reach a very small market, the reality was that such ‘campaign’* quality
coffee appealed only to the relatively few stalwart supporters who were
prepared to make sacrifices in product quality and shopping convenience
for a good cause. However, the collapse of the International Coffee
Agreement and the problems caused by the consequent price fluctuations
was the inspiration for some radical thinking.
In mid-1990, representatives of four organizations met to plan a new
enterprise which would produce and market a brand of coffee which
could compete successfully on supermarket shelves alongside the biggest
brands in the business. Cafédirect, the company which emerged, has four
partners (Oxfam, Twin Trading, Equal Exchange and Traidcraft), each
with representation on the Board. It has no full-time employees, no pro-
duction units and no distribution facilities. Sales became the responsibil-
ity of one person working four days a week, and brand management
activities were undertaken by Media Natura, an agency which specializes
in working for environmental and charitable organizations. The mission
of the Cafédirect enterprise was to pass more of the proceeds back to the
coffee farmers; instead of 10p they would get 40p for every 8oz pack of
Cafédirect coffee sold. A further objective agreed by the partners was to
stabilize the fluctuations in the price of coffee beans. A crucial aspect of
this was contracting to pay growers a guaranteed $1.26 per lb to cover
basic production costs and wages, regardless of how low the market price
The supplier and alliance market domain 197
Trade represents 80 per cent of the income of developing countries, and coffee is
second only to oil in importance as an internationally traded commodity. In South
America coffee is of such economic importance that in 1940 a number of countries
agreed upon export quotas. Each country was given a quota for the amount of coffee
it could put onto the market each year. If the market price of coffee beans fell below
a specified level, all of the quotas were cut until prices rose again.World wide coffee
export quotas were adopted in 1962 when an International Coffee Agreement was
negotiated by the United Nations. The agreement was subsequently renegotiated
three times, involving 41 exporting and 25 importing countries. By the late 1980s the
agreement started to run into difficulties. Coffee-growing countries began bartering
coffee with countries outside the agreement. Consumer countries wanted an
increase in the quota for higher grade beans in order to meet changing consumer
preference. Then in 1989 the participating countries failed to reach agreement, and
the world price of coffee plummeted.Figure 3.2.1 The international coffee agreement.*‘Campaign’ coffees have a poor reputation for flavour, quality and availability.
For some time associated with support for the Sandanistas in Nicaragua, it is
imported, processed and sold through charity outlets to the more dedicated charity
supporters.