By Alma Likic, Marketing Manager, PLITEK and NCA Next Gen member
Alma Likic, Marketing Manager at PLITEK and NCA Next Gen member, interviewed Nathalia Martins Azzi, a second-generation coffee grower and exporter at Our Coffees, for a discussion about the history of the company and the current coffee growing situation Brazil.
First, a little history about Brazilian coffee:
Brazil has been the world’s largest coffee grower and producer for more than 150 years. The first coffee bush in Brazil was planted by Lieutenant Francisco de Melo Palheta in 1727. According to the legend, the Portuguese were looking for a cut of the coffee market but could not obtain seeds from bordering French Guiana, due to the governor’s unwillingness to export the seeds. Lieutenant Palheta was sent to French Guiana on a diplomatic mission to resolve a border dispute when he seduced the Guianese’s governor’s wife who secretly gave him a bouquet spiked with seeds which he was able to smuggle across the border. Coffee was then spread from northern Brazil to the mountainous southeastern states where it thrived because of the temperature, heavy rainfall, and a distinctive dry season which provided optimum conditions for its growth.
Brazil’s 7,844,000,000 pounds of coffee grown each year (80% of which is arabica) make up 30% of the world’s supply, but an astounding third stays in the country. This does not come as a surprise as 98% of Brazilian households drink coffee.
A coffee powerhouse with incredibly diverse coffee options from basic commodity coffee to the world-stunning specialty coffee offers different varieties, some natural, some hybrid, some cultivated in a lab—designed for specific climate conditions including Mundo Novo, Yellow Bourbon, Caturra and Catuai.
Brazilian coffee is processed by the wet (washed), dry (natural), semi-washed (pulped natural), and recently emerged re-passed (raisins) methods. Most coffee beans are still processed with dry method since Brazil is one of the few countries in the world that has the appropriate weather to do so successfully.
Wet (washed): This process is used to remove the four layers surrounding the coffee bean. It is done in small portions. The coffee beans using this method are cleaner, vibrant, and fruitier.
Dry (natural): The coffee cherries are placed in the water, and those floating are removed. The remaining coffee cherries are dried in concrete slabs. The coffee beans in this process are heavy-bodied, sweet, smooth, and complex.
Semi-washed (Pulped natural): This method involves pulping the coffee but skipping the fermentation phase to remove the skin. Thus, the coffee beans in this method gain the characteristics of coffee beans, which had undergone the dry and wet processes.
Re-passed (raisins). In this process, the coffee cherry floaters –(typically coffee beans that have dried on the tree)- float to the surface and are then discarded from the rest. The coffee beans in this method are much sweeter than the traditional pulped coffee.
Main Growing Regions: Minas Gerais, Espirito Santo, São Paulo, Bahia
Harvest: April to September
– Tell us about family history / farm?
José Maria comes from a deep-rooted history of coffee tradition. As a boy, his grandfather had a small coffee farm where his father and uncles used to work. José has many great memories of picking cherries with his family and playing around the coffee trees with his grandfather. In pursuit of a better life, at the age of seventeen, José Maria moved to the city of Belo Horizonte. However, after a few years, Jose decided to carry on family tradition of growing coffee, moved back to Campos Altos, and bought a farm in 2008. The company started exporting coffee in 2013. In order to offer good quality coffee and allow traceability, the business focused on implementing vertically integrated business model. Today, aside from growing coffee, the company offers wet milling process, dry milling process, warehousing, exporting, importing in other countries and wholesalers around the world.
– Can you take us through the journey from cup to seed? What makes Brazilian coffee unique/special?
Brazilian Coffee is unique because of its quality. It is a result of continuous technological advances that help producers grow good quality coffee. Post-harvest process plays an essential role. We invest in technology and new methods including experimental fermentations, taking care of the beans in the drying process and then resting it. This ensures good quality and makes all the difference in the process. Having great varieties is important, but a complex post-harvest process takes it to the next level of quality.
– What is the socio-economic situation in Brazil? How is the coffee growing and exporting affected?
The Brazil socio-economic situation is complex. The country has a big source of economic production such as agriculture, mining, food production, meat production, manufacturing, and industrial goods exporting. Coffee growing has been affected by the higher prices of fuel, cost of farming machinery and supplies, and due to worker equity rules, which we take very seriously. For the past 5 years, Brazil has experienced a trade surplus making it hard to get space and availability on vessels to export.
– What is the impact of Covid on coffee growers and exporters?
Covid 19 greatly impacted the coffee industry and our customers felt completely lost with no expectation of the future. Coffee shops closed, news about lockdowns changed daily, restriction implemented, and economic reopening was unclear. As a result, our customers stopped buying green coffee, causing many coffee growers and exporters cashflow problems.
-Tell us about your experience with NCA.
NCA meetings are always great, we can meet everyone from the industry, and it is very helpful to talk about the market. NCA is a reliable source of information that helps us make better decisions about our business.
-What would be your advice to new Next Gen members?
Participate in the events, participate in seminars, webinars and courses. Knowledge and networking make a great difference in the coffee business. The coffee industry is all about relationship building.
By Nora Johnson, NCA Next Gen Communications Committee Chair and Commodities Manager at Massimo Zanetti Beverages USA.
Although every day is “Coffee Day” for those of us working within the coffee supply chain, on September 29th and October 1st, the rest of the population joins in to celebrate National Coffee Day (for the United States) and International Coffee Day, respectively.
If you are like me and wondering who actually declared a given day “International Coffee Day,” wonder no longer! With the inaugural celebration having been held on October 1, 2015, International Coffee Day was officially declared by the International Coffee Organization (ICO) as a day of “celebration of the coffee sector’s diversity, quality, and passion… an opportunity for coffee lovers to share their love of the beverage and support the millions of farmers whose livelihoods depend on the aromatic crop.” Many individual nations had been celebrating their own National Coffee Day for several years prior. Japan even began celebrating as early as 1983! What an exemplary reminder of just how much passion exists within our industry; from the passion of those who produce it, to those who trade, roast, and package it, to those who consume it, coffee is enveloped by a special sense of enthusiasm.
To our fellow coffee colleagues, the NCA Next Gen Council hopes that your cup was full on this year’s National Coffee Day!
By Nora Johnson, NCA Next Gen member and Commodities Manager at Massimo Zanetti Beverage USA
Nora Johnson, NCA Next Gen member, recently spoke with Gustavo Cerna, Senior Manager Coffee & Tea at the National DCP. Check out the interview below to learn more about Gustavo’s experience and his advice for fellow Next Gen members in the coffee industry.
The interview below has been condensed and edited for clarity with approval from the interviewee.
Tell me more about your background. How did you get to where you are today?
I was born into coffee. My family started growing coffee in the 1990s after the civil war in Nicaragua. My dad had this idea that coffee would be a good business; he started with one farm, and that grew to 10 farms by the year 2000. It was a rough ride in the year 2000. I was young, a teenager, and that was when the coffee price crisis started. Over that time, coffee hit $0.46 per pound. That was when we [the family] really started getting involved in the business.
I was 15 years old and working on the exporting, doing the paperwork, gathering certificates of origin, going through customs, getting the quality analysis; that was what we had to do – we had to cut costs at $0.46 per pound. This experience allowed me to learn first-hand of the organization and the paperwork that it takes to get a container of coffee out from origin. I truly understand the great amount of work that happens at origin to get a container out, especially in countries where technology isn’t always friendly.
For me, going to a farm is almost like second nature. I know what is going on from the moment I step in – growing coffee, harvesting, fermenting, processing, going to farms every weekend – that was my childhood.
My coffee journey then took me to other stages in the coffee supply chain. I started at Starbucks, working not on their coffee team, but as a demand planner. Working at Starbucks really gave me the full view of what happens once coffee gets to the roaster: what it takes to serve coffee at scale. All the things that happen in the middle – it’s incredible. From demand planning to supply planning to store development to the creation of the art on the bags; it’s a whole army of people working just to develop the concept and serve the cup of coffee to customers. My jaw dropped – this is what it takes to run a coffee operation. Sometimes, as coffee farmers, we forget that it’s not simple to serve coffee; there is a whole operation to serve coffee to consumers too. Yes, it’s a profitable business, but it also takes a lot of work: distribution, supply chain, roasting.
I learned a lot there, and it was the moment in my coffee career the where I learned the breadth of the coffee industry. That’s where I explored other origins. I grew up drinking Nicaraguan coffee – a lot of farmers only drink their own coffee. Nicaraguan is my go-to, but now I have other coffees that I enjoy as well. It was when I learned to appreciate the coffee world outside of Nicaragua and how Starbucks really tries to deliver that story to the consumer, because at the end of the day, how you tell that story is also really important.
From there, I voluntarily left Starbucks to go to Cornell to get my master’s in Agricultural Economics. I was there for 15 months, but then I took a sabbatical from coffee and went into cocoa. I did cocoa for 2 years, then I saw this opportunity at Dunkin’ and went for it.
The business has changed so much from what is was in 1990, 2000, 2010. Now in the era of COVID, who knows what trends will stick. The business is upside down from what it was back when my dad started. Back then, consumers didn’t understand as much about coffee; now, the new generations have more clarity of where the coffee is coming from and they know what they want. There are more expectations for coffee: cup profile, ethical sourcing, how it is consumed. Cold beverages in coffee are king now.
There are more opportunities and more occasions for coffee, and that is giving consumers more power in today’s world. Origin diversity, sustainability targets – it’s great when consumer expectations and sustainability targets can meet. That’s my goal. At the end of the day, we can all be competitors, but if we all work towards something, it is a better coffee world and industry. All companies need to collaborate and work together to make a better coffee world. That’s why I took this opportunity – to take on this challenge.
Did you feel a pressure to stay in coffee?
I am the youngest out of four; my two older brothers still manage the farm and help my dad manage the whole operation. Generational relief had to be there – my brothers are great at doing that.
I didn’t feel that pressure. I am now using my knowledge that I gained there for the greater good in coffee. Someday I can go and apply what I have learned here back in Nicaragua. Coffee farmers need to understand that they live in a globalized world. Sometimes we want the best price for our coffee, but us farmers need to understand that it is going to be impacted by what happens in Vietnam, Peru, Kenya, etc. We need to be able to differentiate and create a product that is unique for consumers.
As the Senior Manager Coffee & Tea at the National DCP, what does your role entail? What does a typical workday look like for you?
I am responsible for working with our roasters to procure the green coffee that is needed for our Dunkin’-approved items. I work directly with five roasters to convert green coffee into the different packaging formats that we have. I also work with them to hedge that green coffee from the physical side and the futures side. Doing this requires having a good rolling hedge and a good strategy, determining how far out we cover for certain origins. I design that strategy and my roasters collaborate with me in taking those positions. It’s a constant work in progress. Outside of coffee, I also manage the tea side, which is a bit more straight forward than coffee as it is less volatile.
Finally, at the end of the day, I am responsible for ensuring that we have a constant supply within our DCs [Distribution Centers] in all formats. I need to guarantee that we have a non-issue supply chain from roaster to DC for roasted coffee from both a price and a supply perspective.
What other commodities have you managed or traded? How did you best learn and get the skillset to be a successful trader? Have any tips for an eager trader at the front of his/her career?
After Cornell, I went back to Nicaragua and managed a cocoa nursery. My goal was to start up a high-tech cocoa farm. Efficiency in production starts with having the right plant – in cocoa, by nature, you need to clone plants. It is a very diverse variety, so the seed is never the same as the mother tree. While there, I traded Nicaraguan and Ecuadorian cocoa.
Coffee people tend to only want to be in coffee. It’s always good to have a different perspective. The other non-soft commodities are more efficiently priced – coffee is in a gray area. In the other commodities, you also may have one major entity – like the USDA – regulating and controlling information. The softs are a world of their own – information is not clear, you must rely on on-the-ground information, and sometimes people don’t want to share information for that reason. My recommendation for any coffee person is to go work in another non-soft commodity. It will give you a different view on how risk is managed.
In graduate school I really focused on derivatives. I also took some other courses with FC Stone [StoneX]. Since I was 12 years old, I’ve been watching the board [futures market] – I have always been interested in futures, how coffee is priced, and what goes into it. School gave me a great foundation; I still use it in my day-to-day work. Take a course on options and derivatives – I learn something new every time I take a course on something like that.
Sustainability is a critical topic in coffee, and there are so many facets to what sustainability looks like. Given your background and experience across the supply chain, if you could unite the industry around one or two main areas in sustainability, what would they be and why?
We try to focus on all things sustainability, but at scale, we need to focus on one issue and that should be transparency. If we don’t know how our dollars are flowing from destination to consumer, then we don’t know what decisions to make. Transparency will tell us how efficient our supply chain is and where the farmer needs the most help.
We can’t just have data that gets thrown out there either. We need more tangible methods on how to tackle it. Once we know the issue to focus on – what steps do we need to take next? Do we contact a breeder? Is it a better soil management program that is needed by the farmers?
Let’s nail down one category and one subcategory and let’s tackle it one at a time with the category being reestablished on an annual basis. What we identify also needs to be the result of a group consensus in order to do it at scale, or else we are on a hamster wheel, and will revisit the same issue again in 5 years.
You mentioned your graduate degree in agricultural economics. How has what you learned in your graduate program impacted your career or supported you in your various roles?
I learned a lot, particularly about agricultural optimization and what that means for a farmer in Kenya to a corn producer in Iowa. You evaluate the decision factors that these different people have and what their decision trees look like. Cornell provided me with an opportunity to understand the decisions that different farmers make based on different factors, their location, etc. This was very well suited for coffee – it helped me understand how decisions are made on a case-by-case basis, for instance, how to compare a corn farmer in Iowa with a coffee farmer in Brazil. Cornell also had a wide range of paths and programs. I chose to go on a deep derivatives path combined with a focus on understanding farmer rationale and resource valuation. These two areas provide great value for both sustainability and futures trading.
If you could change anything throughout your career path (i.e. timing of an event, more experience in a related area), what would it be? (No regrets, of course!)
If I had the opportunity, I would not have left Starbucks to do my master’s full-time at Cornell. If there was a way, I would have remained at Starbucks while going to school.
I also would have traveled more to other origin countries. I still want more experience with Asian coffee production. I would’ve liked to start that process earlier than I did. You don’t want to get too obsessed with the countries you regularly go to – from an origin diversity perspective, it would be great to experience these other origins and get a better understanding for how they make decisions based on their socioeconomics.
Based on your career experience, what skills do you look for in a strong leader or manager?
Somebody that can listen. Listening skills are key – not just someone that hears you, but someone that absorbs and synthesizes what you said. Overall, the rest of the work will happen, but if you don’t listen to what people say and transmit that to others, it’ll be very hard.
COVID has required that we all adapt to working differently. Are there any changes or adaptations that you have made that you think will remain, even in a post-COVID work world?
I think it is all connected – work from home is giving consumers more power, particularly when it comes to coffee. Consumers can now say “I like what I tried last time at the store, and now I am going to buy it again.” On top of that, this behavior is coming at a savings to consumers and more profit to farmers.
Consider Colombia – Colombia has invested significantly in their marketing, name, and reputation. Consumers associate Colombia with good coffee – more people are drawn to buy Colombian coffee. That’s great – Colombia coffee has established this direct relationship and awareness from consumers. It is a differentiating factor in the market. Other origins will also have more direct contact with consumers now that consumers have more options in choosing what to brew at home.
What advice would you give to a fellow Next Gen candidate working in the coffee industry?
For someone that is just getting started in coffee, be open minded – don’t think that coffee is everything. Be aware of trends that are happening in other categories. Try to explore and knock on the door of other decision makers if you are interested in something. Coffee careers and jobs aren’t often widely publicized – talk to people outside of your company and listen to the problems and opportunities that others are facing. You will definitely learn something new; don’t turn down an opportunity to learn something because you think you know everything.
For people that have been in the industry, sometimes we need a break from coffee. It’s okay to take a break from coffee – post-COVID, travel, meet people in different parts of the supply chain – it will always benefit you in the long run. In coffee, we are fortunate to have this continuous learning experience. It is grown in so many countries that there is really no excuse not to learn.
Don’t be afraid to speak up – being the young generation in coffee, it is easy to be intimated, but we have a unique point of view being from another generation, so don’t be afraid.
2019 marked the 10th year of the annual SCTA Conference and Dinner located in Basel, Switzerland. For the second year in a row, the NCA Next Gen Council was invited to participate in the event, a proposal which was once again graciously accepted. In addition to the elegance of the dinner itself, our Council members were able to attend an information session and networking hour dedicated exclusively to Next Gen members.
The initiative was led by Guillaume Zbinden, who has been at the forefront of the effort of the SCTA to emulate the NCA’s Next Gen platform. Guillaume’s keynote speech was followed by a thorough review by Michael von Luehrte of the activities of both the SCTA Next Gen Council, but also those of the contingent of Next Gen Members throughout countries of origin.
And to round out the conference section of the Next Gen session, attendees were able to see ‘into the future’ with remarks by Dean Sanders and a panel led by Susana Robledo.
The event was a great success and the growth of the Next Gen “movement” was apparent!
Michael Gaviña delivering his General Session remarks at the 2018 NCA Convention
Exclusive Q&A: Michael Gaviña, F. Gaviña & Sons
“We really have something special, we have a very collegial industry that is passionate about a product that our customers hold dearly.”
Michael Gaviña is the current of the National Coffee Association. He is a fourth-generation executive at F. Gaviña & Sons, Inc. (FGS), responsible for pricing raw materials and managing inventory. A Coffee Quality Institute Q grader, he joined FGS in 2002 as a buyer. He is has served as CFO of DF Roasters since 2015.
Here, talks to Next Generation Council Communications subcommittee member Kyle Bawot about what he’s learned over his career, the challenges ahead for coffee businesses, and his hope for next generation of industry leaders.
And clearly he’s kept caffeinated. In a few short years, the NCA has evolved as an organization to provide enhanced member benefits and educational opportunities, while also serving as a critical advocate on key industry issues like the Prop. 65 labeling case in California.
Here, he talks to Zach Olsen, Regional Sales Manager at Bunn USA and incoming Chair of the NCA Next Generation Council, about his career, the coffee industry, and Caddyshack.
How and when did you get involved with the coffee industry?
It was right after Katrina in 2005 and I was living in New York City interviewing for jobs in advertising. My dad had to relocate Westfeldt Brothers to North Carolina, and asked if I would work on the New York Board of Trade (now the ICE) as a clerk and assist WBI.
I put everything on hold and started immediately. I fell in love with it!
If you ask how I ended up at Westfeldt Brothers, that was probably because my mom made my dad give me a job.
What interested you in joining the NCA Next Gen group and then becoming part of the council?
Switzerland is an important country for the coffee trade and roasting industry, and serves as the headquarters for several major coffee trading houses and roasters. (The country is even one of the world’s top five coffee exporters.)