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We enjoy talking about coffee’s mass appeal. In the United States, coffee is not just consumed; it is inhaled. Indeed, upwards of 7 out of 10 people drink it everyday, and recent reputable research points to significant overall health benefits that result from frequent consumption.
The coffee retail business (ourselves included) has often made use of the statistic that coffee is the second most traded commodity in the world, right behind oil. For years, this stat has pervaded not only trade journals, newspapers, and magazines, but also the expensive and highly sophisticated market research that we’ve done. BUT….that may not be the case, as current evidence points to the exceeding complexity of the product that so many of us enjoy daily (to the tune of 60 billion+ cups of coffee a year, in the USA alone).
Writing for the Tea & Coffee Trade Journal, Mark Pendergrast, in his article, Coffee Second Only to Oil?, claims that this calculation is incorrect, arguing that, when the dust settles, coffee is actually around the top 5 in traded goods. That won’t even get you an olympic medal!
The most illuminating section of his article focuses on the coffee bean supply chain – namely, the process from beans’ importation to their retail sale. Summarizing the findings of Ric Rhinehart, executive director of the Specialty Coffee Association of America, Pendergrast pinpoints some “interesting” methods of computation:
If you are looking at the value of green coffee beans, he explained, about 135 million bags of 132 pounds each were produced in 2008, yielding around 18 million pounds. If you take an average of $1.24/lb for the beans, that’s about $22 billion dollars. “Here is a place where the math gets interesting,” Rhinehart wrote. All that coffee gets roasted, reducing its weight to around 14 billion pounds. Of that, roughly 70% is sold for home consumption at about $4.50/lb, yielding about $45 billion. The balance, representing a little over 4 billion pounds of roasted coffee, is sold as more expensive brewed coffee for another $45 billion or so. So, Rhinehart says, you could argue that coffee is really a $90-billion-a-year industry.
Further,
If you allow the $90 billion figure for coffee, you would also have to look at the cost of oil after it was turned into gas at the pump and many other products. For copper, you would have to look at the cost of copper pipes, roofing and other uses. And you would of course (in the case of coffee) be ignoring the costs of roasting, overhead, barista expenses and the like.
Obviously, there is an immense amount of relevant data that warrants our consideration. But, at it’s core, this data is sufficient to cast serious doubt on the previously-accepted statistic. (For more data, please enjoy this UN Comtrade link).
Simply put, coffee is not the second most traded commodity in the world. It is, however, the second most valuable commodity exported by “developing” or “third world” countries. This is the important takeaway. Our enjoyment of coffee supports farmers throughout the world, including some countries that are literally on the brink of starvation. So, the next time you drink coffee, don’t think that you are just enjoying a cup. Know that your consumption actually keeps many links in the supply chain productive and active, furthering the livelihoods of coffee farmers worldwide.
The real beauty is when you can combine the benefit of consumption with a specific cause that strengthens and nourishes people in a dynamic way. Oh, that’s a noble cause (pun and point intended)!
