Sustainable Relationships Are Best for Business

It seems that we’re on a bit of a roll when it comes to high profile figures from the coffee industry delivering interesting speeches. You might recall that during the recent Global Coffee Forum in Milan Andrea Illy spoke about a potential shortage of beans and about the future of the industry at a business level. Both speeches were intriguing and extremely thought provoking.

Well after Illy’s double duty, it was the turn of Nestle Nespresso CEO Kean-Marc Duvoisin to deliver a key note speech, with the biggest takeaway being the necessity of big beverage companies to undertake value sharing exercises that would benefit the entire coffee supply chain.

The most obvious tactic, Duvoisin said, would be to establish long-term relationships with farmers, something which has perhaps been lost in the industry as smaller companies and roasteries lead the way in this field.

He repeatedly stressed that looking after farmers would ensure a consistent supply chain, one that could be improved upon over the years which would in turn increases both quality and consistency.

As well as this, he said that such a link would help certain humanitarian issues.

“Right now,” he begun, “there is a Colombian coffee farmer struggling to balance his books. He is faced with fluctuating production costs, and buyers, who behave in an unpredictable way, buy at spot price, and change origins of coffee [when] prices are lower someplace else.

“Creating a reliable cash flow is difficult…He can’t effectively plan his business one year to the next, let alone think about retirement”

As an example model that other people should follow, Duvoisin pointed people towards Nespresso’s own ‘AAA Sustainable Quality Program’.

Another aspect that the Nespresso chief discussed was the volatility of coffee prices. Linking it with his plea for businesses to link up with farmers, he noted that the end of the International Coffee Agreement in 1989, coupled with other instabilities, has ultimate produced an unsustainable model that makes farming unprofitable.

“Fluctuations in the price of coffee pose a persistent challenge to business interests like ours, but also to the stability of farmers’ incomes.

“Price volatility remains one of the biggest challenges to this day of this industry,” he said.

Photo: Jer Thorp (Creative Commons)