- Direct trade started off as specialty coffee’s social project
- Today, research shows that most consumers will pay a larger premium for “ethical” coffee than higher quality coffee
- Many brands use direct trade as a marketing gimmick, but it actually makes good business sense
FOR years, direct trade has been synonymous with the specialty coffee industry’s ethos of sourcing high-quality beans while fostering relationships with coffee producers.
Direct trade emerged as a noble endeavour, a form of social responsibility in which roasters aimed to support farmers and communities through fairer pricing and partnerships.
It was, and still is, an initiative aimed at promoting the environmental, social and economic sustainability of coffee production. Established in the 1990s, it has recently gained prominence in the technical and scientific literature, but studies and discussion on the topic are still superficial and fragmented.
Despite its good intentions, it quickly became a go-to form of marketing for many. More “flexible” and less costly than certification, it was a way to stand out on the shelves and provide consumers with the vague assurance that the product was somehow directly connected to producers and therefore ethically sourced – a big jump with little accountability.
According to a research article about the use of the direct trade label, it is “an uncertified label connoting an approach wherein roasters negotiate coffee price and quality with farmers without intermediaries, with purported farmer income benefits.”
Mayorga Coffee pioneered many of the concepts that are under the umbrella of what we now know as “direct trade” in specialty coffee. In the mid-90s, the company was one of the first coffee roasters to ever focus on working directly with coffee producers.
“I think it’s unfortunate that the coffee industry has taken the basic concept of knowing who their suppliers are and turned it into marketing,” says Martin Mayorga, Founder and CEO of Mayorga Coffee.
“Like most buzzword terms that the industry latches onto, direct trade is a vague premise with no agreed-upon definition. Some roasters think that seeing a producer’s name on the bag they bought from a multinational trader and talking about that producer is enough. Others think it’s going to a farm once a year and taking pictures. As a Latino who grew up in Latin America, I’ve grown to resent this type of performative marketing.”
However, a subtle yet significant shift is underway in the world of coffee sourcing, redefining the way direct trade is perceived and practised.
Direct trade is no longer solely about showcasing social projects or marketing initiatives. Instead, it has transformed into a strategic business approach for roasters to engage directly with their suppliers – the farmers. Done right, it can be an effective way of creating a more equitable system.
Increasingly, direct trade involves in-depth discussions on pricing, quality standards, transparency, and long-term commitments between roasters and producers. This shift signifies a departure from mere marketing tactics to a more pragmatic focus on ensuring mutual benefit and sustainable partnerships.
Knowing your supplier is more than a marketing asset
In the past, some businesses leveraging the concept of direct trade focused much of their efforts on superficial gestures such as managing their suppliers’ social media presence or organising origin trips for roasters facilitated by importers.
However, roasters are increasingly recognising that direct trade isn’t merely a label to be stamped on packaging—it’s a strategic approach to building collaborative relationships that yield positive outcomes for both parties.
First of all, direct trade and other “ethical labels” appeal to consumers. One recent study found that consumers will pay a larger premium for the coffee attributes that have a public-good component over attributes with purely private benefits (i.e., quality).”
But beyond the direct trade label being a competitive asset, it’s very essence – basically, knowing your supplier – if handled with the right amount of effort and intention, can be hugely beneficial to roasters’ businesses.
“Knowing your supplier is just smart business,” says Martin. “Change will only happen in this industry once roasters engage the producer that needs support – usually indigenous, small, remote producers – understand their needs holistically, and develop genuine relationships with them to work alongside them to change the extractive manner in which coffee is traded.”
By engaging directly with producers, roasters gain a deeper understanding of the entire coffee supply chain, from cultivation to processing, and can negotiate terms that align with their quality standards, pricing requirements, and sustainability goals.
Understanding your supplier on a personal level fosters trust, transparency, and accountability, potentially leading to enhanced product quality, consistent supply, and mutual respect.
Through direct trade relationships, roasters can navigate challenges, optimise costs, secure reliable sources of high-quality coffee, and differentiate themselves in a competitive market by offering unique and traceable coffee experiences to consumers.
“It’s super simple,” says Martin. “Knowing your suppliers ensures better quality, consistent product, and gives you a deeper understanding of the realities of coffee-producing communities. In my opinion, roasters who don’t personally know their producers and claim to care about their livelihoods don’t truly care about the long-term health of the supply chain and the people impacted by it.”
Direct trade partnership dynamics are changing
While direct trade initially emerged as a way for coffee roasters to connect directly with producers, today producers are increasingly seeking out roasters in turn to establish direct partnerships.
This reciprocal relationship model signals a broader trend towards viewing direct trade not as a charitable endeavour, but as a strategic business initiative with clear economic benefits for all stakeholders involved.
The tide is indeed turning as roasters increasingly recognise the value of direct trade as a solid business practice rather than just a social project. This is partially owed to tough economic times with thinning profit margins that force them to examine where their money is going more shrewdly.
Both sides of the transaction want to avoid the expense of a finder’s fee, but the risk and responsibility of managing the associated finance and logistics themselves can be a deterrent – and with reason.
Roasters run the risk of drowning under the financial and logistical requirements of transaction management, and producers are pressed to take on additional responsibilities related to marketing, distribution, and quality control – which isn’t always sustainable in the long term. Cutting out the middleman can avoid a finder’s fee, but financing coffee is expensive – taking up to 120 days to see a return on investment.
As a compromise, a new form of direct trade is emerging, where roasters delegate only the finance, paperwork and logistics to brokers or importers who then act as service providers.
Social media and online platforms become vital tools in that context, to help network and form trusted commercial partnerships, or long-term business relationships.
Coffee trade shows like the Producer Roaster Forum, SCA Expo, World of Coffee, and a host of producer country-led events also become crucial to building networks that enable these types of relationships, as do “origin trips.”. No longer just celebrations or marketing opportunities, they become real business platforms.
“PRF allows roasters to directly communicate with producers, which I think is an important first step,” says Martin.
“I would like, however, to see more of those roasters implement that level of engagement into their day-to-day operations and decisions. It’s easy to highlight direct trade when it’s a good social media moment. The real work is when there are challenges that roasters and producers need to resolve together.”
Moving forward, direct trade partnerships will likely emphasise accountability, shared value creation, and continuous innovation, underscoring the notion that direct trade isn’t charity – it’s just good business.
Coffee Intelligence
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