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Coffee is probably the most popular beverage in the world after water, with over 400 billion cups consumed annually. It is one of the largest traded commodities in the world and forms a global industry employing almost 20 million people worldwide. Coffee is grown mainly in developing countries within 5,000km North and South of the equator and is consumed mainly in the developed countries of the northern hemisphere. There are two main varieties of coffee - Arabica coffee, which provides the flavour and Robusta coffee, which mainly provides the body. Arabicas constitute about 65% of world production and are grown mainly in South and Central America. Robustas comprise about 35% of world production and are grown mainly in Africa and Asia.
Olam in the Coffee Business
With Olam's geographical focus on Africa and Asia in the early years, it was only natural that Olam's coffee business was initially focused mainly on Robusta coffee. From the beginning, the coffee business leveraged Olam's core competency of origin management skills, with the business model based on buying raw coffee from as close to the farm gate as viable.
Olam was already present in many of the coffee growing origins as it traded in other products in these countries. Due to this Olam was quickly able to transfer procurement skills and systems from other businesses to start sourcing coffee in these countries and at the same time transfer these skills and systems across borders to new coffee origins. This resulted in explosive growth and by the late nineties Olam had established itself as a large and reliable supplier of Robusta Coffee out of African and Asian Origins.
Over the last few years Olam has started to aggressively pursue growth in Arabicas and established its presence in several South American origins. It started with Brazil, which is the largest producer of coffee in the world, and in just a few years has become a major exporter out of that country. Since then it has followed up by continuously setting up processing and export operations in several of the major coffee producing countries of S.America including Columbia, Peru and Honduras.
Today Olam is one of the major trade houses for coffee and the largest shipper of Robusta coffee in the world. Olam has physical presence in all the major coffee growing regions of the world - In Africa the main origins are Cote d'Ivoire, Cameroon , Uganda and Tanzania ; In Asia it is present in Indonesia, Vietnam and India ; And in S.America it is present in Brazil, Colombia, Peru and Honduras . In each of these origins Olam has significant presence and is one of the largest exporters.
Olam enjoys a clear advantage in terms of procurement reach, in each of the origins that it operates in. In almost every coffee growing and trading centre, from Cote d'Ivoire to Uganda in Africa and India to Vietnam in Asia there is an Olam buying office or an Olam buying agent. Not only does this allow Olam to buy volumes at competitive prices, but also its presence at the grass root level gives Olam access to information to support its marketing and trading decisions.
Olam has also made significant investments in Processing plants and machinery in all the major origin countries to have full control on the processing and output Quality.
Olam has built its marketing network on the strength of its origins. Today, Olam is not only able to offer customers a wide basket of coffees to meet their requirements, but it is also able to recommend alternative growths for their blends. With fixed sources of supply and its in house processing, Olam is able to offer a regular and consistent quality. In addition, it is able to offer special grades tailored to specific customer requirements. Olam's customer base today includes almost all the major roasters in US & Europe, including some of the biggest multinational groups involved in coffee. Apart from the traditional markets of Europe, US & Japan, Olam also sells coffee into the markets of the Middle East, North Africa and Eastern Europe. Strong relationships with its customers and an understanding of the local complexities has resulted in Olam being a major supplier in these markets.
One of the major strengths that Olam has, to manage its wide range of coffees and highly diversified markets, is its ability to value coffees. Olam is able to assess the coffee at the point of buying, understand how various markets/customers value each type of coffee, and find the best market/customer for each type of coffee thereby ensuring that value for the customer and the business is optimised.
Olam now seeks to leverage its pre-eminent position in the world robusta trade, along with its understanding of Coffee Quality and its relationships with the major coffee roasters in the world, to build up a similar leadership position in its arabica business.
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