Continuing our four-part series unpacking the historic opportunities for change for global coffee businesses in 2021, 5THWAVE examines the rise of new technology and what global action on climate change means for the coffee industry. Catch up on part one here
Grounds for optimism: Why progressive coffee businesses can thrive in the years ahead
The rise of new technology
“The pandemic has accelerated everything,” European Bank President Christine Laggard told The Economist
in February 2021. Indeed, technological advancements spurred by the Covid-19 crisis have enabled new ways of working and transacting, lifting the lid on a host of new opportunities for coffee businesses.
Cashless payment systems are enabling greater utilisation of consumer data, enhancing customer experience and generating operational efficiencies. Video calling technology and communications apps are now widespread and well adopted, allowing seamless connectivity over vast distances and reducing the need for carbon-emitting business travel. Underlining this trend, annual profits at California-based video calling service Zoom rose 326% to $2.65bn during 2020.
“The free flow of supply chain information is vital because that makes the farmer an equal stakeholder in the supply chain"
– Alexander Barrett, CEO, iFinca
“Coffee shops have adapted very well to digital sales. We’ve observed the rise of digital tools for a while, but now there is a big push for smaller coffee shops to adopt the technology.” says James Watson, a senior beverage analyst at Rabobank.
China’s coffee consumers are also rapidly embracing technology. World Coffee Portal research shows 86% of Chinese consumers surveyed have previously ordered coffee for delivery, with 64% indicating they have downloaded a coffee shop app.
Increasingly, technology will enable consumers to take far greater control of their ethical and sustainable choices. Founded in 2018 the iFinca app uses block chain technology to provide visibility across the entire coffee supply chain.
“The free flow of supply chain information is vital because that makes the farmer an equal stakeholder in the supply chain,” says the firm’s Founder and CEO, Alexander Barrett.
With an encrypted QR code, a participating café can provide around 140 data points on the coffee they sell – from parchment weights, cherry colours and shipping documents.
“We’re starting with specialty because that’s the right market, but you are going to see a shift in the commodity coffee market sooner or later because of consumer demand,” says Barrett.”
Smaller coffee shops are now adopting new technologies and tools and they increase digital sales
For now, platforms like iFinca remain a tool for the specialty industry and consumers with an active interest in ethical coffee. Nevertheless, as a widening array of technology-enabled data becomes more common in the coffee market, it is likely that increased consumer demand for transparency will shape a new era of more inclusive, ethical and sustainable trade with coffee producers.
Action on the climate crisis
The climate crisis is one of the defining issues of our time, representing a profound threat to human civilisation. Tackling this monumental challenge will require unprecedented cooperation between nations, businesses and individuals. International recognition of global heating and its potentially devastating impact on the planet, plus greater moves to tackle single-use plastics and air pollution, demonstrate a radical pivot towards sustainable business practices.
As many societies paused during Covid-19 lockdowns, global carbon emissions are estimated to have dropped by up to 7% over the last year. Air quality in cities has also improved markedly as commuters stayed home and car journeys became less frequent.
"Coffee is the canary in the coal mine when it comes to diseases like coffee leaf rust and the coffee borer beetle"
– David Griswold, CEO, Sustainable Harvest Coffee Importers
In 2021, the global appetite for meaningful action on the climate crisis has gained undeniable momentum. China’s surprise late- 2020 announcement that it would target carbon neutrality by 2060 is of huge significance in the fight against damaging climate change. The world’s largest greenhouse gas emitter has pledged to reach peak carbon emissions within the next decade.
According to consultancy Wood Mackenzie the ambitious 40-year target will require $6.4trn in new green energy generating capacity, investment that has the capability to kick-start a global green technology revolution.
The humble cup of coffee is just one front in the wider battle for the future of our planet, straddling a vast international supply chain under increasing strain from rising global temperatures.
“We’re seeing unusual patterns of weather in every single country, and coffee is the canary in the coal mine when it comes to diseases like coffee leaf rust and the coffee borer beetle,” says David Griswold, Founder and CEO of Sustainable Harvest Coffee Importers, a global pioneer of sustainable and ethical coffee trade.
Increased attention on renewable energy sources. Global carbon emissions are estimated to have dropped by up to 7% over the last year of national lockdowns
The impact of the climate crisis on coffee growing as a viable enterprise is also a key driver of economic migration. In 2020, the so-called ‘migrant caravan’ of Central and South American refugees attempting to reach the US, many of whom travelled from coffee growing countries, made headlines around the world.
A ray of hope is that despite the pressures of the pandemic, ethical and sustainable consumption continues to increase, as demonstrated by rapid growth in ethical and sustainable business movements, such as B Corp and Fairtrade.
With the US returning to the forefront of global efforts to limit damaging climate change by re-joining the Paris Agreement, and younger consumers rallying behind the cause, there is now a genuine and unprecedented window of opportunity to rebuild a greener, and inherently more equitable global economy – and keep our favourite coffees firmly on the menu.
Part three of Grounds for Optimism will explore the increased focus on quality of life and human values, and new business model opportunities
This article was first published as part of a feature analysis in Issue 6 of 5THWAVE magazine.
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