Löfbergs was founded in 1906 by the brothers Anders, John and Josef Löfberg. They began roasting their own coffee in Karlstad in 1911. Today, the company is one of the Nordic region’s biggest family-owned coffee businesses, producing the equivalent of more than 10 million cups of coffee every day. Löfbergs is still fully owned by the Löfberg family, now in its third and fourth generations.
I spoke with Martin Löfberg, one of that fourth generation and head of procurement for the company. I asked him what that role entailed.
I spend a lot of time in the coffee origin countries. Out of the twelve years I have spent with the company, I reckon I have travelled for one year of that. I have especially been focusing on the co-operative side, Fairtrade, organic and Rainforest Alliance certified cooperatives, mainly in Central and South America.
On a daily basis I do a lot of cupping: three times a day for a total of 300 cups. That’s an important part of my role. It allows me to be actively involved and not just manage the procurement process from a distance. It is important for me to be inside the flow. It allows me to keep an ear to the rail tracks, to listen to what’s going on, to understand the challenges in producing countries, and to stay on top of how our farmers and partners are doing. Although it may sound counterintuitive, being hands-on allows me to look at the business in a more strategic way.
Throughout my day, I also have to keep on top of the coffee price and follow the futures markets.
What percentage of your coffee do you buy against the futures and what percentage on a flat price?
We buy close to 99 percent of our coffee on a differential basis against the futures. We only buy our speciality coffees on a flat price.
About 15-20 percent of the coffee that we buy is Fairtrade. For a number of years now world prices have been low, and these purchases have been at the Fairtrade minimum price. These coffees are priced on a differential basis, but a minimum price applies. It is 140 cents per pound for washed arabicas, with a 30-cent premium for organic, plus a 20-cent social premium. That gives a minimum price of 190 cents, to which you may have to add a quality premium.
In the past three years the world price has been higher than that for only one day – in December 2019! Apart from that one day, the Fairtrade minimum price has applied.
When you buy coffee, do you buy with a particular blend in mind, or do you sometimes buy a coffee and work out where to put it later?
Some consumers like a consistent taste profile over the seasons and over the years. If a new-found coffee fits into our blends, we are happy to introduce it. However, we operate on a more strategic basis for the blends. The blend drives the coffee.
This is not as easy as it sounds; every new crop is a new page in a book. It’s never the same as the previous crop, and it takes a long time to get an understanding of that. It takes at least five years to become a rookie in this business. It’s always changing. So, for the blends we continually try to be proactive and to see how the crops are coming out, and what qualities are being produced. We have a very narrow tolerance in our blends.
Some consumers like to buy specific origins or regions, or single estates or even single lots, part of an estate. Sometimes, we come across something that is really unique. When we do, we buy it and then test it through our two coffee shops, which are a little bit our centres for innovation, to see if the consumers like it.
There’s a treasure chest of findings throughout my travels that I have been able to introduce. We are able to use our big flows of coffees to put a few bags inside a container to make it easier for us to import.
Some people have complained that there’s too many certification agencies. Have you found this?
We don’t really see this as a problem, particularly with the merger that is now under way between UTZ and Rainforest Alliance. The merger should be completed by 2022, but from 1st July 2020 you can cross-use coffees from farms and estates under both.
We are in favour of the merger as it can be a challenge for farmers to handle too many standards. It’s costly for them to be part of a certification scheme, not just in money but also in time. It is also confusing from the consumer side. Having too many certification standards dilutes the picture.
However, having more than one certifying agency means having access to a wider market. UTZ and Rainforest Alliance were quite similar in their standards.
Fairtrade is different because of their focus on the premium and the minimum price. They are strong from a social perspective. Then you have the organic coffees which are very strong from an environmental perspective.
Rainforest Alliance and UTZ operate on the bigger farms where Fairtrade doesn’t operate. So, Fairtrade is small scale, while Rainforest Alliance / UTZ can be applied on a bigger scale.
We see certification as important, and one of many tools, but for us the Löfbergs brand is more important. Our brand is the guarantee and the trust from consumers and partners that we build into it. Certification symbols and so forth are sometimes important for consumers, but Löfbergs is the true seal.
What’s your favourite type of coffee? And how do you prepare it?
It depends on the day and the time of day! My most common technique is to self-grind and then use a filter. But I also use a French press and an Aeropress.
As for which coffee I prefer, it’s like choosing between your kids. It’s impossible! I do have my favourite espresso though. It’s a natural Brazilian one. If I don’t get it at least once a week I would die!
Many thanks Martin for your time and input!
© Commodity Conversations ® 2020
This is an extract of an interview that will be published later this year in my new book Merchants & Roasters – Conversations over Coffee