Is the coffee sector ready for future global trends?

I read the article of  Global trends for 2013: A top ten for business leaders published by The Economist November 26 and it made me questioned about the coffee sector.  Is it ready to face the future´s top ten global trends? Coffee has made tremendous changes in the last decades.  From instant coffee era or “first wave” as appointed by Trish Rothgeb, from Wrecking Ball Coffee Roasters, to the “introduction of coffee bars” by Starbucks and more recently the “slow coffee movement” and all of its fancy toys that seek to brew the best cup of coffee.

How coffee is traded has also changed. From big importers buying bulk coffee packed in 150 pound bags made of yute, t0 small roasteries importing varietal coffees packed in vacuum bags of 35 pounds directly from the estates. The science behind roasting and brewing coffee has spread from those big companies to almost all specialty shops there are around the world.  What are those top ten global trends that challenge the coffee sector? I will present my opinion in the next posts.

chart (1)

1.”Social everything:  New generations and their digital world stepping forward”. The new generation of coffee is represented by young entrepreneur that were hooked with coffee characteristics starting for its fresh ground aroma and its stimulating effects. They might been delighted with the Starbuck´s coffee bars style but were looking for something more committed with coffee as a product. Who grew it, where, how and under what geographical circumstances. They were also children of a new technological era. Computers were “personal media” to discover not only word processors but the whole world. And so they did. They started a journey of traveling and doing business directly with the producer asking for “customized products” and building relationships mainly connected by e-mails. “Social everything” was easy to achieve, since adopting new ways of communicating made a perfect match to support their business.

This established social web will strengthen customer services in both ways: from coffee retailers to their customers, but also from their origin suppliers. Just as an example, you can follow some of these pioneers on Twitter to find out. Intelligentsia Coffee and Tea @Intelligentsia, Stumptown Coffee Roasters @stumptowncoffee or Counter Culture Coffee @counter_culture. Their challenge will be utilize these tools as a competitive advantage to distinguish and maintain customer’s loyalty. On the other side, new generation of growers have adopted to social web too. Faster communications and different communications have also made them more aware of the final product, what the consumers think of it and how is being sold. They will also have to discover communication strategies to better keep their buying customers informed about what is going on at origin, what to expect and why they should buy their product.

2.”Redefining value: The consumer is winning the fight to own the new consumer”. According to The Economist’s article, the new 21st Century´s value is “share with me”. Of course, again this is an interchange of experiences: what you do in your business that is valuable for me as a grower, as a buyer and as a custumer. Changes in weather, how many blossoms annually, what is expected in the harvest, first coffees from such origin arriving to the warehouse, “order soon  before it’s gone” are bits of information already shared in the web. Creating educating content for all parts involved in the coffee chain so that it becomes a “valuable share” will contribute to win this fight in the future. Sweet Maria´s, green coffee supplier and information center for home consumption  knows about it better.

3.”Distributed everything:  Mobility in production and consumption”. Well, let´s think of what can’t be distributed as the article questions. Recently, coffee was distributed exclusively through exporters and importers. Now that has also changed. It is true that still some part of the business needs to be done through those two actors, such as the dry milling of coffee, shipping it and the licensing required to import the product. But the goal for a successful grower is to build a dry mill and be ready for the future trends. As soon as buyers and retailers achieve higher volumes, importing would not be a barrier either. Both ends of the chain (growers and retailers) are able to set prices without any intermediary and they are using exporters and importers as providers of services they can’t manage themselves such as the distribution. If they find more efficient channels to do this, such as consolidation of containers and/or more convenient fees for air freight, it will be even easier. Packaging of the product is even better now with vacuum packs, grain-pro bags and prices can even be set through auction platforms (such as Cup of Excellence program or independent estate auctions). Who ever finds and structures a more efficient distribution channel will open a huge new model of doing coffee business.

Green coffee in vacuum packs (modify from an original photo taken by El Injerto)

4.”The next “industrial” revolution: Robots and smart machines reshaping work”. While there is a strong preference of customers for hand-made brewed coffee, it is also true that there is an increasing demand for single-serve coffee. “Already, 24% of U.S. homes are equipped with a single-cup coffee machine, making it second only to standard drip makers in terms of household penetration”, according to market research firm Mintel in the article Making a better cup of coffee at home , published by the WSJ. The easiest, cheapest and the most flavorful brewed, the most accepted among home consumers. I believe this trend will continue to grow and will be perhaps the most popular among those living alone with certain accommodated life style or just don’t want to spend time brewing coffee, while the education of specialty coffee reaches a broader spectrum. Because, among other reasons, it is easy even to clean!

The technology of roasting is more and more sophisticated, bringing up-to-date machines that can accept customized roasting profiles making the process as precise as possible. Baristas can even utilize MoJoToGo™, a Universal Refractometer application that basically does analysis of strength and extraction for computer-free determinations of variables for brewing the best cup of coffee. I believe this is very positive since hand-brewing methods depend on many variables. So the more efficient and easier to control those variables, the fastest the process of getting the numbers right and thus, making it easier for normal consumers to replicate it. The next step I guess will be taking customized orders from customer’s smart phones on-the-go. Just as Korean’s do with their supermarket order (Korea’s Tesco reinvents grocery shopping with QR-code “stores”)

On the side of growers, coffee Arabica is hand-picked in order to assure only the ripen cherries are picked. Machines are not sophisticated enough to pick only the red ones, contributing to loss of quality. Nevertheless, more and more growers are being aware of the importance of accuracy to achieve replicable results in the process. Concentrations of sugars, enzymatic process in the fermentation tanks or parchment humidity controllers are introduced to their regular tasks. For example, adding an electronic platform to receive others or set prices, would that be too trendy?  The agriculture of survival will be substituted for a more technology based-agriculture and enterprise-modeled farm in order to succeed. A vital one will be how to improve and reproduce genetics of varieties with higher resistance to plagues and diseases or that have proven to produce better quality cups in specific geographical conditions.

Next challenges to write about will be “The new space race:  Pushing the frontiers of technology once again; Geopolitical wars: The fight to control the future and Resource wars escalating: From a world of abundance to shortage; Business stepping up: From profit to purpose; Information is power: The security challenge and Who needs banks anyway? Reshaping the financial system.

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