AI hailed as the “future of the coffee industry” as Demetria closes US$3M funding

03 Mar 2021 --- Demetria, the first AI-powered software as a service (SaaS) start-up for the coffee supply chain, has closed a US$3 million seed funding round. With the world’s first data cloud to identify and track coffee quality with full traceability, Demetria is set to drive efficiency, transparency and sustainability throughout the commodity’s value chain, empowering producers and roasters with “first-of-its-kind insights” that positively impact the livelihoods of coffee farmers.

This funding will be used to scale the company as it acquires new customers and further develops its suite of applications for farmers, traders and roasters, Felipe Ayerbe, co-founder and CEO of Demetria, tells FoodIngredientsFirst.

He says the company is “in discussions with major roasters” who are keen to deploy the company’s technology.

“Each client believes this is the future of the coffee industry,” he affirms.

“One of our major challenges is choosing who to work with and grow the company with – we’re in discussions with the biggest roasting companies. We are also seeking investment for our Series A round.”

Cupping is inaccessible to the vast majority of the 12.5 million smallholder farmers who produce 60% of the world’s coffee beans.The round was led by Latin American-Israeli investor Celeritas and a group of private investors including Mercantil Colpatria, the investment branch of Grupo Colpatria, which is a key player in the Colombian financial sector. 

The power of AI
This week, Demetria “emerges from stealth,” which means that all of its activities are new. 

“As far as we’re aware, this is the first time that AI is used in the assessment of sensory quality in green coffee beans,” explains Ayerbe.

The consumer knows their favorite coffee and expects the same taste, aroma and experience, and Demetria wants to improve the whole chain from farmer to end-consumer. 

“The demand is there for quality coffee, and the application of this technology will significantly increase the supply of top quality coffee,” he notes. 

Growers will understand which farming methods produce better crops, and they will be significantly more motivated to grow crops which translates as more money for their families and communities.

“We have the chance to be the start-up which revolutionizes the entire supply chain for coffee, to help traders, growers, farmers, roasters and everyone in the coffee industry to move and improve their business models, with more coffee at less cost,” adds Ayerbe.

“Everyone will win through the use of this technology, and coffee lovers have a lot to look forward to.”

Growing out of tradition
Until now, coffee bean quality has been determined solely by cupping, a manual, expensive, time-consuming process carried out by the industry’s certified tasting experts, located in countries where coffee is exported.

Consequently, roasters and traders have had minimal visibility into the quality of beans they are purchasing until very late in the process. 

Demetria is evaluating the quality of coffee beans through the manual, time-consuming process of “cupping” by a certified expert, which typically only occurs further down the supply chain. 

“This means that farmers, the majority of which are smallholders, have no understanding of the quality of their produce, so it’s usually sold for a base price via a complex supply chain, and many struggle to cover their operating costs or maintain their livelihoods,” explains Ayerbe. 

When farmers produce high-quality coffee beans, they have no idea how to replicate processes to reproduce crops of an equivalent standard. “It’s complete guesswork,” he reveals. 

The lack of access to cupping is also a significant problem for first-level buyers, such as cooperatives, who effectively buy their beans blindly, with no idea of their beans’ quality until cupping can be performed.

Global coffee production is beset by a host of factors that make crop quality volatile and its market unstable. 

Farmers’ inability to guarantee a consistent level of beans means that a significant number of them receive just a base commodity price for their produce. For the first time, quality and taste can now be assessed at any stage of the coffee production and distribution process, from farm to table. 

Only later in the process, when beans pass through an extensive and complex supply chain that incorporates traders, processors and exporters, is determined. Consequently, farmers receive on average just 2.5 percent (US$0.07) from a cup of coffee retailing at US$2.80.

“The ‘wine-ification’ of coffee means that levels of discernment and premiums for the beverage have been increasing exponentially, yet the perception and treatment of coffee farmers differs vastly compared to that of vineyard owners,” adds Eduardo Shoval, co-founder and executive chairman of Demetria. 

“Our vision is to provide an enhanced and sustainable quality coffee experience for all coffee drinkers globally while revamping the industry’s value chain for the 21st century.”

Underscoring visibility
Meanwhile, lack of industry data is a “significant roadblock” for industry growth since roasters lack visibility across the value chain which means that they can’t know the quality available until relatively late in the process.

Demetria’s technology addresses these challenges by bringing insights and invaluable data intelligence to the coffee industry for the first time, enabling farmers, traders and roasters to make more informed, better decisions. 

“The platform drives efficiency and traceability across the entire coffee value chain and positively impacts the livelihoods of farmers, who will receive a fairer price for their crop,” continues Ayerbe. 

Pioneering coffee aroma & taste
According to Demetria, coffee aroma and taste are the most critical quality variables of the coffee bean. 

For the first time, quality and taste can now be assessed at any stage of the coffee production and distribution process, from farm to table. 

Utilizing state-of-the-art, portable near-infra-red (NIR) sensors to analyze and fingerprint green coffee beans for biochemical markers, Demetria has created an AI-based data intelligence platform that accurately matches each bean profile according to the industry standard coffee flavor wheel. 

The company is launching a suite of SaaS-based solutions to replace age-old, manual production processes used to ascertain bean quality alongside cupping, delivering taste assessment and profiling, as well as swift, accurate quality measurement and traceability throughout the supply chain.

“The ability to discover the quality of green coffee beans is a game-changer for an entire industry that’s relied on a primitive supply chain and artisanal processes for 300 years,” Ayerbe details. 

“It’s hard to believe that the world’s biggest roasters have effectively been buying beans with minimal knowledge about their quality and that the majority of coffee farmers – the most critical players in the supply chain – don’t understand the quality of their crops and hence are paid unfairly, threatening the sustainability of this US$450 billion industry.”

“Our technology delivers vital intelligence to ensure crop consistency and quality control, resulting in readdressing the economics of the coffee value chain to benefit every key player.”

Growers will understand which farming methods produce better crops, and they will be significantly more motivated to support their families and communities.“Matchmaking” solutions
Demetria has completed a pilot with Carcafe, the Colombian coffee division of one of the world’s oldest and largest agricultural commodity traders Volcafe/ED&F Man. 

Carcafe has identified a distinct high-value “cupping” profile, and Demetria has built a matchmaking solution to determine which green beans have the best organoleptic properties.

“Carcafe worked with Demetria to develop a pilot application that allows anyone, anywhere, with a portable sensor, to detect a specific and high-value sensory taste profile of green coffee,” explains Sebastian Pinzón, general manager at Carcafe. 

“We are in the process of adopting and rolling out this technology to increase the efficiency and effectiveness of our prospecting process at our purchase points and in the field.”

Demetria is also working with Federación Nacional de Cafeteros (FNC), the Colombian National Federation for Coffee Growers, to develop a series of apps that help farmers and their transaction points in the supply chain to control and track bean quality and price it accordingly.

Through the use and affordable democratization of sensors, cloud computing and other technologies, coffee growers will be able to manage each stage of the production process in a simple, timely and accurate manner. 

“More importantly, they will be able to evaluate the quality of their crop and gain a price that reflects this. Technologies like Demetria empower the FNC to achieve its goals and play a key role in the sustainability of our industry,” explains Roberto Velez, president of the FNC.

By Elizabeth Green