Over the past several months, there has been a flood of media coverage taking what seem to me to be increasingly panicked approaches to covering changing coffee prices and what it may mean for coffee consumers.
As many of us have experienced first-hand, the COVID-19 pandemic has devastated communities around the globe and put extraordinary strain on the supply chains coffee relies on every day but that rarely see the spotlight. Suppliers of everything from toilet paper to furniture to shipping containers and computer chips have struggled to keep up with dramatic shifts in consumer demand, shortages of certain ingredients and inputs, and skyrocketing prices for transportation — not to mention the pandemic’s impacts on workers, their health, and their workplaces.
Of course, since coffee is a beloved staple in grocery shopping carts, media reports about potential shortages or price increases generate a lot of questions – and clicks.
NCA has taken a steady approach throughout, turning first to the data. As NCA reported in our September 2020 report on coffee consumption during the pandemic, COVID-19 has greatly impacted where Americans drink coffee (driving more at-home consumption, unsurprisingly) but had relatively little impact on how much coffee we drink or how often.
In fact, overall coffee demand has been remarkably stable for decades. About 60% of Americans drink coffee every day, more than any other beverage, and that has been the case for at least ten years. Coffee is a pleasure a part of life – and a habit, and our latest consumer research, which we’ll be releasing in the coming weeks, shows that consumers are gradually returning to the pre-pandemic coffee drinking customs.
Coffee planting, harvesting, and purchasing also tend toward stability. Coffee trees are slow growers, taking several years to reach maturity. Planting and purchasing plans are typically made several years in advance, and coffee can be transported and stored for relatively long periods of time, helping to smooth out peaks and valleys in supply and demand.
Another factor that has cushioned the impact of current stressors on consumers’ coffee experience is that we’ve actually had a surplus of coffee on the global market for many years. That is, until recently farmers grew more coffee than the world drank. That surplus supply kept prices below levels seen in the past. In 2019 the surplus helped lead to global coffee prices decreasing by 15 percent.
Now, between COVID-19 impacts and the effects of both drought and frost in Brazil – one of the world’s most significant coffee producers – USDA predicts that for the first time since 2015 the world will drink more coffee in the year ahead than farmers will grow in that year. The frost in Brazil, linked to a supply deficit forecast by some, is what has set off new rounds of speculation about prices.
But speculation is just that. Many people are working hard to fully measure and understand the full impact of the extreme weather in Brazil and how to help impacted farmers recover. Estimates so far have ranged widely, with the most recent reports suggesting crop damage is less extensive than had been feared.
From extreme weather to new requirements for health and safety in coffee shops, I’m proud and grateful to say the coffee industry has been remarkably resilient – and remains committed to the future of coffee. Whether through commitments made under Conservation International’s Sustainable Coffee Challenge, individual programs, or the ongoing work of the International Coffee Organization, the industry’s commitment to sustainability — and the farmers who grow coffee — has persevered throughout the pandemic.
Coffee prices are determined by many factors, and the NCA plays no role in their trajectory. Whatever the future holds, we will continue to closely monitor consumption and market data, work to support farmers’ crops and livelihoods, and be a champion for coffee by providing accurate, informed information and insight to help guide us into the future.
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Bent Dietrich Jr, Coffee Trader at American Coffee Corporation, chatted with Basilio Fusich, trader at the renowned and highly-regarded Cohonducafé. A coffee exporter in Honduras, Cohonducafé leverages its local knowledge and relationships to share Honduran coffee with every corner of the globe.
The interview below has been lightly edited and condensed for clarity.
When was Co. Honducafe founded? How did you get your start in the coffee industry and at Co. Honducafe?
November 1999. Coffee has always been part of my life. Ever since I was a kid, coffee has been a topic of conversation. I officially began to work at Honducafe right after I finished my master’s degree in Coffee Economics and Science from Universita del Caffé in Illy in Trieste, Italy.
What is the current socio-economic climate for coffee growers, exporters, and stakeholders in Honduras?
These last couple of years have been very harsh for all parties involved. Back in the 2018/2019 crop, the market was below levels of $100, then during COVID-19 came the 2019/2020 crop, and then we had hurricanes Eta and Iota in [the span of] 15 days for crop 2020/2021 — and are still suffering from the pandemic. Ever since I began in the industry, the country has been climbing uphill every year to be able to export its crop.
What are the biggest challenges young members of the coffee industry face in Honduras?
There is already a lot of competition in the industry and adding the hardships of COVID-19 will make it more challenging. The reason I mention Covid is that the economic impact on small businesses here will be very long term. The economy is extremely dependent on coffee and any changes to the supply chain pressure the entire economy.
The freight rates are increasing, causing all our necessary goods to [go up in price] rapidly. At the end of the day, younger and newer farmers are more susceptible cost increases. The real challenge will be keeping younger people engaged in the industry long-term.
Does Co. Honducafe have any sustainability initiatives in Honduras you are particularly proud of?
We have Fundacion Co. Honducafe, a non-profit organization that promotes the development and improvement of the coffee sector by promoting and supporting initiatives that promote productivity, economic growth, social responsibility and care for the environment.
We have numerous projects with many clients around the world that have built schools in coffee producing areas in Honduras.
We have seen the market rally from around $150 recently to almost $220 and back. For this year, how do you think it will impact Honduran producers? You mentioned previously it was an election year, and coming off last year’s hurricane, there must be many concerns for the industry?
It would have been great for the producers to have these levels at the beginning of the 2019/2020 crop so that they can receive more money and invest in their farms. The timing limited the opportunity for producers to take advantage of the higher prices. We are hoping that this year everything goes smoothly and the industry can work without interruptions from political and natural events.
What do you think NCA Next Gen members should really know about Honduras, and the future of coffee in Honduras?
I invite them to get to know more about our coffee. We have excellent quality that can be promoted in the highest markets of the industry.
Any advice for young people in coffee on growing in the industry?
My advice is to continue the good work that is being done, and always be on the lookout for new technologies that will make coffee growing more efficient and sustainable. Through our foundation, we partner with farmers and producers to continually explore new technologies and inputs to increase their yields and profitability.
What has your experience been working with the NCA?
My experience has been great. It has given me the opportunity to seek new customers and build my network of clients.
Finally, what is your favorite way to consume a cup of coffee?
I will sound boring, but my favorite way to consume my multiple cups of coffee during the day is Americano with no sugar. Especially freshly roasted from my grandfather’s farm.
Next Genner Jonathan Gabbay, Trader at RGC Coffee, shares the gear he relies on to maximize his productivity when working from home.
We’ve all had to adapt to a “new normal” in the age of covid-19. If anything, it’s propelled us into the age of the teleworker. This can be daunting and exciting at the same time. If you’re like me, you have the option to go in to the office or work from home (WFH), but most people don’t. WFH is no longer a luxury but a critical business decision that has allowed countless organizations continue being productive while social-distancing.
Since so many of us have no choice but to embrace it, we may as well learn to love it, or make it somewhat bearable. Below are some items outside the obvious that have helped me attain piece of mind and maintain concentration from my new work-cave (or -cage).
Noise cancelling headphones – How else are you going to listen to dope beats while plugged into the grid. I bought a lower-end pair of Sony’s on black Friday and they’re great. You don’t necessarily need the highest end to get good use out of them. Plus these have built in Bluetooth and can connect to my computer and double as a headset.
Cable Management – Part of having a zen workspace is removing all the noise, including visual noise. Well, we’re in the 21st century and we’re still tripping over wires. The ‘clean look’ of my office is just as important to me as how well my computer functions or the speed of my internet (ok almost). If you’re like me, you have a hard time keeping things clean, but a simple Cord Hider Box Organizer or Sleeve Cord can make your life a lot easier and the setup look way nicer.
USB Multi-Charger Cable – one cable, for multiple devices. Double check if it can connect data as well as charge your device. Same goes for a multi-charger adapter for USB and USB-C (a lot of devices are moving towards this).
Desk Pad – centers you and your work space, forcing you to stay organized. Also doubles as a mouse pad so you can throw away your old one.
Phone Stand – Somewhere to put down your smartphone and video chat. Bonus points if it has a built in wireless charger.
Desk Tray – throw all your mail or temporary documents in there to keep things clean. I have still yet to get one so the other half of my workspace looks like paper-mageddon.
RGB Headphone Stand – ok, this one is way out in left field and safely entrenched in the completely unnecessary category… and yet… I’m a night owl, or a close-to-middle-aged version of one. When my house goes quiet and I’m alone with my thoughts, I dim the lights and feel at peace with the soft lighting in my work-cave. The ambient lighting also matches my google wifi router and my air diffuser (more on that soon) to compliment the soft relaxing beats that put me in a work-trance.
Air Diffuser – I never in a million years would have expected to enjoy this. I was wrong. My partner recently introduced me to this product. You have to repeatedly spend money on ‘essential’ oils, but once you find out which scent you fancy you can buy cheaper in larger quantities. Mine is matte black, matching the look of my office, and has the aforementioned LED lighting. Personally I find stimulating all the senses enhances my productivity (and you can go full Costanza and add the pastrami sandwich for good measure).
I will keep this section short. A quiet workspace, a solid computer and monitor, and most importantly, a very good chair.
The first two are obvious. You need the right tools to do your job and the having a solid home setup is critical. However what is the most overlooked aspect is a really good chair. Think of it this way, you spend a little extra on a mattress that you spend 1/3 of your life on. You splurge on the memory foam or a special pillow. Your chair is your mattress, just for your conscious self for another 1/3 of your life. Don’t get a good chair. Get a really good chair.
If you have any cool items you’d like to add to this list, send us a line and we’ll include it in the next article.
By Nora Johnson, Commodities Manager, Massimo Zanetti Beverage USA
“Where is that container of coffee?”
Chances are, if you work for a green coffee importer, exporter, roaster, or warehouse, you have either been the one asking this question or the one being asked this question. This answer to this question lies in a fundamental aspect of the coffee trade and supply chains everywhere – logistics.
Given the events of the past fifteen months – a global pandemic, a container shortage, record-breaking container demand, port congestion, blank sailings, a blockage of the Suez Canal, a rare freeze in Texas, the hack of the Colonial Pipeline, and a strike in Colombia, just to name a few – supply chains have been faced with numerous challenges.
For the inaugural piece of the ‘Logistically Speaking’ interview series, Nora Johnson, Commodities Manager at Massimo Zanetti Beverage USA (MZB-USA) and NCA Next Gen Council Member, sat down with Don Pisano, President of American Coffee Corporation and renowned leader in logistics.
The interview below has been condensed and edited for clarity with approval from the interviewee.
Tell me about your background and career. How long have you worked in coffee, and how did you find yourself in logistics?
Don: I got into the commodities business back in 1976, working for a British firm handling insurance and claims. They were trading cocoa, coffee, and tea, but they were bigger in cocoa than coffee. I worked for them for about three years, then moved over to the logistics field. I then spent the rest of my career in coffee, apart from a four-year stint with the Sugar Division of ED&F Man. That was right before I joined American Coffee and the Hacofco Group. For 38 out of 45 years I was strictly in coffee. I was glad to get back to coffee, that’s for sure – coffee is an engaging industry, everyone likes to talk about coffee – it gets in your blood and you build a lot of relationships.
As the President of American Coffee Corporation, do you still find that logistics has a role in your everyday job?
D: I am an admitted “logistics geek,” but you can’t really separate logistics from running a company. The commodities business is supply chain and it just so happens that the product that we are dealing with is coffee. Coffee is unlike any other industry, but at the end of the day, it is supply chain – logistics is supply chain and it is a key part of the overall business.
There are constantly decisions that need to be made and dealt with whether it is on the origin side or on the US/Canada side. I am very fortunate to have the logistics background and I think the company is served well by it. Any senior level person should have at least a knowledge of the processes and an understanding of what it takes to get your product delivered whether it be an agricultural product or a finished good.
From the NCA to the GCA to the National Industrial Transpiration League, you have dedicated yourself and served in so many capacities throughout both the coffee and logistics industries overall. What kind of topics would these different committees address for the industry?
D: Each role is quite different, but they are all related.
For the Green Coffee Association [GCA Logistics Committee (Chairman) and GCA Board of Directors (Board Member)], we have dealt with all things related to coffee movements, from U.S. Customs and FDA issues to ocean, truck, and rail transportation, to warehousing issues, cargo insurance, and more. The GCA Logistics Committee currently has around 29 members representing companies across the coffee supply chain – we span the full gamut, and it represents a significant portion of the GCA membership.
We have published a number of industry best practices over the years. These have been widely distributed to the membership and outside the membership. You can still find these on the GCA website.
The National Industrial Transportation League [NIT League Board of Directors (Board Member) and NIT League Ocean Transportation Committee (Former Chairman)] deals with everything transportation. We work with regulatory agencies, Senate and House Committees, the Federal Maritime Commission, the Surface Transportation Board, and the Department of Highways. The League acts as the voice of the shipper. Members range from small shippers to the likes of Cargill, Nestlé Purina, and Exxon Mobil.
I had the privilege to serve 2 terms, 6 years, as Chairman of the NIT League’s Ocean Transportation Committee. Internationally, NIT League is a member of the Global Shippers Forum. Based in London, the Global Shippers Forum represents various national trade associations from around the world. It is a recognized NGO and deals with issues in front of the United Nations, International Maritime Organization, and World Customs Organization. It is a privilege to serve them. Recently, the NIT League has been dealing with demurrage and detention issues, working with the National Retail Federation, and right now, we are drafting proposed legislation to revise the U.S. Shipping Act of 1984.
The Warehouse and License Committee of the NY Board of Trade [Warehouse and License Committee of the NY Board of Trade (Former Chairman)] provided oversight of the companies and individuals that were licensed to store or perform services on behalf of the Exchange for both coffee and cocoa (and wood pulp products at the end). Over the years, the Warehouse and License Committee enhanced the warehousing, storage, and insurance requirements to ensure that the performance of the licensed warehouses and companies kept the contract [futures contract] liquid. This committee has since been brought in-house within the ICE.
While with the National Coffee Association Logistics Committee [NCA Logistics Committee (Former Chairman)], we were working more directly on coffee regulatory issues, whether with Customs, the FDA, all the FSMA regulations, and various other issues.
Can you elaborate on your experience with the NCA Logistics Committee and the work you did with FSMA (Food Safety Modernization Act)?
We addressed each of the 7 regulations that resulted from FSMA. The FDA created 7 different regulations over a period of years addressing the different segments that would require a regulatory authority over them. The NCA weighed in on all relevant regulations that applied to coffee to make sure that coffee was being treated as a raw, agricultural product as opposed to a finished product. Green coffee is processed prior to consumption, so it must be treated differently than other finished products. We also worked with the Scientific Advisory Committee and other NCA members to come up with the Hazard Analysis Template that the industry could use as a guideline.
Would you recommend that up-and-coming coffee professional get involved early on? How would one go about that?
I definitely would – the coffee industry is going to face many challenges and opportunities, so I would encourage each of you to get active and get engaged in efforts that would provide benefits to your careers and your companies and the coffee industry at large.
The coffee trade associations are always looking for volunteers – reach out to any of the associations and look out for requests for volunteers for the various committees (note: your company must be a member in good standing to participate). Check out the associations’ websites, look at the various committees, and see what best aligns with your discipline, role, and interests. As long as your company and your immediate superior supports you, reach out and volunteer your time to serve.
You will benefit, your company will benefit, and you will get knowledge of the issues that are being faced throughout the trade. You are then better equipped to deal with those issues. At the end of the day, the industry is still very much based on relationships. It is well worth the investment of your time.
This might be the toughest question of them all…! Can you walk us through and characterize the logistics crises of the last 15 months? What has the past year in logistics looked like from your perspective?
D: The crisis was the COVID pandemic. We’ve been treating the logistics dilemma as a crisis, but really, it’s more the consequence of that crisis and lock downs, and a tough challenge for our supply chain. In my career, this has probably been the most difficult challenge and certainly the most costly one. The sheer volume of trade has overwhelmed the existing network capacity. There is currently insufficient equipment – insufficient containers, trailers, vessel space, rail and truck capacity, and even drivers – it has been extremely difficult.
Going back to the early stages at the beginning of 2020, there was excess capacity in the market – mostly on the ocean side – but there was more than enough capacity. Then COVID hit and everything plummeted, but once people repositioned themselves at home, there was a surge in demand. Then you had an influx in spending with stimulus money and a surge in spending on PPE and medical equipment. Between electronics, consumer purchases, and medical equipment, the demand was tremendous. The carriers were fairly slow in getting their capacity back online. Ships were at anchor, idle, because the carriers didn’t want them to be sailing at 50% capacity. When things started to move, they were slow to get capacity back into the market. Then, the demand just outstripped any increase in capacity. It got bad in the fall, then it got worse, and it has remained extremely tight. Many of your traditionally containerized commodities are now even being shipped in break bulk as in years prior.
Right now, it’s a struggle to find capacity. The last round of stimulus enacted in March has prolonged the challenge of getting enough capacity back online. Personal savings has been at an all-time high, consumer debt was at a very low level, and governments were still rather restrictive on the services sector at this time, so people continued to spend money on electronics and durable goods.
Coffee competes for capacity against other products of higher value. The value of the freight versus the value of the goods within the container is more bearable for these higher valued goods (electronics, furniture) than what you could bear for coffee or another agricultural product.
Now, with the lifting of the restrictions on the hospitality sector, you are starting to see a narrowing in the gap between consumer purchases of goods and spending on services. As this gap narrows, there should be less money to be spent on the purchasing of goods and supplies. I am remaining optimistic and hoping to see capacity start to improve towards the latter end of the fall though this may not lead to any immediate reduction in freight rates. As they say, live in hope, die in despair!
Do you think that the happenings of the past 15 months have transformed the logistics landscape forever? In other words, do we have a “new normal” for logistics practices moving forward?
D: It has definitely highlighted the importance of logistics departments and personnel at just about any company that has to deliver a product – this is a good thing. I think that companies will reevaluate their supply chain partners, how they contract with their carriers, and whether they have enough options to choose from when times get tough in addition to considering upgrades to their systems to manage their supply chains. I also think that manufacturers, warehouses, and distribution centers will look at what they need to do in-house to become “shippers of choice.” This would make life better for our truckers – oftentimes, the trucker gets little consideration at some facilities. Becoming a shipper of choice where they [the trucker] know they will be treated with respect will count.
I’m not sure the term “new normal” would be appliable to the logistics industry since it is perpetually changing. You get a “new normal” every other day.
Of your entire career, what was the most memorable logistics crisis, event, or time that you experienced?
D: Honestly, there are many difficult periods that I’ve had over a long career – many that I would prefer to forget! – but for the coffee industry in the U.S. and myself personally, Hurricane Katrina in 2005. It devastated New Orleans and caused significant damage to warehouses, the port, businesses serving the coffee industry, and of course, it was a huge loss to coffee stocks that were stored within the port warehouses.
At the time, I was Chairman of the Warehouse and License Committee, and together with their VP of Operations, we went down to New Orleans to report on the conditions, expected losses, and the recovery efforts. We stayed on a Naval vessel as no hotels were available. I was equally as awestruck by the scope of the devastation that was inflicted on New Orleans as I was by the dedication and perseverance of our many friends in the industry. After ensuring that their families were safe, had survived, and were cared for, these people looked first at protecting the hundreds of thousands of bags of coffee that were stored in their facilities. The facilities were severely damaged – half a roof and side walls missing – it was incredible. They then had to work to repair the facilities and deal with the damaged product in an effort to recover and preserve as much of it as possible and as quickly as possible. By reporting on these efforts to the Exchange we helped to stabilize the market volatility that was caused by the storm and allowed for a rational and deliberate path forward which benefited the coffee industry and the great people and businesses of New Orleans.
I saw this first-hand – it was remarkable how they persevered and recovered.
What would be your best piece of logistics-related advice for a “Next Gen-er” working in the coffee industry?
D: In general, reach out beyond your desk and your office perimeter. Challenge yourself and expand your sphere of influence. You always want to be part of the solution, not the problem. Volunteer your time (whether it is within your company or within trade organizations) and build your network with professionals inside and outside of the coffee industry. Broaden your knowledge, elevate your career potential, give yourself different dimensions, get involved in your community, and make your life more interesting. Find a mentor, someone who you trust that will have your best interest at heart. Importantly, remember that it is always best to build your network before you need it!
Bent Dietrich, Trader at American Coffee Corporation and NCA Next Gen member, recently sat down with Alejandro Lozano Rojas, Manager of marketing and Innovation at EXPOCAFE S.A., for a discussion on his background and any words of advice he has for aspiring young coffee professionals.
Let’s start at the beginning. How did you start your coffee journey? How did you start at Expocafe and what made you decide that coffee is what you wanted to pursue?
I started as an independent businessman, broker and advisor for international business (import and exports) in the Colombian market. In 2005, I was ready for a journey to the UK but Mitsubishi Corporation recruited me as a coffee buyer in Colombia, for the Japanese market. That marked 5 very intense years of learning the coffee trade and many other products. By the end of 2010, my chapter with Mitsubishi closed. It was during a vacation in Europe when I was contacted by Expocafe to become a coffee trader. The ten years since has been made up of incredible experiences and continuous learning in the world of coffee.
Since you started working at Expocafe in 2011, what would you say have been the biggest changes you’ve seen in the industry, on both the customer side, and also within Colombia?
Shifting from mainstream to 100% certified, I would say coffee drinkers around the world are thirsty to have more stories about coffee and better understand how they participate and consume sustainably. There is still work needed in solving problems the market cannot address. Colombia is shifting from just great quality to a leader in terms of sustainability and innovation. I still remember when the Scandinavian market was purely commercial and now it is interesting to see them shift to 100% certified coffee. Also leading this change is the growth in specialty shops and the boom of micro-lots.
In Colombia, farmers are very open to change and ready to adapt. They want better farms and more income. They have and will continue to adopt modern technologies, be better informed and better connected.
Expocafe is known for their ties to local cooperatives. Can you please elaborate/explain your structure, and what makes you different?
Bent, this is such an interesting topic for economic theory. Basically, thousands of coffee growers in Colombia, let’s say roughly 77,000 out of about 540,000 are members of 33 Cooperatives. These Cooperatives make transactions with members and non-members accounting for about 30% of the total Colombian coffee output. Under this baseline, Expocafe S.A is owned by the Cooperatives and trades about 30% of this grand total, in this sense our channel trades roughly 9% of the total coffee exports of Colombia, in its majority differentiated coffee (total about 1.1 M bags 70Kg).
With this you can see, how complex and interesting our network to build this coffee economic system can be.
With that in mind, are there any special projects, initiatives you are particularly proud of on the sustainability front?
As about 80% of our portfolio is traded as differentiated coffees (certified, verified, Direct Trade, origin, micro-lots and preparation among others), we believe we are mature enough to build new initiatives to innovate and integrate resources with other players in the national and international economy. Our new venture in sustainability is named WRM (Water Resource Management – The Blue Coffee Bean). This represents the ethics of virtues to generate manageable projects, and to support highly vulnerable coffee communities such as children, indigenous, women and those in high poverty region, to name a few. The core is to first approach the person behind the coffee and help give access to basic sanitation, reduce water pollution in coffee processing and increase education among others.
Through this, we can help develop their capabilities to produce value added coffee (for example as certified coffee, or premium demanding specialty lots).
In your opinion, what should your customers (trade/roasters) be doing differently in their approach to promote sustainability? What steps can we take to improve the industry as a whole?
Sustainability is part of the business but should not be negotiable. Integrative vs distributive, changing the world starts solving problems at the source.
Origin is not a utopia. The new reality of Covid demonstrates how basic sanitation is still the key to survive.
The industrial revolution occurred in 1780 and after 240 years, many industries are still searching for a way to be environmentally friendly, to improve the world we live in. The environmental challenges are no longer just ideas, these are real threats.
Businesses should now be thinking about building wealth through elevating living standards (Conscious Capitalism).
We should be starting discussions on sustainability from the bottom-up, not top-down. Sustainability initiatives should grow from discussions had with producers, and expand from there.
Since this interview is targeted for the NCA Next Gen, where do you see the industry in 10-20 years? What changes do you anticipate in Colombia (farmers/coops or anything else) and with your customers?
Cooperatives at the end will strengthen their operations as an expression of the local culture’s needs and desires. We will have coffee growers who will use the latest technology in their farms (solar panels, smart systems to clean water, smart soil fertilization) and generate their own food. Data will be collected from the farms, and the whole value chain will be more sustainable and transparent. In this sense, 20 years Juan Valdez will be recalled for growing the best coffee and the most sustainable one. In other words, we should be the Tesla of Coffee.
We will see stronger commitment from the industry and other stakeholders, to help make this dream come true.
What advice would you give an NCA Next Gener?
When I joined Expocafe in 2011 I attended my first NCA (that year was the NCA’s 100th Anniversary). With this in mind, I believe you are the ones who will write a new book. To Next Gen members, I would advise you all to unite forces and work on small projects origin. Build it up it from A to Z, suffer through it, manage it, make it come true and market it. You will enjoy the experience, and learn the values of the coffee chain.
How has the NCA helped Expocafe? What value does it provide?
The NCA is a great example of how an industry should perform and grow. For Expocafe, we find it to be the best network, information, and regular updates about the coffee industry. The friendships it facilitates. All this shows how the coffee world is more than just business. It’s about community and relationships.
If you had to pick a favorite coffee/prep, what would it be? (Correct answer is anything traded through Hacofco 😊 )
I like tinto campesino. It’s black coffee, sweetened with sugar cane. It reminds me of good times with my father on our farm. When I’m at work, I enjoy an espresso. Now that I see the two faces of the business (commercial and sustainability), it’s a gratifying experience to drink a coffee I know benefits the coffee growers in our value chains
In a year that has been so challenging, every little bit helps, especially for those who need that help the most.
That’s why I’m so proud that NCA members are doing a lot more than a little bit to help others – in their own communities and around the world. In fact, over the past few months NCA has been fortunate to share in some of the amazing initiatives brought forward by our members and partners. We, in turn, would like to share these initiatives with the broader coffee community to inspire others.
At our most recent NCA board meeting, Willy Foote of Root Capital (NCA’s Coffee Charity of The Year) shared his organization’s commitment to growing agricultural enterprises that support smallholder farmers, especially seeking out businesses whose credit needs are too big for microfinance, but too small or risky for commercial banks.
Root Capital loans range from $200,000 to $2 million and are specially tailored to coffee farmers’ unique harvest and sales cycles. Root Capital also provides customized training to strengthen enterprises’ financial management skills and agronomic capacity. It is an honor to recognize organizations like Root Capital through NCA’s member-funded Coffee Charity of the Year program.
Each year we also hold an Annual Day of Service during our Convention. While we couldn’t be together in Music City for the Convention this year, we were proud to work with Chef Deb Paquette of Etch Restaurant in Nashville, TN to donate 200 meals to frontline emergency and medical responders.
We also made modest donations to the organizations featured in our 2020 Charity Showcase – just a small token to support their work and help keep our collective “shoulder to the wheel,” so to speak. The organizations in our 2021 Charity Showcase have been chosen because we believe in their mission, outcomes, governance, and financial practices. We support them, and we hope you will, too.
There is always more to do, and our work is focused not only on charity but on contributing to truly equitable and sustainable development that will ensure coffee farmers can thrive. Because there simply is no coffee industry without thriving coffee farmers.
In addition to supporting the work of organizations like Root Capital, NCA has been active in providing coffee stakeholders’ views through initiatives like the U.S. Agency for International Development’s Global Food Security Strategy and Feed the Future program. Coffee is a key part of the agricultural economy in many developing countries, and supporting coffee farmers should be part of all strategies to advance coffee growing communities’ futures, strengthen food security, and advance stability.
You can learn more about how coffee fits in the world’s sustainable future by exploring NCA members’ contributions in our Sustainability Showcase and also by exploring the ambitious goals established in Conservation International’s Sustainable Coffee Challenge. Together, we are committed to making coffee the world’s first truly sustainable agricultural commodity. And if you feel inspired, make a donation, large or small, to any of the organizations in our showcase – you’ll be helping a good cause.
Lastly, after a year of challenges both personal and professional, NCA wanted to recognize those organizations and individuals who stepped up to help their communities. Our #NCAYearOfService initiative sought to highlight coffee companies big and small that helped fuel frontline workers to fight the pandemic, deliver meals to local hospitals, make charitable donations, and more. We also were happy to honor our Volunteer of the year, Ellen Jordan of Global Grounds, for giving so much of her time and many resources to coffee and the NCA Science Leadership Council; and Jonathan Feuer of LMZ Soluble Coffee, Inc., for his long track record of distinguished leadership in the industry and the Association.
NCA: We Serve Coffee – through the generosity and commitment of our members.
2021 Charity of the Year Award Winner
Root Capital- Origin Charity of the Year
Root Capital invests in the growth of agricultural enterprises that support smallholder farmers, seeking out businesses whose credit needs are too big for microfinance and too small or risky for commercial banks. Root Capital loans range from $200,000 to $2 million and are specially tailored to coffee farmers’ unique harvest and sales cycles. Root Capital also provides customized training to strengthen farmers’ financial management skills and agronomic capacity.
By Alma Likic, Marketing Manager, PLITEK and NCA Next Gen member
Recently, Alma Likic, Marketing Manager at PLITEK and NCA Next Gen member, interviewed Yisehak Awel, a third-generation coffee grower and exporter from Mullege Coffee, for a discussion about the history of his company and the current coffee growing situation in his home country.
But first, a little history about Ethiopian coffee:
Ethiopia has long been considered the place of coffee origin. According to legend, a goat herding monk noticed that when his herd was nibbling on the bright red berries of a certain tree, they became more energetic (“jumping goats”). The goatherder chewed the fruit himself and confirmed his discovery, which he then shared with others at the monastery. The rest is history: Word of this energizing bean spread, and by the 15th century, coffee was being sipped across the Arabian Peninsula, making its way to Europe by the 17th century and soon spreading around the world. To this day, coffee is critical to Ethiopia, accounting for 70% of all its export revenues and employing 15 million Ethiopians.
The flavors of Ethiopian coffee are notably diverse – from citrus, bergamot, and florals, to candied fruit and even tropical fruit flavors. It’s principle coffee-growing regions can be divided into the following: Sidama/Sidamo, Harrar, Yirgacheffe, Limu, Jima, and Ghimbi/Lekempti.
There are three coffee production systems used in Ethiopia: Forest Coffees, where wild-grown coffee is harvested by the local population; Garden Coffees, grown in small holder plots around homestead or other dwellings along with other crops; and Plantation Coffees, a very small percentage of Ethiopian coffee, grown on large estates.
The following interview with Yisehak Awel has been lightly edited and condensed for clarity.
How did Mullege Coffee come to be?
My grandfather, Awel, started Mullege Coffee PLC in 1953. His beginnings were humbling as a lone farmer within the confines of small city called Areka in the southern part of Ethiopia. His big ideas weren’t as restrained as his economic situation for which he found a solution; He started as a farmer selling to wet mill owners. To increase sales, he managed to negotiate with other farmers to buy their red cherry coffee to expand and diversify his product line, having an advantage and opportunity to grow. He did that long enough to be able to own his own washing station and buy from multiple red cherry farmers in southern Ethiopia to sell parchment coffee directly to the exporters. And by 1996, thirty-three years after its inception, and with my father, Mustapha, joining the family business, Mullege Coffee started selling coffee directly to the European market.
What is the socio-economic situation in Ethiopia?
The socio-economic status in Ethiopia may not be ideal, but through farmers’ growth in wages, there is some optimism of that continuous growth in the years to come. The productivity is still at an infancy stage. The most common farm size is 1.98 acres, limiting each farmer’s opportunities. Farmers’ inability to scale their crops encumbers growth at a more rapid pace, which ultimately affects their overall income. Despite this, the small but steady growth over the last decade has given everyone a glimmer of hope to see more significant changes to the country’s infrastructure to improve the lives of farmers.
What are the biggest challenges for young Ethiopian coffee producers? The greatest opportunities?
Scale of production is a major challenge. Most young farmers inherited land from their parents which they share amongst their siblings. Farm lot sizes are extremely small ranging from 1.5 to 5 acres of land. Therefore, the cost of production is high due to low output. However, there are tremendous opportunities in diversifying crops. Avocado trees are used as a shade tree for coffee. There is an increase of demand for Avocado fresh fruits and avocado oil for both local and international markets.
Is there a sense of excitement about coffee for young producers?
Not quite. Young people want to work in an urban environment and pursue careers or entrepreneurship.
What is coffee consumption like among producers?
Ethiopia consumes more than 50% of its production. Coffee is a ritual and part of our lifestyle. Majority of young people consume coffee.
How do young coffee producers view sustainability in coffee?
There isn’t enough awareness when it comes to sustainability of coffee among young producers. Those who are aware challenge the logic of sustainability since the monetary return is low. I’ve had a farmer who said to me “we barely have enough to produce let alone to sustain.”
Any current events/forces outside of coffee affection young coffee producers in Ethiopia?
Urban migration is a main factor affecting young coffee producers. There numerous industrial projects coffee growing region by local and international investors. Wages are very attractive and young people prefer the urban lifestyle.
Any message to your Next Gen counterparts in North America?
The perspective and perception of farmers has already changed. Farmers are aware and exposed to what’s happening in the global coffee value chain. As young coffee professionals in consuming countries you have different challenge than your predecessors; we all need to come together to convince coffee farmers to keep producing coffee.
What is the impact of Covid-19 on coffee growers and exporters?
As exporters, we have been negatively impacted by the Covid-19, but we’ve still managed to sustain during these unfortunate times. One of the reasons is because we serve the international market as well as the local market. And the local market has not been affected as much. Ethiopia consumes over 50% of the coffee produced. Coffee growers and exporters have been able to maintain their local customer base. Additionally, the government has provided incentives to farmers with a goal to increase farmland for coffee growers in certain areas like Jimma and Leemu, which will contribute to increase in farmers’ output. Because of the mass consumption of coffee locally and government initiatives to sustain farmers, coffee growers have been able to weather this storm.
How would you describe your experience with NCA (events) to young professionals looking to join?
I have been attending NCA events since 2013. The contents of the presentations are very insightful and informative about the coffee industry. It is by far the best event for networking with potential clients, industry experts, and catching up with colleagues from the entire coffee supply chain. In the past few years NCA has focused on engaging young coffee professionals with the Next Gen initiative. Joining the NCA is worth for me to take a 16 hour flight every year for this 3 day event.
Jonathan Gabbay (RGC Coffee) recently sat down with John “JD” Demuria, Managing Partner at Volcafe USA and past Chair of the NCA Board of Directors, for a retrospective on his time in the industry and what is in store for future coffee professionals.
How did you get into coffee?
The first 4 years, in the late 70’s, I started in the banking side, which gave me pretty good insight into the commodity sector. I was young and energetic and eager to learn from people. I was doing it from the side of a banker, not a trader, with Volkart Bros, which is known today as Volcafe, and I was able to take advantage of an opening on the trading side. I started in the low end. Not everybody starts in the boardroom, you have to pay your dues and learn and understand the fundamentals in all areas. I was fortunate being able to work with a group that was very much about educating and teaching and starting from the basics.
Starting your career in coffee the industry was different. Young coffee professionals have never experienced a Brazil frost or the ICO quotas that you’ve had to combat. What is the biggest difference in what we’re experiencing as an industry today vs when you were starting out.
The thing that sands out the most is the technology we have. Back in the day, we had a telex operator and long distance phone calls were not reliable. So your telex operator was your most important trader on the desk. Today we talk across the world for free. Back in the day, there would be a frost in Brazil, and we’d know about it a week before the farmers in Brazil even knew about it! Today it’s instantaneous.
We didn’t have volatility like we had today related to macro issues, hedge fund trading, speculative trading, geo-political issues, currencies, climate change along with the supply and demand of coffee itself. In the early days it was flat price, we didn’t work out differentials yet. There wasn’t a big need to hedge like we do today. And we went from simple futures trading to buying underlying futures, options and all the different products out there today.
As a follow up to the above question, what piece of advice would you offer someone starting out in coffee?
I think the most important thing when you start out, no matter your background or education, is to understand that coffee is not a thing you can learn from a textbook. Take advantage of the people who come ahead of you, ask questions, and listen. Take the opportunity to learn. You will eventually get to the same result, but your approach will be different dealing with a different demographic and environment. You’ll have a whole new set of tools to work with but a whole new set of challenges to deal with.
Also relationships. At the beginning, I took the time to get out and network with people. Obviously it’s very different today. But I would encourage anyone to reach out and forge those relationships, they will come back to help you in the longer term.
As the industry has changed, so has the focus of the NCA. What are some of the bigger shifts in focus you’ve seen?
The focus has always been on making sure that we protect and promote the industry. This is an association that is 108 years old. Along the way a lot of changes and adjustments were made. Today we are more relevant than we were in the past and I think what’s important is having the right leadership in place. We’ve always been the voice of the coffee industry, but we lost that voice for a while. I mean that we were always the proactive voice when something would go wrong on the regulatory side, a health scare, or a scientific problem. When someone needed information, they’d come to the NCA. That kind of got lost. Today we are an association that is now leveraging the science behind coffee, and that is the Scientific Advisory Committee. A couple years ago, no one knew they existed, and today they are working on cold brew, prop 65, diacetyl among others. We had a great win with the IARC report. They hadn’t looked at coffee closely since 1992 and we successfully had coffee removed from the list of possible carcinogenic products. That was a great win for the association that has come back to help us with the prop 65 fight in California.
In your opinion, why should young professionals get involved in the NCA and how would they benefit?
Your voice doesn’t get heard if you’re not there. There’s no better way to make a mark in your industry than engagement. You have a voice if you get out and participate. If you are active, your voice will be heard. We all have a common goal to promote coffee and consumption and to try to proactively solve the issues in the industry.
Also being engaged allows people the opportunity to network and hear about other businesses and see how they’re doing. Maybe share some of the problems you have in the industry you have worked on.
The best thing we did as an association is to start the next-gen council, because it gives you that voice and you report to the boardroom. There’s also new projects coming down the road and its super important for us to develop the next wave of leadership in the industry.
As past chairman of the NCA, what accomplishment are you most proud of?
My biggest takeaway when I retired as chairman, was how well the board worked together, how we all moved in the same direction. We all saw things eye to eye, and I think a lot had to do with Bill Murray’s leadership. The way they recognized the problems, gave resources, created the Next-Gen. We had the results of IARC, which needed emergency funding, and raised awareness of the Scientific Advisory Group (as mentioned earlier, they worked on prop 65, IARC, diacetyl, and cold brew standards that were just released).
We wanted to expand our global footprint. We are no longer a North American association, we’re much more than that and operate in a global space. The issues we deal with as an industry are not unique to us, they are global issues. We have to have common voices with other associations and not draw a line in the sand, but work together as a global unit.
Since this interview took place, a lot has changed in the coffee world and abroad with the global Covid-19 pandemic. We revisited this interview and followed up with JD early in 2021 to find out what has changed and how the NCA and his own business has adapted.
In 2021, what can we expect from the NCA and how has the association adapted to this new world?
(Laughs) I think the question is ‘what has not changed?’ Both in our personal and professional lives. We’ve had to learn and adapt on the fly and look for silver linings. With the NCA, we’ve had to keep everyone informed and on the same page. The association is very complex, there’s scientific research, office work, serving membership needs all will defending the needs of the industry in the political and scientific landscape. My hat is off to Bill Murray and the NCA Team for creating resources and toolkits that are extremely useful and keep everyone informed and safe. Each year the Association recruits, sends out info and different opportunities for people to get engaged.
What opportunities have now manifested for young professionals that were not there before Covid?
We can expect the future of the convention to be a hybrid type of event, that will be a combination of in-person and virtual meetings. Professionals can still co-mingle with people with years of experience. There will be new opportunities for new membership to get involved in the Next-Gen (committees) and for the younger generation the chance to attend the main event virtually when they may have not been able to before.
What has saved you in your own business?
What has saved us? Multiple things and they are difficult to prioritize. First, the team I have in place is spectacular. They have made sacrifices and shown dedication, and I’m very proud to say they are extremely young and diverse. Eight or nine are in the millennial category. Diversity helped us adapt to new technology, customer service, given us accessibility 24 hours a day and set up virtual meetings weekly with clients. We’ve adopted peoples’ homes, basements, kitchens. Mancaves became work caves. And we’ve added some extra technology like having multiple screens. A minimal investment has led to a massive benefit.
What does the post-pandemic future hold for the hundreds of thousands of retail outlets that provide coffee to Americans away-from-home?
The most recent study we conducted, the National Coffee Association’s National Coffee Data Trends report, offers many reasons for optimism for all segments of the coffee sector – including away-from-home.
Unlike some industries – travel, tourism, live entertainment – the coffee industry, as a whole, has fared reasonably well. Coffee drinking is not only safe, no matter where you enjoy it, but is connected to numerous health benefits. In fact, a large group of independent studies associates coffee drinking with lower levels of depression – important to know during a horrific pandemic.
All of which supports America’s continuing love affair with coffee, right through the pandemic. In January of this year, 58% of Americans reported drinking coffee “yesterday,” down from 62% a year ago, a modest change – especially when considering the study’s 2.5% margin of error.
But while coffee continues to be America’s favorite beverage, it is true that the away-from-home segment has been impacted by the pandemic. This impact, though, is temporary – a direct result of the pandemic – and is already reversing.
We know this because of what the data tells us about the recent past – and consumer attitudes – towards coffee.
First, one reason the away-from-home coffee segment has suffered is because of the rolling, random lockdowns the country has experienced. These are coming to an end.
Second, the slight decrease in overall coffee consumption is linked to the economic impact of the pandemic. 24% of Americans told us in January of 2021 that their financial situation was “much or somewhat worse” than a year ago, up from 13% who told us the same thing in January 2020. Stimulus checks are in the mail, and shortages of workers are growing. Recent reports confirmed a surge in retail sales in March and dropping unemployment. The economy is poised for a comeback – the worry now is actually over an “overheated” economy, and the inflation that could ensue.
Third, coffee drinking during the pandemic has been up marginally in the morning and at breakfast – but down marginally in the afternoon. 24% of Americans reported having an afternoon coffee in January ’20, down to 20% this past January. That afternoon coffee is closely associated with socializing, work, or being out and about, and will reverse as America reopens.
Fourth, contrary to the headlines, away-from-home coffee never disappeared. In fact, over two-thirds of respondents told us in January ’21 that they were already back in their coffee shops, or anticipating a return in the near future. First responders, truckers, delivery service workers, skilled tradespeople, grocery store employees, public sector employees – those in the “Essential” parts of the economy (including many coffee suppliers, by the way) have been there all along. About 11% of coffee drinkers drank their coffee during their commute – right through the pandemic.
Fifth, away-from-home coffee has pivoted quickly to adapt to the new reality, and coffee drinkers have responded. By September of last year, 39% of away-from-home coffee drinkers had ordered through an app, up from 24% in January ’20.
But there’s more. Turning from what has been happening to what coffee drinkers want to happen, the optimism grows even stronger.
The sixth reason for optimism is that coffee drinkers miss their away-from-home coffee. In January, 2021, 35% of respondents either agreed strongly or somewhat agreed that they “miss the social aspect” of going out to coffee shops, cafes, and restaurants, 34% said that they miss their “regular” away-from-home venues, and 33% said that they miss treating themselves by going out.
Some social psychologists have speculated that the post-lockdown period could be like the Roaring 20’s – a country ready to let loose. Indulging in a favorite coffee beverage prepared by a favorite barista would be one way to do that!
Seventh, the steps that away-from-home venues can take to encourage customers’ return – while requiring some investment – are straightforward. 43% of respondents told us that having workers wear masks and gloves – and having other customers wear masks – were steps that venues can take to “encourage (me) to visit them more often.” Practicing visible sanitation protocols, and limiting capacity/crowd control also scored highly. (See our free NCA guide to safely reopening your coffee business for more on this topic.)
Bottom line? Vaccines are rolling out, even with hiccups. The economy is improving. America has not lost its love for, its need for, and its relationship with coffee. America misses its favorite coffee shop, restaurant, and café – and for the one-third of Americans who are cautious about resuming their old routines, there are more reasons every day to feel reassured.
We’ve been through the worst we ever could have imagined – but today, and tomorrow, are better for all of us in coffee – especially the men and women around the world who grow the coffee we love.
By Nora Johnson, Commodities Manager, Massimo Zanetti Beverage USA
To kick off the 2021 NCA Virtual Convention, the Next Generation Council was proud to present the panel discussion: “Ideation to Action: Sharing the risks and rewards of sustainability in the coffee value chain.” Organized by the NCA Next Gen’s Events Committee, this panel discussion was an attempt to bring the supply chain together for an earnest conversation about sustainability. As the Events Committee’s Chair, Eric Mitchell, explains “It is clear to this generation that when it comes to sustainability, we must act united as an industry—individual initiatives will only get us so far.”
Thus, NCA Next Gen invited participants from each part of the value chain: Francisco Lacayo (L53 Estates), Hugo Valdivia (HVC Exports), Esteban Jaramillo (S&D Coffee and Tea), Nathalie Gabby Huddleston (RGC Coffee), and David Browning (Enveritas). And the panel was moderated by Olivia Bartelheim of the Rainforest Alliance.
Sustainability is one of the “hottest topics” in coffee, yet, despite the topic’s forefront position in conversations across the supply chain, getting from conversation to application has proven to be challenging. These knowledgeable panelists provided experienced-based insights into how the risks and rewards of implementing critical sustainability initiatives can better be distributed and how the next generation of coffee leaders can help forge the way.
We have highlighted some key insights from each of the panelists below, but if you missed your first chance to watch the panel live or think you would benefit from a second viewing, be sure to check out the recording above.
The responses below have been paraphrased and lightly edited for clarity.
Nathalie Gabbay Huddleston, President RGC Coffee:
In response to the opening question of the panel, Nathalie shared three themes to keep in mind in order to ensure a balanced risk and reward for all stakeholders in the value chain:
Collaboration is critical – you can’t tackle the world’s challenges alone.
Listen to your partners along the supply chain and then build something that makes sense. Use a ground up approach on a wash-rinse-repeat cycle of trying, testing, and measuring as every solution is going to be different based on the situation and the community.
Start small and scale up but think big! Practice sustainability at scale.
When it comes to engaging other producers, workers, and customers, Nathalie said to “inspire the why.” Feel inspired about the initiative and the project and why it matters, then inspire others to understand the need to make these changes while backing it all up with the data-supported business case.
David Browning, CEO – Enveritas:
When asked about how companies should be using data to take on responsibility in accelerating progress towards the most urgent issues, David explained that “you can’t manage what you can’t measure.”
David contextualized this issue by metaphorically contrasting the reactions that occur in sustainability with the more proactive measures that are part of most organizations’ day-to-day business practices. Quality testing and measurements are part of the standard practices within most companies, yet oftentimes it takes a media story to trigger actions in sustainability. The scientific process with quality testing works, so apply it to sustainability in the same manner.
Francisco Lacayo, Industrial Manager – L53 Estates:
As a young professional in coffee and seeing the struggles that many generations have faced due to both price and production cycles, Francisco invested additional capital to have a higher yield despite the higher risk on his side. This translated to a lower cost per pound in the long term. In order to support the higher yield, additional labor was required resulting in a more sustainable income for workers. The increased capital investment allowed for more consistent production cycles, yielding more consistent relationships with customers as well.
When speaking on the climate crisis, Francisco encouraged others within the supply chain to visit the regions where there is less mechanization. He elaborated, sharing that we need to create more awareness for the most vulnerable populations at origin as to what climate change is and how it can affect them. We need to increase awareness through education which requires added capital investment from throughout the supply chain.
Francisco shared that although the word “sustainable” is beautiful, sharing profits across the value chain is how we will be able to sustain lives. We cannot talk about sustainability when prices are staying the same or decreasing year after year.
Hugo Valdivia, COO – HVC Exports:
Based in Peru, Hugo spoke about the importance of the price to quality ratio and of how efforts get placed on volume over sustainability initiatives and quality. As an example from his experience in Peru, by focusing on specialty and certified coffees as opposed to commercial grades, his organization was able to increase the price to quality ratio in order to deliver a fair price to the farmer.
When asked about what the sector can do to support young professionals as they confront the climate and price crises, Hugo described of how the next generation of farmers are transitioning out of coffee and into other products with less volatility. He explained of how coffee in Peru is viewed as a cash crop, resulting in limited reinvestment. In order to support young professionals, Hugo encouraged the development of shared value relationships across the supply chain.
Esteban Jaramillo, Sustainability Manager – S&D Coffee and Tea:
Sharing the risk and reward depends on the customer – not all organizations understand the coffee supply chain. We need to start by talking about the risk of not engaging in a sustainable supply chain.
Climate change is getting more attention from consumers, nonprofits, and government institutions, yet there is a gap between the understanding and the willingness to invest in sustainability. We need to make companies accountable while sharing that accountability with consumers. Risk means something different to every company – try to understand how risk impacts each company. Sustainability needs to be understood holistically, not by only one angle.
Hope for the future:
It wouldn’t be a Next Gen panel without asking panelists to share of what gives them hope about the Next Generation of coffee professionals. From increased awareness to a greater sense of empathy and innovation, our panelists guaranteed that there is much hope to be had.
To all Next Generation professionals, David Browning left us with a challenge to harness the enthusiasm and awareness of industry and organizational leadership as it relates to sustainability. The enthusiasm from leadership is there, but it is up to us now, this next generation, to be the ones to take us from Ideation to Action.