Here’s How You Make Coffee a Billion-Dollar Business

How You Set in Motion Coffee's Global Business A hypothetical look at this billion-dollar business that ties up people across continents, cultures and social classes, thanks to you. You It's 5 AM. You brew a cup of your favorite Kenya whole bean coffee, setting in motion a complex value chain. 11 12 1 100 60% 35% Million Americans drink coffee every day American drinkers need coffee in the morning American drinkers prefer their coffee black $18 BILLION is spent every year on specialty coffee in the US. That's the equivalent of total GDP of a country such as Bosnia. Lifestyle of an American gourmet coffee drinker SOCIAL CLASS: Young middle to upper class (target market of specialty coffee) PRIMARY CONCERN: Career advancement, house mortgage Coffee shop It stocks a regular supply of Kenya whole beans because it knows every week you drop by to buy a pack. More than half the size of Central Park when all 17,000 Starbucks shops in the world are placed side by side Starbucks, world's most popular gourmet coffee brand 1676 when the first coffee house opened in the U.S IDUNKIN BONUTS 1950 when Dunkin' Donuts first opened, spearheading coffee house franchises Lifestyle of the coffee shop franchise owner SOCIAL CLASS: Upper middle class with about $1 M personal net worth PRIMARY CONCERN: Kids' Ivy League education; mortgage on a second house Logistics Company It delivers its weekly batch of Kenya whole beans to your favorite coffee shop... and to 1,699 other branches across the US. OFF COFF COFF OF COF OFF COFFEE EE 130 7,000 distribution Centers jobs to run the centers operated by one logistics company Lifestyle of a Logistics Co. owner SOCIAL CLASS: Top 1% - belongs to the really rich PRIMARY CONCERN: Seek growth markets and outsourcing to cut costs Coffee House Company It imports and roasts whole coffee beans to perfection and flavor, then packs and sends them to the logistics company for delivery. In 2011 US was no.1 coffee importer in the world US UK 24,378 bags 4,292 bags SHIPPED US SHIPPED UK US imports 5 times more coffee than tea-loving UK Drinking coffee was considered patriotic during the colonial times to support the Boston Tea Party against the British Empire's tax abuses Top 6 countries where U.S. buys coffee $400 $500 $577 Million $600 $1.40 $2.00 Billion $2.50 Billion Million Million Million Billion Canada Vietnam Guatemala Mexico Colombia Brazil Rest of the World Lifestyle of a Coffee House Company owner Same as logistics company owner, who is probably a business associate Coffee Mill Coffee cherries are washed, hulled, and graded for export to the US coffee house company Brazil produces more coffee than next top 4 coffee-producing countries combined Coffee is the second most traded commodity in the world after 54,500 bags Vietnam, Colombia, Indonesia, India 42,650 bags Brazil petroleum Thika Mills, a major Kenya mill, can process half of the country's annual coffee production Other Kenya Mills Thika Mills 48% 52% 50,000 Kenya's annual coffee crop in 2009 (in tons) Lifestyle of a mill owner SOCIAL CLASS: Usually from an old rich clan, Kenya's mill owners are among the country's richest PRIMARY CONCERN: corner more investments in Kenya's industries Coffee Coyote He buys coffee cherries from farmers at below-market price and sells them to the mill at high profit. SELL BUY Cherries $0.14 Cherries $0.26 per kg per kg FARMERS MILLERS Lifestyle of a coffee coyote SOCIAL CLASS: Coyotes often double as loan sharks forcing farmers to sell at a loss Coyotes often own the only vehicle in remote farm lands Belong to Kenya's middle class PRIMARY CONCERN: how to stop farmers from organizing cooperatives that will bypass coyotes Bushogo the farmer He harvests 200 coffee trees in Kenya, tending to them and making sure they bear cherries that exude the right flavor. 100 Million People worldwide depending on coffee for livelihood 25 Million are farmers Cost of drinking coffee each day of the year* * One American Annual income consumer's annual cost of a farmer $1000 $1200 for 1% cups of Starbucks coffee at $2.20 per cup (NYC price)" Lifestyle of a farmer SOCIAL CLASS: Lives in his shack in the farm with no running water and electricity PRIMARY CONCERN: food and his kids' education Is Coffee a Fair Trade for the Farmer? References http://www.fairtrade.org.uk/includes/documents/cm_docs/2012/F/FT_Coffee_Report_May2012.pdf http://com.revues.org/5360 http://www.globalexchange.org/fairtrade/coffee/faq http://www.statisticbrain.com/coffee-drinking-statistics/ http://www.entrepreneur.com/franchise500/index.html http://www.thefranchisemall.com/franchises/details/13694-0-seattles_best_coffee.htm http://www.scribd.com/doc/9683015/Starbucks-Campaign-Market-Analysis http://www.studentsoftheworld.info/infopays/rank/PNB2.html http://dev.ico.org/documents/icc-107-1le-drinking-patterns.pdf http://topics.bloomberg.com/u.s.-department-of-agriculture/ http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Coffee%20Annual_Nairobi_Kenya_5-15-2012.pdf http://www.listed.co.ke/business/kenya-nut-company-Itd-4db9592f2df79.html http://factsanddetails.com/world.php?itemid=1567& Ruby Media CORPORATION Designed for: E FinancesOnline.com by: www.RubyMediaCorporation.com