What is the Coffee Industry?

Mike Howells

Where it came from is probably not the first thing one thinks of when taking that first sip of coffee in the morning. Nevertheless, the origins of the coffee industry are instructive and parallel the origins of global economics in general. How beans grown in Ethiopia or Papua New Guinea wind up in mugs around the world can inform shipping, import-export and sales techniques for a multitude of other goods.

A cup of black coffee.
A cup of black coffee.

As produce and a commodity, coffee has existed for hundreds of years. The coffee plant is native to the part of Africa now known as Ethiopia. Its seeds - the beans that are roasted and ground to make coffee - were first used to make the beverage possibly as early as the 9th century. By the 1400s, coffee had become popular among Arab communities, and was traded with westerners along with other exotic substances like silk and nutmeg.

Many companies offer fair-trade coffee purchased directly from small-scale growers.
Many companies offer fair-trade coffee purchased directly from small-scale growers.

Once introduced to Europeans, coffee became hugely popular despite initial condemnation by religious authorities as a "Muslim drink." By the 1600s, the beverage was officially accepted and coffee houses became the de facto centers of business in cities such as Amsterdam, London, and Paris. Huge importing concerns were established to ship coffee beans into European ports. Interestingly, it was in fact the Dutch, and not Arab traders, who brought coffee to the Pacific Islands and Indonesia, where it became a hugely important crop.

Some of the largest players in the retail coffee industry include Starbucks.
Some of the largest players in the retail coffee industry include Starbucks.

By the 20th century the coffee industry was truly global, with the vast majority of beans supplied by developing countries in Africa, South and Central America, and in the Pacific. Studies conducted in the early 21st century estimate as many as 100 million people in countries like Rwanda, Peru, and Indonesia rely on the coffee industry for their livelihood.

The coffee plant is native to what is now known as Ethiopia.
The coffee plant is native to what is now known as Ethiopia.

Such high reliance on coffee as a cash crop by working poor around the world led, almost inevitably in hindsight, to abusive treatment of the workers by coffee producers and exporters. For much of the 20th century, tenant farmers and other workers were routinely forced into near slave-like contracts to produce coffee at minuscule profit to themselves. In response to these conditions, the fair-trade movement - in which a reasonable unit price for a good is negotiated and contractually guaranteed prior to harvest - began expanding to the coffee industry.

Many people brew or buy coffee before work every morning.
Many people brew or buy coffee before work every morning.

By 2005, one half of one percent of all coffee produced worldwide was purchased directly from growers in a fair-trade manner. Fair-trade coffee continues to grow in popularity and become more of a mainstream product. Some of largest players in the retail coffee industry, including StarbucksĀ®, have made fair-trade products a significant percentage of their total offerings. Since 2003, for example, American coffee retailer Dunkin' DonutsĀ® has made their espresso products exclusively with fair-trade beans.

A large cup of take out coffee from a coffee shop.
A large cup of take out coffee from a coffee shop.
Whole roasted coffee beans.
Whole roasted coffee beans.
Ground coffee.
Ground coffee.

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