• QA 141
    What is the demand for certified coffee like Utz Kapeh, and what drives major players to take an interest?
    Today, what is the real demand for certified coffee like Utz Kapeh? Can this demand be expressed statistically? Above all, what drives this demand and what are the deciding factors that cause major industry participants to pay attention to this kind of product?
    Asked by:
    Student - France

    The use of Utz Kapeh certified coffee has grown tenfold since 2002 (entry year with just 3,600 tonnes) to about 36,000 tonnes in 2006. Demand almost trebled in 2003 to 14,000 tonnes after which the rate of growth slowed to 50% in 2004, 38% in 2005 and 24% in 2006. Major markets currently are The Netherlands, Belgium, the United Kingdom, Denmark, Finland, Norway, Sweden, Japan and Switzerland. *

    However, what drives demand for certified products is in a way a 'chicken and egg' question. Much if not most of today's fresh produce carries a certification label of some sort but, we believe the reason is that fresh fruits and vegetables are end products that are sold directly to the final consumer. Fresh produce is not transformed and in many instances certification is now the only way to retain market access…

    For coffee the situation is rather different because coffee growers in the main provide green coffee to overseas roasters who in turn produce and retail the finished product. Consequently, in most instances the identity of the producing countries, let alone the individual producer, is not known to the end-user and as a result there has been much less consumer awareness of the production process. Therefore, until fairly recently the mainstream coffee industry remained largely unaffected by certification issues but initiatives like Utz Kapeh, Fairtrade, Rainforest Alliance and others have raised awareness, not only amongst consumers but also within the industry itself. **

    However, we do believe that the scope for sophisticated certification schemes is probably limited because of (sometimes substantial) cost. At the same time, as supply grows so the price premium potential for growers shrinks. This is so because for a large body of end-users the intrinsic quality of the coffee they buy is of more importance than is certified compliance with a code of conduct or standard. And furthermore, the growing supply of certified coffees is not always demand driven.

    However, many of today's average consumers do wish to be able to place a certain trust in claims such as 'this is an environmentally friendly' or 'socially responsible' product. Such consumers may not be looking for special on-pack labels etc but rather simply wish to feel assured they are not purchasing 'unfriendly' products. As a result, over time, major buyers of mainstream coffee will increasingly insist on certain broad safeguards (but not necessarily certifications) as regards the manner in which the coffee they buy is produced.  This in turn will enable them to offer the requisite assurances to their customers.

    This trend has also led to the establishment of the 4C or Common Code for the Coffee Community initiative. This is a joint undertaking between the major mainstream roasters, coffee producers and civil society that aims to offer an entry-level system (or base-code) of guidelines and measurements. See www.sustainable-coffee.net for the full background on this - 4C was formally established late 2006 after a number of years of preparatory work.

    Through continuous improvement and independent verification (i.e. without certification) 4C aims to assist coffee producers generally to progress to more sustainable production systems, A progression that, in return, will make it easier for them to retain access to the mainstream market for coffee. The expectation is also that producers wishing to move further up the sustainability chain can then relatively easily accede to more sophisticated certification schemes as Utz Kapeh and others. ***

    On the demand side, potentially the demand for 4C coffee is unlimited. This because it is the mainstream industry's intention that, over time, most coffee purchased will be 4C verified. As a result, and again over time, it may be expected that 4C increasingly becomes the entry norm for mainstream coffee. If so then non-verified and non-certified coffees will undoubtedly lose market share or, will sell for less.

    Posted 17 March 2007

    *     Source: Utz Kapeh data.

    **    For an explanation of 'mainstream' see Q&A 131 in the Q&A Archive.

    *** Utz Kapeh describes its certification as follows: Good coffee no longer just means good taste, quality and price; today's consumers also demand it to be made with care for people and the environment. And they expect their roasters to be able to assure them of responsible production. Utz Kapeh enables a coffee brand to assure its customers that the coffee was grown with appropriate agrochemical use, that children have access to education, that workers and their families live in appropriate housing, that workers have access to healthier conditions and training, that their labor rights are protected, that farmers are empowered with professional coffee growing and marketing techniques, that they are granted access to market information and build relationships with their buyers. In other words: customers can keep on enjoying their coffee, and trust that we take care of the process.

    Utz Kapeh is a tool to incorporate and credibly demonstrate socially and environmentally responsible business practices in the complete coffee range. Utz Kapeh certification provides the assurance of responsible production that coffee drinkers expect. With Utz Kapeh, roasters can assure their customers that their (favorite) coffee brand knows exactly where their coffee comes from and that it was grown responsibly. Utz Kapeh-certified coffee growers take care of their coffee, the people and the environment.

    NB: Effective March 2007 Utz Kapeh changed its name to UTZ CERTIFIED 'Good inside' and the Internet address became www.utzcertified.org

    Related chapter(s):
    Related Q & A:
    Q&A 039, 100, 102