ICO economic report: Shock to the system

As coffee prices remain relatively low, concerns about the socio-economic impact on coffee producing countries continue. International Coffee Organization research uncovers the wider implications for sustainable development. Read more

Solidaridad Founder Nico Roozen calls for change in 2020

GCR petitions industry leaders on the year ahead: the opportunities, challenges, and trends set to change the game and demand our attention in 2020.

Nico Roozen
Founder, Solidaridad Network and first fair trade labelling scheme

“Unboring” the coffee sector has to be our ambition for the decade to come. No more traditional thinking and boring debates leading to more of the same without real change.

We will see a lot of talk about sustainability and inclusivity, but I fear there won’t be effective action to turn the picture. 2020 will be a year of continued low prices, which will be challenging for smaller producers and traders. Consolidation at both ends of the value chain will be further stimulated by the introduction of processed cold beverages in the consumer market. Roasters will continue to use their traders as their banks with tightened terms of payment of up to 360 days, further stimulating concentration of trading companies.

It is time to protect competition in a freer market place, pushing back monopolies. From a different end, new concepts of forwards integration will be introduced.

What we also foresee is the growth of private, corporate sustainability programs at the cost of so-called Voluntary Sustainability Standards. Assurance of supply will be the leading motive narrowing the sustainability agenda down to its economic dimension. For 4C, the year 2020 will turn out to be a crucial one to survive because its programs highly overlap with private programs.

Apparently a winning entry point will be the upcoming concept of a true price and living income. With rather complicated tools and huge payments to overpaid consultants, an endless flow of country-specific true price calculations will be discussed in international fora. In my view, non-government organisations will run the risk just to justify low famer income based on debatable living income definitions and calculations.

Creating an upwards trend in pricing and farmer income requires much more than building awareness and mobilising voluntary commitments. This living income debate will sharply contrast with the realities in markets with continued price pressure and unbalanced supply chains.

Jeffrey Sachs’ convincing report Ensuring economic viability and sustainability of coffee production promises a more promising pathway. The strong combination of the development of National Coffee Sustainability Plans and a Global Coffee Fund underpinned by a multi-stakeholder approach could be a change-maker.

A key strategy includes moving from voluntary to mandatory commitments, regulatory frameworks offering “good governance”, and increasing producer profits transforming business models.

Hopefully, we will go from boring years to a new exciting decade of change. We can do it.

Buencafé Director Constanza Mejía predicts consumption growth in 2020

GCR petitions industry leaders on the year ahead: the opportunities, challenges, and trends set to change the game and demand our attention in 2020.

Constanza Mejía
Director, Buencafé

According to our estimates and research, in 2020 global coffee consumption will continue growing at steady rates.

I believe that beyond supply and demand fluctuations, we must understand new consumption patterns and trends. This includes higher consumer expectations, the search for “authentic and different” products, and the desire to create experiences with which consumers can express their individuality. In order to meet such demands, many companies are looking to expand their product portfolio from instant coffee to whole beans, and ground coffee and capsules to ready-to-drink cans.

In Colombia, this translates to an increased demand for high-quality products. As such, the industry has begun to incorporate origin coffees and premium brands into its portfolio.

We also have to take into account that the future demand for coffee – despite the global trend towards premiumisation – is linked to specific conditions. In high-income countries, there is a shift towards better quality processes. In regions where the population tends to increase, growth of affordable formats is expected, and countries where tea has traditionally been consumed show an increase in coffee consumption.

I think it is important to plan ahead and apply global strategies to encourage growth of the coffee industry and consumption. Market surveys with local consumers must be conducted to ensure supply can meet each region’s needs and taste preferences.

We have also seen a growing number of young consumers spend their money in specialty coffee shops if the product is part of “an experience”. This includes when the product features unconventional images or shapes, or because of a combination of exotic flavours. Young people no longer drink “only” black coffee and at breakfast. It is part of their morning or afternoon in cold, milky, or bubble brews, among others. Consumption moments are changing.

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