The paper aims to understand the role of sensory quality scoring used at the competition auctions on pricing outcomes and how the auction process could be improved to increase sustainability in the specialty coffee market.
The authors build a conceptual model explaining the potential role of sensory quality scoring in generating inequitable outcomes in specialty coffee auctions. The authors' research is exploratory. The authors base the propositions on the findings of the extant literature and our analysis of data from 24 Best of Panama (BOP) Auctions that took place between 2017 and 2021.
A striking feature in recent BOP Auctions is a winner-takes-all (WTA) outcome. The authors also document the presence of significant price inversion. The authors attribute these outcomes to the interactions of information-poor producers, information-rich intermediaries and conspicuous consumers in competition auctions, where the product quality measurement is highly unreliable.
Data need to be gathered more broadly to enable the operationalization of the current propositions into testable hypotheses.
These strategies intend to provide guidelines for producers, consumers and other value chain participants on creating equitable solutions to a thriving industry where a WTA phenomenon occurs.
The current study is the first to argue that existing quality scoring practices, as well as conspicuous consumption, contribute to the inequities. Finally, the study proposes novel interventions to standardize the quality grading protocols and communicate them transparently to both producers and consumers.
