How do specialty coffee roasters buy rare lots at auction?

Every year, there are plenty of green coffee auctions that take place in the specialty coffee industry. Whether in-person or virtual, these platforms provide producers with opportunities to showcase their best coffees – and potentially receive higher prices for them.

Moreover, some private auctions also grant roasters and green coffee buyers access to more limited-edition or ultra-rare lots. In turn, these coffees can then be marketed as more premium and unique offerings.

As part of this, auctions which focus on one specific variety or species (usually more exclusive coffee varieties such as Gesha) are becoming more popular.

To find out more, I spoke with Max Perez, owner of Finca La Hermosa in Guatemala, and Leonor Xiao, founder and green coffee buyer at Canasto Coffee Co. Read on for more of their insight.

You may also like our article on virtual coffee auctions.

What are private auctions and how do they work?

Although private auctions are a relatively new concept in the coffee industry, green coffee has been traded at auction for centuries. Typically, green coffee auctions are hosted by importers, exporters, non-government organisations, or other industry stakeholders in producing countries.

Auctions are often held in person, but more and more are starting to take place online. This allows buyers from all over the world to attend – making them much more accessible.

As with any type of auction, buyers place bids on different green coffee lots. Once an auction starts, buyers will bid in specific increments until all coffees have at least one bid each, or until at least a specific amount of time has passed where no bidding has taken place.

Prior to an auction, all submitted coffees are cupped and scored blind by professional Q graders. This is done using the Specialty Coffee Association 100-point scale. This is so the bidders have an idea of the level of quality for each coffee.

Moreover, at some competitions prior to auctions, all coffees must score at least 86 points to advance to the next assessment stage. Ultimately, this required level of quality has helped to drive innovation at green coffee auctions even further.

High quality & even higher prices

Over the past two decades, the prices paid for coffee at auctions have been increasing more and more.

The first example was in 2004. That year, Hacienda La Esmerelda sold one of its Geshas for US $21/lb at the Best of Panama (BoP) auction. At the time, this was a world record for the highest price ever paid for a coffee.

Fast forward to 2021 and a honey processed Gesha produced by Elida Estate sold for a staggering US $6,034/lb. This is by far the most expensive coffee in the world.

Naturally, these astonishingly high prices have influenced more and more producers to co-host their own private auctions.

A private green coffee auction is a useful way for producers or co-operatives to showcase their more exclusive and ultra-rare lots. To participate in these auctions, buyers must register online in advance. As there are also a limited number of spots available, registrants may have to pay a fee to take part in the auction. Roasters may also have to purchase samples of the coffees they want to buy beforehand.

Why are these auctions becoming more popular?

Broadly speaking, specialty coffee places a lot of value on quality, transparency, traceability, and sustainability. In line with this, demand for higher-quality, more exclusive coffee varieties (and even species) has grown over the past decade or so.

“Private auctions are becoming increasingly popular because demand for more unique and exclusive specialty coffee is growing,” Max says. “These auctions offer buyers the opportunity to access limited-edition and rare coffee lots which aren’t usually available on the wider market.”

Max also explains how producers can use private auctions as platforms to market their coffees in different ways.

“These auctions also allow sellers to control the buying process, potentially generate higher profits, and create a sense of exclusivity around their coffees,” he tells me.

Leonor agrees, saying: “After the auction, the producer can label the coffee as an auction lot to emphasise its exclusivity.

“Moreover, private auction coffee lots are usually small in size,” she adds. “This can mean that producers may receive a higher price for them because a single buyer will usually purchase their coffee.”

What about single-variety coffee auctions?

Alongside private auctions in general, the number of more niche auctions has noticeably increased over the past few years. These include:

Single origin auctions (with all coffees produced in the same country, region, or even farm)

Auctions which include coffees from a single producer, co-operative, or exporter

Single-variety auctions, which focus specifically on one variety of coffee

One example is the Gesha Forest auction by Finca La Hermosa, which will take place online on 5 July 2023.

“The auction will feature a variety of our Gesha coffees, each with its own unique flavour profile, aroma, and characteristics,” Max tells me. “It will also include Gesha coffee lots from different origins, including Guatemala, Panama, Tanzania, and Ethiopia.

“The lots (some of which are organic) will also be available in different processing methods, such as washed, natural and anaerobic,” he adds. “These different processing techniques showcase the versatility and complexity of Gesha coffee.”

Gesha is one of the most-sought after varieties in the specialty coffee sector. Known for its exceptional cup quality and its ability to receive high prices, the variety has dominated auctions over the past decade or so.

“The Gesha Forest project by Finca La Hermosa involves meticulous farming practices to grow, harvest, and process Gesha coffee to ensure the highest quality coffee possible,” Max explains. “The unique microclimate and volcanic soil of Finca La Hermosa, which is located on the slopes of the Acatenango volcano in Guatemala, make it an ideal environment for growing Gesha.”

Leonor tells me that the variety is particularly popular in East Asia, including in China, where consumers are often more willing to pay higher prices for more exclusive and rare coffee.

“Gesha always stands out on the cupping table as it usually receives higher scores,” she says.

What are the benefits of buying rare coffee from private auctions?

For producers who have the infrastructure and financial resources, there are a number of benefits to hosting private auctions.

“These platforms are an opportunity to showcase producers’ hard work and dedication, potentially receive higher prices, and build long-term relationships with buyers,” Max says.

“Private auctions can also promote transparency, traceability, and sustainability in the specialty coffee industry.

“Auctions like the Gesha Forest by Finca La Hermosa can showcase a producer’s commitment to sustainable and environmentally-friendly farming practices, thereby promoting a more responsible and conscious coffee industry,” he adds.

In terms of traceability, Leonor explains that auctions can be useful platforms for both farmers and roasters.

“Producers know where their coffee is going when it’s bought through auctions,” she says. “Private auctions can be a link between producers and roasters.

“Moreover, receiving feedback from roasters, traders, and producers will help to make auctions more meaningful and impactful,” she adds.

What about roasters?

When it comes to roasters, there are several advantages to attending green coffee auctions – especially for those who want to sell and market more premium and rare coffees.

“Roasters have access to more unique and exclusive lots,” Max tells me. “This enables them to differentiate their coffees and potentially attract a broader range of consumers.”

Looking at Gesha specifically, the variety is more commonly found in Panama and Ethiopia – and also recently in Colombia, too. Many specialty coffee consumers place significant value on more exclusive varieties sourced from new origins. For instance, sourcing coffee from farms outside of these origins, such as Finca La Hermosa in Guatemala, can be a unique selling point for roasters.

“By buying coffees from auctions, roasters have an opportunity to showcase their recognition of high-quality coffees, and thereby add value to their brand,” Leonor concludes.

Private auctions, as well as auctions more generally, play a role in driving specialty coffee forward. For those who have the capacity and buying power to attend, they can experience some extraordinary coffees that they may not be able to find elsewhere.

With demand for more exclusive coffees only growing in certain markets, we’re sure to see private auctions continue to be a point of conversation in the coffee industry going forward.

Enjoyed this? Then read our guide to green coffee auctions.

Photo credits: Finca La Hermosa

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Please note: Finca La Hermosa is a sponsor of Perfect Daily Grind.

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