The industry giant surprised the coffee world by swooping into a recent competition to buy the top-ranked beans, which now sell at its snazzy Capitol Hill roastery.
The Cup of Excellence is the coffee world’s foremost competition, a cross between “American Idol” and the Olympics that can bring a measure of profit and fame to farmers growing the most exquisite beans.
Held separately in 10 coffee-producing nations, it gathers an international jury of coffee experts to pick and rank the best coffees after days of blind tasting. An auction follows, in which specialty coffee roasters bid on the winning lots at prices that often flare up to $50 a pound.
That’s about 30 times the benchmark price for ordinary mild Arabica — and it’s paid only by the highest of the higher-end roasters and cafes, almost exclusively from coffee-crazy Japan, South Korea and Australia.
But at a recent Cup of Excellence auction in Brazil, an unlikely entrant — Starbucks — made a splash when it bought the entire lot of the top-ranked coffee, from a family-owned farm in southeastern Brazil, for $23.80 a pound.
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Now the coffee is being sold exclusively at the company’s Reserve Roastery and Tasting Room on Capitol Hill for $80 a pound, or about $7.50 for a cup.
Starbucks coffee buyer Ann Traumann, who discovered what’s been dubbed “Sítio Baixadão” (pronounced SEE-tee-o by-sha-DAH-o) during a blind tasting as a juror at that Cup of Excellence competition in January, describes it as having a mango-like flavor, with tropical fruit aromas and a creamy finish. “I had never drunk coffee like that,” says Traumann.
Many in the very-high-end side of the coffee industry were surprised to see Starbucks buy that lot. Until then the company had been a stranger to these auctions, mainly because they don’t offer the massive quantities of reasonably priced coffee it needs. In 2014, the company paid for its coffee an average $1.72 per pound.
But Starbucks now is working to shed its middlebrow image and regain control of the very top of the coffee market, where in the last decade it lost ground to the likes of Portland’s Stumptown and Chicago’s Intelligentsia Coffee. (Intelligentsia on its website sells a Burundi 12-ounce bag of coffee for $130.)
To that end Starbucks is boosting its Reserve brand, through which it sells more exclusive, and expensive, beans.
The ultimate showcase for this brand is the Capitol Hill roastery and cafe, a veritable coffee Disneyland, where the best of the company’s savoir-faire is on display. Coffee there is described in the overwrought prose usually associated with wine tasting.
A Starbucks employee at the roastery recently described the Brazilian coffee bought in the auction by Traumann as tasting like olives. A little card handed out at the roastery says it has “head-spinning sweetness and complexity,” and “green apple-like acidity” in addition to hints of “mango and crushed dark fruits.”
The card cites Traumann, in a bout of lyric anthropomorphism, characterizing the coffee as a Brazilian man. “I fell in love with a Brazilian,” whom she recognized “by his perfume and knew right away he would be my favorite.”
Traumann’s passion for the coffee “would not be denied,” says the card, so Starbucks ended up with the whole lot.
The entrance of a giant such as Starbucks is likely to add to the disruption of a small market that was already heating up — the average price of beans at the Cup of Excellence has grown 21 percent in the past two years as Asian and Australian buyers competed for the best lots. Purchases by Starbucks may make it even more competitive.
Experts, however, say that Starbucks will bring this rarefied market out of relative obscurity. “I think it’s going to bring a big shining light on it,” says Stephen Hurst of Mercanta, a specialty coffee trading outfit based in London.
In a world where most beans trade at rock-bottom prices based on commodity markets, or through opaque deals made with a handshake, the Cup of Excellence is an example of unbridled transparency and sustainability, says Hurst. So if Starbucks’ participation makes it more well-known, all the better, in his view.
“Will it drive prices to insanity and whatnot? Somebody is paying insane amounts of money for coffee from civet cats in Thailand,” he says, describing that as a gimmick.
“At least here if you’re spending lots of money, you’re spending it correctly.” Moreover, most of the money goes directly to the farmer, he says.
Debbie Hill, executive director of the Portland-based Alliance for Coffee Excellence, which holds the Cup of Excellence contest and auctions, says Starbucks may extend some of its brand power to the rest of the high-end coffee market.
“To the extent Starbucks is able to expose (Cup of Excellence) coffee to its large consumer base, that will have a very positive impact,” she says.
Coffee has historically been traded as an easily replaceable commodity product, its finer nuances lost to most bulk buyers. But a growing specialty movement led some quality-hungry coffee buyers to hold the first Cup of Excellence award and auction in 1999.
It was a way to bring the highest quality beans to the surface — and to encourage farmers to produce them by paying good prices. By last year the program had resulted in more than $40 million being paid to these farmers.
The association holds competitions from Rwanda to El Salvador. The three-week selection effort would make the Miss Universe franchise proud.
During the first two weeks, a national jury is selected and holds so-called “cuppings” — blind tastings of dozens or even hundreds of samples sent in by local farmers. They grade coffees on a 100-point scale similar to the ratings used for ranking wine.
Those coffees that get more than 85 points after each week make it to the next round of competition, which leads to a third so-called “International Week,” judged by 15 to 25 coffee experts from around the world.There, all coffees are cupped twice; those that get more than 85 points get a Cup of Excellence designation. The top 10 coffees are cupped a third time for a final ranking.
Premium coffee buyers often pay from $8 to $50 per pound for the winning coffees, which come in small batches; that’s significantly more than what the traditional market would pay.
The record price at a Cup of Excellence auction is $80 per pound, for a No. 1 coffee in Guatemala in 2008.
But more importantly, Hill says, the growers get recognition that may lead to profitable direct relationships with buyers.
It’s “like winning the gold medal at the Olympics,” Hill says.
In the subjective world of coffee tasting, this contest is as objective as it gets: To become an international juror, one must have at least three years of professional coffee-tasting experience. And first-time participants attend as observers — meaning their scores don’t count. If they’re on the mark, they’re invited to become full-fledged jurors at future events.
Traumann, the Starbucks coffee buyer, is from Le Havre, a bustling Norman port city where her grandfather became one of the first specialty coffee importers in France.
The 30-year-old was a coffee buyer in Hamburg, Europe’s most important coffee port, when Starbucks in September recruited her to head the sourcing for the Reserve brand. Now she scours the world from her base in Switzerland to discover the beans that will make Starbucks shine in the world of high-end coffee.
That quest led her last January to Brazil, where she was a juror at one of the two Cup of Excellence competitions annually held in that country. She cupped the coffee she eventually found would be Sítio Baixadão three times.
“The first time I knew: This one is the winner,” she said of the coffee.
The coffee scored a record high of 95.18 points in that particular Cup of Excellence, which ranks Brazil’s so-called “natural coffees” — meaning the coffee cherries are dried out in the sun instead of having their pulp washed out. After the coffee scored No. 1 and the auction started, she decided to bid on it and bought the whole 2,000-pound lot.
The coffee now is offered just at the Capitol Hill roastery; eventually it might be sold in a few stores and online — until it runs out.
Traumann says Starbucks is not going to hog all the Cup of Excellence coffee going forward: She will only attend a few of the events, and only go for the stuff she really, really likes. And despite Starbucks’ big pockets, she says she won’t engage in unreasonable bids.
Hill, the Coffee Excellence group’s executive director, says the influence of Starbucks, which many years ago was critical to changing the way Americans think about coffee, now might whet consumers’ appetite for the best beans.
“I would hope that would drive demand for (Cup of Excellence) coffees at their local coffee shops and roasteries, in turn leading to increased purchases” by other U.S. importers, she says.