Coffee is a global commodity and source of national revenue for many countries. Recently, deregulation, new consumption patterns, and evolving corporate strategies have dramatically changed the coffee chain. Market liberalization has taken root in many coffee producing countries. There is an emergence of new coffee consumption patterns which are as a result of fair trade, “sustainable” and organic coffee, and the growing specialty importance (Ponte, 2004). There is also a dramatic spread of coffee bar chains, even though consumption in these bars is low. Consumers now have the choice from a variety of coffee based on their origin, brewing style, packaging, ambiance, and flavoring among other factors (Ponte, 2004). To understand this situation better, the paper looks at how sustainability standards affect coffee marketing chain structures and the industry in general.
Standards help in sending information about a product’s attributes. The classification of these attributes depends on their ease of measurement. Attributes can be classified into search, experience, and credence. On the other hand, standards also have their classifications. A standard may fall under mandatory, private, or voluntary categories. These categories may affect the flow of trade through the placement of technical requirements, certification, import of goods, or testing.
It is important to understand the role of standards and their evolution in the agro-food industries and how they shape the market access and features of consumption (Giovannucci et al., 2005). Food safety awareness highly affects the consumption of foods; consumer tastes globalization, environmental and social concerns, and health and diet. This situation has led to product differentiation. However, standards are not independent of power struggles, opportunistic behavior, and manipulation. Instead, they empower the institutions that decide their certification. They contribute to the determination of additional value along the supply chain. Instead of viewing standards as instruments of decreasing transactional costs, the society should view them as value chain coordination instruments. This means that approaches used in comprehending the impact of sustainability on developing coffee trade require political economy approach integration which is more power sensitive.
Sustainability has become a major issue in the coffee industry helping the commodity market grow. The specialty coffee industry in North America boasts an approximate 17% of the total green coffee volume which is imported by the United States (Giovannucci et al., 2005). The sales by the industry lie at approximately 40% of the coffee market in the United States (Giovannucci et al., 2005). According to statistics, sustainability can grow the coffee market by 5-20 percent annually (Giovannucci et al., 2005). In 2000, for instance, the US recorded $2.5 billion in the sales of specialty coffee beans, while specialty coffee beverage sales lied at $5.4 billion (Giovannucci et al., 2005). The latter was the added value after the coffee underwent several procedures such as flavoring, mixing with milk, and coming up with specific consumption ambiance.
Sustainability helps coffee provide positive returns to the consumers and the operators. This kind of organic coffee fetches an average of $1.3/Kg, fair trade coffee fetches $1.36/Kg, while shade-grow fetches $1.17/Kg (Bitzer et al., 2008). These are the various prices which operators pay their suppliers. However, the most important factors in making sustainable coffee be of value to the business are the specialty quality of taste, personal ethics, and beliefs which the society hold on fair trade and the environment (Bitzer et al., 2008). Interestingly, sustainable coffee is not customer-driven. Studies indicate that responses from a research indicate that only 50.9% think this kind of coffee depends on the demand by consumers (Bitzer et al., 2008).
From the analysis on the paper, it is possible to conclude that sustainability impacts the coffee industry in several ways. First, it helps identify the tastes of consumers giving producers and bar owners the chance of blending it according to the preferences of their clients. Also, sustainability adds value to the end coffee products such as chocolates and other coffee-based beverages.
- Bitzer, V, Francken, M., & Glasbergen, P. (2008). Intersectoral partnerships for a sustainable coffee chain: really addressing sustainability or just picking (coffee) cherries?. Global Environmental Change, 18(2).
- Ponte, S. (2004). Standards and sustainability in the coffee sector. International Institute for Sustainable Development.
- Giovannucci, D., & Ponte, S. (2005). “Standards as a new form of social contract? Sustainability initiatives in the coffee industry.”Food Policy 30, no. 3 (2005).