Coffee and the Relation of Economics Coffee is much more than the hot, black liquid that millions of us drink every morning; it is a worldwide commodity that has been keeping us awake for hundreds of years. It seems that a coffee shop can be seen on every shopping center and a coffee pot in every work break room. Our lives today revolve around coffee, regardless if we drink it or not, and ironically it not only stimulates of senses but also our economy. We wouldn’t be able to imagine Bill Gates not with his cup of coffee making Microsoft in his garage, or Henry Ford waking up early to perfect the auto industry and the assembly line. The economics of coffee may not be a simple one to study, but it is one you will be kept up all night learning about. There are three components for the coffee industry which is composed of the suppliers or the farmers, the manufactures or the producers and the consumers or the drinkers. All three of these components of the industry are fighting each other to make the most profit and salary, while also spending the least amount of money. This causes problems when the workers are demanding higher wages which will result in higher cost of production and lead to higher coffee costs. On the other side of the equation the consumers want their coffee to cost less and less for them, which is making workers work harder and for less money. All the arguing between these three aspects of the industry eventually results in a price which makes all the aspects of it happy, although each wants more the benefit them. The market for coffee is an Oligopoly where there are four primary multinational corporations which dominate the industry which include: Kraft General Foods, Nestle, Proctor & Gamble and Sara Lee. In a... ... middle of paper ... ...ement does prove some truth due to the simple fact if people make more then they will spend more. According to Dawn Kawamoto’s article “Is Coffee the New Leading Economic Indicator?” in a Daily Finance Article, he discovered that coffee consumption outside the home has a direct correlation to unemployment and the economic status. He tracked the coffee consumption and the economic status between 2001 and 2011 and discovered that “Coffee consumption outside of the home reached its highest level in a decade between 2004 to 2006, as the nation's annual average unemployment rate improved along with a stronger economy”. A recession and bad economic times leads to a lower percent of coffee consumption, while an improving economy leads to increased coffee consumption. This trend is due to people are feeling more comfortable with their finances and they consume more coffee.
Scrutiny of caffeine and its effects has increased dramatically in the last 20 years, due in part to an increase in consumption of caffeine. In fact, coffee consumption among young adults rose to 3.2 cups per day in 2008 from 2.4 cups per day in 2005 (Rokerya 1). For instance, in a one hour period, on Richland College’s on-campus Starbucks, the author took note of how many customers arrived and purchased a cup of coffee. Between 8:00 and 9:00 AM, there were 51 customers, implying that – especially at college - many people are dependent on coffee in the mornings. However, the results from these studies are inconclusive and often somewhat contradictory – many studies (such as that by Tetsuya Ohara et al.) show that caffeine is a great boon to
The coffee bean supplier market is made up of mostly a few large suppliers, which would suggest suppliers have significant bargaining power. This power is limited by the sheer size of Starbucks which continues to grow, which mitigates supplier power as achieving such a large contract as with Starbucks is very lucrative. Furthermore, Starbucks has engaged in backward vertical integration, purchasing coffee farms in China and Costa Rica, to ensure their supply of high quality beans at a reasonable price, regardless of the increasing demand of high quality beans and the limited suppliers.
Coffee, a $80 million trade industry, is dominated by multinational corporations. (“The Story.” Black Gold. Pixeco and SpeakIt. Web.
In the United States, coffee is the second largest import (Roosevelt, 2004). Furthermore, the United States, consumes one-fifth of all the worlds¡¦ coffee (Global Exchange, 2004). The present industry is expanding. It is estimated that North America¡¦s sector will reach saturation levels within 5 year (Datamonitor. n.d.). According to National Coffee Association (NCA), 8 out of 10 Americans consume coffee. In addition, it is estimated that half of the American population drinks coffee daily. The international market remains highly competitive. It is estimated that 3,300 cups of coffee are consumed every second of the day worldwide (Ecomall, n.d.). The latest trends included dual drinkers, an increase in senior citizens...
Koehn, N.F., Besharov, M.A., & Miller, K. (2008). Starbucks Coffee Company in the 21st Century. [Case study]. Boston, MA: Harvard Business School Publishing.
Many of the key discoveries and milestones of the Age of Enlightenment played out in coffeehouses, from Newton’s laws of physics to the beginning of the French Revolution. To this day, coffee remains the drink of choice for intellectuals and creative thinkers. It persists as a drink which people meet to discuss, develop, and exchange ideas and information along with facilitating cooperation without the risk of the loss of
(3)These increases in production also lead to lower labour costs. Large businesses such as Starbucks and US roasters sell their coffee and speciality drinks at a staggeringly higher price than they pay coffee farmers. (9) Provided that there is a large imbalance in the distr... ... middle of paper ... .... utoronto.ca/docview/229033484/fulltextPDF/141D8D8AD5137EC666C/4?accountid=14771 http://search.proquest.com.myaccess.library.utoronto.ca/docview/231320448/fulltextPDF/141D8D8AD5137EC666C/7?accountid=14771 http://bf4dv7zn3u.search.serialssolutions.com.myaccess.library.utoronto.ca/?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&rfr_id=info:sid/ProQ%3Apqrl&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.jtitle=The+Hispanic+American+Historical+Review&rft.atitle=Coffee+anyone%3F+Recent+research+on+Latin+American+coffee+societies&rft.au=Topik%2C+Steven+C&rft.aulast=Topik&rft.aufirst=Steven&rft.date=2000-05-01&rft.volume=80&rft.issue=2&rft.spage=225&rft.isbn=&rft.btitle=&rft.title=The+Hispanic+American+Historical+Review&rft.issn=00182168 http://search.proquest.com.myaccess.library.utoronto.ca/docview/274700686/fulltextPDF/141D8F82C22756DB7E/4?accountid=14771
Besides the high demand and cost for gasoline these days, coffee is considered the second most traded commodity on worldwide markets next to oil. "Coffee is grown in more than 50 countries in a band around the equator and provides a living for more than 20 million farmers. Altogether, up to 100 million people worldwide are involved in the growing, processing, trading and retailing of the product" (Spilling the Beans , ). In 2001, coffee farmers and plantations produced over 15 billion pounds of coffee while the world market only bought 13 billion pounds. The overproduction in the coffee industry is not a usual thing and is one of the major reasons why prices vary throughout the industry.
Americans are obsessed with a lot of things: our smart phones, celebrities, and finding a good bargain. But perhaps the thing we’re most obsessed with is good ol’ coffee. For many of us, our mornings are perfectly diabolical without at least a cup or two or three of the stuff. And, come 2 o’clock, when we know in our heart and bones we’ll never make it ‘til five and we need that pick me up, many of us head to the nearest deli or barista to grab a cup of “second wind.”
When comes to Economic aspect, coffee is the second most traded product in the world after petroleum. As the country’s economy is dependent on agriculture, which accounts for about 45 percent of the GDP, 90 percent of exports and 80 percent of total employment, coffee is one of the most important commodities to the Ethiopian economy. It has always been the country’s most important cash crop and largest export commodity. (Zelalem Tesera p
According Nathalie Vera, staff writer of The Bottom Line, in her article "Coffee and College Students: A Harmful Relationship?" Coffee has been a part of college students for recreation and academic purposes, the writer...
Coffee over all affects a substantial amount of people, especially Americans, with just everyday production. It can be very good for the human body with the amount of vitamins and nutrients in it, but too much can lead to an obvious “overdose” of caffeine and can be unhealthy. Coffee has come very long way from Arabia and is still growing worldwide.
Thesis Statement: While acknowledging that drinking coffee increases in cardiovascular disease risk factors thereby posing a health threat, this essay aim to argue that coffee is beneficial to one’s health since it helps reduce body weight, prevent several chronic diseases and provide a short-term memory boost.
Coffee is an incredible trade commodity and fuels many countries called coffee countries. (Francis) It is so valuable that around the world coffee is only sold less than Arabian oil. (Avey) The International Coffee Organization or ICO regulates coffee prices for inclines and declines and the world supply. It has operated since 1963 when it started. It also controls imports and exports. It was the united nations that created the ICO. Some “coffee countries” economies are half coffee exports. Before the ICO was created coffee producers set the prices. When the farmers tried to sell at one price the producer could change it in any way he wants because no one else would buy their beans. Coffee shops sold their coffee at much lower prices. some of the coffee countries started to lose money. These countries economies were crashing. The prices of coffee in 2001 were one third of the 1960’s prices. (Francis) New yorkers are rumored to drink seven times more coffee than every other city. Famed French writer Voltaire drank forty to fifty small French cups a day. Teddy Roosevelt drank one gallon a day. He was also rumored to have made up the “Good To The Last Drop” slogan. Without coffee financially the world would be very different.
Bruss (2001) argues that the company hopes as well to make new investments in new coffee types. Starbucks has recently developed a new type of coffee called green-coffee. These strategies are created with the objective of support Starbucks’ commitment to buy coffee that has grown and processed by suppliers. They meet certain conditions of social, economic and quality standards. In addition to that, the company is paying additional premiums to those vendors who meet the specific requirements that the company wants.