Many that know me will tell you that while I am a rea­son­ably good ‘cof­fee per­son’ I would never make it in the cat­e­gory of busi­ness eco­nom­ics genius. On the con­trary, I pride myself on know­ing just one sim­ple eco­nomic principle:

If you make a high qual­ity prod­uct that peo­ple want, and let peo­ple know you have it for sale, you will have cre­ated a sus­tain­able program.

Are there other pro­grams that will be prof­itable for your busi­ness? Of course there are. Is there another prin­ci­ple more cer­tain in the growth of your busi­ness? Not really. You see this sus­tain­abil­ity pro­gram relies on truth, pride in prod­uct, faith in oth­ers to appre­ci­ate qual­ity when they see it and a desire to share your prod­uct with others.

Some will say ‘If eco­nom­ics were this easy every­one would be rich.’ They are both right and wrong. They are wrong for assum­ing that this type of a pro­gram is easy and with­out risk. They are right when they assume that those who truly under­stand it, and live it, become rich.

With a prod­uct like cof­fee which starts its jour­ney far from where it ends up, the qual­ity pro­gram plays out sev­eral times. The farmer who under­stands the prin­ci­ple will care for his trees in the off-season and only har­vest the red ripe cher­ries. He knows that doing things this way will increase costs and in cer­tain cases lower over­all pro­duc­tion. He also knows there are cus­tomers out there will­ing to sign long term con­tracts at above mar­ket value for his cof­fee. These con­tracts will cover the extra expenses and pro­vide cer­tainty that he can con­tinue to pro­duce cof­fee for sea­sons to come.

If the farmer does not have her own mill, she can sell her cher­ries to the local mill or exporter uti­liz­ing the same qual­ity sys­tem. A buyer knows that if they care for the cher­ries prop­erly they will cre­ate a beau­ti­ful lot of cof­fee that will rate higher than oth­ers. They will take the extra time to patio dry, rest the parch­ment, seg­ment the lot by size and den­sity, and then hand sort for defects. They do this because they know the cof­fee will score higher on the cup­ping table and there­fore increase the dif­fer­en­tial they get for the cof­fee. This increase cov­ers the cost and rewards the effort.

The importer that has con­tracted for the higher qual­ity cof­fee also will real­ize they need to care for the cof­fee to main­tain its qual­ity. They will ship it with reli­able car­ri­ers, and store it in a reli­able ware­house. Roasters they do busi­ness with under­stand the need for the qual­ity pre­mium and will sign their pur­chase con­tracts to reflect the extra expense for spe­cial handling.

The roaster will now spend extra time in sam­ple roast­ing the cof­fee to find the best way to present it to their cus­tomers. This can slow pro­duc­tion and increase pack­ag­ing costs. The roaster knows that his cus­tomers will reward the high qual­ity cof­fee with a pre­mium that will cover the addi­tional costs.

Does this mean that any­one in the chain gets to charge what­ever he or she wants? Of course not! But it does two extremely impor­tant things that were men­tioned above: Covers increased costs plus an addi­tional profit pre­mium, and pro­vides longer term agree­ments between par­ties which sta­bi­lizes the marketplace.

So where is the risk in a sys­tem that rewards qual­ity? To me the most obvi­ous answer is in the dilu­tion of the word ‘qual­ity’ or ‘spe­cialty’ with prod­ucts that are nei­ther. Some roast­ers and retail­ers will uti­lize the words but forego any real qual­ity con­trols. In essence they try to real­ize short term gains on the cyn­i­cal belief that the cus­tomer does not know or appre­ci­ate qual­ity. When you fool peo­ple in this way they even­tu­ally catch on and stop trust­ing those that claim a qual­ity prod­uct. To min­i­mize this risk many are turn­ing to objec­tive third party groups to rate the cof­fee. Some of these groups, such as the Coffee Quality Institute have for­mal eval­u­a­tions that can be used in cof­fee con­tracts that will ensure that what you buy is what you get by defin­ing the qual­ity for a par­tic­u­lar lot of coffee.

The rewards in the sys­tem are numer­able: Higher cus­tomer loy­alty, larger profit mar­gins, con­sis­tent sup­plies, and knowl­edge that your sys­tem improved lives of oth­ers along the chain. But HOW do you exe­cute on this plan? Let’s break down the ini­tial premise in order to dis­cover an action plan to start the qual­ity program.

1)    ‘Make a high qual­ity prod­uct that peo­ple want’. We make cof­fee and peo­ple want that! Now all that is needed is a ded­i­ca­tion to qual­ity so when you pro­duce your piece of the cof­fee chain you can, with hon­esty and pride, call it ‘specialty’.

2)    ‘Let peo­ple know you have it for sale’. One of the hard­est lessons to learn is that the starv­ing artist some­times starves because he refuses to ‘com­mer­cial­ize’ what he does. You have to have con­fi­dence and pride in what you do and you must not be embar­rassed to have your mar­ket­ing depart­ment spread the word. An orga­nized and dri­ven word-of-mouth cam­paign often works the best. Tell your story and let peo­ple take plea­sure in it. They will appre­ci­ate the cof­fee even more.

I think like a roaster because that is the part of the chain with which I am most famil­iar. But the busi­ness premise holds true regard­less of your posi­tion in it. Higher qual­ity will be worth more to your cus­tomer. If it is not, then find a new cus­tomer because they are not com­mit­ted to qual­ity even if they say they are.

Being com­mit­ted to a qual­ity pro­gram can be hard, espe­cially when money is tight. But remem­ber this to ease your mind: any idiot can race to the bot­tom by cut­ting price. The only way to dif­fer­en­ti­ate your­self is to cut your price fur­ther because that cus­tomer does not care. Only a hand­ful of your com­peti­tors and cus­tomers are com­mit­ted to qual­ity. These cus­tomers are the loyal, under­stand­ing and long term think­ing clients that you want. If you don’t cut cor­ners you will have a truly sus­tain­able busi­ness model in place.