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The Coffee Industry – An Overview
It is believed that coffee was first consumed as a hot beverage
in East Africa during the 11th century. Today, coffee is one
of the most popular beverages, with more than $80 billion
in retail sales worldwide.* Furthermore, the coffee industry
provides a livelihood for an estimated 25 million coffee
farmers* in more than 60 coffee-producing countries.*
The coffee market has always been prone to ups and downs,
mostly related to the balance between supply and demand.
Back in 2001, coffee prices fell to a record low of $0.42 per
pound ($0.91 per kilogram), and fluctuated near the bottom
for several years. These particular market conditions created a
climate of economic instability that had an impact on many
farmers and their communities. Today’s market conditions
are greatly improved, evident by recent prices of coffee traded
on the New York “C” market (the worldwide reference used
by coffee traders). In fiscal 2006, world coffee prices averaged
$1.04 per pound ($2.29 per kilogram).
There are two commercially viable species of coffee – robusta
and arabica. High-quality arabica coffee is grown on farms
that range from very small family-run parcels to large-scale
estates, located primarily between the Tropics of Cancer and
Capricorn and situated at higher elevations. These elevations
provide optimal climatic conditions needed to grow the type
of coffee that is considered specialty grade.
The higher-quality and more expensive arabica beans are
sold as specialty coffee, which accounts for approximately
10 percent** of total worldwide coffee purchases, including
the coffee Starbucks buys. Starbucks purchases high-quality
arabica coffee beans, paying premium prices for premium
quality. These coffees are sold under the Starbucks, Seattle’s
Best Coffee and Torrefazione Italia brands.
* International Coffee Organization
** Specialty Coffee Association of America
P R O D U C T S
Quick Coffee Facts:
Total worldwide coffee production (Oct. 2005–Sept. 2006):
15 billion pounds (7 billion kilograms)*
Total coffee purchased by Starbucks (Oct. 2005–Sept.
2006): 294 million pounds (133 million kilograms)
Number of coffee farmers worldwide: 25 million*
Number of countries where coffee is grown: About 60*
Number of countries where Starbucks bought coffee in
fiscal 2006: 24