Industry

Traders

The coffee-producing countries earn very little from the sale and export of their produce. Green coffee beans, a minimally processed product, accounts for approximately 95% of coffee exports. A large share of the profits in the coffee supply chain go to the middlemen and the large roasters. International coffee trading companies operate in the coffee-producing countries via joint ventures with local middlemen. Five large companies control this trade: Neumann and Volcafé (both based in Germany); Cargill; Decotrade (trading arm of Sara Lee/Douwe Egberts) and Taloca (owned by Philip Morris/Kraft), both based in Switzerland. International traders are likely to continue investing in operations in origin countries so as to meet the needs of major roasters.

Roasters

Coffee roasters process green coffee beans into a variety of end-products, including filter coffee, instant coffee, and the new ‘coffee pads’. Almost 45% of the green coffee imports is purchased by the five largest roasters, that mainly sell their processed coffees in the European, American and Japanese markets. Nestlé and Philip Morris/Kraft each process 13%, while Tchibo purchases 4% for the German market. Proctor & Gamble sells most of its share (4%) in the United States. Sara Lee/Douwe Egberts roasts 10%, which is sold mainly in the European and Brazilian markets. Nestlé dominates the soluble coffee market with a market share of over 50%. These multinationals make good profits from roasting coffee. Profit margins are considerable thanks to a combination of low-priced green coffee, innovative product development and a strong brand strategy.

Companies and brands
Company Affiliated companies and brands
Philip Morris Kraft Foods, Jacob Suchard, Maxwell House, Splendid, Grand Mere, Carte Noir, Lyons, Birds, Brim, Gevalia, Maxim
Nestlé Taster’s choice, Nescafé, Hills Brothers, Lite, Sarks, MGB
Sara Lee Douwe Egberts, Merrild, La Maison du Café, Café do Ponte, Caboclo, Café Pilao, Seleto, Uniao, Marcilla, Soley
Procter & Gamble Folgers, Millstone, Highpoint
Tchibo Eduscho, Tchibo Privatkaffee

Certified coffee

Thanks to the success of the Fairtrade movement in questioning the current coffee trading system, it is no longer possible for the world’s largest multinational roasters to deny the problems at the beginning of the coffee chain. Over the last few years, the major roasters have started to take an interest in coffee production standards and to adopt credible codes of conduct. All of them procure a small amount of coffee from certified sources. Nestlé has a Fairtrade product line and cooperates with Rainforest Alliance for its AAA Nespresso programme. Sara Lee/Douwe Egberts has a mainstream partnership with UTZ Certified. Kraft works together with Rainforest Alliance, while Tchibo has chosen to work with Rainforest Alliance and Fairtrade.

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