The Brazilian Coffee Industry

6 Pages 1530 Words

The Brazilian Coffee Industry
Coffee beverage, a widely consumed beverage around the world, is derived from processed coffee beans (green beans). While the cultivation of coffee trees and production of coffee beans is spread among sixty countries worldwide, there is an increasingly smaller number of buyers and roasters of green coffee. Brazil and Colombia are the largest coffee producing countries, while over 70% of all coffee contracts are traded in Switzerland.
The production of coffee beans is a labor intense industry since it requires handpicking of ripe beans. The production of coffee is also highly correlated to weather conditions, since the coffee tree is sensitive to low temperatures. Therefore, annual production of coffee is unpredictable until the end of the harvest season. There are currently six intermediaries in the distribution channel between the farmer and the end consumer. In the last decade there has been a trend toward consolidation and globalization, and it is expected that during this decade the number of intermediaries will decline to just three.
The coffee industry is becoming more competitive as bigger players (roasters and manufacturers) are attempting to have predictable margins and stable coffee prices. On the other hand, there is a trend toward consolidation on the production side of the equation; this trend is still very slow but widely expected by analysts of the coffee industry. Besides a trend toward initiating bigger coffee plantations, there is also an obvious preference toward more technologically advanced forms of coffee culture over the traditional means. This is clear by efforts of the Colombian Institute of Coffee to utilize genetically engineered coffee plants and the initiation of large coffee plantations with state-of-the-art irrigation and support means in the state of Bahia in Brazil.
Brazil is world's biggest producer of green coffee beans with approximate market share of 30%. Dependin...