Although sales of traditional coffee products, such as instant coffee, continue to grow, most coffee producers are paying particular attention to high-value single origin coffees and specialty blends. Consumers are increasingly looking for a ‘better’ cup of coffee – a brew that is fruity, flavourful and carries the distinct taste of the place it was picked. Although the trend towards single origin and specialty coffees is creating opportunities for many boutique roasters and of course coffee growers, it’s worth noting the new challenges and factors affecting inventory management that are beginning to crop up for roasters.
Supply Chain Reliability
Conditions in the global market for coffee can be chaotic, with many coffee roasters struggling to secure the long-term supply they need to deliver a consistent product to market. The shift to premium coffees is one of the key factors affecting inventory management and the supply chain for coffee producers. Although roasters have always struggled with supply chain uncertainty, the consequences are greater for specialty coffee roasters who make up an increasingly large part of the market. Specialty coffee roasters tend to trade in single origin or location specific blends – if a roaster’s most popular blend uses Arabica from a single farm or village in Indonesia, that roaster has to contend with a much more precarious supply chain than a roaster producing a standard blend that can balance a range of different bean styles.
This pressure isn’t expected to ease off. In 2016, the Australia-based Climate Institute released a concerning report, A Brewing Storm: The Climate Change Risks to Coffee. A key message is that rising temperatures and unpredictable weather conditions are likely to complicate the supply chain. The institute notes that climate change is expected to reduce the global area that is appropriate for coffee growing by up to 50 percent in the next few decades.
Higher Consumer Expectations
The wider beverage market is experiencing a trend towards premium products and coffee is no exception. The younger consumers have begun to establish an unmissable presence in the coffee industry. Younger market segments are willing to pay more for a coffee that they consider has deeper, identifiable flavours and which meets an increasingly high ethical standard. Coffee producers know how to deliver flavourful coffee – simpler coffee that is lightly roasted – but balancing consumers’ ethical and price expectations is difficult, except at the extreme end of the premium market.
An Increasingly Complex Inventory Operation
In days gone by, a typical roaster might have purchased some generic arabica and some robusta from an importer, put those beans into two large drums and only reordered when one of the drums was near the bottom. These days, roasters have to contend with a much larger number of product lines, meaning procuring and holding many more varieties of bean from an ever more diverse group of suppliers. Moreover, because coffee producers are opting for lighter roasts, ensuring that green coffee beans are maintained in good condition is essential. To avoid the risk of spoilage, many roasters are now adopting lean inventory control practices; in particular, roasters are placing smaller, more frequent orders for beans. These factors affecting inventory management mean that procurement staff need to be on the top of their game, including developing collaborative relationships with growers and importers.