Recap #10 | May 28, 2020

 
 

Welcome to Recap, a brief overview of recent coffee developments every two weeks from the Specialty Coffee Association, made possible with the support of DaVinci. 

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Organizers of the inaugural Ethiopian Cup of Excellence competition were undeterred by the onset of a global pandemic. In April 2019, Alliance for Coffee Excellence (ACE) announced that it would run the first-ever Ethiopian Cup of Excellence program in 2020. According to Dr. Adugna Debela, Director General of the Ethiopian Coffee and Tea Authority, the competition was held by sending coffee samples to each member of the jury rather than bringing them to Ethiopia as originally planned. Three coffees, all from the Sidama region, scored more than 90 points in the competition, each receiving the Presidential Award. All of the top 28 coffees will be sold in a record-breaking online auction on June 25. 

An ongoing story in coffee investments, first noted in December 2019, also came full circle this month: JAB Holdings has announced the planned initial public offering, or IPO, of JDE Peet’s on the Amsterdam Stock Exchange. A combination of Jacobs Douwe Egberts and Peet’s Coffee, JDE Peet’s holds a sizable coffee brand portfolio across traditional roast and ground coffees as well as soluble coffee, on-demand systems, and compatible products. The impending JDE Peet’s IPO confirms that, despite recent difficulties for China’s Luckin Coffee, investors continue to see the potential in coffee companies to deliver profits. In another example, Kopi Kenangan, an Indonesian startup founded in 2017, has just raised US$109 million in Series B funding. As a part of the funding round, Eduardo Saverin—famously known as the co-founder of Facebook—will join Kopi Kenangan’s board of directors. The company aims to provide a mid-market coffee option that celebrates Indonesian and South-east Asian flavors. As specialty coffee’s popularity continues to surge in local and global markets, it’s interesting to note the degree to which larger companies—like JDE Peet’s, Luckin Coffee, and Kopi Kenangan—are leveraging it to engage investors. When considered in concert with the uneven distribution of the additional value specialty coffee offers on top of lower-quality products, the market’s current belief in the “profitability” of specialty coffee could hamper efforts to redistribute value along the chain more equitably. 

And finally, as COVID-19 continues to impact coffee producers around the world, reports of government aid and agricultural support continue to make headlines. In Honduras, an unprecedented executive order has declared agroindustry support a national priority. A number of programs, including the “Presidential Coffee Bonus,” “Solidarity Productive Bonus,” and the “Family Agriculture Program” all provide financial support in different ways to small and medium coffee producers. In Uganda, coffee production was labeled “critical” in a presidential directive. With the government’s support during their March lockdown, Uganda coffee exports increased by 38%. In return, the Uganda Coffee Development Authority mobilized its members to donate coffee, maize, fuel, medical equipment, and other essentials to communities in need, including frontline workers. 

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