Coffee and Wine

A Comparison of Two Value Chains,

Ownership Structures and
Sustainability Standards

AAWE – Bordeaux – June 2016

Morten Scholer
mortenscholer@hotmail.com
Coffee – Flowering, cherries and green beans
 Coffee – Two species

Arabica Robusta

Origin Ethiopia – via Mocca, Arabia Lake Victoria – Uganda, D.R.C. …

Share of 60 % 40%
World
Latin America, East Africa, Vietnam + other S.E. Asia, Brazil,
production
South East Asia West/Central Africa

Quality Fine-flavoured aromatic Strong and harsher (filler)

(Caffeine) (1.0 – 1.5%) ( 2% )

Exchange ICE, New York LIFFE, London

 Coffee and wine – Two value chains

Coffee Wine

• Field work • Field work

• Harvest • Harvest
• In-land trading • De-stemming, sorting, crunching
• Primary processing (dry or wet) • Maceration
• Milling • Fermentation
• Sorting • Storage (aging)
• Stuffing (bags or bulk) • Blending
• Sale from exporter • Bottling
• ………………………. Border ………………… • Sale from producer
• Shipping • ……………..………... Border …………………...
• Storage • Shipping
• In-land transportation • Storage
• Roasting • In-land transportation
• Blending • Sale to professional or retail
• Packing • Serving – drinking
• Sale to professional or retail
• Grinding
• Brewing (professional or at home)
• Serving – drinking
 Options for enhancement of quality

Coffee (few)
- Steam-cleaning (Robusta)
- Aroma preservation (soluble/instant)
- Dark roasting (a ‘cover’ more than a genuine improvement)

Wine (many)
- Concentration (cryogenic/ice, evaporation, reverse osmosis, …)
- Industrial yeasts – huge choice with many functions
- Chaptalization (adding sugar)
- Acidification and de-acidification
- Fining with additives
- Cone-spinning in vacuum + high temp. (alcohol/aroma adjustment)
- Oak-flavouring (using barrels, staves and chips)
 Coffee and wine – Large companies in the value chain
Coffee – Portion of World production (magnitudes) Wine
J.M. Smucker, USA
Investors JAB Holding (Benckiser, Reimann), Germany Gallo Winery USA
11% Neumann – NKG Germany
Trading houses 10% ECOM (incl. Armajaro) Switzerland Constellation USA
7% OLAM Singapore – UK
7% EDF Man – Volcafe UK – Switzerland The Wine Group USA
Eight hold 50% 6% LouisDreyfus France – CH – NL
4% Noble Hong Kong – S’pore Treasury Wine Group Australia
3% Sucafina Switzerland
2% COEX USA
Penaflor (Trapiche) Argentina
13% Jacobs Douwe Egberts (Ex-SL/Kraft/Mondelez) NL
Roasters / Brands 11% Nestlé, incl. Nescafé and Nespresso Switzerland Concha y Toro Chile
5% Smucker’s (Folgers, Milstone, …) USA
3% Elite-Strauss Israel – USA
3% Tchibo Germany Castel France
Eight hold 40% 2% Starbucks USA
2% Lavazza Italy Accolade Australia
1.5% Keurig Green Mountain USA
1.5% Melitta Germany Pernod Richard France
1.5% Segafredo-Zanetti Italy
1.5% Aldi Germany
1.0% Kraft (Maxwell House, …) USA Bronco Wine USA
1.0% UCC Japan

Outlets / Retail 2% Starbucks, USA Eight hold 10%

- Donkin’ Donuts, USA
 Coffee – Leading sustainability standards

Standards with a Standards covering

Dimension ‘main dimension’ ‘all dimensions’

- Organic Rainforest Alliance

Environment
(Biodynamic, Shade-grown, Bird-friendly) Utz Certified

……………………………................

Social - Fairtrade (FLO) 4C

- Fair Trade USA ……………………………….............

- Nespresso – AAA
- Starbucks C.A.F.E. Practice
- Keurig Green Mountain’s
Economic Responsible Sourcing
 Coffee and wine – Four structural differences
- Value chain (parties involved and physical transformations)
Complex for coffee – simpler for wine

- Quality enhancement (‘manipulation’)

Only few options in coffee – many in wine

- Size of companies (relative size)

Big in coffee (some have +10% of world trade) – small in wine (all below 3%)

- Sustainability standards
Coffee is more complex than wine (coffee has worldwide standards,
with more processes, locations and partners (sometimes illiterate))