What Goes into Your Cup of Coffee?

Peter Roberts, Professor of Organization & M anagement at Emory University’s Goizueta Business School, was founding academic director of Social Enterprise @ Goizueta. He joined The Goizueta Effect Podcast to explore the vast inequities between growers and retailers/roasters, how historical movements like colonialism and slavery have shaped the origins of this industry, and what role climate change and the pandemic are playing today. He also delves into how consumers, roasters, and retailers can work together to balance the scales. 

Peter also serves as the academic director of specialty coffee programs for The Roberto C. Goizueta Business & Society Institute.His research focuses on how the behavior and performance of organizations evolve over time. His current projects focus on social entrepreneurs and accelerators, microbusiness development, and the global specialty coffee industry. He has been featured in the Harvard Business Review, Forbes, Bloomberg, Food and Wine, and Salon. 

The Magnitude of the Coffee Industry 

By the Numbers 

• In 2019, roughly two-thirds of American adults drank coffee every day. 
• Over the past 30 years, the specialty coffee market has expanded exponentially and now accounts for up to 40% of all coffee consumed.  
• In 2020, the coffee market was valued at more than $102 billion.  
• With 25 million families around the world responsible for growing coffee, the economic and social impacts of this industry are broad and deep.  

Evolution of the Coffee Industry 

The global coffee industry has always been characterized by stark contrasts. Retailers, roasters, and importers often do very well financially, while those who grow coffee struggle to break even.  

This is not a new phenomenon. The coffee industry only exists because of colonialism and slavery. Originally, coffee was not grown in Central and South America, but when Europe and the United States started consuming inordinate amounts of coffee, coffee plants and people were brought from Africa.  

In the late 1800s, formal slave owning and colonialism went out of fashion. At this point, global markets kicked in, and coffee became a lucrative way for middlemen, such as roasters and sellers, to maintain low coffee grain prices.  

Major brands like Folgers and Maxwell House dominated the first wave of coffee consumption, then Peet's and Starbucks and Caribous set up a second wave of coffee. Recently, the third wave of coffee has become popular, which is the movement focusing on small, micro lot-oriented, and direct-trade roasters.  

While coffee has often been lucrative for retailers and roasters, most coffee producers in the world are not able to cover the cost of production. 

From Bean to Cup 

Consumers often assume that all the magic happens in a coffee shop. However, the people that work on coffee farms, or in beneficios, pour a lot of skill, talent, work, and time into the production of coffee. 

Before coffee is roasted, it's a bean. Before that, it’s a cherry. And prior to this, it’s on shrubs. Before the beans are ready to be harvested, the grower cares for the plant for at least three to four years. Often, at least 25 sets of hands play a role in shaping a single pound of coffee.  

Coffee growers handle much of the heavy lifting and shoulder much of the risk. However, the payoff is not even. On the retail end, $15-$20 is a reasonable per-pound price for specialty coffee, but the median price that coffee growers receive is just $2.60.   

Specialty Coffee Production 

Exchange grade coffee or commercial/commodity coffee has fairly low standards for quality, which allows for many defects. However, specialty coffee must secure a grade of at least 81, which involves cupping and scrutinizing all of its elements. This product cannot feature green beans that would change its flavor profile. The coffee has to be picked, processed, and sorted multiple times. The world of specialty coffee involves high quality expectations. All of that extra work needs to be paid for. 

The Effect of Climate Change on Coffee Growing 

Coffee production is impacted by many external forces, including climate change. In the next 20 years, 60-70 percent of the land that currently grows coffee may become ill-suited for cultivat