What is a bonded warehouse in green coffee?

A bonded warehouse is a secure storage facility approved by customs authorities where imported goods can be held without import duty or VAT being paid until the goods are released into the domestic market. The goods are technically still "in bond" - under customs control - and duty is only triggered when they are cleared for domestic use.

In green coffee, bonded warehouses are where most bulk imported coffee is stored between arrival at port and sale to roasters. A UK importer bringing a container of Ethiopian coffee through Felixstowe will typically have it moved to a bonded warehouse rather than paying duty immediately. The coffee can be bought, sold, and physically held in the bonded warehouse without triggering the duty payment. When a roaster purchases a lot and it's released to them - via a Delivery Order - that's when it clears customs and duty becomes payable.

For roasters, the practical implication is that green coffee listed on an importer's offer sheet is often held in bonded storage. The price quoted may or may not include duty - it's worth confirming whether a price is ex-bond (duty unpaid) or duty-paid (cleared), as this affects your true landed cost calculation.