Transcript BD Imports
Slide 1
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 2
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 3
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 4
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 5
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 6
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 7
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 8
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 9
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 10
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 11
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 12
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 13
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 14
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 15
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 16
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 17
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 18
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 19
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 20
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 21
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 22
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 23
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 24
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 25
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 26
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 27
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 28
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 29
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 30
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 31
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 32
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 33
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 34
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 35
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 36
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 37
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 38
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 2
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 3
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 4
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 5
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 6
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 7
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 8
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 9
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 10
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 11
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 12
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 13
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 14
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 15
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 16
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 17
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 18
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 19
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 20
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 21
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 22
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 23
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 24
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 25
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 26
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 27
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 28
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 29
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 30
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 31
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 32
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 33
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 34
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 35
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 36
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 37
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS
Slide 38
BD IMPORTS
purveyors of exceptional quality
specialty-grade coffees
agenda
A Closer Look At Coffee
From the Crop to Your Cup: the Kenya Road
Kenya, Coffee and the World
Selecting the best for BD Imports
2
a closer look at coffee
The Business of Coffee in the US
Where Coffee Grows
The World of Kenyan Coffee
Botanical Species
Grades
Crops: Growing Seasons, Regions & Harvest
3
the business of coffee in the US
Second largest US import, after petroleum
Two types
Robusta
National brands, e.g. Folger’s, Maxwell House
Arabica
Specialty coffee houses, e.g. Starbucks, Peets
Imported from more than 80 different origins
Fewer than 100 US-based importers of
specialty-grade coffees
4
where coffee grows
The Americas
Southeast Asia
The Middle East
East Africa
5
kenya—botanical species
Five different
botanical varieties
K7- older plant
SL28 – older plant
SL34 – older plant
Ruiru 11- newer more
pest resistant, higher
yield
Blue Mountain
6
grades of kenyan coffee
Up to 8 different grades of coffees marketed
AA Largest bean size (7.20 mm screen); highest prices
AB Smaller bean size (6.20 mm screen); good prices
C
Smaller than AB
TT Light, ragged beans separated from other grades
E
“Elephant”—two beans joined together
PB Grows as one bean in a single cherry; 10% of crop
T
Smallest, thinnest beans; chipped, broken, flawed
Buni Not wet-processed, fell from trees; 7% of crop
7
marketing confusion
Brand names given to Kenya AA by exporters
and/or importers
AA Top
AA+
AA FAQ
AA Minus
Private label name
8
growing seasons
jan
feb
mar
apr may jun
jul
aug
sep
oct
nov
dec
main crop to auction
60% of total crop
harvest main crop
fly crop to auction
harvest fly crop
40% of total
crop
9
growing regions
Nyeri, Kirinyaga, Embu,
Muran’ga
Location: from
Slopes of Mt. Kenya N & NE
Altitude:1500m – 2100m
Varieties: SL28, SL34, Ruiru
(>1.5%)
Rich volcanic soil
Main-crop coffees
20% of produce is
top category
10
growing regions
Meru
Location: Slopes of Mt. Kenya
During 1987/88 coffee price
recession, farmers abandoned
crops
11
growing regions
Kiambu, Ruiru, Thika
Location:
N/NE of Nairobi
Altitude: 1500-2100 m
Rainfall: 1000m3
Climate:
7-32 degrees C
Varieties: SL28, SL34,
Ruiru 11
Typically, average
main-crop coffees
Ruiru planted on a
large scale will soon
come to market
12
growing regions
Machakos
Location:
Eastern Region
Altitude: 900-1400m
Semi-arid climate
Early Crop coffees
13
growing regions
Makuyu, Donyo,
Sabuk, Mitubiri
Location:
E/SE of Nairobi
Semi-arid climate
Early Crop coffees
14
from the crop to your cup—
the kenya road
The Business of Coffee in the US
Purveying Specialty-grade Kenyan Coffee
The Market Today: Critical Times for Kenyan Coffee
From Crop to Cup: the Kenyan Road
Our AA From Kenya to Consumer
15
purveying kenyan coffee—
the Kenyan Coffee Auction
All Kenyan coffee sold
at auction on Tuesday
mornings by authorized
marketing agents
±100 licensed
buyers/exporters
Buyers get samples 10
days prior to auction
16
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
17
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Moves coffee from Nairobi to
port of Mombasa via rail or truck
Loads 44,000 lbs (300 x 132-lb bags)
onto steamship container
Prepares appropriate documentation
for US Customs
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
Exporter
Certificate of Fumigation
Bill of Laden
Certificate of Origin
Commercial Invoice
Phytosanitation Certificate
* Relative to crop and conditions
18
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
3 – 9 months*
KENYA
Auctioneer
Exporter
* Relative to crop and conditions
19
from the crop to your cup—
the kenya road
7 changes of hand within
country of origin
Farmer
Cooperative Society
Union of Cooperative Society
Miller
Marketing Agent
AND
3 – 9 months*
KENYA
Auctioneer
Exporter
Importer
Coffee
retailers and
distribution channels
3-4 weeks
Up to 4 changes of hand
before arrival in US
Distributor
Roaster
(e.g. restaurants,
grocery stores)
CONSUMER
* Relative to crop and conditions
20
our AA from kenya to consumer
Our quality assurance process
After auction, 10 lbs of each purchased lot
from Nairobi
At departure, 10 lbs from port of Mombassa
On arrival, 2 lbs from our warehouse (CA/NY)
We make sure that the coffee we get
is the coffee we bought.
21
kenya, coffee and the world
Kenya and Coffee
The Market Today:
Critical Times for Kenyan Coffee
Prognosis: Positive
22
kenya and coffee
Coffee represents 20% of Kenya’s exports
2000/1: 1.2MM 60K bags = ksh 10.2bb
2001/2: imports up marginally
Coffee employs ±250,000 Kenyans
60% small scale growers
40% plantations
Coffee production presently in decline
23
kenya—export trade matrix
Kenyan Coffee Exports (60-k bags)
Importer
Germany
Netherlands
Belgium
Sweden
UK
US
2000
2001
387,166
137,339
98,936
86,438
66,677
63,567
430,018
132,129
95,990
89,158
44,305
81,713
24
the market today:
critical times for kenyan coffee
MY
1999/
2000
101.000 MT
produced
110
100
90
MY
2000/1
51.700 MT
produced
50% decline
80
70
60
50
MY
2001/2*
53.000 MT
estimated
marginal
increase
40
30
20
10
0
Metric Tons per Market Year
Source: GAIN Report, US, 2002. NB: MY = market year, MT = metric ton
25
the market today:
critical times for kenyan coffee
Reasons for production decline
Low farmer morale
Poor market prices
Seedling prices rose from ksh 10 to ksh 201
—small farmers can’t afford new plants2
Ongoing national coffee reforms
Kenya Coffee Act (April 2002) completes first phase of
liberalization of coffee industry; seen as promising
Exceptional-quality Kenya AA will be more
prized and more rare in the future
1 USD 1 = ksh 78
2 Source: GAIN Report,
US, 2002
26
2002/3—a positive prognosis
2002/3: estimated production 70.000 MT—up 20%
Good weather, improvements in husbandry and higher
market prices all support high expectations
Prices USD/50K bag green:
1999/2000:
USD 84
LAST WEEK
2000/1:
USD 68
>USD 200/50k bag
2001/2:
USD 120
Investment ops in coffee farm inputs and value-adding
equipment (coffee roasters, milling)
Stabex Funds have facilitated important strides
at farmer level
10 April: EAFCA’s first internet auction fetched record price
(Ueshima Coffee Co. of Japan; USD 453/50k bag)1,2
Co-op Bank of Kenya Limited considering wiping out coffee
farmers’ old interest (12-13% interest rate)
1EAFCA
= Eastern Africa Fine Coffees Association.
2
Source: GAIN Report, US, 2002
27
selecting the best for bd imports
Our Eyes and Ears At Auction
Exceptional Kenya AA
Socioeconomically Responsible Coffee
The BD Imports selection process
28
our eyes and ears at auction
Native-born, world-travelled professional
50+ years in Kenyan coffee industry
Represents BD Imports exclusively
Is a primary part of our direct link to source
29
our strategy
“Cost+profit” model vs “C-market” model
Study auction reports to determine
age of coffee
Sample coffees throughout the process
Purchase small auction lots from top
growing regions
Purchase 95% Main crop coffees
Further sort lots at origin if necessary to
remove broken/discolored beans, shells
and chips
30
our standards
The real thing—as fresh as can be
Within 1 week after purchase
coffee leaves Kenya
No blending of lots
No re-naming of lots
We use Lot number and Cooperative Society name
as per auction; eg, Lot 157/Mushagara-Kirinyaga
31
exceptional kenya AA
Mushagara/Kirinyaga
132-bag lot fetched highest price at mid-March
auction and was most sought-after by many
aggressive buyers
Mushagara grown by cooperative society in
Kirinyaga region on the slopes of Mt. Kenya
Altitude:
Climate/ Rainfall:
Temperature:
Varieties:
Production:
1500-2100 m
1000 m3 per annum
7-32 degrees C
SL28, SL34, Ruiru 11(>1.5%)
8852 tons per annum
32
the bd imports selection process
Our buyer sends us a sample of each of the best
exceptional AA crops
We send cupping samples to each of our clients, and
we cup the same ourselves
We set purchase guidelines for buying fresh green
beans based on the individual preferences and needs
of our clients, and import them directly ourselves
Each shipment is warehoused for distribution in our
facilities in CA and NY
bd imports
believes
Consistently
Experiencing
The
very bestand
the
roast
honestly
best
always
Kenya
purveying
starts
AA should
the
always
with
the
bevery
like
amakes
safari
beans.
in aBD
cup.
best
Kenya
AAbest
the
difference.
33
BD Imports and you—
a winning partnership
Sole US importer of many distinctive crops of
Kenyan AA
Larger importers shun smaller producers who can
afford to devote time and attention to superior crops
Niche created for dedicated specialty importers while
cornering specialty crops among few competitors
Competitive pricing model permits profit while
not outpricing product
Quality is our object, not quantity
Purveyors of “socioeconomically responsible”
specialty green coffees
34
changing the world one cup at a time—
socioeconomically responsible coffee
We view growers as an
extension of our business,
therefore also of yours
Specialty coffee imports
provide vital means
for sustenance and
progress for small- to
mid-size growers
Importing specialty
produce means “giving
back” to coffeegrowers
directly, since much of the
profit from export does
not reach growers
Supporting specialty
growers promotes
clean agriculture and
“quality over quantity”
in export coffee
While bringing specialty
Kenyan coffee to the world,
we also bring the world to
Kenyan coffeegrowers
Information is power
35
summary
More and larger roasters are discovering the quality
difference BD offers
Direct link to origin
Solid relationships with buyers and growers of
our product assures supply and integrity
Socioeconomically responsible product and practices
Specialty coffee attracts exceptional clients, like ours
and yours
bd imports’
forecast
•more individualized services
•expanded focus of target imports
36
BD IMPORTS
THANKS YOU!!
BD IMPORTS