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Trade Talks: Spotlight on Coffee

November 20, 2023

Coffee, the beloved drink that fills approx. 3 billion cups each day, is more than a morning ritual: it’s a global preference that connects us all.

In this interview, we delve into the world of coffee trading with Denis Wauters, Coffee Head of Marketing for EMEA, exploring how the coffee journey, from farm to cup, has evolved over a century, and LDC’s deep-rooted commitment to helping shape a sustainable coffee industry.

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Q
So, Denis, what appeals to you about coffee?

A

I’ve always thought that coffee was special for many reasons, including its tangible and relatable nature. Coffee is not just something you trade, it’s an experience you can directly enjoy: you can actually taste the difference in coffee quality, and the fact that it can taste better but cost less, sparks my curiosity. 


Q
How did you start to work in coffee? 

A

My journey at LDC began through the Graduate Program, which gave me the opportunity to rotate through various platforms and trade a variety of different products, and ultimately led me to pursue a role as part of the Coffee team. 

I became really interested in the significant role sustainability was playing in the evolution of coffee. Consumers were ready to pay more for sustainably produced coffees – a shift that could not only reshape the supply chain but also enhance the livelihoods of countless farmers worldwide, generating additional income based on premiums for sustainably produced coffee. The prospect of being a part of this transformation was incredibly exciting.  


Q
Can you tell us about what’s involved in a typical trade?

A

When booking a trade, we first make sure we understand exactly what our client needs.  

Our teams in producing countries, like Ethiopia or Mexico, estimate whether we can source enough coffee of the right quality, ideally from projects we develop in the field. Once we have their input, we measure risks inherent to the many value chain steps that coffee will go through: sourcing, processing, transport, etc. Our Logistics team then helps us to identify the best way to move the goods to wherever our clients want them, taking into account any requirements at destination. Once this is all cleared, we go ahead with our offer and, upon agreement with the client, we start moving the coffee from farm to cup.


Q
LDC has been a global agricultural merchant for over 170 years.
Do you think the role of a trader has changed significantly over
this time?

A

Well, I haven’t been around that long! But I think that while our context has driven fundamental changes to supply chains and the way we work, the essence of what we do remains similar to what our predecessors did a century ago: It’s still about leveraging the latest data, technologies and innovations, and even more importantly, about relationships and in-person interactions.  

And, of course, trading has always been about understanding market drivers – what triggers the flow of one product from point A to point B, and what makes another product stay where it is. Market analysis has always been an essential skill. However, I do feel that the flows themselves have become more complex. 


Q
Why do you think flows have become more complex? 

A

I see growing complexity mostly in relation to an increasingly demanding regulatory environment, as well as consumer requirements, for sustainability. There’s a fantastic push toward sustainable practices and the pace of change in requirements has accelerated. 

At LDC, we see it as our responsibility to support our partners in navigating this shifting landscape through various projects, tools and systems that we are actively developing. 


Q
Would you say that sustainability influences your trading decisions? 

A

Our trading decisions are driven by the collective insight of our team, including our research and quality managers, as we analyze data and products together – but yes, sustainability has a significant influence.  

All the stars are aligned for this to be the case – LDC has made sustainability a key priority, the market demands it, the regulatory environment is evolving in that direction and, on top of all that, I feel that all our team members are committed.  

So yes, it’s a major driving factor and we are constantly driving toward better practices – through internal initiatives and collaboration with external partners. 

And in fact, as a trader, I would say my role is about fostering partnerships: whether it’s negotiating a deal or collaborating with team members, suppliers and customers, I aim to create mutually beneficial relationships. This means that when we negotiate, it’s not just about the present deal but also ensuring the relationship endures beyond it. The bonds formed in this business can span generations!  

The global coffee supply chain is evolving, to ensure end consumer demands are met. The requirements for the coffee we source is constantly changing, and in order to meet these, we are developing supply chains to ensure specific flows for our clients. So our role is increasingly to be an integrated supply chain manager and risk manager, and we have growing teams working in sustainability, compliance, farmer training, etc.  


Q
Could you elaborate on how LDC is supporting its supply chain partners? 

A

One of the most tangible examples is the Stronger Coffee Initiative we launched in 2022. This initiative focuses on enhancing farmer prosperity, promoting the production of low-carbon coffee, and conserving and restoring coffee landscapes through regenerative agriculture. It also seeks to structure access to collaborative investments, thereby driving scalable sustainability across the coffee value chain. 

And this is just one part of a wider coffee sustainability strategy that seeks to create tangible impacts at farm level and across our commercial operations, to ensure supply continuity and sustainability.  


Q
What will help ensure a sustainable future for the sector? 

A

To maintain the momentum toward sustainability, a balanced approach combining market dynamics with effective regulation will help to ensure consistency. Any drop in demand for sustainably-sourced products could affect the trust farmers place in these initiatives to support their families and livelihoods.


Q
Thank you, Denis. And in closing, any advice or insight for aspiring traders out there? 

A

Well first of all, consider joining LDC! 

More generally, if you’re keen to work in commodities trading, look to get some hands-on experience in the supply chain of the commodity you’re interested in – either at origin or destination. For example, I worked with an NGO in India that supported smallholder farmers with certification, to increase the value of their sustainable agricultural products. In Peru, at a think-tank, I dove into how better-designed crop insurance could help farmers gain access to credit. At the European Investment Bank, I focused on due diligence for agricultural projects. 

These experiences can help you build the expertise you need to excel in trading, thanks to a better understanding of the supply chain from farm to customer.

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