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THE TROUBLE WITH MICRO-LOTS?

The Pros and Cons
of This Macro-Trend

A PROFESSOR OF MINE told me once that a quick way to succeed in the academic world was by choosing a grand topic and then micro-analyzing a tiny fragment of that issue. A particular sentence of a Henry James novel for example, a 10-second sequence of notes from “Kind of Blue,” or a single scene or camera angle from one of Hitchcock’s masterpieces. The net result of these miniscule anatomies is that anyone can become an expert if they look hard enough at a given thing for a long enough period of time. And perhaps this logic can extend to coffee, where in the last few years the industry has become increasingly aware of micro-lots, those small chops of (theoretically) superior or nuanced coffee. Many roasters have built reputations based on quality and the pursuit of rare coffees, in much the same manner my professor urged me to seek out the academically microscopic.

     With that in mind, what follows should not be read as a critique of the micro-lot movement per se, but rather the exploration of a small roaster faced with the reality of paying an increasing amount of attention to those diminutive parcels of coffee. I’ll leave the economical analyses of the micro-lot movement in relationship to the macro-machinations of the coffee industry to someone with an advanced degree in economics.

Micro-Lots Defined

Before delving into the discourse surrounding micro-lots, it might be useful to define our subject. I like to imagine the greater micro-lot movement by looking at the coffee-producing topographies of the planet as if I were using Google Earth, panning in on a particular landscape from outer space until I can imagine standing amongst the coffee trees themselves, neck deep in ripe cherries or blossoms.
     “Micro-lots are the most manageable way to control quality to the utmost degree: one farm, one field, one day, etc.” says Tracy Allen, vice president of Zoka Coffee Roaster and Tea. Allen’s simple definition is extremely elegant and useful: just think specifics. Essentially, micro-lots are the nano-technology of the coffee industry, a kind of surgery on the crop, extracting a specific segment of the harvest endemic to one specific area on the farm. This attention to detail will also extend beyond the geographical separation of the cherries to the preparation, where exacting measures are enforced to produce something exemplary inside the cup. Thus, micro-lots cannot just be thought of in the physical sense; there is the subjective matter of taste to consider as well.
     And according to Allen, “Micro-lots are not new, they are just experiencing a typical cyclical business cycle that has brought them back into focus. This time however, it seems they are here to stay, given their warm reception and the number of bidders working with farmers to improve their lots. Small-batch roasters taking care of micro-lot growers seems like a marriage made to last.”

First Impressions

My own experience with micro-lots began in the spring of this year when I met with Sebastien Lafaye of Café Coop de Costa Rica and learned about the extraordinary efforts underway to separate out about 75 different micro-lots.
     After the typical lengthy airplane ride and frenzied drive through San Jose, I reached Café Coop’s offices in the gloaming of a March evening as far-away rain clouds worked fingers of rain over a range of foothills. Sebastien offered me a cup of coffee and began recounting the challenges of Café Coop’s micro-lot project and the myriad rewards: greater prices for the farmer, increased quality and nuance for the roaster and consumer, and perhaps an idiosyncratic product with a unique and marketable back-story.
     Well aware of the micro-lot movement and interested in his offerings, I inquired about the availability of his lots. I was then treated to a veritable who’s who list of formidable U.S. roasters, many of whom had already selected some lots or would be traveling to Costa Rica just after my departure to select their lots.
     My trip to Costa Rica ostensibly planned around visiting the DOTA Cooperative, I finished my cup of coffee and bid Lafaye adieu. Another vehicular escort had been arranged to see me through the mountains to the town of Santa Maria de DOTA where I would spend the following days touring the production facilities and farms with Roberto Mata Naranjo, the general manager of CoopeDOTA.
     The next morning, Naranjo’s SUV was pitching on the mountain two-tracks not utterly unlike a yacht in heavy chop. Armed with a dashboard altimeter, he announced our ascent into the cloudless sky as we skirted by parcel after parcel of coffee, the DOTA valley extending in all directions, a giant bowl of coffee cupped by the mountains and sky. Giant eucalyptus trees towered in places over the road, their bark a green Technicolor rainbow. The last of the season’s pickers moved almost imperceptibly between the rows of coffee, filling baskets and chatting in low tones. We disembarked the vehicle high in the mountains to examine some plants and speak to a farmer ready to drive his coffee cherries down the steep road to the beneficio for processing. As Naranjo spoke to the farmer, I had a chance to examine the topography before me, the specific arroyos and vegetation, the dramatic declinations and patches of dark shade beneath pockets of mature trees.
     Presented with this vista, I could for the first time truly understand both the challenges and rewards Sebastien had illuminated for me the night earlier. Before the emergence of micro-lots, ALL of this coffee was being prepared in the same bags, in spite of the land’s specific idiosyncrasies, the farmers’ efforts, or the happenstance of agriculture. Shouldn’t roasters and consumers have access to the most beautiful of those beans? Shouldn’t the farmers be rewarded for their outstanding efforts, both with monetary rewards and critical fame? But then too, what will happen to the overall production of CoopeDOTA coffee without those micro-jewels? Will the quality of that terrific coffee decline?

Quality

The essence of the micro-lot movement is the search for rarified quality. A micro-lot really isn’t attractive without some remarkable attribute inside the cup.
     As Andi C. Trindle of Volcafe observes, “I absolutely believe that the micro-lot movement has contributed to improved recognition of quality, and maybe to quality itself. By separating out the very best beans from a single small plot of land, it is possible to identify what makes coffee truly great in the cup and this is an interesting and often exciting proposition. Not only does it put exquisite coffees into the marketplace where we can drive consumer demand for top quality, but it teaches the farmer about what we are looking for (and what the market is willing to pay for) in terms of quality.”
     Allen concurs, “Now we no longer have to take ‘the good with the bad,’ or average for that matter. This creates another point of difference between our company and our competitors that brings added value to both the grower and end user.”
     But one glaring repercussion of the micro-lot movement is its other effect on quality. How can a farmer or cooperative isolate or skim the top-quality beans of a given harvest and market them in small lots without diminishing the quality of the rest of the harvest? Don’t those uniquely superior beans add something to the overall production value? It seems that many farmers, in an effort to produce a small quantity of superior-quality coffee, have perhaps ignored the remainder of their harvest and a more holistic balance is in order.
     “Over time, a smart farmer will utilize some of the premiums received to invest in maximizing the amount of top-quality coffee that can be potentially served as micro-lots,” suggests Trindle. “It is in everyone’s interest for farmers to invest in quality improvements of their coffee. The challenge, of course, is that the coffee that is left in the main lot has now lost the very best beans that would have contributed to its overall quality. In some cases, this can lead to a noticeably diminished quality for the main lot.”
     Aside from any potential risk at the farm level in relation to the micro-lot movement is the implication of how this extraction of quality beans from the overall production can affect various roasters. For example, the roaster who has purchased a specific micro-lot from Farm A versus the roaster who has bought bags of the general production from Farm A.
     “My first recognition of the down side of micro-lots from a roaster’s perspective came when one of my larger roasting clients, who does have some budget to travel, expressed frustration that their company experienced a loss of quality in a coffee they had been buying and supporting for years when a notable roaster came in and offered high premiums for skimming the very top quality beans from the farm,” Trindle says. “This client was very ambivalent, believing that it was great for the farmers to get the money and to gain better recognition of top quality, but also felt saddened that they had to seriously consider whether they could continue to work with the coffee that was left after the micro-lot selection. I’m not sure how this particular situation worked out, but it certainly indicates that farmers should be careful about short-term thinking when they make these arrangements.”
     For most roasters, the scenario Trindle outlined above is moot, as for the moment many farmers globally have yet to join the micro-lot movement, and hence, their overall production hasn’t been affected, but perhaps, in the near future, one of your favorite farm’s or cooperative’s coffee will taste slightly different—and not for the better.

Access

Throughout my stay in Costa Rica I simultaneously marveled at and fretted about the clout of some roasters in their seemingly fanatical pursuit of fantastic micro-lots. Of course I don’t begrudge those roasters their market access or ability to buy great beans. I want farmers to be encouraged to seek the highest quality and selfishly I want to taste the best coffees available. But it can be frustrating for a smaller roaster to follow in the wake of those industry luminaries, and one begins to wonder if it is even possible for a small roaster to access these lots of coffee.
     When approached about the accessibility of these small lots from a small roaster’s perspective, Kayd Neill of Elan Organic Coffees responded by saying, “I do believe that small to mid-size roasters can obtain these high-quality micro-lots. If clients request we source a specific lot, we will do our best to make this happen. Also, since we have a number of clients interested in purchasing only the highest-quality coffees, we will have no problem selling the rest of the lot/container if the person who requested it cannot commit to the entire amount of bags.”
     Back inside the smoky interior of the Johnson Brothers roastery, Neill’s comments felt reassuring in the wake of an expensive origin trip, and each and every broker I contacted thereafter echoed her sentiments. Small to mid-size roasters may find solace in the knowledge that as long as the roaster is willing to pay for the coffee, access is available through brokers armed with much more substantial travel and purchase budgets. There might not be a need to run out and secure that American Airlines credit card quite yet. Apparently where there is a will in specialty coffee, there is a way.
     Small to mid-size roasters should also be reminded of almost any cupping they’ve attended where four or more cuppers are comparing notes: sometimes consensus is almost instant, and sometimes not. The point is, roasters traveling non-stop to origin and cherry-picking micro-lots does not mean that their palates are infallible. Their ninety-point coffee may be your eighty-point coffee.

Enter the Auction System

For a small roasting company like PT’s Coffee based out of Topeka, Kan., the auction system satisfies a number of needs, not the least of which is quality.
     “The auction system is a great way to identify outstanding producers,” says Jeff Taylor of PT’s Coffee. “Producers who know how to grow and identify the most outstanding plots and micro-climates within their farm. Then they make the extra effort to sort and process these coffees separately to gain the extra price. It is an amazing amount of work and not all farmers are willing to do it.”
     The auction system has other advantages as well. “It’s easier in some ways,” says Michael Johnson, president of Johnson Brothers Coffee Roasters, the company for which I work. “A lot of the work has already been done for us. The sourcing, the sample roasting, the cupping. We still have to double cup back at the lab, but a good deal of the work is already done. A jury of globally respected judges cups all those coffees. The best of the best has been identified for us, in some cases by our friends and colleagues, people whose palates we know. These are roasters we’ve even teamed up with in the past.”
     For small roasters without much of a budget to source at origin, the Cup of Excellence program (or similar auction programs such as the Best of Panama, Pride of New Guinea, etc.) may be an attractive option; a chance to buy micro-lots from the comfort of one’s own roastery and often with the added benefit of teaming with other roasters to disperse potential risk.

Demand

For some small roasters, there is cold comfort in the realization that the micro-lot movement isn’t for everyone, and some consumers simply will not be interested. If one’s clientele desires flavored products or darkly roasted batches, what is the point of acquiring a highly nuanced lot of coffee? Additionally, if one’s client base isn’t in search of a coffee with a rarified story, why shell out more then $2 a pound for a micro-lot coffee when a terrific 87-point coffee is available for 20 to 40 cents less? No one wants to be construed as a price shopper in the coffee industry, but for many, thriftiness remains a virtue, and a necessity.
     But for an increasing amount of roasters there is a certain cache in investing in these coffees. Many companies, including my employer, maintain a handful of micro-lots for several private labeling accounts seeking a “reserve coffee”—an elite coffee in small quantity that will command a higher price. These coffees seem to command a certain urgency with clientele by their very finite nature and quality.
     Maintaining these private labels also allows companies to separate themselves from some regional competitors simply by exerting more effort in an attempt to secure an elite level of quality.
     For many specialty roasters of all sizes, micro-lots are becoming vital to the success of their business.
     “Micro-lots are essential to our success,” says Taylor. “PT’s doesn’t have the need to purchase an entire box of a single coffee. I like to think that’s our advantage instead of a disadvantage. Now we look for the small lots that don’t fit the needs of bigger companies because there isn’t enough of it.”

Coda

Throughout the writing and research of this story, my fellow roasters often disappointed me. Almost without exception, roasters from around the country agreed to participate in this article and then shied away at the last moment, perhaps in defense of what they consider trade secrets, and perhaps because micro-lots really have no presence in their current business model.
     I further suspect that many roasters don’t want to admit that the micro-lot movement is not without flaws, either for the roasting community at large or at the farm level. I also suspect that back at origin there is some ambivalence to the movement as well, as with any paradigm shift in an industry.
     During my time in Costa Rica, the excitement of finding customers willing to pay unprecedented premiums for micro-lots seemed tempered by the trepidation of the fallout of lost quality on a macro level. One farmer seemed incredulous about the micro-lot movement, asking me, “Why would anyone pay extra for a taste they’ve already come to expect at a lower price?”
     In my mind, micro-lots are not going away, nor should they. I like their stories, I appreciate the effort in their separation, I want their nuanced attributes, and I want the farmers to be paid more. But I’m also casting a suspicious eye at any cooperative or single-estate coffee that lands at our roastery in the coming years, and I’m taking more detailed cupping notes as well.
     I’m also reminded of something Naranjo told me high in the mountains above the DOTA Cooperative as we kicked at the parched soil: “Coffee needs stress,” he said.
     I think the micro-lot movement is supplying that stress, that quiet controversy, that market and industry tension that has the potential to push everyone and everything forward into an age of higher prices and higher quality. But not without stress.

NICKOLAS BUTLER is director of operations for Johnson Brothers Coffee Roasters in Madison, Wisc..