Mercanta

A Message from Lord Pickles and Lord Blunkett, followed by Mercanta's best practice article

The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Mercanta is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.

Blunkett signature Rt Hon The Lord David Blunkett
Pickles signature Rt Hon The Lord Eric Pickles

londonschoolofcoffee.com

THE PARLIAMENTARY REVIEW
Highlighting best practice
36 | MERCANTA THE COFFEE HUNTERS
Managing Director Stephen Hurst
Meeting with coffee producers
in Caicedo, Antioquia, Colombia
There are more than 20,000 coffee shops in the UK, a number
that’s expected to increase significantly in the coming years.
Behind this boom in coffee culture are the suppliers of the
unroasted (green) coffee beans: the raw material of the more
than two billion coffee beverages that are consumed globally per
day. Mercanta The Coffee Hunters are the “behind the scenes”
suppliers of premium differentiated unroasted coffee beans worth
more than £8 million per year to hundreds of specialty coffee
roasters in 45-plus countries, exporting from the UK to over 30
countries in Europe, Africa, the Middle East and Asia. Founder
and Managing Director Stephen Hurst tells
The Parliamentary
Review
how this enormous undertaking is carried out.
We began before specialty coffee was recognised in Europe; indeed, the Specialty
Coffee Association of Europe was only founded in 1998. As early adopters, the
going was difficult for Mercanta to begin with, as virtually nobody recognised or
appreciated the product we were selling. We had to sell our vision and educate
people about the product.
The product
Coffee is a shrub, a small tree, in the Rubiaceae family. The fruit is a cherry and
the seed is a coffee bean. There are two main species: robusta and arabica.
Arabica coffee is superior, more widely grown and made up of hundreds of
varietals, in much the same way as wine grapes are. Coffee is produced in 50 or
so mainly tropical-belt countries, 20 of which Mercanta stock and source from.
FACTS ABOUT
MERCANTA THE COFFEE HUNTERS
»Managing Director:
StephenHurst
»Founded in 1996
»Based in Kingston upon
Thames
»Services: Supply of specialty
unroasted coffee beans
»No. of employees: 23
Mercanta The Coffee
Hunters
37MERCANTA THE COFFEE HUNTERS |
BEST PRACTICE REPRESENTATIVE 2019
Mercanta’sbusiness has nothing to
do with the more commonly assumed
commodity – that is, industrial,
undifferentiated coffee beans. Instead,
it has everything to do with best-of-
harvest beans, intensive quality selection
and a multi-origin, multivarietal
extensive productcatalogue.
It’s also worth mentioning that we
are in the specialty beverage supply
business, not the coffee commodity
business. Importantly, we’re in the
farm-to-customer sector (coffee
roasting companies), making us
custodians of quality, as well as of
financial and logistical execution.
Specialty coffee beans, it should be
added, can be described as those that
score at least 80 (out of 100) on a
peer-group tasting analysis.
The customer
There are tens of thousands of coffee
roasting companies in the world,
ranging from industrial giants to
tiny artisans. The structure of the
coffee roasting business is similar
to the beer industry, in that a few
huge multinational brand owners
dominate the household names, while
countless local, craft, artisanal roasting
companies also proliferate. Mercanta’s
clients are defined by the quality of the
beans that they buy, rather than the
size of their company.
However, many, perhaps even the
majority, of our customers are in
the smaller craft and artisan sector.
To give some sense of the range of
scale, Nestlé UK roast more coffee in
a day than many of our clients roast
in a year. Our clients seek traceable,
ethically sourced, best-of-harvest beans
and considerable origin variety.
Sourcing, coffee labs,
expertise, producer partners
Mercanta provide specialty coffee to
roaster clients in over 45 countries,
with a farm-to-roastery guarantee of
fine coffee beans – the raw materials
for producing fine-quality roasted
coffee products. We achieve this with a
team of expert coffee tasters (cuppers),
intensive origin research and producer
partner selection (“coffee hunting”),
as well as a network of coffee labs at
origin and in consumer markets.
We distribute our coffee beans
through seven warehouses in North
America, the UK, Germany, Dubai and
Singapore. We have offices and coffee
labs in Seattle, Kingston upon Thames,
Glasgow, Dubai, Singapore, Hamburg,
Medellín and Guatemala City. Our
team comprises 23 employees from 11
nations. Moreover, our original coffee
producer partners come in a wide range
of sizes and types of organisation,
including one- to three-hectare farms,
larger family estates, co-operatives and
their individual member farms, grower
associations and groups, tiny farmers
grouped together at a collection point,
and substantial agro-farm groups. This
is because specialty quality coffee can
come from a number of sources, which
do not fit any simple template.
London School of Coffee
Recognising that information and
education are vital to understanding the
different coffee qualities, we established
a training, consultancy and educational
Mercanta global map
It has everything
to do with best-
of-harvest
beans, intensive
quality selection
and a multi-
origin,
multivarietal
extensive
product
catalogue
THE PARLIAMENTARY REVIEW
Highlighting best practice
38 | MERCANTA THE COFFEE HUNTERS
sister company called London School
of Coffee in 2005. The London School
of Coffee has a customised training
facility in Fulham, London, which offers
a wide variety of courses on-site, as
well as corporate events, consultancy
and training at client premises.
Ethics and pricing
The coffee business has attracted
considerable scrutiny regarding
ethics in purchasing, with confusing
and sometimes misleading claims
about ethics in sourcing. For years,
Mercanta have guaranteed an “origin
minimum” price of $1.80/lb for
all Arabica coffee purchases from
origin. Unlike the majority of our
competitors, all Mercanta business is
transacted at an outright fixed price.
While this may sound obvious, this
is not typically the case in the coffee
business, with purchase contracts
frequently transacted at premium and
discounted prices that are connected
to the commodity market price for
coffee. Consumers have no guideline
to judge the ethical claims. To offer
a perspective on this, the following
summary may prove useful:
»Commodity coffee price, August
2018: $1/lb
»Reasonable production cost estimate
for Arabica coffee: $1.50/lb
»Mercanta guaranteed origin
minimum price: $1.80/lb
»Mercanta average price paid for
origin purchases in 2018: $2.30/lb
»Cup of Excellence Best-of-Harvest
Auction average price: over $10/lb
»Cup of Excellence Best-of-Harvest
Auction highest ever price: over
$300/lb
Partnerships
Mercanta enjoy a strategic partnership
with Ecom Agroindustrial Corporation
(ECOM), a 168-year-old coffee, cocoa,
cotton and sugar merchant with
operations in 40 producing countries.
We operate entirely independently,
seeking to leverage ECOM’s vast
network for additional value-added
opportunities.
Challenges
Since our founding in 1996, when the
market for specialty coffee beans hardly
existed, hundreds of competitors have
entered the arena. Some are specialists
in certain origins, some are multi-role
service providers and some provide
part of the farm-to-roastery service
that Mercanta provide. The price gap
between ethically sourced specialty
grade coffees and commercially
available commodity coffees is also a
serious concern, as our clients compete
with coffee roasting companies, buying
raw materials at less than half the price.
The future
July 2018 saw Mercanta achieve single-
month sales of £1.07 million, the biggest
in our company’s history, which is a
platform for a great future. We opened
new offices in Dubai and Glasgow in
the last quarter of 2018, as well as
new premises for the London School
of Coffee. To paraphrase a quote from
elsewhere: the bitterness of poor quality
outlives the sweetness of low price.
We have offices
and coffee labs
in Seattle,
Kingston upon
Thames,
Glasgow, Dubai,
Singapore,
Hamburg,
Medellín and
Guatemala City
Ripe coffee cherries
at Finca El Tambor,
Guatemala

londonschoolofcoffee.com

This article was sponsored by Mercanta. The Parliamentary Review is wholly funded by the representatives who write for it. The publication in which this article originally appeared contained the following foreword from Rt Hon Kwasi Kwarteng.

Rt Hon Kwasi Kwarteng's Foreword For The Parliamentary Review

By Rt Hon Kwasi Kwarteng

This year’s Parliamentary Review reflects on a tumultuous and extraordinary year, globally and nationally. As well as being an MP, I am a keen student of history, and I am conscious that 2020 would mark the end of an era. It will be remembered as the year in which we concluded Brexit negotiations and finally left the European Union. Above all, it will be remembered as the year of Covid-19.

In our fight against the pandemic, I am delighted that our vaccination programme is beginning to turn the tide – and I pay tribute to the British businesses, scientists and all those who have helped us to achieve this. But the virus has dealt enormous damage, and we now have a duty to rebuild our economy.

We must ensure that businesses are protected. We have made more than £350 billion available to that end, with grants, business rates relief and our furlough scheme supporting more than 11 million people and jobs in every corner of the country, maintaining livelihoods while easing the pressure on employers. The next step is to work with business to build back better and greener, putting the net zero carbon challenge at the heart of our recovery. This is a complex undertaking, but one which I hope will be recognised as a once in a lifetime opportunity.

Through the prime minister’s ten point plan for a green industrial revolution, we can level up every region of the UK, supporting 250,000 green jobs while we accelerate our progress towards net zero carbon emissions.

With our commitment to raise R&D spending to 2.4% of GDP and the creation of the Advanced Research & Invention Agency, we are empowering our fantastic researchers to take on groundbreaking research, delivering funding with flexibility and speed. With this approach, innovators will be able to work with our traditional industrial heartlands to explore new technologies, and design and manufacture the products on which the future will be built – ready for export around the globe.

And I believe trade will flourish. We are a leading nation in the fight against climate change. As the host of COP26 this year, we have an incredible opportunity to market our low-carbon products and expertise. Our departure from the EU gives us the chance to be a champion of truly global free trade; we have already signed trade deals with more than 60 countries around the world.

As we turn the page and leave 2020 behind, I am excited about the new chapter which Britain is now writing for itself, and for the opportunities which lie ahead of us.
Rt Hon Kwasi Kwarteng
Secretary of State for Business, Energy and Industrial Strategy