Tuesday, June 23, 2020

Rebirth of a Roaster - M36 Coffee Launches


Co-owners: Ken Pargulski (L) and Lisa Tuveson (R)
Lisa Tuveson and Ken Pargulski have performed a "COVID rescue" of the coffee sort, launching new roasting company M36 Coffee Roasters out of the ashes of an old one. The owners of icon Michigan roasting company, Espresso Royale Coffee (ERC), decided to sell in the midst of multiple COVID pandemic-related business issues. Today I was allowed a brief visit (with social distancing) to check-in on the duo. It's amazing! The M36 brand is clearly displayed even though the official opening of the company was only June 1, 2020. Ken has been a roaster at ERC over 20 years, 13 of them as master roaster. "He's always been at the heart of operations here," Lisa explains. Lisa started with ERC in 1989 and eventually became VP of operations. As co-owner with Ken, she will continue to lead administration, sales, contracting, etc. There's a feeling of "coming into their own" as I speak to them. It's like owning a roasting company is the logical next step for both of them.

What happened?
Espresso Royale, established in 1988, was ahead of the game on many fronts before COVID19 hit. They were in the midst of launching a buy-ahead app to make purchasing brewed drinks simple and fast for consumers. The company had
Closed Espresso Royale store on State St, Ann Arbor
key accounts with universities, due to its ability to create synergies that saved money for the food service companies signing the coffee contracts for those institutions.

But the challenges of managing expensive retail space and dozens of employees during a global health pandemic with rising risks and increasing 'unknowns' was too much. "There was a temporary closing at the end of March," Ken told me, "which became official some weeks later, but not publicly announced until June 11." He was already working limited hours when the owners told Ken they would not continue. He thought about it for one night, and the next day came back to the owners asking if he could buy the company. Soon Lisa was attracted to the conversation also. They formed a two-person team, with Lisa taking 51% ownership to Ken's 49%.

What's happening now?
Growth! Ken and Lisa are working out of exactly the same roasting, "headquarters" space as Espresso Royale and have acquired all of the roasting equipment. Kurt Donaldson, the long-time head of machine service and account rep for universities, is on the team with them. This has enabled them to keep operations going with no interruptions. Grocery and on-line sales are growing. By being as frugal as possible, they are working on keeping current customers happy and supplied and securing new customers.

Innovation is still perking along as always. The previous company had launched a "Bourbon Barrel Aged Coffee" with lots of excitement and M36 has
Bourbon barrel-aged coffee at M36
successfully continued that label. "For consumers looking for the aroma of bourbon, this one will give you that!" exclaims Ken.

Future?
Ken says growth of on-line sales will be a focus in the future. They are keeping the look-and-feel of the M36 brand inclusive, not only in terms of gender and race, but also with conscientiousness about the age of their most loyal consumer base. The middle-age demographic has demonstrated a love of Espresso Royale's roast profile and Ken, as the master of that roast, wants to reassure them that it is not changing.

A retail coffee house in Illinois that had close ties to the former company is continuing with the M36 brand and plans to open two locations before the end of this year.
Ken, dedicated roaster, now steps to the helm of M36.

For the key university accounts, Lisa and Ken are forced to take a wait-and-see approach as to how many students return to campus and when. Announcements from university officials mostly describe a "mixed approach" to learning, combining in-person and distance learning options for students. "It's a tough problem with no easy answers," Lisa admits. While she would love to know the foot-traffic is returning to the dozens of university buildings where the university sells their coffee, she also knows a return to a full lock-down is something everyone needs to avoid.

They are talking to the Michigan DNR about options to increase sales of their "MI Parks" branded coffees. With names like "S'mores Roast" and "Paddlers Brew" it seems like there could be some natural synergies with M36 brand and its "Michigan centered" name. Purchases of these coffees help to improve recreation in Michigan state parks, trails and Waterways.

What's behind the M36 name?
Front door of the roastery for the new M36
I asked Ken and Lisa how they landed on the M36 name. It seems they were brainstorming together, coming up with many names, which they would then google and find out were already taken. They knew they needed something unique and noticed roasters with place-based names were undeniably one-of-a-kind. That's when Lisa thought of M36. Ken liked it and the new name was born! Now, just weeks later, you can see the sharp, black-and-white logo proudly displayed outside and inside their building in an industrial park off the real M36 highway in Whitmore Lake, Michigan.

What is on the M36 highway? 
M-36 is a state trunkline highway of Michigan's lower peninsula that runs for about 50 miles, west–east between the two small, rural towns of Mason (15 miles south of Lansing) to Whitmore Lake, which is 12 miles north of Ann Arbor. Like many two-lane highways in Michigan, it is known for the off-road scenery of forests and farmland, and the traffic includes a lot of pick-up trucks, semi-trucks and bikers. All things that go great with coffee, especially a re-born coffee brand named M36!




Common sight on the M36 two-lane highway.
As always, taste quality comes first at M36.

Friday, May 8, 2020

In Rwanda Coronavirus restrictions increase labor costs for coffee farmers

May 8, 2020
Yesterday The Conversation, an on-line newpaper targeting the academic community published an article on how the Coronavirus pandemic is affecting coffee the coffee supply chain in Rwanda. Two researchers we know at Michigan State University are the authors - Andrew Gerard and David L. Ortega. Click here to read! It is a short article and well written.

A key take-away from the article is that "health restrictions are increasing coffee production costs in Rwanda..."  At Artisan Coffee Imports we have also been investigating the impacts of Rwanda's Coronavirus policies on coffee farmers. Our informal research confirms that costs of production are going to be high for farmers this year due to the increased labor costs. Labor is known to be about 75% of all costs for coffee farmers in Rwanda, (click here for source), and harvesting labor is 36% of that total labor figure.

Click here to hop over to our "Resiliency Coffee Blog" and read a summary of 10 interviews with female farmers conducted April 22 - 27, 2020, which is right near peak of the coffee harvest season for Rutsiro district, where they are.

Monday, April 20, 2020

COVID19 Images from Kopakama Cooperative

Strict movement restrictions were implemented starting March 23rd in Rwanda.
April 6 - general assembly for the cooperative had
 to be only the essential few officers, sitting 2 m apart.

Here is what Gervais KAYITARE, Executive Director of Kopakama Cooperative had to say when the lockdown started on March 23:
"The Government took further preventive measures against Coronavirus today. No movements are allowed between Kigali and rural areas nor between districts. For agricultural activities,  we are still allowed to collect cherries. I'm preparing the guidelines for farmers, collectors, reception, etc in order to meet the preventive measures."
Regarding farmers, he shared, 
Modeling masks -
head agronomist, Justin, and
Ejo Heza farmer, Marie Grace
"like others in the World Wide, members of Kopakama are frightened of the pandemic. Because of restrictions, as rural people who live by daily routines, I can't say they feel safe because they're not free to move for satisfying their needs. Despite that they remain calm since they don't have any choice and nothing to do except respect of preventive measures proposed by the Government."
Seems like we will all be happy for Coronavirus to be under control so we can visit again!

See below for the March 23rd announcement from the Minister of Agriculture in Kinyarwanda.




Monday, March 16, 2020

CoffeeFest NYC - Coffee People in the Big Apple!

March 16, 2020

The world has changed dramatically since only a week ago, when coffee people from all over the Eastern United States gathered at Javits Center, NYC for CoffeeFest. I suspect those giant halls are empty now, due to global Coronavirus social distancing! This blog is dedicated to the friends new and old made at the conference. Thank you all for being there, and stay safe until we meet again!














Was great to see Sam of Dillanos -- she won first prize in the US Barista Championship last year. This year she made a great return taking 4th place -- just two weeks ago!














Claire Harriman and colleague, Doug, with Roast Magazine.












Loved seeing Kevin Kuyers of Theta Ridge promoting his women-grown coffee from Colombia!












Cyrus Hernstadt of Think Coffee explained how they thoughtfully put sustainable pricing and great tasting coffee together!












Preston of Birch Coffee impressed Ruth Ann with his frozen capsules of Ethiopian Yirgacheffe!





 The big apple was very welcoming to CoffeeFest!



Tuesday, December 31, 2019

Happy New Year! - Highlights from 2019

As we look back on 2019, the items in our infographic (left) are the biggest highlights. They include:

Achieved Q Processing Level 1 certification! Took the three day course with Drew Billings at Atlas Coffee in Seattle, June 2019

8 new roaster customers of green coffee grown by Rwandan women.
1 new consulting customer
1 new shipping consolidation customer

Lean at Origin training was introduced to a third country - Democratic Republic of Congo! It was an honor to be sponsored by the Polus Foundation (Boston, MA) to work on beautiful Idjwi Island. Artisan trained leaders from 2 coffee cooperatives in Lean at Origin skills.

Finished in the black. Calendar year 2019 achieved a cash-basis profit. While we seek to do good, we have to stay in business and this means earning a profit.

Relationships Deepened. Relationship coffee requires investments of time and travel dollars to be present and observe what is happening at origin. Grateful to be able to travel to Africa three times in 2019.

Coffee Literacy Expansion. Artisan supported Grace Izerewe to follow an intensive 6-week course in Kigali, Rwanda covering many coffee topics including cupping, green grading, sample roasting, production roasting, wet mill processing and LeNez du Cafe sensory skills.

Coffee Career Mentoring. Artisan was proud to be selected as  mentor by Joel Arusha, a rising young coffee entrepreneur in Rwanda. Monthly calls were arranged by Joel where he could ask questions and Ruth Ann tried to guide. It was exciting for both sides to see excellent new career pathways develop for Joel!

IWCA Global Board Director. Ruth Ann was proud to serve on the board of the International Women's Coffee Alliance for a fourth year. The non-profit, all-volunteer group has overcome many obstacles in 2019, moving forward in its transition to a staffed model. Most exciting is when there are opportunities to see up-close what the now 24 chapters around the world are doing!

Monday, July 8, 2019

Eliminating Waste Using Machinery - Dukundekawa Musasa

July 8, 2019
Dukunde Kawa Musasa drying tables offer a spectacular view of Gakenke district mountains.
In Rwanda, you often see four armed soldiers or policemen walking single-file on the side of the road. They walk slowly, as if they have all day to get where they are going and they know they have to walk many miles. I often wondered whether the objective is 1. to be seen on the roads or 2. to get where they are going. Today I learned that at least sometimes, it is to "get where they are going." I stopped at a dusty mountain intersection to ask directions from a civilian, and the lead soldier in a group-of-four walked up to my car and said they needed a ride. Next thing I knew, I had three soldiers with machine guns in my back seat (my translator in the front passenger seat) and the 4th soldier was crouched in the luggage space of my Toyota Rav4 with knees to his chin!

The above scenario is a metaphor for the way Rwandan coffee is also beginning to "get where it is going" by using machinery. For the soldiers, a half-day's walking journey, became a 15 minute, somewhat cramped, car-ride. At Dukundekawa Musasa in Gakenke district, I saw how a forward-thinking cooperative of farmers is investing in machinery to take them where they are going faster.

Since my first visit to Dukundekawa in early 2016, I've returned at least three times. Each time I see new investments in machines. [1]

What Dukundekawa is doing is eliminating waste. They are doing so without knowing that they are demonstrating Lean at Origin principles. (Refer to our "Resiliency Coffee" blog and search on "Lean" to learn more about Lean at Origin.) Here we will share the unique machines that Dukundekawa has brought on-line and name the wastes that these machines will help eliminate.
Pinahlense 11 MT cherry sorter.

1. The Pinhalense cherry sorter was first used in the 2015 season, and fully implemented before the 2016 season started. This machine eliminates defects (one type of waste) by sorting cherries by density that have just been delivered by site collectors. Site collectors bring large volumes of cherry to the washing station. One site collector might arrive with as much as 800 kg. The cherry sorting machine uses gravity, water and floatation. The machine's channels shake and have holes in the bottom to separate the dense (good) cherry from the light (bad) cherry, sometimes called "floaters." The two types are moved into a different chutes. Dukundekawa staff can easily measure the weight of the floaters of any site collector's delivery. The agreement signed with the collector is that if any delivery has more than 1% floaters, the entire weight of floaters will be deducted from his service pay. In the 2019 season, only one collector over-stepped the 1% mark for allowable floaters. Apparently, the threat of a monetary fine is usually good enough to ensure site collectors are strict with quality control at their site.

Looking left.

Above: Looking right. Entrance to reception area is designed for easy access of trucks and farmers.
2. In 2015 Dukundekawa re-constructed the entrance to the receiving area for cherries. They eliminated wasted transportation of material and wasted motion of people by thinking about how to allow trucks and farmers carrying heavy sacks on their heads to get as close as possible to the scale for weighing their delivery. The ramp from the main road (top photo) slopes down and curves towards the reception area, which can be seen straight ahead in the bottom photo. (Under the roof shown in the bottom photo is where the cherry reception process starts.) The improved access saves the steps of workers and farmers who spend hours of back-breaking labor at other washing stations to move heavy sacks up stairs, around columns and over bumpy, steeply sloped terrain to unload trucks or just arrive on foot. While not yet documented, it's possible that the improved access has shortened the lines during peak season, eliminating waiting, another type of waste.
Outside of dry mill


Inside the dry mill.

3. In 2016, Dukundekawa built a dry mill -- right across the street from the washing station (wet mill), establishing one of only a handful of dry mill functioning outside of the capital of Kigali and bringing a significant industrial process to their rural mountain village. Besides increasing the number of skilled and unskilled laborers employed during the season, the dry mill had all the benefits the cooperative management had been longing for: more control over export preparation of their semi-finished product, parchment coffee. The new dry mill eliminates defects by allowing the coop direct control of machine maintenance, settings and storage. It eliminates unnecessary processing steps by allowing the coop to skip steps in the milling process if they are not required by a customer order. It eliminates waiting, because in Kigali the cooperative's trucks of parchment could wait days or weeks for "their turn" to be processed. It eliminates wasted transportation of material, wasted inventory, and wasted motion of people. Clearly, the investment in a dry mill helps Dukundekawa eliminate wastes of many kinds, and the associated costs, for all future seasons, while at the same time increasing quality. It is a strikingly good example of Lean at Origin management.

Manager Isaac with drum dryer
4. In 2018, Dukundekawa purchased a mechanical drum dryer for more speedy drying of low-quality coffees. This dryer eliminates defects to high-grade coffee that occur when space on raised tables is lacking, and quality grades therefore get stacked too high or worse - left waiting in a tank too long. It also eliminates waiting, transportation of material and motion of people. Without a drum dryer, washing stations are forced to dry low-grade depulped coffee on drying tables, taking up valuable real estate for higher grades, or dry the low-grades on plastic sheets spread on the ground. Drying on the ground is unsanitary for the coffee, lengthens the process and involves several additional movements of material and people. However, the real beauty of being able to whisk low-grade coffees into a mechanical dryer is the additional space gained on raised beds for the high-quality coffees, especially during peak season.

Two new coffee elevators (l and r) and the new Sortex color sorter from Buehler.

Rwanda's only Buehler Multi-vision Sortex B now resides at Dukundekawa's dry mill.
5. Now, in 2019, Dukundekawa is in the final installation stages of a Multivision Sortex B color-sorting machine from Buehler. The main waste eliminated by this machine is defects. Olivier, the installation technician from Brazafric, explained to me that the Multivision uses three wavelengths and can therefore detect colors that other (two-wavelength) color sorters in Rwanda cannot. Importantly, they believe they have shown in tests that discoloration from insect damage, not detected by two-wavelength machines, will be identified and rejected by the Multivision model. This capability has the potential to significantly reduce potato taste defect in Rwandan coffee, which has been shown to be highly correlated with antestia bug infestation (click here for the paper).

6 new conveyor belts for sorting green coffee. Automated movement to the "mixing silo" at the back.
Workers will be able to sit during their 7 hour day and sort the green coffee under UV lights.

Chairs where hundreds of women will be able to sit, instead of sitting on the floor to do their job - improving worker conditions, avoiding injury.
6. Also this year, Dukundekawa is installing six new Pinhalense conveyor belts for sorting green coffee, connected to automated transport to a mixing silo. The new equipment and chairs will eliminate waste from defects, waiting, transportation of material, motion of people and inventory. This new process is an advancement and transformation from the traditional hand-sorting method. In most dry mills in Rwanda, you will find a giant hall like the one pictured above, with hundreds of women (and a few men) sitting on their scarves, stretched out like a blanket on the floor. They will have one or two of the plastic bags used for transporting parchment flattened on the floor next to them, on which you will see two or three piles of green beans: the unsorted pile, the "good" pile and the "bad" pile. They work for 7 hours a day. In the dry mill I know best, there is a supervisor who walks around to all the women checking their work, letting them know when/if the "good" pile is good enough to move on to the next bag. [2] Once their "good pile" is approved, each worker has to carry that pile of beans to a different place in the hall, and the "bad pile" or waste beans to even a different place (see spaghetti diagram below). Clearly there is wasted movement of material and people, much waiting for a supervisor and potential for human error under such conditions. Dukundekawa has changed all that.
A so-called "spaghetti diagram" of the traditional hand-sorting process helps visualize the wasted movement of people and material. (The steps of each worker are dotted lines that look like a plate of spaghetti.)
7. A highly valued resource for every coffee producer, however, is a fully equipped and on-site cupping lab. Cupping labs allow a trained cupper to evaluate the quality of each lot of coffee, and thus enables the producer to know the potential value of their crop. Dukundekawa is already advancing from their first on-site cupping lab to a new, still-under-construction, state-of-the-art cupping lab that will likely qualify for Specialty Coffee Association certification.
Outside the old cupping lab - this one to be discontinued this year.

Inside the old cupping lab.
New, quite large, state-of-the-art cupping lab under construction.
With a cupping lab, old or new, producer groups are able to go much further with understanding the quality and thus the value of their coffee. They can work more strategically to eliminate defects in all parts of the production system.

My ride with the soldiers ended happily for everyone, by the way. I invited them to try the brewed coffee I had just purchased at Bourbon in Kigali and kept warm in a thermos. I had little thermal cups (typically used when I serve farmers) and we all stood around enjoying a nice coffee break with Rwandan coffee!

[1] This is the first time I've arrived at Dukundekawa as a buyer. Prior visits I was wearing only my researcher hat. This year Artisan Coffee Imports will import just a few bags of Dukundekawa's Rambagira group women's coffee. Rambagira coffee is from Dukundekawa's female members and it is collected on Wednesdays during harvest. Then it's kept separate throughout processing and export.
[2] The usual rate of work is 30 kg of green coffee sorted per person per day, for high-grade coffee. More coffee can be finished per day for lower grades.


Monday, May 6, 2019

What to Pay for Coffee - Not So Complicated

May 6, 2019
Ejo Heza women's group in Rwanda - sorting cherry

Guest blogger Kathy Tian, MBA/MS 2020, Erb Institute at the University of Michigan and Ruth Ann Church, President, Artisan Coffee Imports

Let's say you're a coffee roaster. Is it complicated to know what to pay for your green coffee? Not so much. Drawing content from two panels at SCA Expo in Boston we synthesize why. Both of these panels rigorously researched costs in Colombia and Rwanda: two different countries and two different continents. In one panel, "East Africa Quality Innovation," Ruth Ann Church shared  the connectedness of marketing, price and quality in Rwanda. Guest blogger, Kathy Tian, spoke on a separate panel: "Implications of Specialty Coffee Farming Costs in Colombia." 

Recommendations to roasters boil down to three steps:

1. Ask your importer if their contract with the producer is a fixed price contract or based on the C-price? Hopefully the importer's answer is that your less-than-container-load of bags of microlot coffee were bought on a fixed price contract. For microlot purchases up to about 300 bags, (sometimes more), this usually possible. NYBOT C-price based pricing is necessary when the coffee volume is large enough to need hedging in futures markets.

2. Ask your importer what is the farmer paid? Hopefully the importer's answer is "we can tell you that no problem." And then they give you a $ per unit answer. If they give you a lot of excuses about how difficult it is to answer, try reassuring them that you can handle doing some conversions if they can't. But shouldn't an importer be able to do the conversions (from local currency to US$; from KG to pounds; from cherry to green)? For example, Artisan Coffee Imports shared the prices Kopakama's members received for the past three years in this chart during the SCA panel:
KOPAKAMA Coop
2016
2017
2018
2019 (projected)
Avg. farmer price* $/lb. green
$.70/lb
$1.02/lb
$1.07/lb 
$.80/ lb
farmgate + 2nd payment + premiums

If your importer seems conflicted or "over asked" when you inquire about the price to the farmer, there's a fair chance that he/she doesn't know. And there's a fair chance they would like to know also, but they have been deflected by their contact at origin when they try to find out. YOU can be the catalyst towards more transparency and education about where value is in the value chain. YOU, as the roaster, have a powerful position in this chain, no matter what your size. If your volumes are small, then your questions and your responses to answers may not change current business practices in the short term. But, when you ask the questions and urge your supplier to get clear answers from their supplier, your voice makes a difference over the long run.

Cherry harvest in Rwanda
3. What is your pricing philosophy? There are many things to consider when it comes to your pricing philosophy, including how much to anchor on the NYBOT C-price, and how much time and money you, the roaster, wants to invest  to understand costs. Also, how much you believe the farmer should be able to dictate their own price. Kathy Tian, based on her experience in Colombia, recommends focusing on the following two thought processes first, which may help simplify and clarify the roaster's approach:
1)      Think about today’s farmers and future farmers. Try to understand the opportunity cost for a young person in the origin country who can consider coffee farming against other options to earn a living.

An importer could potentially play a critical role in helping you achieve this part of your pricing philosophy. For example, perhaps your importer can share what the opportunity costs are of current and future farmers at origin. More than likely, a young person will have alternatives available to them in agriculture. A knowledgeable importer may be able to share the exact value of opportunity costs for you.  

2)      Think about the power that you have in your value chain to lower costs, other than the price paid to the farmer. If you are a small roaster sourcing exclusively from farms of <0.5 hectares, your ability to realize cost savings upstream is very limited. Instead, consider ways in which you could lower costs at the roaster level.
There are a few ways to lower costs at the roaster level. One opportunity is for small roasters to encourage medium size roasters that benefit from economies of scale in packaging, retail, and transportation fees to take action to address the needs of small holder farmers. This is currently happening in the industry but could be amplified to create more rippling impacts in coffee communities around the world. 
A second option is for small roasters to work together and share supply chains—collaborating on sourcing. This should reduce costs of exports and imports by guaranteeing larger order quantities, which can be passed on to the farmer. 
Alternatively, some small roasters seek out green bean importers who act as the consolidator of many small orders and transparently share the cost savings with the producers. "Transparently" in this case means the importer can tell you the dollars and cents per unit (e.g. per pound green) the farmers received. (See 2 above.)