Calm in Times of Panic.

If we can sum up how our 2024 was in two words, it’d be “surprisingly well”. Late 2024 marked the start of another wave of massive panic in the market which we all feel today. Ask a market analyst, a Brazilian farmer or a multinational trader what the reasons of today’s record prices are and you’ll get wildly different answers, but one thing is clear: the wider coffee world and the media responded mostly by creating distance, turning inwards, blaming and shaming.

Thus, being a good middleman in these times seems to mean staying calm, and that seems to have radiated outwards to both our customers and our suppliers in 2024. Instead of becoming more distant, we have naturally become closer with our partners all over the value chain, sparking more cooperation, more understanding, more trust. While we are not claiming that we are immune to today’s high market, the “economy of peace” that we are building is showing that it can stand up to the onslaught of speculation and panic.

The reason we have been able to stay calm last year is further professionalisation and better teamwork. Our cash flow and costs are more under control, our systems and pricing are more adaptive and more of us know our way around them, sparking more dialogue and efficiency internally - which freed up time for the whole team to listen more closely to the needs of producers and roasters - and the strange but interesting reality unfolding around us.

Now, let’s dive into the numbers!

While we see ever more complex ways of pricing develop, either through the market or the true price movement, they seem cold and distant compared to just asking each other: what is price is reasonable? The best and most simple answer we have up to now is - one that allows our partners to produce the coffee again next year, given all externalities in their world, for customers who care.

Accordingly, the prices in this graph do not reflect C-price movements much. Our average farmgate price stayed more or less the same (+5 cents compared to 2023). The only places where we have had lower FOB prices than in 2023 is when we changed our assortment: in Uganda and Congo we started supplementing our offer with our partners’ lower grades (still at a premium), and in Peru where we had record prices the year before and normalised last year.

All the others either stayed similar or increased, but without exception, the high market sparked more dialogue with all our partners. It forced us all to connect even better to create a reflection of what it actually costs to produce, how the market influences what our partners can buy from their community, and what our customers, the roasters, can actually pay. In short, to calibrate and harmonise the whole chain.

We imported just a bit more last year than the year before. One big change was a correction in our Indonesia import, a container less for our government contract. Brazil still accounts for more than 40% of our total portfolio, and most of that coffee doesn’t even reach our webshop as it’s pre-sold to return customers. For reference, in the graph, Nicaragua down to India represent one full container.

A less proud achievement is how much of the regenerative six cents we reserve for our producers we actually paid out. Of the 68K regenerative premium built up since we started in 2022, only 19K has been paid out, and only 5,5K last year, as shown below. While we have made strides by showing all the regenerative projects that have developed in the Power of Six Cents page, we can do better in communicating the fact that it is collectible reliably every year.

We want to show this graph mainly to show our partners what they still can claim. Although it’s not that much, the money is free, it’s yours to spend on anything related to farm restoration / regeneration - things that would normally often move to the back of the priority list - potentially until they become disasters.

The proportion below did not change dramatically compared to last year. The majority of our sales are still in the Netherlands, although of the new customers we received, we are excited to see that most are foreign. Tender sales were also stable, but this figure will more than double next year when the tender for the Municipality of Amsterdam starts.

Here is an interesting new metric - one that we wondered about because we saw how previously less popular origins were picking up in 2024. Most of our origins are being bought by a more diverse group of roasters, which means experience, or better said, relationships, are forming between more roasters and growers - one of our main reasons for existing.

Take India, one we love to complain about being “unseen” in the market… Up 17 (roaster) customers! If you consider that each of these 17 roasters sell to a large amount of cafés, hotels, shop and online customers, that is a lot more lips touching a lot more Indian coffee!

Slightly up from last year, we are amazingly happy with this result. Like our definition of a good price, our own definition of our own economic success is to accumulate enough to be able to fulfill our mission again next year. In this case, it includes some room for necessary investments in the process, that is a great bonus.

After we pay producers, it takes roughly 14 months to sell all their coffee. The graph below represents all the people who gave us the working capital to be able to work according to this business model. What you don’t see here is the 520K of our own money (equity) that we now also use for buying coffee, but are aiming to refinance in our transition to steward ownership.

We’re super proud that because of the advent of our two new social lenders Lifetree Fund and the IONA Foundation, we hardly had to touch our 500K credit line with the bank this year. While the bank is an unmissable ally in our mission, we prefer that all our working capital eventually comes from people who care about and understand our mission - we are well underway in this mission.

We love this picture as it shows in the blink of an eye what it costs for us to do our work: that bundle of colours to the left that is everything but the cost of coffee. Compared to last year, the cost of coffee went up per kg, but our financing cost decreased thanks to our new social lenders.

If there is one picture that we would like to see become an industry standard in transparency reports, it is this one! It shows that we are not in the game to become rich and pay out shareholders, but to efficiently import as much coffee as possible at prices that we can stand behind.

2024 saw no big changes to this pie, except for the addition of Anne, our new sampler. The wage rate per day for each one of us is still identical, and always will be. Last year, we did not correct for inflation so this figure stayed at 165 euro. We did pay out our first ever bonus in December, 20.000 euro divided according to the the ratio below.

In the background however, big changes are happening to our team composition. While the men were already outnumbered 4 to 6*, 2024 will also have been the last year of male domination in terms of working days…

Nothing changed here since last year on paper, but we are leaps closer to becoming a steward owned company. There are two main challenges to this process that have become clear in 2024. The first is organisational, even psychological - when Maarten, Mathieu and Lennart “step out of the middle” of the company, the company’s guidelines and steward roles need to be so clearly defined (and trained) that we all have the confidence to operate under this new, radically flat organisational model.

The second challenge is a matter of form: we realise that the laws of the Netherlands, while relatively advanced, still struggle with the concept of self-owned companies, making the transition an immense (and often too daunting) legal and fiscal puzzle. To truly make widespread impact at trader level, we are creating a way to reward (instead of punish) the move to steward ownership for any coffee, cacao, tea or spice trader.

To train us in thinking like stewards and to inspire us with working examples of steward owned companies, in 2024 we have established relationships with Economy Transformers, We Are Stewards, Stichting Sleipnir, and the broader network of our social lender the IONA foundation. All of these organisations are worth checking out if you want to dive into the question of ownership as a company.

While numbers are the bones of a true transparency report, we also take this opportunity to celebrate some non-numerical milestones. Above all, we have had a very exciting year. This Side Up is maturing further, teaming up with the old establishment as well as the most progressive minds in and around our industry, while finding its voice more independently and fiercely.

So let’s end on a visionary note. We need to be who we are because in these panicky times, there are too few people talking about an alternative, positive scenario for the future of coffee. It’s as simple as this: prices made when people trust each other are prices that move towards, not away from each other. Roasters create compassion and sensitivity to quality among their customers, allowing them to justify higher prices. Meanwhile, producers accept realistic prices in exchange for the security of the long term relationship. Long term connection and commitment to each other naturally allows the price to stabilise and become a reflection of the actual costs made in the chain. However much of a dream this might sound, this scenario is real, our numbers prove it - and you have been instrumental in making it happen

We hope to keep building with you for years to come!