lecture 10: the case of thrive farmers coffee · lecture 10: the case of thrive farmers co↵ee ali...

Lecture 10:The Case of THRIVE Farmers Co↵ee

Ali Hill

ARE 130

November 6, 2017

Ali Hill (ARE 130) Two Case Studies November 6, 2017 1 / 30

1 Accessing the Case

2 THRIVE: Case Overview

3 Background on Co↵ee Supply

4 The U.S. Co↵ee Market

5 Marketing Channels

6 Update: Where are they today?


Accessing the Case

Accessing the Case

The THRIVE Farmers Co↵ee Case is available at:

https://www.ifama.org/resources/Documents/v16i3/Wilson-Wilson-Whittingham.pdf

Note: Any answers to questions discussed in lecture are fairgame for exams, even if they are subjective and not explicitlystated in the Case Study




THRIVE: Case Overview

Case Basics



Case Basics



Case Basics, cont.



Key Takeaways

What is Michael Jones’ current goal for THRIVE Farmers Co↵ee?

What major obstacles can you foresee Michael facing as heattempts to meet this goal?


Background on Co↵ee Supply

Traditional and Fair Trade Co↵ee Markets



THRIVE Co↵ee Market



Di↵erences in the Co↵ee Markets

The Traditional Co↵ee Market

Farmers sell their co↵ee cherries to a local association orcooperative that pays based on the current internationalcommodity market price.





The co↵ee cherries are then processed and milled.

There are three main types of processing: wet processing, dryprocessing, and semi-dry processing (honey drying).

Milling involves removing the last layers of dry skin and remainingfruit residue (done through hulling and polishing), and cleaning andsorting the beans.

After this, the green co↵ee beans are exported and roasted in thereceiving country.





This market structure puts farmers at a disadvantage in twoprimary ways:

1

2



An Aside: Wet Processing/Washed Co↵ee



An Aside: Dry Processing/Unwashed/Natural Co↵ee



An Aside: What about the Cherries?

Source: https://munchies.vice.com/en us/article/78dqva/how-a-failed-cattle-feed-became-the-latest-gluten-free-flour


https://munchies.vice.com/en_us/article/78dqva/how-a-failed-cattle-feed-became-the-latest-gluten-free-flour

https://munchies.vice.com/en_us/article/78dqva/how-a-failed-cattle-feed-became-the-latest-gluten-free-flour



The Fair Trade Co↵ee Market

Has three main benefits over the traditional co↵ee market:

1 It provides a price floor and price premium. These mechanismsserve to:

2 Links producers directly with importers, reducing some transactioncosts and allowing producers to gain value added from processingand milling.

3 Fair Trade requires that the price premium be reinvested incommunity development projects in the producer community.

How do producers invest this money?




The Fair Trade Co↵ee Market

The THRIVE Case Study identifies two main flaws to Fair Trade:

1

2

According to your TA, some other flaws are:




The THRIVE Model




The THRIVE Model

What can we identify as the primary benefits of THRIVE forfarmers?

What do you think are the benefits to consumers?

http://thrivefarmers.com/farmer-direct/


http://thrivefarmers.com/farmer-direct/



The THRIVE Model

The case discusses two main challenges to the THRIVE model:

1 Timing of Payments.

At minimum, the wait to receive the first payment is:

THRIVE is currently developing mechanisms and partnerships tohelp producers while they wait for payment, using:

2 Di↵erentiating THRIVE from traditional and Fair Trade co↵eemarkets.

Why do we think this matters?




Fair Trade

https://www.youtube.com/watch?v=PLKTGWH398Q

The THRIVE Model

http://thrivefarmers.com/video/zarcero/


https://www.youtube.com/watch?v=PLKTGWH398Q

http://thrivefarmers.com/video/zarcero/

The U.S. Co↵ee Market

Background on the U.S. Co↵ee Market




What are some key take-aways about the U.S. Co↵ee Market?


Marketing Channels

THRIVE Marketing Channels


Marketing Channels

Discussion Questions

Why do you think THRIVE wants to expand?

Do you have any thoughts on ways for THRIVE to expand?

Do you think there is a Marketing Channel they should focus on?Is there a channel they are not currently considering that mayhelp?


Update: Where are they today?

Where are they today?


Update: Where are they today?

Some Fun Facts

How do co↵ee places in Davis source their beans?

Peet’s Co↵ee

Starbucks Co↵ee

Temple Co↵ee

Pachamama

Cloud Forest

Mishka’s
