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Direct trade in coffee business

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Over the past few decades, Direct Commercial Coffee has been hailed as the most sustainable and efficient coffee business trend ever. This approach helps to solve the imbalance of the current coffee industry and brings more value. It connects and closely links relationships from manufacturers to end users, bringing practical value to the entire supply chain. In which farmers, roasters and customers all receive fair and transparent benefits. Let’s learn more about this coffee business method with 43 Factory Coffee Roaster!

 

Commercial coffee overview

 

The concept of direct commerce

 

Unlike traditional trade, before reaching consumers, products must go through many intermediaries such as associations, companies or private and state-owned import-export units. Direct trade is the form of coffee purchased directly from the origin without going through intermediaries.

 

Characteristics of direct commercial coffee

 

In direct commercial coffee, roasters will autonomously search for farmers and producers and execute contracts, agreements, and transportation. In this form, they have direct access and freedom to choose products that are in line with business objectives. Since then coffee farmers get better profits, consumers can also use high-quality, transparent products from farm to cup. The commitment contract between the parties is expected to be long-term and increase in value and share more risks. So when the third wave of coffee was popularized, direct commercial coffee also gradually replaced the old ways.

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The benefits of direct commercial coffee

 

For the farmer

In the traditional trade, small-scale farmers are often forced to lower prices, making them almost unable to cover their living expenses and accompany the industry. When moving to direct trade, it is especially important to pay fair prices to farmers. They are evident in the Paid for Farmer prices that suppliers display in product information. By coming closer, purchasing directly from the source without intermediaries, direct commercial coffee will help farmers receive reasonable prices or many times the market. This is understandable because prices in the direct model are freely negotiated by producers with roasters to price their own coffee. Moreover, the farmer also avoids fees such as formalities, contracts and transportation because they are shared by the roaster. The long-term cooperation relationship also helps coffee farmers to have a more stable and sustainable income.

For the roaster

Direct trade enables roasters to establish closer, stronger relationships with farmers. They will know more details from planting plots, harvest time, cultivation techniques, preliminary processing,… everything related to the coffee they cooperate with. With such information, suppliers of finished products can enhance product value, market effectively and limit consumer bidding. Understanding the information also helps the roaster negotiate better purchasing terms and prices for the company. Besides, maintaining a long-term, win-win relationship between the parties also helps the business develop strongly.

 

For customers

The first obvious benefit is that the model brings consumers closer to the household, transparency and traceability become faster and more detailed. Customers can know exactly where their coffee comes from, what stages it goes through, what special ingredients are used, etc. The distance between the customer and the producer is shortened to help them conveniently benefit sharing needs. Manufacturers who understand customers can improve their products accordingly. From there they have easy access to high quality coffee and have the experience as expected. In addition, prices in direct trade will be less volatile due to the long-term cooperation of farmers and roasters. End users can rest assured to use coffee at a reasonable price.

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Inadequacies in the direct commercial coffee business

 

Not a new way of doing business, but so far direct commerce does not have clear standards for verification. They lack management and supervision by specific regulatory bodies. Contracts in direct trade are mostly not strictly controlled, mostly handled by roasters, so there are many problems such as failed contracts, misinformation, fraud, inaccurate information ,… Because many farmers do not have much knowledge in the business, they can only discuss and agree verbally. If the partner refuses to accept this when the coffee is finished processing, it will result in losses for them. Another shortcoming is that when a long-term contract has been signed, the coffee produced does not meet the expectations. Without pre-existing quality conventions, roasters would have to accept poor quality products.

There can be no clarity in the direct commercial coffee process. All cooperation agreements are based on responsibility and ethics between the parties. Sustainable relationships in the model are built solely by the trust of relationships between people. They can break easily when the producer or roaster changes to a new partner. This will cause unnecessary disadvantages for both farmers, businesses and customers.

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No business model is perfect. Direct commercial coffee has different pros and cons. Besides the negative factors that need the development of the whole industry, the model also has values for stakeholders. It enhances the interests of all parties, positively impacting a future of sustainable, equitable coffee industry. Coffee at 43 Factory Coffee Roaster is also available from direct trade. If you want to experience, come to the factory to enjoy coffee.

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