[S3:E4] Weekly Coffee Report

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This week I discuss a program to develop local consumption in Nigeria and compare it to a successful program in Colombia.

If you would like to dive deeper into local consumption, I discuss it in these articles as well:

Show notes

Article 1

How is coffee consumption changing in Nigeria? - Perfect Daily Grind

Coffee culture in Nigeria

  • Nigeria still largely tea & cocoa drinking country due to a national focus on coffee exports.
  • ~75% of Nigerian coffee consumers drink instant coffee
  • coffee shop culture in Nigeria is still in its early stages.

“If your coffee is high-quality, you need to focus on marketing so that people can recognise your brand,” she explains. “What’s more, if you sell consistently good coffee, people will drink it.” — Princess Adeyinka, founder of Happy Coffee in Nigeria.

Local consumption

Virtuous cycle:

“Nigeria has some high-quality coffee beans,” she says. “Between 90% and 95% of coffee consumed in the country is imported, so by sourcing locally, we can promote both local production and local consumption.”

It’s about education

  • Marketing is key
  • Consumer and producer education, even consumer-education by the producers

LaCoFe

Article 2

Origin Report - Colombia | Ally Blog at Ally Open

Domestic prices remain high in Colombia

  • Driven by a high C price
  • Also driven by higher quality of Colombian coffee relative to other origins.

Internal coffee prices have remained high in Colombia, driven by the relatively high C Market price, the devaluation of the Colombian peso, and the high differential paid for coffee from the country relative to other origins. Domestic prices reached a record high in February 2022 before dipping again in March, though the price holds at a high level compared to numbers dating back to January 2020 as reported in the chart below.

  • FNC supporting a farm-rejuvenation project:

During the year, planting density increased to 5,268 trees per hectare as farmers around the country continue renovating parcels of land as part of the Federación Nacional de Cafeteros de Colombia’s (FNC) replanting program. 81,304 hectares of farmland was renovated this year—exceeding the FNC’s goal of 80,000 hectares—bringing the country’s estimated total productivity potential to 14.7 million bags.

  • Public cuppings by producers to help educate consumers

At his café, La María in the city of Pasto, they hold public cuppings organized by the municipality’s administration with the aim of showing the people of Pasto the difference between commercial and specialty coffee, and the potential of this industry. They do this by holding talks and letting the clients of La María cup a commercial coffee, José Solarte’s Pink Bourbon Washed, and a stale lot of the same Pink Bourbon Washed [demonstrating the differences in quality].

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Transcript

This is the weekly coffee report from Oil Slick Coffee each week. I find a few coffee stories that pique my interest and discuss how I make sense of the story. This week’s episode is late compared to the first episode. I have a lot going on my wife and I just finished closing on a new house here in Portland.

And I also started the QP2 or Q processor pro renewal class through the CQI. And that’s gonna take me two weeks of online classes that run maybe two hours a day, each day. So what my daily existence has become is take those classes in the morning with the CQI and then head over to the new house where I am painting several of the rooms.

Uh, we didn’t care for the colors that the house came in. So we’re redoing some of that and we’re also, you know, kitting-out out the house you, we have. Little bits of furniture here and there that we need to buy. So it’s just taking a lot of time and I apologize. I didn’t get the episode out as soon as I wanted to for last week and this week is gonna be a bit short. So let’s jump into it.

The first article I’m gonna talk about is from the Perfect Daily Grind and the title of the article is "How Is Coffee Consumption Changing In Nigeria?" Now, this is… the two articles I’m gonna talk about tie into each other through the idea of local consumption. And I’ve written about this previously on my blog. It’s something that interests me and I think is good for producing countries and we’ll dig into that a little bit more here. Nigeria is still a largely tea and cocoa drinking country. And that’s due to a national focus on coffee exports. And that makes a lot of sense. If a country has a natural resource that they can sell, they’re better off selling it to whichever market gets them the most money and, and for coffee, that’s very often developed countries that have the, uh, disposable income to afford higher quality coffee.

So Nigeria exports, a vast amount of its coffee that it produces. Now. Some interesting statistics: of the few coffee drinkers Nigeria has they estimate that 75% of them drink instant coffee. That’s important because instant coffee is made from commercial-grade or commodity-grade coffee.

It’s not a high-quality coffee because you can hide a lot of imperfections in a little packet of 3-in-1, um, coffee where you add milk and sugar to it. So. If Nigeria is able to increase local consumption of higher quality coffee, that means that they could create a vicious cycle, a virtuous cycle, sorry, a virtuous cycle, and in this virtuous cycle, the increase in demand will hopefully force an increase in supply. And that will. Increase the cash flow within country from consumer to producer. And this is a quote from the article. "Nigeria has some high quality coffee beans. Between 90% and 95% of coffee consumed in the country is imported. So by sourcing locally, we can promote both local production and local consumption." And that’s the virtuous cycle I was talking about.

Now programs that increase local consumption are education programs and marketing programs. And what they need to do is educate the consumer about what is quality coffee, what is a locally-produced, quality coffee that is worth the, the local consumer to spend money on.

And we’ve seen programs like this successfully work notably in Colombia. Colombia had the Toma Café program in which they educated Colombians on the benefits of drinking coffee all day, not just in the morning. And they also educated, they, they released, uh, coffee recipes for drinks and they had this large, national drive to increase local consumption. And it was successful.

They did a pretty good job of increasing local consumption to the point where quality coffee could get a better price sold domestically than it could if it were exported. And therefore that created short run markets where the coffee was sold locally rather than being exported. And that’s what we want to see in Nigeria.

The program in Nigeria is, uh, I believe it’s the Lagos Coffee Fesitval. I think they’re turning that into the program and they’ve mashed up the, the Lagos Coffee Festival title into LaCoFe. and the theme of LaCoFe they’ve already had one event was "Coffee, Culture, and Community". And so that, that shows the, the focus is on driving local consumption through educating on what the culture of coffee consumption could be. And especially through locally-produced, quality coffee.

And another quote from the article is, um, ‘they want to build a base of knowledge on high quality coffee, and that needs to start at the producer level.’

And interestingly they’ve, they’ve had the country’s first ever barista competition. So that’s, that’s another way that you can. Stimulate a local coffee culture, is through these competitions. You get, everybody fired-up about their own local coffee. You have barista competitions, roaster competitions, brewer competitions, and that generates a buzz around the culture and the community.

But the, the, the primary necessity that’s gonna drive, this is disposable income. So you need an expanding middle class that is, um, that has some disposable income in order to spend it on the high quality coffee. So I did a, a quick and a rough and dirty research on the average salary in Nigeria. And what I found was it’s around $1,100 per month. Colombia is on par with that they’re around $1,200 a month. And then Brazil is at roughly $1,600. So to compare the three, you see that Nigeria is right below Colombia and since Colombia was successful with their Toma Café program, at around that salary, that average monthly salary range that gives me hope that Nigeria has the beginning, the very foundation for this local consumption.

Now, this ties into the second article that I’m gonna talk about, and it’s from Ally Open it’s, uh, a blog article and the title is "Origin Report: Colombia". A couple interesting things about this article. Um, number one, they talk about domestic prices being very high in Colombia, and that is supported by a higher C-price.

The C-market price is, um, it’s a futures price, and it’s largely speculative. There’s a lot that goes into the C-market price more than I’m gonna dive into on this episode. Uh, but know that the C-market price informs the price of coffee all over the world. And in Colombia it’s supporting their higher prices.

But their higher prices are also being supported by the quality of their coffee. So this is a quote from the article. ‘Internal coffee prices have remained high in Colombia driven by the relatively high C Market price, the devaluation of the Colombian peso, and the high differential paid for coffee from country, from the country relative to other origins. Domestic prices reached a record high in February, 2022 before dipping back again in March.’

So a couple of things I wanted to take from that quote, number one, the co the, the value of Colombian coffee is higher relative to other origins. And that’s because of the focus on quality. And this is important for countries like Nigeria that are spinning up a locally, uh, a local market for consumption of their own, high-quality coffee, because you can see that quality does increase value when it’s done properly, it can increase value. Um, you have to market it properly also, but, but you have to start by increasing the quality.

Some other points from this article, uh, this origin report; is the FNC is supporting a farm-rejuvenation project. And these are fascinating to me because, um, coming from IT [information technology], one of the things that we did in, um, information technology was if you have a firm and you have a bunch of computers all deployed in the firm, you rotate those computers every three years so that every three years, every individual gets a new computer, but to control costs both for the hardware and also the cost of swapping out somebody’s computer, you do typically 30, you replace 30% of your network every single year. So that every three years everybody gets eventually will get a new computer. Farm-regeneration is, is something that can be done similarly; you take a plot of land and over a span of three-to-five years, you replace a third or a fifth of that plot.

Now you do it. You time it like that with coffee, because coffee takes three to five years to reach economic maturity. Uh, it, coffee, coffee tree is a shrub and it has to reach the point where it’s reproductively mature to produce the fruits because the fruits are a reproductive organ.

And so the FNC in Colombia has been working with farmers to increase the density of their planting. So the more trees you have in a, in a given plot of land, the more coffee that plot of land can produce. Now there’s some give and take there. The more trees you have in a given plot, the more of your attention that plot of land has to have, the more inputs you have to put in, the more fertilizer, the more weeding you have to do, potentially. Um, so on and so forth.

Now, according to the article, the FNC is ahead of their goals on the rejuvenation project. And they’ve replaced 81,000 hectares of farmland with new trees, which is great. Uh it’s, according to the article, it, it brings the country’s estimated total productivity potential to 14.7 million bags.

And these are the kinds of programs that you get with a country that has both government and NGO support and private company support for the industry. You get rejuvenation programs. When I was in Indonesia, there was, I didn’t see any um, large-scale rejuvenation program for the farmers that was organized by either the government or NGOs or private industry.

So these are the kinds of things we like to see in countries. So it’s, I’m hopeful, going back to the, the first article I’m hopeful for the Nigerian project, that’s going to, uh, organize a drive to increase the, the price for high-quality, local coffee.

And then one of the other things that I wanted to bring out of this, this second article, the origin report from Colombia was the fact that one of the producers in the article, one of the producers held cuppings to educate consumers.

And so going back to, or tying that into the article about the Nigerian program; that’s one of the keys where you have, uh, producers educating consumers on what their quality coffee is. So according to the, the origin report about Colombia, they had two coffees from the same farm. One was fresh co a fresh roast coffee, and the other one was a stale coffee and they did a, a public coffee cupping.

To educate the consumers on the difference between stale coffee and fresh coffee. So it’s just simple things like that. For those of us who are professionals and who cup coffee all the time, we may take it for granted what stale coffee is. But with beginning consumers, consumers, beginning their, their journey into exploring coffee, they may not understand what stale versus fresh coffee is and what that tastes like. So things like this can be incredibly beneficial to the entire industry or the entire market, ‘cause you’re getting this circular, virtuous-cycle of education going that drives up demand that drives supply and it just works out like that.

So thank you for listening and tune in next week for another episode.