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Intelligentsia Coffee

“Intelligentsia was known as this stupid and naive company that overpaid farmers and carried too much debt,” says Peter Guiliano of Counter Culture Coffee, as quoted by Michaele Weissman in The New York Times (6/22/06). Notice that Peter is speaking in the past tense — Intelligentsia Coffee may be paying “at least 25 percent above the Fair Trade price” for its coffee, but is turning a profit, “with 2005 sales of $9.4 million and a 2006 growth rate of 21 percent.” Intelligentsia’s keys to success are the idea that drinkers will pay considerably more for better quality coffee, and that growers can share in the margins if they produce better beans. Intelligenstia’s idea apparently takes notions of “Fair Trade” to another level — as “Fair Trade relates only to working conditions, not the quality of the coffee beans.”

Traditionally, growers are paid about the same for their crops, regardless of quality — even though it’s much harder work to grow quality beans. Their return is only what the co-op will bear, and that’s pretty much the same for everybody. Intelligentsia’s founders — Geoff Watts and Doug Zell — basically offer an incentive program that’s premised on creating a relationship with farmers, and not just completing a transaction. They set up a rating system, called a “cupping score,” modeled on the way estate wines are evaluated. Intelligentsia pays “$1.60 a pound for AA coffee that earned a cupping score of 84 to 87 (on a scale of 100); $1.85 a pound for AAA coffees that earned scores of 88-93; and an uheard-of $3 a pound for extraordinary coffee that scored 94 and above.”

By comparison, Fair Trade coffee currently sells for about “$1.26 for a pound of nonorganic beans and $1.41 for organic. Intelligentsia’s prices will never go down, they will only go up, Intelligentsia promises. Local co-ops are simply paid a flat fee of about 26-cents per pound for services such as “dry-milling the beans, prefinancing the crop and providing technical assistance.” The growers, meanwhile, are put in charge of judging their own beans, using Intelligenstia’s standards. Geoff Watts calls the approach “relationship coffee" and says he expects "to pay 50 percent, 100 percent, even 200 percent above Fair Trade rates for beans that are so good that customers will pay $20 and more a pound retail." He comments: "On the grower side and the consumer side, we’re trying to create a culture of quality." ~ Tim Manners, editor