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Coffee industry seeks to increase integration

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Changes in the supply chain of coffee could help the industry to improve how it works together and to produce a better product for trading and roasting companies.

The latest issue of Roast Magazine explains how some of those involved in the industry have developed their setups to help boost productivity and improve financial rewards.

Writer Hanna Neuschwander describes how many coffee growers can be resistant to change, meaning that the notion of making radical alterations to how they work or requiring them to increase their investment outlay can be met with resistance.

Vertical integration in practice

The Rogers Coffee Farm Company has embraced the concept of vertical integration to take full control of around ten per cent of its total annual output. They have differing levels of control over the remaining coffee produced, but also have plans for further integration. 

The company, based in California, now roasts around 35 to 40 million pounds of coffee each year and supplies to large wholesale retailers, including Costco.

It also operates mills in a number of countries such as Panama and Rwanda and believes having ownership over each step of the coffee-producing process has helped them to be responsible and introduce new techniques.

"The results have been remarkable," explained owner Jon Rogers.

"Coffee farmers are very, very cautious. If I ask a farmer to try a farming method that I haven’t tried first and it doesn't work, I could ruin their lives."

The company is now planning to open further mills and continue its experimentation with new technologies to increase yields from coffee farms.

Backward integration

It is not just vertical integration that is providing those within the coffee industry with new opportunities. Backward integration is also becoming one way for growers and roasters to improve their efficiency, while still retaining control of their own product.

"Normally you go from having a cafe to roasting to building wholesale accounts to eventually doing farm visits and direct trade," explained Augusto Carneiro, the founder of Nossa Familia Coffee in Portland.

He originally started with a farm in Brazil and then branched out into roasting it rather than relying on a third party to ensure it retained the company's family ethos.

"We realised early on that our story was going to get lost if we sold the coffee to other roasters who would blend it," added Mr Carneiro.

By 2012, the company had its own roastery and then opened a cafe selling the coffee directly to the public in 2013. Nossa Familia Coffee's unique selling point has resulted in a successful business, although there have been challenges faced during lesser production years that meant he has increased his sources of green coffee in order to keep up with demand.

Bringing people together

The story of the South American coffee company Pergamino is slightly different in that it has attempted to bring together buyers and producers. Based in Colombia, owner Pedro Miguel Echavarria uses his trendy cafe to showcase coffee produced by his family's five farms. Opened in 2012, the cafe is hoping to bring the US coffee culture to the region and target young drinkers – it even has its own on-site roastery.

The decision to move into the speciality coffee market was made five years ago after Pergamino attempted to export coffee directly overseas, but was met with limited success so opted to invest in his own mill.

It was a large risk for the family, but has resulted in higher prices and outlets emerging across Latin America, as a new generation discovers the joy of good coffee.

Globalisation

The increase in global infrastructure has also helped to bring those within the coffee industry closer together. The development of new shipping methods has helped Azahar Coffee Company to directly export pre-roasted coffee from Columbia to high-end coffee shops across the US without the loss of quality. 

Meanwhile, roasting on-site means the company can reduce labour and operating costs, as well as get the harvest roasted quickly. The increased fast shipping costs can also still be offset. This all means retailers have the coffee on their shelves around four days after it has been roasted.

It would appear the international coffee market is successfully working towards ensuring new opportunities exist for those wanting to get more heavily involved in the industry. This has been accompanied by a growth in a number of initiatives in recent years, such as the combined efforts of organisations worldwide like the Colombian Coffee Growers Federation and the Manuel Mejia Foundation, which work to safeguard a better future for all those whose livelihoods depend on coffee.

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