Coffee in lockdown

While the consuming world is confined, what's happening in coffee?

It's a time of reading, bench watching and cooking. Top of the Crop started in January 2020 from a shared office in the train station of Antwerpen,  our primary focus was to supply what we call "80+ green coffee" in a transparent way to our customers.  Now 4 months down the road we have switched our business model to bringing spot coffees to retail roasters in a fluent way.  Our current focus is basically trying to find fresh and stable cupping Arabicas and Robustas with a sticker.  We are faster than most of our peers because we can get samples from the port and sometimes bring them personally to the customers or they just lean on us to approve or reject. 

I have wondered over the past 6 weeks about what will be the outcome of this all but for now I stick to being what is urgent right now. Since I was trained a long time ago in 'traditional' coffee trading the first reaction in a crises is to basically hit the break and clean up any lose ends immediately in order start from scratch. Trading coffee is about risk management,  so we always assume worst case scenarios and trade from there.  So what are the worst case scenarios here?

If we want to look at the future we need to accept the reality and build from there!  I've hung up a whiteboard in our new office (we had just received the keys before the lockdown, so we're basically camping) and every day I analyse,  write in bullets and then take a distance. In the current state I'm constantly on the phone with customers, friends but also different new people in different parts of business in order to have another look on the world and its markets. Currently I use the following statement a lot when talking and analysing "The world has been catapulted back in time for about 20 years with one big difference,  the digitisation - imagine we wouldn't have internet".  What are the current realities? 

1. Consumption has completely switched to in-house consumption and this will last for a longer time than the general confinement.  So even when some measures will disappear eventually out-of-home consumption will take longer to restore than anything else. So everything from hotels,  bars and restaurant are facing basically a lock-down from 12-14 weeks,  while in reality the restart will be slow and hard as well.  If you take this into account you need to assume a longer stretch of time to get to so called "business as usual".  

   The question on top of this will be "Will the consumer feel comfortable enough to spend time in these places?" 

2. Travelling the world like pre-corona is over and will probably never come back. The biggest fall-out will be on tourism in general since most of us will not even feel comfortable flying with 200 unknown people for more than 1 hour in these tight 'flying busses'.  On top of that we all know this pandemic was able to spread so fast because we were all constantly doing intercontinental hopping (1,4 billion people travel normally per year). At least there's a winner in this and that will be nature, but in general this will have the biggest impact of all.  Since spreading wealth through tourism has come to a stop.  No more spending dollars in countries who were depending on this to grow their economies. Tourism is actually one of the factors which the UN is supporting to help socio-economic development and obtain some of the SDG's in development countries (there's even UN World Tourism Organization).

3. There's never been an event that basically stopped the whole world at once,  certainly not in the last 100 years.  All previous impactful events were all regional or in some part of an economic cluster.  Never ever a problem has touched basically ever human being on the globe.  We can all argue this has mostly affected the western world,  when looking at the victims,  but the fall-out is world wide because we had gotten so interconnected. So from Congo to Japan or from Iceland to Chile people have been asked to stop doing what they were doing from one day to another.  The trauma this will create will lead to more uncertainty and poverty. You can't "bail-out" with money or other assets.  Rich or poor everybody can be infected by an invisible enemy who doesn't care if you have a weapon or a credit card.  The outcome of having the virus can depend on your healthcare system.  

   Throw the upcoming elections in a polarised world power on top of that and it feels like we're set for very uncertain times.  

In a lot of ways these are harsh times and there are even harder times ahead,  but humanity is flexible when it's not destructive. So we need to work from an optimistic perspective. While we need to prepare for the worst and hope for the best I see a lot of potential in the future but we have to first climb this huge mountain, all together.