The Various Dominant Trade Paradigms Of The Coffee Industries

A growing group of producers and coffee firms are pursuing strategies that are independent of commodity pricing and the exchanges. Many of these alternatives include some differentiation of the coffee, usually by either quality or cultivation processes.

A number of companies in the industry, including some that are household names, are adopting standards or developing purchasing criteria that transparently link their buying to positive socioeconomic and environmental effects in developing countries. Such emerging trade paradigms may offer producers alternative ways to capture the long-term value of sustainability by linking superior prices to demonstrable advancements in both the quality of the coffee and to more sustainable cultivation and trade practices.

These new trade strategies are also consistent with a complex demand picture. There are structural changes in demand both at the consumer level and at the industry level. These changes include stagnant overall growth in the traditional major importing countries, increased demand for soluble coffee, increased demand for differentiated and higher-value products, new technology allowing greater fungibility in coffee supplies, and geographic-generational shifts in the popularity of different types of coffee products.

At the same time, in many markets there is increasing preference for espresso style coffees that do not depend as much on the flavor profiles of high-quality washed arabica coffees. These shifts, and the strong competitive response of the largest producers, particularly Brazil, are reducing the demand for certain types and origins of coffee, leaving the worst-affected countries with large social and economic costs.