Coffee Industry Case Study

1. Please identify and explain what factor contribute to the globalization of coffee industry. What is globalization? Refers to the rapid development of information technology, the miles of space that intervene between a man and is becoming more and closer. Between countries, blurring the line between region and region, there are less geographical factors caused by the limit. Local and distant events will affect each other. Level including business, politics, culture, etc. About coffee industry, we can call Globalization of Market. The power of the media will make the world's tastes and demand tendency of simplification, make a unified global consumer market. Now we try from the type of coffee, brand, economy, culture to thinking about

Ethiopia's population of nearly 74 million, the cultivation of coffee history beginning in 900, the existing 1.2 million coffee farmers; 15 million on coffee for their livelihoods, 67% of export revenues for coffee. Ethiopia is the origin of coffee, coffee is still base on important economic crops, the annual output is generally about 20 million tons. Most of the world's coffee beans are from Ethiopia. In Ethiopia have a government coffee auction. In auction also have coffee collectors, coffee suppliers, and coffee exporters. The big multinationals have offices here. For example, Taloco is buying for Kraft Food, and Volcate is buying for Nestle and also Starbuck. And there are also other big buyers in Europe like Dallmayr, who based in Germany buying for different roasters around the world. The auction price relies mainly on the New York C market. If New York is down by 5 cents today the coffee exporters are going to buy the coffee for 5 cents down today. Once the coffee purchased from here, the coffee buyers or the coffee exporters are going to unload the coffee at the warehouse, and they process it and sell to their buyer abroad. And after that, the buyer is going to distribute this coffee to roasters, and the roasters are going to buy this coffee, and the roasters again roast the coffee and sell to retailers and cafes. Coffee reaches the consumer after this and after six

The supply chain of coffee industry can understand from the above. Coffee is the world's second largest trade goods, behind the oil. Production in developing countries, imports from developed countries. These super products from each coffee beans to our hand coffee can flip 150 times. For example, convenience stores earn 25%, exporters to earn 10%, farmers get up to 10%. That is to say, if a jar of instant coffee profits of $100, multinational companies takes $55, convenience store to get a $25, exporters take $10, and the hardest coffee farmers got only $10 at most! Lift the banner of free trade volume increasing globalization, goods circulation is very easy, convenient and can even cheaper, and massive national government subsidies to farmers’ northern hemisphere. The farmer doesn't have any decision for their planted beans price because the coffee of the day the value depends on U.S.A or the UK. Farmers to sell their planting coffee beans had to make an adjustment on the price. These behaviors are exploitation for farmers; it is not fair