The Coffee book: Anatomy of an Industry from Crop to the Last Crop
The Coffee book: Anatomy of an Industry from Crop to the Last Crop, written by Nin Luttinger and Gregory Dicum is thoughtful work on the industry, science, and history of coffee. The cover of the book outlines its contents through words such as marketing, production, trade, sustainability, health, and history. The book covers all these sections impressively.
The Historical Background of Coffee
The first section of the book gives the historical background of coffee from its invention in Ethiopia to its growth across the Arab countries, and its spread to Europe. Luttinger & Dicum, (2006) report that the heritage of coffee can be traced back to earlier centuries and that the earliest coffee forest was found along the Ethiopian plateau. They narrate how a goat herder first discovered the potential of these precious been in the plateau region. It occurs that the herder realized how his goats gained significant energy after consuming certain berries from the forest. He reported his discovery to a theological monastery and the abbot at the monastery prepared a drink from the beans which he took. He was surprised to find himself alert for more extended hours during prayers. News of the energy giving beans traveled fast and soon reached the Arabian Peninsula.
The Cultivation and Trade of Coffee on the Arabian Peninsula
The book offers a detailed account of coffee was cultivatated and traded of coffee on the Arabian Peninsula. In their study of the history of coffee, Luttinger & Dicum (2006) learned that Yemen was the first country to grow coffee in the 15th century and that at the beginning of another century it had spread to Turkey, Syria, Egypt, and Persia. Their study reveals the return of European travelers to Arab returned with the news of the newfound beverage and by 1700, coffee spread to Europe, becoming common across the world.
The Coffee Industry: From Crop to the Last Drop
As coffee moves from 'crop to the last drop' of the coffee industry, the coffee industry is characterized by a Market structure that experiences both demand and supply at both ends. Etro (2014) observe that the monopolistic competition characterizes the coffee industry. He explains that there several fundamental market characteristics have determined the entry and competition of coffee in the market. Some of the essential features include market power, market share, and product differentiation. The coffee market structure has evolved since its discovery to the modern market and that Central America was the earliest port in America to receive huge shipments of coffee from the Indies of the Dutch East, marking the origin of the term JAVA (Etro, 2014). The name generally meant coffee. The book reveals some coffee Companies of that time as Eight O'clock, Maxwell House, Hills Brothers, Oracle, and Folgers, which were well developed before the First World War.
The Evolution of the Coffee Market Structure
Luttinger and Dicum assert that the coffee market structure has evolved into a monopolistic competition due to its status as a beverage and restaurant industry and today, worldwide home-consumption coffee is bought from supermarkets and local stores. Research by the authors shows that the sector of food retail is majorly concentrated within Northern Europe, UK, US and contributes significantly towards the chain of food marketing. Roasters have dominated the chain of coffee through expansive investment in brand advertising, This domination is said to have existed despite the creation of private labels for coffee by supermarkets. Consequently, the retail margins for supermarkets are still relatively lower compared to the healthy food portfolio. Luttinger & Dicum (2006) note that in some nations such as America retailers incur losses on their coffee sales to create traffic. Furthermore, Luttinger and Dicum declare that coffee sales have moved to outlets with much lower profit margins such as discount stores and warehouses. The text reports that in 1997, a tenth of the entire purchases of local coffee in America was recorded at Wal-Mart.
The Emergence of Specialty Coffee
The emergence of specialty coffee can be well acknowledged by referring to the Starbucks factor. Starbucks having been founded in 1971, the company had 2000 operational outlets in six nations. Twenty-seven years later, it had joined the market in Europe by acquiring the Seattle Coffee Company. The authors argue that the increase of cafรฉ chains has encouraged an explosive emergence of roasters within the U.S, such that a large population of small roasters is found to dominate a small segment of the local market. Their research shows that in 1987, three key roasting companies within the US held over 80 percent of the retail sector.
The Monopolistic Competition in the Coffee Market
As coffee beans travel from the farm to the roasters and restaurants, it is clear that the demand for both providers and consumers has increased. Hence the message from Luttinger and Dicum is that the coffee market structure is monopolistic competition as it is characterized by a high competition of customers by businesses, product differentiation, expansive knowledge among consumers and new market entries with fewer barriers.
A Call for Equitable Profit Sharing
This report on coffee reveals that the consumer's cup of coffee is an outcome of a complex business process that traces its steps back to the less developed countries across the globe (Baake & Naegele, 2017). With every hand-off, a fraction of every dollar used is claimed by retailers, roasters, shoppers, traders, growers, and other parties involved in the entire process. However, it appears that the profit sharing is unequal among all the parties. Each group is seen to strive for a more significant share of the money spent by the consumer at the cafรฉ, restaurant or supermarket. Vos (2018) suggests that consumers should be offered a chance to decide the dollar amongst the key players in the supply chain of coffee to split the profits. Part of the dollar should be given to the small-scale trader who produces nearly half of the total coffee beans in the world. The local traders also need a share of the dollar for their assistance in transporting coffee beans to the market. Shoppers including importers and exporter should also receive their share for receiving raw seeds form. Roasters also deserve part of the dollar for turning the fresh beans into excellent coffee for consumption. Lastly but not least, retailers who provide space for roasters to sell their brands also need their share of the dollar. (Kolk, 2012) believe that the consumer's dollar should be shared equitably.
Conclusion
Luttinger and Dicum enthusiastically provided insightful information on the history of coffee, marketing tactics, competition, and consumer buying power. The use of charts and graphs in the book helps to improve the flow of information. Regarded as the most satisfying and informative book, Anatomy of an Industry from Crop to the Last Crop is a product of extensive studies combined with enthusiastic and light-hearted writing. The authors successfully trace the coffee bean from ancient Ethiopia through its journey across Islamic traders and its spread to Europe. This book is highly recommended for reading for the coffee lover and business people.
References
Baake, P. and Naegele, H. (2017). Competition between For-Profit and Industry Labels: The Case of Social Labels in the Coffee Market. SSRN Electronic Journal.
Etro, F. (2014). Endogenous Market Structures and the Macroeconomy. Springer.
Kolk, A. (2012). Towards a Sustainable Coffee Market: Paradoxes Faced by a Multinational Company. Corporate Social Responsibility and Environmental Management, 19(2), pp.79-89.
Luttinger, N. "Dicum, G. (2006) The Coffee Book New Press (2nd ed)
Vos, J. (2018). Coffee, Cash, and Consumption. Radical History Review, 2018(131), pp.183-188.
