The History Of The Coffee Industry In Colombia

The history of the coffee industry in Colombia

To analyze the Coffee Case of Colombia, it is importantOf 100 million people depend on this for subsistence, despite coffee experiences an inelastic demand: small increases in production cause large falls in price;Coffee prices are extremely volatile, depending on offer, weather and economic conditions.

In Colombia, coffee is the most important agricultural activity and around 4 million people depend on business as one of its main sources of income. In 1927, the National Federation of Coffee Growers (FNC) was founded by a group of coffee growers with the aim of improving the living conditions of Colombian coffee growers, their families and the development of the country’s coffee rural areas;It is a private non -profit entity, focused on defending and promoting the Colombian coffee business.

The FNC had financed the investigation of the best agricultural practices and environmental trends since its inception. CENICAFE: Cultivation science and coffee processing;Cenicafe scientists used chromatographers to study the chemical composition of coffee grains from all over the world and resort to genetic research tools to analyze the genome of Colombian coffee plants

At the end of the 1950s a world overs. This strongly impact the national economy, given its dependence on coffee exports. Although in 1959 the United States was the destination of 77% of Colombian coffee exports, only 4% of American consumers knew that coffee was cultivated in Colombia, so that the FNC decides to hire the advertising agency Doyle Dane Bernbach ofNew York (DDB), with the aim of increasing the income of coffee production, creating new markets and a stronger global brand image, which would later lead to an increase in demand.

At this point in the analysis we can examine that some market strategies such as:

• Market segmentation: Given the gentle taste of Colombian coffee, the primary objective consumer were young, educated and rich women between 25 and 49 years of age.
• Brand positioning: DDB was entrusted with the task of differentiating Colombian coffee as a product of a higher value for consumers, this is how in 1960 the character Juan Valdez was created which represented the typical Colombian families cultivating coffee, coffee growers,Highlighting the quality of the grains cultivated in the mountain and the intense work required to produce high quality coffee, versions of the image of Valdez, in interpretation or in photographic form, were patented as registered trademarks.
• Advertising and promotion strategies: television ads that showed Juan Valdez in a coffee plantfood/institutional.

These strategies fulfilled their objective of raising awareness among the foreign consumer about the quality of the grain and increasing consumption abroad, becoming an icon of Colombia coffee, the motto "The richest coffee in the world" which was used in all piecescreative. This quality -based differentiation was different from the previous advertising of coffee, which had emphasized lifestyle and price.

The competitive advantage is given in five factors:

• Economic: good dividends that the activity leaves;Taking into account that in more than half of the 1.053 Colombian municipalities, coffee is the most important agricultural activity allowing around 4 million people to live directly from coffee production. Coffee production responds for a third of rural employment and created a very important rural middle class.
• Geographical: for the distribution of producers and the ability to efficiently supply a product;Considering the volcanic soil and tropical mountain climate, Colombia provides a natural environment to cultivate high quality coffee all year, while most countries are limited to stationary crops, also coffee production is intense in labor in labor
• Production experience: Because this industry has matured for so many years, it allows them to be increasingly efficient;In its 73 years of existence, the FNC has managed to maintain a positive margin marketing coffee, has implanted a premium of almost 0.10 dollars/pound on coffees from other countries.
• Logistics: distribution, marketing and relationship is an important factor;On average the coffee growers take their maturity between three and four years, they are spilled in water for fermentation and subsequently drying, after 7 to 15 days, the grains are taken to the market where they are tested to determine their aroma, color, size, humidity and texture. Only after this long process the grains receive their approval seal for export.
• Quality: allows the product to meet the needs of the most important customers;Colombia is characterized by producing coffee from the soft Arabic variety, with which a coffee and aromatic coffee, acute in flavor, is obtained with a relatively low caffeine content, the country has achieved recognition for high quality standards in theVariety produced.

We can say that the 90’s was a decade of great changes for coffee marketing due to the breakdown of the installment pact in 1989, it implied a need to increase crop productivity to compete in a free market situation. To this break of the pact, Colombia reacted late and despite the efforts from the FNC to counteract the effects with productivity, purchase, education and promotion of the Café de Colombia, the country did not have the old coffee bonanzas again and thePrices have remained down, although the efforts deployed led to the obtaining of premium prices for Colombian green coffee and to deepen relationships with toaster, these marketing and sales programs faced resistance within the FNC, sinceIt was hard for them to capture more value.

In the 1980s, coffee lost to soft drinks its position as a leading drink in the United States, the main factor was the disinterest of young generations for coffee, soft drink companies began to exploit successfully, the Pepsi generation beganTo see their soda as their drink, because of this the toasters focused more on cost reduction strategies to compensate for the decline in consumption.

The most important toaster tried to reverse the market trend by launching several generic advertising companies, aimed at improving the image of coffee among young people.

By the end of 2000, the fall in the price of coffee beans had driven the gross margins for coffee toasters, to this the lack of innovation was added, which caused discontent with the coffee of bad flavor in the 1970s of 1970generating interest in the gourmet drink segment

This was used by competitors such as Starbucks, who developed an attractive sale proposal, creating an experience based on an environment of “friendly community” and innovative coffee -related products, which we can consider as diversification of products, this niche manages to attract aNew generation of young coffee makerproduction process, lowering quality, or even interrupting coffee cultivation. As a result, some consumers organizations have pressed the chains to offer fair trade coffee in their stores. Under fair trade, toaster and growers established agreements that created new value and benefits, both producers and consumers.

In conclusion we can say that the marketing strategy used by the National Federation of Coffee Growers of Colombia, although they had great success at the time did not have an approach or addressing towards final consumers but towards large coffee transformers.