- Cup of Excellence was partly created to get better prices for coffee producers
- Producers with better means or larger estates can see huge return on investment, but some smallholder farmers benefit less
- CoE, ACE and SCA recently announced a formal partnership – is this an attempt to improve and scale up the auction model?
AUCTIONS like Cup of Excellence offer specialty coffee producers an opportunity to gain international recognition, elevate their profile and improve the prices received for their coffees.
However, despite the potentially large gains that can be made from programmes like these, they aren’t the right fit for every producer. They can sometimes be a risky gamble with limited scalability for future growth.
The Cup of Excellence (CoE) is perhaps the most well-known and widespread auction programme for specialty coffee. Operated by the non-profit organisation Alliance for Coffee Excellence (ACE) since 1999, the CoE auctions are currently active in 17 different coffee-producing countries and are among the most rigorous and internationally recognised competitions in the coffee industry.
For many, producer success at the auction is considered equivalent to a barista winning the World Coffee Championships – an initiative that offers global international recognition and acclaim to competition finalists. While it has a proven track record of raising farmer profiles and increasing their prices by association, today it doesn’t seem to carry the prestige it once did.
“Ten years ago, winning a CoE was a sure shot to get widely noticed,” says Ted Fischer, professor of anthropology and Director of the Institute for Coffee Studies at Vanderbilt University. “While it remains important and useful to many, CoE isn’t the rocket ship to fame it once was. I’m not sure why – maybe it’s having more CoE competitions, or the rise of other forms of exclusive selling and online auctions.”
A few well-known farms have built their brand on winning top places at the CoE multiple times, like Los Pirineos in El Salvador, and El Injerto in Guatemala. With perhaps the exception of Ethiopia’s Legesse Botasa Dikale, who won with a record price in 2022 with less than half a hectare of land, small-scale producers don’t usually make the winners’ list.
“Most competing and winning farms are medium-to-large sized operations, with some financial capital, the freedom to experiment with varietals and processing, and the cultural knowledge of how to present their coffees,” says Ted.
Originally developed to encourage the production of specialty coffee and reward producers for their hard work, these auctions tend to have lower returns for those who do not have the financial or social aptitude to meet global buyers’ demands.
“It’s an excellent programme that helps with farm branding, networking, and building commercial relationships – it offers credibility,” says Jorge Raul Rivera, Vice President at J. Raul Rivera S.A de C.V. “But without mentoring it can be hard for farmers with less resources to stand out.”
Return on investment can be huge, but risks remain
Beyond local intermediaries, collectives, certified coffees, and direct connection with specialty buyers, opportunities for coffee producers to stand out and gain prestige remain rare.
This is what makes auctions like the CoE appealing. Securing finalist status almost certainly leads to a higher price per pound for winning or high-scoring lots and can achieve a lasting reputation for excellence for winning farms.
“There are many farmers and producers who have built a brand or a business based on their CoE win – especially producers or station owners,” says Kenean Dukamo, Deputy CEO at Daye Bensa Coffee.
“Smallholder farmers who win usually just take the money home and that’s it. More established producers with a name use CoE to sustain and grow their brand. New entries can start a business from it, but smallholder farmers without a washing station lack the marketing, communication, capital and network required to build a brand from it.”
Auctions can prove to be a costly exercise. Although producers can enter at least one sample of coffee at no cost, additional coffees can only be entered by paying a fee. They must also reserve the lots they enter for the CoE programme, often hundreds of pounds (lbs) worth. If these are not selected by judging panels for the auction, producers must then find a buyer for them directly or through an intermediary.
There is also a commission fee to factor in for all coffees that are entered into and purchased at the final auction, with a portion of all earnings paid to the Organising Country Commission for CoE auctions. Commission notwithstanding, producers typically earn a far higher price overall for their coffee and have a greater net gain.
“Buyers recognize the CoE. It’s a way for them to identify desirable quality coffee, and new buyer relationships definitely get started from this,” says Ted. “My concern is that there are more barriers to entry for smallholders overall.”
The model has inspired other initiatives – Cafe Imports have ‘Best Cup’ auctions to facilitate the sale of microlots, while award-winning producer Lamastus Family Estates in Panama hold an annual ‘Estates Auction’ – often with record-breaking prices.
Governmental competitions and auctions have also popped up, focused on elevating the profile of specific coffee producers, farms and growing regions. Although they seek to break away from the “CoE model” that promotes single producers and coffee-producing regions, this can also damage social cohesion in coffee growing communities.
“The market is moving toward a winner-takes-all model, with small quality differences at the very high-end making a huge difference in returns,” says Ted. “Most smallholders want – and need – to work through cooperatives to have a decent chance at market access. These competitions can sometimes erode that collective work to celebrate individual farmers.”
How can we make CoE work for more producers?
Auction and competition programmes like the CoE have undoubtedly led to great success for some producers, and continue to provide buyers with access to high-quality coffees – albeit with a high price tag for the top-scoring coffees.
However, it’s far from a “one-size-fits-all” scenario, and participating in auctions may not always be the right step for certain producers.
“It’s harder for smallholder farmers to build a company or business around CoE because they lack the marketing, communication, networking and financial capacities to make it successful in the long term,” says Kenean.
“I’d love to see CoE have a platform down the road for smallholder farmer winners where they receive support on selling their coffee. It could be that they need to merge with an exporter so they can continue to build their farm and develop a brand at the same time.”
At World of Coffee Copenhagen this year, Cup of Excellence (CoE) and Alliance for Coffee Excellence (ACE) announced a surprising new partnership with the Specialty Coffee Association (SCA). Historically, CoE, ACE, and SCA have operated independently, occasionally collaborating on smaller projects. Is this new formal partnership an attempt to improve and scale up the CoE model?
Meanwhile, for producers, a safer bet could be to focus on other means to become more financially secure, such as financing, lowering overhead costs and negotiating better prices with existing clients. However, the allure of auction success remains tempting for those who have the capacity to enter.
Some claim that CoE and similar auctions are losing their appeal, as they are increasingly deemed relevant to the coffee industry, but not to the consumer. Meanwhile, the rise of private auctions is further undermining the relevance of more established auctions, especially as buyers become more particular about the coffees they seek out.
“There is still space to be highly distinctive, like Panama, but as a national strategy to promote broad economic growth, I think there should be a focus on scalability and inclusion. I think it depends on the country,” says Ted.
Producers and producing countries can still build a brand on the CoE programme and other auction systems – like Panama did, and continues to do – but it requires careful assessment and strategy.
A shift to greater scalability may see the CoE rise to greater prominence again, and result in a better return on investment for producers of all sizes.
Coffee Intelligence
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