drops.* With the security offered by a Cafédirect contract, farmers could
make plans for the future, obtain loans, improve their production
methods and provide more security and welfare for their families. Despite
suggestions made by the big coffee processing companies that fair trade
merely leads to overproduction and lower prices, experience has shown
that few farmers risk planting new coffee trees since they take three years
to bear fruit, and conditions in the international coffee market are too
uncertain to make the investment viable. Instead, many farmers have
sought to diversify into other products, like honey, black-eyed beans,
lemon grass or cocoa.
In developing the Cafédirect brand, the group was planning to take on
the giants of the industry, like Kraft General Foods, Paulig and Lavazza.
What is more, they planned to do it with higher raw material costs, limited
funds and none of the scale economies and marketing expertise enjoyed by
their rivals.
They knew that they could not depend upon the fair trade message
alone to convince buyers. In order to compete, they would have to deliver
real value to the consumers and meet the needs of the supermarket
198 Relationship Marketing
0
20
40
60
80
100
120
140
160
180
Cents/lb
19851986198719881989199019911992199319941995
Figure 3.2.2 Market price of green coffee beans, Brazil.*Later, in 1994, the market price for green coffee beans briefly exceeded $1.26 per
lb. Cafédirect responded to this by changing the contract so that coffee growers
were paid the market price plus 10 per cent, with a minimumfloor price of
$l.26 per lb.