Algrano Story #1
“By the spread of mobile devices in producing countries, growers are connected and can now access the buying market, leading to a democratisation of trade.”
“We are fully transparent during the entire process – It’s a textbook case of how digitalisation can influence a very old trade and do this on a worldwide level.”
“In 2017, Algrano paid 30 per cent more to growers than they could have achieved at the highest market price for the period.”
“Pascal Schlittler, Founder of single serve coffee capsule company Mocoffee, is no stranger to innovation in the coffee industry. Since then, Schlittler has built his knowledge and presence in the coffee industry. He is now using his experience and resources to form Mycoffeeworld, an initiative and investment vehicle supporting start-up companies during their growth phase.
One such company is Algrano, an online platform allowing growers and roasters to communicate and trade coffee directly and openly. Schlittler has supported the young company as a sparring partner regarding sales and marketing activities.
“This is the first and only platform that I am aware of that is really connecting roasters with growers and enabling such a transparent business model.”
It’s a textbook case of how digitialisation can influence a very old trade and to do this on a worldwide level.”
Algrano CEO Dr. Raphael Studer tells Global Coffee Report the company provides roasters the opportunity to update how they buy coffee in the same way they do their equipment. “There is a lot of innovation going on [in the coffee industry], but how coffee has been sourced has never changed,” Studer says. “Today, most coffee bags are bought over the phone. That’s how it still happens and we really want to change that. Buying coffee is a standardised thing, especially if you go through the commodities market. Why shouldn’t it be done in a standardised way?”Algrano’s digital platform not only provides access to new sets of information for roasters and growers it connects, but offers the services needed to transport the coffee from the grower to the roaster. These services include shipping, financing, warehousing and quality management.
This means the roaster can focus on what matters to them; discovering unique coffees at origin, then roasting and selling them. “The hassle of direct trade starts when the roasters find out the burdens, paperwork, and administration that needs to be done,” Studer says. “At end of the day, when taking part in direct trade, you should focus on developing relationships with your growers and selling your green beans, not talking to tax authorities.
” Algrano employs a fully transparent price model, displaying the costs of each service to the grower and the roaster. This implies that roasters can customise their supply chains.
For instance, if a roaster orders coffee from green bean traders, Studer says they will have the coffee already sitting in a warehouse and will need to charge additional storage costs.
Algrano, on the other hand, will only charge for the two months the warehouse is used. A key benefit of Algrano’s platform is the sheer amount of data roasters can acquire that they would not have access to otherwise. “The roaster receives so much information about the grower, which is beneficial for a variety of purposes, from traceability and supply chain information to marketing content,” Studer says.
Many roasters using the service tell Studer they also enjoy being able to ethically and sustainably source their coffee.
Algrano was formed in 2013, when Co-founder Gilles Brunner, who worked in a coffee trading house at the time, realised coffee growers needed an online tool that could connect them to customers in global markets. Brunner partnered with Studer and software development expert Christian Burri to develop the platform, which initially did not include a trading element.
“When we showed this platform to cooperatives and growers and asked if they’d use it, they said yes, but where can we sell our coffee to the roasters directly?” Studer says. “That is why we built Algrano.
The technological revolution in coffee trade is pushed by the spread of mobile devices in producing countries. Growers are connected and can now access the buying market, leading to a democratisation of trade. They’re sick of being told what their coffee is worth. They want to establish a brand, differentiate their product and communicate directly with the people buying their coffee.
“It’s the next generation of coffee buyers and sellers asking for an easy- to-use and transparent ecosystem.”
”Algrano offers its services at a fixed cost, meaning every additional cent a roaster is willing to pay for a particular green bean goes directly to its growers. In 2017, Algrano paid 30 per cent more to growers than they could have achieved at the highest market price for the period.
“Algrano is not a trader, we do not do stocks or have intention to buy low and sell high,” Studer says. “This ensures a new direct price model, where the quality premium the roaster is willing to pay goes straight to the grower.”
Through Algrano, roasters can broadcast their needs, in terms of quality, origin, delivery times, and price. Farmers and cooperatives can answer this request with a concrete offer that meets these requirements. Alternatively, growers can actively offer freshly harvested coffee to the Algrano community. Once mutual interest is established online, a physical exchange of samples takes place. The samples flow through Algrano’s quality lab so a team of Q Graders can assess the coffee and determine if it matches its online description. The final transaction then occurs, where the grower receives payment and the coffee is delivered to the roaster.
“We are fully transparent during the entire process,” Studer says. “Everyone knows how much they paid, what we took, where the coffee sits now, who assessed its quality and when it will arrive at destination.”
Since Algrano’s launch in 2015, thousands of growers and roaster have signed on to the platform. Studer says the company’s focus right now is to expand even further. “One and a half years ago, we asked ourselves how Algrano is going to develop. Are we going to stay a small company or do we have bigger ambitions? That’s when we decided to step out of Algrano and look for growth capital,” Studer says.
Algrano has formed connections with companies from around the world whose resources and knowledge help the online platform grow its scope.
Partnerships with Fairtrade in 2017 and the El Salvador Coffee Council in 2018 have also been beneficial to Algrano’s growth.
“We’re a two-sided platform. We want to have as many growers as possible have access to Algrano, and that can only be beneficial for the roasters using our service,” Studer says. “You spread the word fastest by going through groups that represent the goals.” Studer believes Algrano can provide growers and roasters with the tools to make the coffee supply chain sustainable for future generations, by providing growers with an additional direct sales channel, and roasters with streamlined buying operations from origin. “There are many problems putting coffee supply at risk right now. I believe that Algrano can help address some of these problems,” he says. “It’s the next generation of coffee buyers and sellers asking for an easy-to-use and transparent ecosystem. They are ones already capitalising on this system.” Studer says it is younger growers that want to separate themselves from the commodities market, but don’t have the resources to travel and market their coffee. “For these young growers with big ambitions, Algrano is a necessity.” GCR