SGD Coffee wants to make Sagada coffee among the best in the world

They work directly with farmers with the long-term goal of maintaining-and improving-local coffee.

( Coffee is important. It’s what fuels workforces around the world, keeping executives and employees alike awake and alert during the work day. It is a social glue, bringing people together, whether it be friends or significant others. It’s birthed creativity and dissentworks of art as well as revolutions have been incubated and hatched in coffee shops. It is also the second most traded commodity in the world, next to crude oil, and one of the most consumed beverages in the world.

The Philippines has a coffee-growing culture (now considerably tinier than its heyday before the war), small compared to big coffee-producing countries like Brazil and Vietnam. But the last decade has seen more and more people rediscovering the subtleties of Philippine coffee and working with smallholder farmers and farming communities to produce quality coffee beans.

One such company is SGD Coffee, which works with farmers in Sagada. SGD is run by Rich and Margaret Watanabe, a couple whose passion for coffee can, especially in Rich’s case, border on the obsessive.


Mr. Watanabe retired from corporate life in 2009 to pursue his passion for coffee. He started as a coffee trader to familiarize himself with the industry. “I always came short of finding coffee that was to my standards. I thought, ‘Wow, even though I’m able to pay a premium price for coffee, there isn’t any for me. Maybe I should do my own coffee.’”

Part of his research took him to the New York Coffee Exchange, the epicenter of global coffee trade, where he realized that Philippine coffee wasn’t traded. In fact, no one even knew that the Philippines produced coffee! “I cannot say why we are not known, but I can say why we are not traded.

“Some of the reasons why one product or commodity is not traded is one, it doesn’t pass the quality. Two, it doesn’t have the minimum quantity. It could be a range of reasons. Sometimes politics. If you are a country that is not supportive of another country’s policy, okay, not traded.

“I know we’re not in any political tussle with the United States but we lack the quantity and I think we lack quality as well, but I’m not sure why the New York Coffee Exchange says we’re not traded,” Watanabe says. “I came back feeling optimistic. One, nobody in the industry here could give me very good Philippine coffee. Two, nobody in the States knows about Philippine coffee. I said, ‘That’s a niche market.’”

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He then set out to find the best place to grow coffee. A list of coffee characteristics and environmental factors in hand, Watanabe searched all over, going to Laguna, Mindanao, Cebu, and Bohol, until finally ending up in Sagada. “I had never been to Sagada,” he says. “I wanted to get lost. I drove until I got to the end of the road, so I parked my car and I started trekking. The locals asked, ’What brings you here?’ I said, ‘I’m looking for coffee or for a place where I can plant it.’ They said, ‘Oh, coffee. We have some. Would you like to taste?’”

An old lady made coffee in front of him using their traditional method. “No machine, no roasterthey just roasted some coffee over a pan and beat the hell out of it and poured it into a kettle, boiled it for I don’t know how long and they served it.”

Watanabe wasn’t expecting much. In fact, he was preparing to pretend to be nice. He wasn’t expecting to be blown away. “But when I drank the coffee, ‘Wow!’ was my first word. It tasted like pine aroma, leaves, sweet caramel, very full bodyeverything that I was looking for was in that cup.

“I could not believe how this could happen in a remote village done in that traditional way when I had just come from New York, when I just came from the coffee industry where we have machines and what-have-yous and this humbly prepared cup was the best cup I’ve had in my life.


“And from that time on, I said, ‘I’m going to make sure that everybody shares this experience. I’m going to make sure that the people in this village get to preserve this coffee that they have.’ That’s what got me into coffee.”

Partnering with Farmers

Working with Sagada residents is notoriously difficult, because first and foremost, it is important to gain the trust of the community. “I would go there, they would ask me questions, they would serve me coffee (which was worth the trip and the trek), but they would ask questions, and sometimes, that (would be) it. And months passed and one day I said, ‘Why don’t you just try?’ So I tried with one farmer and it seemed to go well so the other farmer decided ‘Okay, maybe we can try this as well on my land.’ And so on and so forth,” he says. “It started through a lot of discussions and interactions, that’s why this is what we have after seven years. I mean, a normal businessman would have this in two months.”

SGD partners with farmers, using their land to plant coffee trees. “We work with UPLB with this. We have a soil scientist and a crop scientist and an organic expert and an entomologist,” Watanabe says. “This is sort of a partnership so that their land can be productive.”

When ripe, the beans are sold to the company at premium prices. “My point is not whether I own this or you own that. My point is I want this coffee, Philippine coffee, the best that I’ve tasted in the world, preserved. Or maybe, if I’m lucky, handed on to the next generation, which is why that arrangement is such a no-brainer.”


SGD is currently actively working with about 15 to 20 farmers on three mountains. “That’s the only number we can accommodate for now. There are about a hundred more farmers who want to join us but we’re trying not to overstretch ourselves.”

What do beans from Sagada taste like? “This is what you call Arabica Typica,” Watanabe says. “It’s very balanced and full-flavored. It’s just so clean and smooth, and as the seasons change and as the years go on, there’s a lot of other pleasant nuances that I discover in the coffee. You still have that great, bold, smooth, clean flavor, very sweet, chocolatey, and there were years that there was a nice blueberry quality to it. I love it because it’s never the same every year. Sagada coffee is always changing but it’s always pleasant.”

The Coffee Science Center

After establishing SGD Coffee, Watanabe realized that he wanted to share the fruits of his research with others, be they coffee enthusiasts or professionals. Thus, the Coffee Science Center was born. “There is no coffee school. There’s one being developed in the States. When I say coffee school, I don’t mean barista school, I mean really chemicals and agriculture and engineering. What’s out there is a lot of standards that the industry has set.

“What we do in the Coffee Science Center is we take a critical view of those standards... and see whether that applies to a particular activity or endeavor. So there’s standards in agriculture as well in farming. How those standards perform when applied to coffee in Sagada is what we share.


“So the Coffee Science Center... is a wealth of knowledge that will be taught to you… but (also) an ongoing dynamic changing knowledge because there’s a lot about coffee that is also changing. Climate is changing, the preconceived notion of farming is changing as well, so what you are learning in the Coffee Science Center is how to adapt to or understand what is changing.

“We’re just all trying to share knowledge and maybe then someone is encouraged to innovate and we hope that that someone comes back and shares it with the others who are coming in and so on. The whole purpose is for us to be able to preserve and enhance our coffee heritage.”

The Coffee Science Center offers basic barista classes, which is standard. They also offer sensory classes, which is very important when one wants to learn how to really appreciate coffee, or when one is in a quality assurance position in the coffee business. Perhaps the most unique course they have is the Applied Sciences in Coffee Origins, which includes a field trip to the Sagada farm for firsthand experience, as well as the opportunity to interact with the farmers.

“Coffee Science Center is the only institution that Runs its own field laboratoryan actual working farm where you can engage in farming and practice the lessons and concepts. It’s very rare to find an institution that can provide that,” Watanabe says. “Other institutions like in the States, the University of California Berkeley, they do have a fantastic coffee program but they don’t have a farm, so they have to partner with a farm in Central America. CSC has its own farm and we’re currently doing experiments there.”


SGD Bodega

The on-the-job training arm of the Coffee Science Center is the SGD Bodega, a coffee shop staffed mainly by students who need to clock in the hours needed by law to finish the barista course. “The bodega is part of the school. It is where we immerse our students in real life coffee operation. I think learning is always better through experience. We always believe in practice.”

The whole setup is located in a repurposed home in the quiet side of Teachers Village. The Bodega got its name because it literally was supposed to be a storeroom that somehow got turned into a coffee shop and educational space.

Open from 8 a.m. to 10 p.m., the usually quiet space is large but seats only a few. It has high ceilings and lots of windows that let in plenty of natural light. “The entire SGD Bodega is a proof-of-concept for sustainability that old things can be cool, that not everything that is nice should be new. We have this sustainability wall (made from) refuse cargo pallets by the side of Mario Lopez Avenue in the Harbor Area... We stained it and drilled it right on the wall.


“Our bar is made from GI sheets, the oldest that I can find in the junk shop. They were scratching their headswhy would I want to find the oldest when everyone wants to look for junk that looks as new as possible? They sold me this for seven pesos a kilo. Some of the older ones had a rusty look to them and it gave a lot of character and texture.

“Our tables are fallen trees from Sagada. The tables are off-cuts discarded on the side of the road. We took them, smoothed them out and now it lives its life holding up your fantastic half-plates.

“Our doors are also off-cuts, the sides of the trees that nobody wants. It’s actually crooked. They said, ‘That’s not enough to make an entire door.’ I said, ‘That’s okay, we’re going to put glass on them.’

“The concept for the interior is a lesson in the Coffee Science Center. We don’t want to just be teaching and have the students say, ‘That’s what you say, but it hasn’t been done,’ so what we did was we practiced it before we taught it,” Watanabe says. “Everyone comes in and says, ‘Nice. Very warm.’ (And I say,) ‘Just like Sagada.’”

The first thing freelancers who like to work in coffee shops will notice is the abundance of plugs, practically two sockets to every sitting space. This is intentional. “Who does not want to have more sockets and who doesn't want to have universal sockets, one that you do not need to bring an adaptor for?” Watanabe asks.


The Bodega serves hot meals and pastries. The pastries are made in-house. “Our pastries are baked fresh every day. There are two concepts that we go by with our pastriesone is that it should match the flavor profiles of our coffee (in terms of taste and texture).

“Second, it’s non-refrigerated. We tried to come up with pastry items that if you are a student of the coffee science center tryin to learn how to put up your own coffee shop and not break the bank, then there is a way by presenting pastries that are not refrigerated...because without refrigeration, you can cut down on your operations by 10 to 15% in overhead.”

There are Russian tea cookies, lemon bars (P65), revel bars (P65), chocolate chip oatmeal cookies (P60), and orange oatmeal cookies (P60). Watanabe wasn’t exaggerating. The pastries complement the coffee quite extraordinarily. The oatmeal makes the cookies extra chewy, the chocolate and orange flavors heightened by fragrant vanilla. The revel bar isn’t too sweet, holding together, begging to be dipped in coffee. The tea cookies break apart between the teeth, their flavor there yet not there, pushing the diner to take just one more. Alas, I was not able to try the lemon bars, but I will once I return.


The pastries are served in beautiful half-plates from Cornerstone ceramics, rejects that have been repurposed. “They come from a very passionate ceramics maker. He only choose the best clayat least 2000 years old. He spends his retired life working on hand-crafted ceramic plates,” Watanabe says.

They also bake loaves of sourdough bread (P150) made with Sagada yogurt which is lovely with butter.

Their meals is also made in-house. Their All Day Breakfast is served with two eggs, vegetable sides, rice, and a cup of coffee. “It’s not that it should match the flavor profiles but that it should represent Sagada.

“Our chicken tocino (P180) is made in-house without chemicals, and so is the longganisa. The danggit (P200) is not from Sagadathere is no fish therebut we felt that it deserved the real estate because one, it’s so nice to. Have danggit in Sagada for breakfast, and two, this danggit is awesome. We have a family doing this danggit.

“The fish is from Palawan but they way this family prepares the danggit is very very different from the usual salty and almost potato-crispy texture. Our danggit is flavorful, not salty and it's crunchy but not potato-thin crisp.”

Their pasta dishes are served with toast. “Etag is from Sagada. We get it from some of our farmers who do this. If they have an extra etag or two, I’ll get that. Our etag gets sent over from Sagada every so often (for the Etag Carbonara, P220). The Sagada omelette (P180) (is made with) vegetables found in Sagada. It’s a very Sagada dish.


“It should feel like when you’re eating our food, the only thing missing is that old lady burning pine wood by your side. It should transport you, at least for a few minutes of the day, back to Sagada, back to the coffee’s origins.”

And then there is the coffee. “Our coffees, they are 100% arabica. We don't mix beans.”

Choices are: Espresso (P95), SGD black (P120), flat white (P145), cappuccino (P145), SGD cold (P175), and affogato (P155). “They are only sourced from one location, each location would have different farmers and they are all traceable to a farmer. That’s what’s missing with a lot of coffee shops who say, ‘We’re helping farmers’ but when you ask, ‘Can you tell me which particular farmer or where was this coffee grown?’ They can’t say or they say, ‘Our supplier brings it to us and he says they help farmers.’ But as a proof of concept, we make sure that our coffee is traceable to a farmer,” Watanabe says. “This, we’d love to share with people who want to go into the coffee business. We will even help out coffee shop owners to directly transact with the farmer of origin. That’s what we would love to see.”


Challenges in, and Hopes for, the Coffee Industry
Farming isn’t the bucolic existence a lot of paintings and stories make it out to be. It’s hard work, even in these modern times, especially with global warming and even simple human activity. “There is an impact on climate change in coffee. As the weather patterns are disrupted, you have either longer rainy season or longer warm season and that affects the life cycles of pests,” Watanabe says. “There are also human (challenges). In tourism, with the influx of people, there’s also the influx of contamination from other farms. Pests from other farms can be brought in by tyres, shoes, and that starts the infestation. Not to mention the garbage that people bring.

“As much as Sagada is very strict on garbage, you can not avoid having people throw this and that, so one of the things that I feel strongly for is when we plant and when we dig, we find all this garbage. They pose a problem because if your soil is full of plastic, how can you grow anything? But not just tourists bring garbage. Commercialization as well. Urbanizationas communities become more commercialized, the traditional practice of preparing food becomes less and less prevalent and people are buying more instant food so you have a lot of garbage.”

Though the local governments have tried to address the issues farmers face, Watanabe feels like better results would be achieved if their efforts were refocused. “A lot of our farmers still process coffee traditionally, so it would be great to see government support on individual farmers. Farm inputsyou have depoppers, you have drying beds, equipment. Its very difficult for individual farmers to have equipment. And when you say that you have a shared facility, but you know Sagada, you're walking an hour away up and down to the nearest center just to proceed 10 kg.”


Part of how SGD Coffee helps farmers is by buying beans from them, leaving the company to do the processing. “The direction I want to go is simple: higher quality coffee. I feel like we should take the models of Panama and Costa Rica. We cannot compete with Brazil or Vietnam in terms of quantity and production and yield.

“So if we’re looking at an addition concept, like one hectare produces x amount of coffee and you make this much... if we’re looking at a linear progression, I’m sure we won’t be able to compete with Vietnam and Brazil because Brazil is such a huge mass of land. We can’t compete with Vietnam because Vietnam has such a solid political will,” Watanabe says.

“I think that the direction we should take is going for higher quality is making more money out of one tree simply because 85% of Filipino farmers are small holder farmers. They own less that one to two hectares of land, and that’s the most affluent of them.

“Most of the farmers I see are just backyard farmers. So if you can’t have more land...and we are stuck with the production-intensive approach, you’re stuck earning whatsay P10 for 10 trees. But if we can come in, help you come up with great coffee that people are willing to buy at a higher value, then those 10 trees becomes P100 without the farmer having to get more land. So simply by changing the quality of the coffee, I think we can change a lot of lives. That is the direction I am going in.”


Aside from the coffee shop, SGD sells ground and whole beans for home use, and can even have them delivered door-to-door. Some of their institutional clients include a coffee shop in Cebu and a resort in Quezon.

How has working with SGD Coffee affected the lives of their partner-farmers? “There was a group that did research. There were some feedback that I would cherish for the rest of my life. They said that before SGD came to work with them, they did not find any more reason to work with coffee, and so SGD coffee has given them back some enthusiasm, some encouragement to continue working with coffee,” Watanabe says.

“What I hope really that SGD is doing for the farmers is being able to do two things: one, preserve the coffee culture and make it sustainable enough to be handed over to the next generation and two, the hardest part of the equation, is for the next generation to take the coffee heritage because it’s one thing to give it and it’s another to take it. At least (this way) everyone down the line can still enjoy Philippine coffee and hopefully, get Philippine coffee recognized as one of the best coffees in the world.”

Those would be good things, indeed.

SGD Coffee is at No. 45 Maalalahanin St., Teachers Village East, Diliman, Quezon City. Contact 0916-433-7972 or check out the SGD Coffee Facebook page.

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