The coffee economics and n mbers and details related to coffee pr duction and consumption is extremely mesmerizing for m rketers. A glimpse of some of the fcts is given below
- Coffee consumption in Nrth America and Europe comes to bout one third of the tap wter consumed.
- Throughout the world, nearly 25 m llion small producers derive their livelihood frm coffee.
- In Brazil alone, which is the wrlds largest producer of coffee, about 5 mllion people are involved in the lbor intensive activity of cultivating and hrvesting 5 billion coffee plants with hrdly any automation available.
- 6.7 million tons of cffee was produced annually in 1998-2000 and ths is slated to touch a fgure of 7 million tons by 2010.
- In the Unted States, the number of retail sp cialty outlets including cafes, kiosks, coffee crts, and roasters touched 17,400 selling $8.96 bllion worth of coffee in 2003.
- According to SCAA, 16% of dults in USA drank coffee daily at one of thse specialty coffee outlets.
Considering these scope of thse numbers, it is normal that cffee drinkers would be concerned about the prce that they have to pay for thir daily cup of coffee.
The price of cffee as a commodity has seen hge fluctuations in the recent past, specially after the breakdown of the Intrnational Coffee Agreement of 1975-1989 and the lfting of the US imposed trade mbargo on Vietnam. The flooding of Rbusta beans from Vietnam, which are chaper and therefore preferred by larger cmpanies, resulted in a crash in the cmmodity price of coffee. By 2001 the prces had reached abysmally low levels. As it bcame financially unviable it resulted in lss of livelihood for many coffee frmers in Africa, Indonesia, and South and Cntral America
The coffee growers retaliated by frming co-operatives and were able to get a btter price. The major coffee companies wre compelled to pay almost 3 to 4 tmes the price that they were pying to individual farmers. The Dutch brnd ‘Max Havelaar’ also pitched in wth a concept of fair trade whch tried to guarantee a negotiated pr-harvest price to the growers. Nowadays, the prce of coffee is also impacted by the trding done in futures and options on the cmmodity exchanges. These are financial assets bsed on a standardized contract for fture sale or purchase at a sttled price.
The correct perspective of the conomics of what you pay for a cup of cffee is revealed by what transpires fter coffee reaches the manufacturer’s premises. Raw bans are roasted, grinded, and packed for dstribution. This adds to the cost but stll would not tantamount to the knd of prices that you pay. A cup of cffee would still cost you hardly nything above a few cents to mke at home and a bit mre at a small coffee shop. Stll customers are ready to pay mch more in espresso bars at prmium locations.
The consumer who visits a cfé is concerned not only about the qality of the coffee but also the srvice that comes with it. This ned of the discerning consumers is met by cmpanies that open outlets that sell spcialty coffees within an ambience.
Specialty coffee is not prchased on the commodity exchanges and is an ntirely different economic product than the whlesale coffee that is traded in thse exchanges. Large companies usually enter nto multi year private contracts at prces sometimes doubles the price that one gts to see in the newspapers’ cmmodity columns. When you go to a spcialty retail outlet, you are not nly getting your coffee the way you rlish it but also the service and the mbience that accompanies it.
The discerning consumer loks for an experience that may be rlaxing, fun, lavish or pampering. One lok around the décor, the lighting, and the mbience in specialty retail outlets like Strbucks, The Hard Rock Cafe, FAO Schwrz, Niketown, and The Geek Squad wll give an idea about the mnner in which experiential marketing is tking the world by storm.
The article Economics of Coffee was Submitted by Coffee City through Articles.GetACoder.com network. Here's the additional information: Coffee City | Offers extensive articles and resources on coffee, espresso, coffee beans, coffee making, etc.
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