Coffee Industry
According to legend the origins of the coffee industry began when an Arabian goatherd named Kaldi found that his goats reacted strangely around a certain green-leafed bush with red cherries. He ascertained that the excitement exhibited by the goats was due to the effects from eating these cherries. He also consumed some of the fruit and felt "invigorated"; later monks were said to have benefited from the plants qualities to help them stay awake during their long hours of prayer. Whether this story has any basis in fact is unknown but what has been determined is that Coffea Arabica originates from Ethiopia. The plant was cultivated by the Oromom people in the Kafa Province of the country. Arab traders are said to have transported seeds and grew plantations in about 1000 A.D. (Coffee, FAO)
The first known coffee house or coffee shop was reportedly started in Constantinople in 1475; the concept later spread to other parts of Europe (ibid) Interestingly, Lloyd's Insurance Company was reputedly started in the back of a coffee shop in 1689 (ibid)
The route by which coffee entered Europe is not clearly known, although it has been suggested that the route was via Turkey. "It is possible that coffee was brought in along the same trade routes that were used to transport gold, valuable gums, and ivory from Africa; and silk and spices from Asia. (ibid) Coffee was firmly established in Europe by the 16th century.
Despite the popularity of the beverage today, the story of coffee production is one that has been of debatable success, particularly for developing countries and for the growers and producers of the plant. Today, coffee is grown in more than 50 countries around the world and supplies a livelihood to more than 20-million farmers. (Spilling the beans) However, the recent history of coffee production and international trade has been problematized by declining prices for the raw material parallel to global demand. Another important aspect affecting yields and market value is the intervention of large companies and corporations in the marketing, processing and distribution of coffee, which has resulted in problems for the farmers in developing countries.
Globally, coffee consumption is increasing but not nearly as rapidly as production, so prices are decreasing. In 2002 real coffee prices reached historic lows. Many producers are abandoning coffee plantations; others are destroying them. All of this is happening when markets in developed countries are fixated more than ever on high-quality coffee. While many consumers are willing to pay more for their coffee, they are actually drinking less of it. Furthermore, increased supply has not been followed by a commensurate decrease in price in most developed countries. (Coffee, FAO)
The coffee bean is harvested from a small tree or shrub which predominantly grows in tropical climates and requires sunshine and moderate rainfall. The coffee plant begins to mature and flower within three years of planting. The two most important aspects that affect coffee production are land and labor.
Coffee grown in full-sun has a productive life of six to eight years and shade-grown coffee eighteen to twenty-four years (even more if plants are cut back and harvested from new shoots); the relative value of land and labor can shift over time."
Coffee, FAO)
Importantly for the consideration of coffee production in developing countries, it is estimated that the areas or holdings on which coffee is produced has been reduced from the previous commercial size of 500 hectares to holdings of less than 5 hectares. This has become the average for more than half the global population. (ibid)
There are two main species of coffee that make up the bulk of output throughout the world. These are Arabica (Coffea arabica) and Robusta (C. canephora). Arabica was the first coffee to be produced for sale and originated in the Ethiopian highlands. The production of Robusta coffee began only after World War II. Generally Arabica coffee is produced in Latin America and Robusta in West Africa and South East Asia.
2. Importance of Coffee
It is difficult to underestimate the importance of coffee for the world economy, particularly for the economical growth of many developing counties that are heavily dependent on the product. "Coffee is the most valuable commodity after crude oil. It is the most valuable agricultural commodity in word trade." (Spilling the Beans) An indication of the importance of coffee, in terms of world trade, is that in 2000 exports throughout the world totaled 8.7 billion dollars.
The main countries in which coffee is grown are Brazil, Mexico, Angola Ethiopia, India and Vietnam, as well as the Pacific Islands. The annual crop is estimated at 7 million tones. (ibid)
It is estimated that 100 million people, mainly in developing countries, are dependant...
Minimum Wage: Since employment levels in the coffee industry will recover in the short-term and experience minimal growth, the minimum wage will also recover slightly because of greater automation. Currently, the minimum wage for every worker in this industry is $12,589 and is expected to increase to $13,197 in the next five years. The automation of the food-preparation process is considered as the major factor for the long-term trend of declining
S. versus the loyalty to Dietrich's Coffee in Southern California. Differentiating on specific types and flavors of drinks, smaller coffee shops and larger, more globalized chains seek to define their brand and unique value proposition primarily through the use of unique drinks. Despite these efforts however, new product development is a weakness in this industry. The lack of new product development expertise often leads coffee retailers to offer enhanced services
The net result has been growth in the industry averaging 2.9% over the period of analysis (U.S. Department of Commerce). Segmentation Analysis First from product segmentation perspective, the coffee industry is dominated by roasted bean products (75%) followed by ground and specialty coffees and tea (11% each). Specialty teas are a market niche at 3%. Figure 1, Product Segmentation of the Coffee Industry, graphically shows the share of market attributable to
Coffee Industry: Economics and Investment An interesting industry to consider in terms not only of investment, but also in terms of history, socio-cultural and economic influences, is coffee. It appears that, although the industry has recently experienced a world-wide crisis in sales, prices and quality, the industry is still flexible enough to provide opportunities for small companies and even coffee-producing individuals. Indeed, it appears that the crisis has brought about
Green Mountain Coffee The coffee industry is only moderately attractive. The bargaining power of buyers is relatively high for a few reasons. There is a fairly low level of differentiation in the coffee business, so consumers are apt to substitute one coffee for another if the price is not right. In addition, the bargaining power of suppliers is relatively high, since coffee is traded on the global commodities market. Green Mountain
In the coffee industry, intellectual property rights tend to extend only to branding. There are no rights extended to specific roasts, beans, or other inputs. Brand name protections include trademarks, slogans and other similar intellectual property. Common coffee terminology cannot be trademarked -- so for example Starbucks can trademark Frappuccino because that is not a generic term, but it cannot trademark cappuccino, because that is a generic term. In general,
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