Is the coffee sector ready for the top ten global trends. Part III (and final).

Let’s get into the final three global trends.

8. “Business stepping up: From profit to purpose”. According to the article Global trends for 2013: A top ten for business leaders this is about “building legitimacy… in the eyes of demanding consumers, employees and stakeholders who care about the impact and motivations of companies with whom they associate”. This is something the specialty coffee industry has been building in the past decades.

But as new generations come in the scene, the concern is being addressed more towards the relationship between quality production and who are the farmers behind that production. Is there a balance between coffee excellence and the price paid to the grower that is really in need of that premium price?  Just as an example, a micro-lot (1 to 10 bags of selected and distinct coffee region within the farm) could receive up to $4.00 per pound if a small to medium roaster likes the quality.  Such is the case of the discussion about a post wrote in September by Nick Cho, co-owner of The Wrecking Ball Coffee Roaster, Are we all 1%-ers too?, and responses by James Hoffman, co-owner of Square Mile Coffee Roasters and former World Barista Champion, Responses: Are we all 1%-ers too?

Fifteen years ago, I remember the discussion was about buying Fair Trade Certified coffee to ensure a proper price to growers.  But back then, price was set at the lowest ($0.49 a pound in the C contract) so this option made perfect sense: setting a fix price so growers would not suffer.  Unfortunately, when prices are above that fix price, growers don’t want to depend on that fix price because they could have earned a lot more. Again, the market is reaching its lowest and these types of trading offer a solution.

Are growers paying properly to their workers? Are they covering social needs such as nurseries for the workers’ children? Is their production environmentally friendly? Now that coffee rust has attacked coffee plantations making the use of systemic agrochemical the only viable solution, will consumers be willing to keep buying non-certified organic coffee? Would they rather buy lower quality but certified organic? I think all of these questions will remain and will drive consumer’s preferences in the future.  Business leaders (growers or buyers) will have to rethink their models towards transparency, not only in the price is being paid, but in each of these principles in order to succeed. They will have to find a purpose behind that business model and a balance where both parties are satisfied of the “fair-trade” they have established outside of all other paradigmatic structures.

Geisha
Geisha variety plantation in Santa Felisa, located in Acatenango, Chimaltenango, Guatemala.

9. “Information is power: The security challenge”. A few years ago, when Twitter became more famous in Guatemala, someone, nicked named as “the twitter-er” by the population, was judged and condemned for having twitted that a local bank was broke. I think this is a perfect example of “retain control as mobility and the democratization of everything” is taking place. Of course, this is just a drastic example of how hard this can be.  But in coffee, I think, there is a pretty large “social web community” that shares back and forth information about coffee in every area: production, exports, market, roast, brewing methods, certifications… The thing is that “everyone is an expert” and “everyone has a self-technique or way” of doing things and thus, a segmented target in the market.

Who says what to whom will make a big difference in the relevance of the information shared. I think more and more this trend will contribute to democratize information among the coffee sector and only credibility and legitimacy of the source will be the indicator of acceptance.

10.”Who needs banks anyway? Reshaping the financial system”.  Payment of goods has never been so easy. Perhaps in developed countries is even easier.  Undeveloped countries still don’t have that much of freedom to pay for example utilizing credit cards related to a local bank in some on-line store in the USA. But through third parties (like PayPal for instance) that issue is resolved.  Traditionally, a coffee transaction should have been done between an exporter and a buyer (importer) who utilized a bank as intermediate.  Documents were sent to the bank so that the buyer had a guaranty that the coffee was being shipped and then the deposit was done as soon as coffee arrived to port.

Nowadays, transactions are done faster and easier. Despite the fact that there are no intermediaries that guarantee both parties, the grower can be paid directly to a bank account or the buyer paying with a credit card.  The only situation to improve is commercial references of the parties involved in the transaction.  It is well known that even through an on-line auction program there are some situations where an unknown buyer delays the payment to the grower or a coffee lot is not delivered in the optimum exportable conditions.  But I do believe that most of the coffee transactions will be done through none traditional mechanisms that will have to be ready and tuned to the needs of merging business and trading models.

In conclusion, the coffee sector is very well leading to the future global trends. In some areas, still a bit of details to work on, especially in financial system.  But one thing is certain, the traditional way of paying coffee was based on “trust”.  Perhaps a word that is more difficult because of the size of the global community. Nevertheless that facility to access the social web will contribute as well to control those uncertainties.  Technology, making everything social, bringing new business value, new and more modern distribution channels, new niche markets in different geographical areas and finding new products of higher quality or better produced will bring the coffee world even closer to the consumer. Never in the history of commerce and business has the consumer been so powerful. Get ready for that!


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