Competing on the traditional over crowded
Coffee production is only located in tropical countries as we can observe on this map. Indeed, coffee cannot grow up out of tropical places. Coffee is the second wordwilde most important production after petroleum. The first coffee productor is Brazil followed by Colmobia and then come Indonesia, Mexico, Kenya and Cote d'Ivoir.
Surprisingly, productor countries do not consume coffee because of its high final price. Those countries export two third of their production abroad mostly to 5 multinationales from nothern countries: Nestlé, Kraft Food, Sara Lee, Procter & Gamble, Lavazza. Those companies buy the coffee from the productor countries and then transform it to fit with the taste of consumers. Productor countries only get from 3% to 7% of the final selling price, the importance of these huge multinationales allows them to impose their prices to those small productors. Most of them can not survive with the small margins allocated to them by the multinationales. They do not have a world to say, everything is in between the hands of Nestlé, Kraft Food, etc … The first ones hurt by the economic crisis on the coffee market are without any doubt the small productors.
It makes the competition hard on this market. Indeed, unless brands are from those multinationales it is really hard to compete on this market already over crowded. But there are solutions …
A bad point for those multinationales: the quality of the coffee getting lower by its surproduction.
However, within the global wordwilde crisis we are living on, many consumers change or want to their habits and start consuming
products they feel more equitable. We can observe that more and more consumers are nowadays looking for fair trade with high quality products.
Then, from a couple of years, we assist at an increase of small
and independant productions selling coffees. Fair trade seems to be a solution for many small productors and for a large part of consumers. Those brands who are socially fair get relative important profits in comparision to coffee not from fair trade. Habbits of consumers are always in evolution and especially now that consumers are taking more into account fair trade and quality products. As an example already in 2001, fair trade reachs $ 29.95 millions to productors participating to fair trade and this number has not stopped increasing! Coffee is nowadays the fair product sold the most on the market. Consumers do not want to participate anymore at the increase of the inequalities, this a trend getting more and more popluar. We can observe an impressive multiplication of products, shops from fair trade.