Coffee - The Supply Chain
INTRODUCTION
Today, a jar of instant coffee can be found in 93 per cent of British homes and increasingly consumers are trying out different types of coffee, such as cappuccino, espresso, mocha and latte. The expanding consumer demand for product choice, quality and value has led to an increase in the coffees being made available to a discerning public. ‘Value’ is the way in which the consumer views an organisation’s product in comparison with competitive offerings. So how does coffee get from growing on a tree perhaps 1,000m up a mountainside in Africa, Asia, Central or South America, to a cup of Nescafé in your home, and in millions of homes throughout the world? This case study explains why Nestlé needs a …show more content…
Roasting On leaving the plantation, the coffee is pale green - hence the name ‘green coffee’ for the traded product. Only when it is roasted does it turn brown taking on its characteristic aroma and flavour. It is the roasted beans which are used to make coffee products.

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Price - balancing supply and demand
Coffee prices are determined day-today on the world commodity markets in London and New York and with so many intermediaries standing between the producer and the consumer, how can we ensure that coffee growers receive a fair reward for their labours? Is the answer - as some believe - for coffee manufacturers to cut out the intermediaries, buy their coffee direct from farmers and guarantee a minimum price? The price of coffee is determined by the relationship between the amount of coffee available to be sold (supply) and the amount which people want to buy (demand). If there is more coffee available than people want to buy at current prices, the price will fall. The market thus ultimately determines the price that the farmer receives. There are circumstances in which farmers can receive more than the market price, for example: if the quality of their coffee is high if they undertake some or all of the processing stages which someone else would otherwise be paid to do if they can sell direct to a manufacturer