When ethics are good for business: A case study on the strategic importance of direct trade for three speciality coffee roasters in Copenhagen

Svenja Schroeder

Student thesis: Master thesis

Abstract

International roasters and large retailers are driving global coffee commodity chains since the 1980s, retaining most of the value created in the chain in coffee-consuming countries. Recently, independent micro roasters are challenging the status quo with new demands on quality, retail strategies and business ethics. Characteristic for the "third wave of coffee" movement is the ambition to create unique taste experiences from selected coffee beans of premium quality. Additionally, these roasters share a strong personal conviction that ethics and quality go hand in hand: Coffee growers should receive a fair share of the value created in the coffee supply chain. The coffee commodity market is not able to meet these new demands to ethics and coffee quality. As a result, progressive roasters turn to direct trade. In direct trade chains roasters face high complexity of transaction, low ability to codify the transaction and high supplier capabilities. They turn to relational governance to coordinate the activities in the chain. Direct trade has previously been understood as an ethical alternative to commodity trade. Through in-depth interviews with three direct trade roasters in Copenhagen, this study finds that there is a strategic dimension to direct trade that has previously not been considered. The case companies use direct trade strategically to (a) identify and secure exceptional quality coffees; (b) adopt the trade relationship to differences in supplier capabilities; (c) communicate product value to consumers; and (d) manage volatility and change in the global coffee market. KEY

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2015
Number of pages99