Ethiopia's specialty coffee sector offers a mosaic of flavours coming from a rich Ethiopian coffee heritage and diverse growing regions. As competition for top Ethiopian coffees continues, having a clear contracting strategy matters. One approach worth paying close attention to is early contracting. Below, we break down why early contracting plays an important role in Ethiopia, especially in a context shaped by political uncertainty, climate-related risks, and shifting economic conditions that impact the specialty coffee market.
Benefits of Contracting Coffee Lots Early
Financial Leverage for Suppliers
Advanced contracts (not to be confused with futures contracts) are more than just an agreement, they're financial instruments for specialty coffee suppliers. They enable suppliers to secure favourable bank loans and, in turn, empower us to source premium Ethiopian coffee more efficiently. By showcasing commitment through early contracts, suppliers are granted better loan terms, making it feasible to procure and produce more coffee.
Guaranteeing Quality
Early contracts provide coffee buyers with a security blanket. We get to cherry-pick from the latest arrivals from our extensive network of producers, suppliers, and shippers. This ensures we're procuring the highest-quality Ethiopian coffee every time. Early contracts can also safeguard against potential moisture issues, which occasionally arise due to post-harvest weather patterns.
Priority Access and Streamlined Allocation
Early contracting is a declaration of trust in our specialty coffee suppliers. This established faith translates into benefits: from privileged access to premium coffee samples to a fast-tracked allocation process when the coffee reaches Addis Ababa warehouses.
Furthermore, with an early contract, we're often granted exclusive entry to suppliers' warehouses, enabling us to handpick the finest Ethiopian coffee lots upon arrival and promptly identify stock lot samples. This holistic approach provides insights into a washing station's quality and positions us to ship premium coffees efficiently. In essence, an early contract in the Ethiopian coffee industry is a VIP pass, ensuring preferential treatment and reflecting the trust in our business relationships.
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Essential for the Supply Chain
Early contracts aren't merely a purchase order; they're pivotal for the Ethiopian coffee supply chain. Both exporters and Ethiopian banks rely on these contracts as collateral for loans. This financial backing facilitates exporters to quickly secure the best red cherries at the onset of harvest.
Maximising Quality: The initial harvest period yields some of the best cherries. Securing them promptly ensures premium coffee.
Competitive Edge: Quick procurement ensures exporters are not left with leftover coffee of lower quality.
Consistency in Supply: By procuring quality cherries early, exporters can maintain a consistent supply of specialty Ethiopian coffee throughout the season.
Predictability & Planning: Early procurement allows exporters to better predict stock, plan logistics, processing, and coffee shipments efficient.
Ensuring Prompt Shipment: Washed coffees are processed first, and early contracts ensure buyers are at the forefront of the queue, saving weeks in shipping time and costs.
Because of this, it is often better to contract a mixed container with one type of process. For example, contract a full container of washed coffees (with different lots of your choosing) for shipment in February, and if a full container isn’t needed, additional bags of natural coffees can be consolidated with other roasters or shipped in a smaller container later.
Ensuring Prompt Shipment
Washed coffees are processed first (by regulation), leading them to be the initial ones shipped. An early contract ensures buyers are at the forefront of this queue, potentially saving weeks in shipping time and associated costs.
Because of this, it is much better to contract a mixed container with one type of process. For example, you can contract a full container of washed coffees (with the different lots of your choosing) for shipment in February and (if you don’t want a full container) additional bags of natural coffees to either be consolidated with other roasters in your area or to be sent in a short container later (at a slightly increased cost).
Demonstrating Commitment & Trust
Contracts signify commitment to what is often a complex process. When buyers have a clear idea of the profile, grade, volume, and region they’re looking for, allocation becomes much more straightforward. Buyers can approve pre-shipment samples quickly and receive their lots without delay.
Early contracting in Ethiopia is a way to invest in quality, long-term relationships, and shared growth. For buyers, it helps secure access to top Ethiopian coffees and creates a more stable, transparent flow from farm to roastery to cup. Commit early, and set yourself up for a strong season ahead.
