create more lucrative market opportunities for their producers. Top-scoring coffees and can fetch prices ranging from $10 to over $100 per pound.

“The very first Cup of Excellence was held in Brazil, and was highly experimental,” says George Howell, owner of George Howell Coffee and one of the original founders of the CoE. “We had to promise any farmers who won that we’d pay 10% higher than the Brazil market price. But it did way more than that – it was very successful.” 

According to George, the CoE filled a product differentiation gap at that time. 

“Before CoE, as the quality consultant for the Gourmet Project in Brazil, I’d always hear ‘it’s better than the Brazilian I have, but it’s not US $0.25 better’,” he says. Holding auctions was an ideal solution for emerging third wave coffee roasters eager for outstanding quality and willing to pay a premium for it.

Today, there are a number of coffee auctions held worldwide, organised by entities like the SCA and held in various coffee-producing countries. These also include online events, offering solutions for producers and roasters who struggle to manage travel logistics.

Essentially, green coffee auctions have multiplied.

This has led to something of an existential crisis for them. It could be argued that they used to be special events that sold the best and most scarce coffees, but the sheer amount of auctions now seems at odds with that.

coffee auctions have changed

Existential crisis

By their nature, auctions distinguish the best from the rest. In the ever-changing specialty coffee market, however, indicators of quality can be as volatile as market prices. As such, auctions raise questions about what defines quality and who gets to decide. 

And for most farmers, constantly evolving perceptions of quality means risk. Additionally, delayed payments from buyers can worsen existing liquidity issues for less wealthy coffee growers, making auction participation even riskier – especially amid these changing trends.

Ultimately, we are seeing quality definitions becoming somewhat confused. One factor central to the debate is “scarcity”.

The exponential growth of green coffee auctions has coincided with a simultaneous shift in focus. Initially aimed at securing better prices for exceptional quality, auctions now prioritise identifying the rarest coffees, emphasising scarcity over quality.

Auctions are inherently exclusive, rewarding buyers with the highest means and coffees with the rarest attributes – excluding the lowest bidders and least exceptional products. However, this was not always the case.

“Cup of Excellence was originally about providing access to supermarkets for producers who wouldn’t normally have that opportunity – showing producers that by working on quality, you can get better prices,” says Alan Newman, founder and managing director of Sensible Coffee.

“But with so many auctions today, it’s evolved more into a quality and innovation competition and farmers now see it as a marketing tool, rather than a way to generate revenue as such.” 

Auctions have evolved to increasingly reward new and experimental techniques in coffee processing. In the past, they mainly featured washed and semi-washed coffees, but now they embrace naturals and other modern processing methods that are popular today.

“The judging criteria were very different from what they are today, and rewarded ‘clean coffee’, which was defined by the washed method,” says George. According to him, the discovery of Gesha and the record-breaking prices it fetched led to a rush towards finding the next best thing.

And so, as more countries experimented with new varieties and processing methods, techniques like honey-processed and carbonic maceration became more prominent at auctions, leading to new, sought-after flavour profiles. As such, judging criteria adapted to reward these new trends.

The impact on coffee farmers

However, this has inadvertently limited farmer participation. Experimentation with small lots demands significant investment in time, money, high-quality equipment, infrastructure, and access to expensive inputs from producers.

Central American farmers who were originally involved with auctions produced exceptional but traditionally processed washed coffees. These farmers don’t necessarily have the means to keep up with new trends and their associated costs.

As they continue to grow, there’s a concern that the auction model prioritises novelty over intrinsic coffee quality – and increasingly leaves less wealthy coffee farmers out of the race.

At the same time, ​​high auction fees disproportionately impact poorer farmers and divert revenue that could have benefited them directly. 

All this feeds into a cycle where the same producers with more resources, knowhow, and established networks tend to dominate the auctions year after year.

“The mechanism that opens the field up for smaller players to come through with washed coffees is no longer there,” says George. “Wine has a full classification system and an established reputation of what quality is, based on generations of understanding – coffee is a modern beverage that doesn’t have that advantage. 

“We must reward the qualities, not the novelties.”

Will coffee auctions change?

The growing number of auctions and the evolution of our definition of quality have had both positive and negative effects.

“Pacamara, Gesha – these extraordinary varieties would not have necessarily been discovered without these auctions,” says George. “Pulped naturals with fruity notes can be wonderful – that part is great.

“A washed Bourbon can also be extraordinary, but it takes more concentration and not having attention pulled away by what is louder and brighter. Now we have to get back to the roots of more traditional varieties as well.” 

He suggests that cupping washed coffees, naturals, and experimentals separately could be a potential solution to make auctions more inclusive for producers while maintaining exclusivity based on quality.

“Cupping naturals next to washed coffees is like listening to full powered electric rock ‘n’ roll next to acoustic guitar,” he says. “They deserve their own categories.”

Auctions also serve as targeted platforms, connecting the right buyers with the right growers to facilitate successful direct trade relationships.

“CoE auctions are all phenomenally successful,” says Alan. “They have cultivated a dedicated audience that pays an annual subscription to access the niche market they’re looking for.

“I still think that what they’re doing is incredible in that sense. An auction will get the farmer on the map – but without the right infrastructure to back it up, it won’t be sustainable.”

Auction mechanisms providing improved access to finance for producers could also help to address some of these challenges. This could include buyer guarantees to winning growers, helping to de-risk them and make them more eligible for loans. 

This support could enable producers to unlock growth opportunities, scale up, and generate steady, higher income – reducing their dependence on sporadic high prices.

Ultimately, specialty green coffee auctions are inherently exclusive – which isn’t necessarily bad. But with the growing number of auctions and increased expectation for innovation at farm level, some smaller coffee growers with limited access to resources are being excluded – the polar opposite of CoE’s original intention.