International Coffee Market

Topics: Coffee, Economics, Supply and demand Pages: 4 (1221 words) Published: October 8, 2012
International coffee market

Due to the international coffee bean price significantly fluctuate from 1996 to 2009, the global coffee also has same change between this year. This paper will look at changes on global coffee market based on five parts. First of all, describing several reasons cause variation of global coffee market. The second part will illustrate market structure of international coffee industry. Then, based on coffee market structure, explaining which strategy they are using and reason of coffee companies choosing these strategies. Furthermore, indicating the cost and benefit of strategy used by coffee companies. Finally, this paper would focus on the relationship between macroeconomic changing and coffee industry.

Since global economic dramatically growing, there are three events effect coffee bean price in terms of new planting supplies, increasingly less coffee famers planting coffee beans and establishing new coffee market. Due to outstanding coffee beans productive capacity in Vietnam and Brazil, there are 113 million bags for supply and 106 million bags for demand, it is 40 million bags bean as a gap between demand and supply in 2002(John, 2010:37). As a support, John (2010:36) stated that when a or more than one crucial of supply change (except price events), the whole supple curve will shift. It is indicated by figure 1 in the appendix which shows S1 shift to S2, contributed by new significant supply (Vietnam and Brazil). As a result, whole coffee bean market get a new equilibrium point at e2 which has lower price in Pe2 and higher quantity in Qe2, comparing with e1. However, John (2010:36) also clam that most of coffee market workforce worked in poor financial circumstances that living as debt, and others abandon their land and property in farmland to migrated into city. Otherwise, lots of farmers in order to chasing higher profits by quit coffee industry, especially, Vietnamese famers instead growing coffee bean to illegal...
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