Coffee is the most important tradable crop for 25 million smallholders in 60 tropical countries. Coffee growing is part of specific global commodity chains, which are border-crossing value-added creating networks of producers, traders and service providers, whose end result is the use of a finished commodity [Gereffi, Korzeniewicz and Korzeniewicz 1994]. They process the coffee berries picked manually into exportable green coffee beans, which are transformed into a roasted, ground and packed final good powder, to be consumed as a brew by cup. The crop suffers from market imbalances and has a long history of private and public actions to reach equilibrium without lasting success. After profound and persisting price crises in the 1990s, there are now far-reaching proposals to reform the world coffee market with the implementation of a long-term strategy to reduce coffee areas. This may cause welfare disasters among coffee cultivators and mismatches with long-run consumer’s preferences.
The global commodity chain is a globalization metaphor to explain the income generation and distribution by international production activities and to design policies to improve the results. A key issue in our methodology is the identification and explanation of the governance structure that controls the chain and determines in great part how resources and gains are allocated, who may participate and under what conditions. Because of the increasing demand-driven nature of the coffee chains, we use a chain reversal approach that starts from the consumer and goes through the different nodes to raw material exploitation at the growers’ end.
Control is executed through market power and coordination between firms in different segments or between external (as NGOs, governments) and internal parties in the chain [Muradian and Pelupessy 2005: 2031]. Coordination is the exchange of extra-market information, capabilities and activities between parties (within or outside the chain) not linked through ownership. This is meant to ensure particular product specifications, performances, processes and logistics. When buyers in developed economies interact with suppliers from developing ones, coordination is needed to get reliable transactions in cases of high risks, heterogeneous production conditions, technological backwardness and unstable financial systems [Hobbs and Young 2001].
Recent publications have given important insights into the structure and functioning of coffee chains [Talbot 2004; Daviron and Ponte 2005], but the nature and impact of the sequence of the imperfect or non-competitive markets in the chains should be more explicitly considered.
euvend & coffeena is the meeting point for all important decision-makers from vending and coffee. It is the leading international trade fair for automated sales solutions, professional coffee systems, coffee, hot and cold beverages, snacks and filling products, multipayment solutions, cups and services.
162 exhibitors from 22 countries and around 4,200 trade visitors from 66 countries, of which 88% are decision-makers. 13,500 m² full of innovations, potential partners, business opportunities and bright future prospects: euvend & coffeena is the fixed point in the industry and a must for every industry participant. The latest innovations at the interface between man and machine are presented here. This is where the crucial contacts between manufacturers, operators and the most important customers from promising areas such as office coffee service and the out-of-home market are created. This is where the future of the industry takes place – with you in the center.
With a strong presence, euvend & coffeena underlined its importance as the most important platform for business and networking in the international vending and coffee industry. 162 exhibitors from 22 countries presented the latest trends and innovations in the fields of automated sales solutions, professional coffee systems, coffee, hot and cold beverages, snacks and filling products, multipayment solutions, cups and services. A total of around 4,200 trade visitors from 66 countries came to Cologne from May 9th to 11th, 2019.
Almost 40 percent of the exhibitors and visitors came from abroad.
“The continuous growth of trade visitors and exhibitors from abroad confirms the importance of euvend & coffeena as the most important international business platform in the industry. We also set standards in terms of the quality and variety of offers with regard to current and future trends and innovations,” explains Anne Schumacher , Business Unit Manager Nutrition and Nutrition Technology at Koelnmesse GmbH. The Bundesverband der Deutschen Vending-Automatenwirtschaft eV (BDV), the sponsor of euvend & coffeena, adds: “The industry is very satisfied with this year’s event. The fair is an important one for the entire vending and office coffee service sector Impulse generators, whether in machine technology or in the areas of payment and sustainable cup solutions,
The euvend & coffeena convinced with its diverse range of topics. From the point of view of the exhibitors, the good quality of the visitors was of central importance for their success at the fair. Contacts are not only high quality, but have already led to contracts with some exhibitors. According to an independent survey, just under 82 percent of exhibitors are satisfied with the order business they have already carried out. Around 80 percent would recommend participating in euvend & coffeena to a friend of theirs. Robert Ropel, manager of the new exhibitor Pear Group GmbH & Co KG (brand representative of the energy drink CARABAO) says: “With euvend & coffeena 2019, CARABAO was able to reach a new target group.” Hassan Nagi, Business Development Payment of Feig Electronic GmbH adds: ” The fair was amazing. We will come back next time. The strategic realignment is a smart move. “
On the visitor side, around 40 percent (plus three percent compared to 2017) recorded significant growth from abroad. Growing visitor numbers came mainly from the Netherlands, Ukraine, Hungary, Spain and Poland. Interested parties from China, Chile, Israel, Japan and South Africa were also registered in Cologne. Large customers such as Autobahn Tank & Rast, Compass Group, Deutsche Post, Dorint, Eurest, Eurowings, Fraport, Geile, Lekkerland, Real, Rewe, Selecta, Sodexo and Volkswagen were on site. Euvend & coffeena saw entries from companies such as Coffee at Work, Coffee Perfect, Kaffee Partner and Seeberger from the growth market of Office Coffee Service.
Trends and topics
Office coffee service was one of the strongest topics at this year’s fair. Under the keyword New Work and the changing working worlds and the creation of collaborative work areas, catering for employees and customers plays an increasingly important role. This current trend was directly experienced in the special area “Office Coworking Lab”. In the Payment area, which according to industry representatives was fully represented at the fair, digital solutions such as contactless payment by girocard or smartphone play a central role.
Other important topics were healthy filling products and sustainable cup solutions from reusable concepts to 100 percent recyclable material. Vending machine-based kiosk solutions (Micro Markets) were also more strongly represented at euvend & coffeena this year. These are shop systems in which the goods are not offered from machines, but from “normal” shelves and cooling elements. Payment is made through automated till systems. In this way, euvend & coffeena also takes account of the unattended retail trend.
The conference program “Visions of Vending – the future of vending” took up these trends. Industry experts provided answers to important questions relating to the topics of new work, new retail and market developments abroad using the example of China.
The sustainability of the linkages between coffee growing in developing countries and final consumption in developed ones has been continuously under pressure. Market demand of the main consuming countries will not increase substantially and mismatches with changing consumer preferences may cause additional problems. In these countries only the number of coffee drinkers could be increased, while some opportunities are available in the emerging markets of Eastern Europe and the Third World. Easy access to coffee cultivation and trade has contributed to structural global oversupply.
Coffee chain governance and coordination gave no durable solutions and could not prevent asymmetric income distributions. Consumer markets are highly concentrated, but price competition seems to be moderate. Non-price competition is much more important because consumers do prefer quality, differentiated and new products. Traditionally this had been achieved with blending practices of multinational roasters, which today cover 90% of the market. Quality differentiation was based on sensorial attributes in the first place, but since the 1980s extrinsic or non-sensorial ones as sustainability were added. Both kinds of differentiations are mainly realized by downstream adding value activities near the final consumer, which increases the market power of big roasting and retailing companies. Big supermarket chains compete with the roasters, but the latter could maintain their position by the blends and corresponding brands.
This strengthens their position in the international markets, despite the apparent bilateral oligopoly relationship of producers’ and consumers’ countries. International trading houses also became competitors, but have lost ground to roasters and retailers. In this way a few big (multinational) coffee companies had become the governance force in most of the global coffee chains and execute their control by operating in imperfect markets and coordinating production and trade conditions. International price volatility is not only caused by spot market imbalances, but also by the behavior of speculators and hedgers in the futures market. Concentration is also present in the post-harvest stages in producing countries. However, the oligopolistic structures are in this case unstable in the long run because of potential entry of newcomers, often subsidiaries of foreign companies with finance. This is quite different from the more stable oligopolistic structures in consuming countries.
At the supply end of the chain are numerous smallholders with little or no market power and difficult access to inputs, with low supply elasticities as a consequence. In a period of increasing export prices as in the 2000s, depending on the coffee variety, growers receive between 10 and 25% of the consumer price in the chain. When prices fall, the share of cultivators will be much lower. In spite of liberalization, growers suffer the consequences of fluctuating world market prices and the asymmetries in power and income distribution of the local buyers’ markets.
Interventions are widely present in the coffee chain. Lead companies in the first place and other chain actors apply coordination to get reliable transactions. From outside the chain there are appropriations of high rents by importing country governments and entry barriers to protect their coffee companies.
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