The Powerful Role of Intangibles in the Coffee Value Chain

Coffee is one of the most important internationally traded commodities. Most of the ca. USD 200 billion value that coffee generates globally accrues to brands, retailers, and supply chain operators; yet most of the risks are borne by the producers at origin countries. Intangibles associated with technology, design and branding as well as access to distribution channels play a significant role in defining the global value chain governance (GVC) and value appropriation. However, there is evidence that in the most dynamic market segments intangibles can be utilized to not only improve grower value but also to increase the total value of the industry. This paper highlights how the conditions associated with innovative consumption trends and logistical abilities (from origin through to retail) can enable the marketing of highly differentiated products that embed origin intellectual property. The implications are far reaching and include: a) new opportunities for coffee growing communities to improve their incomes; b) effects on the strategic direction of more vibrant and diverse global value chains; and c) lessons that likely apply to other consumer-facing commodities as well. The paper describes: a) the coffee industry and its GVC structure; b) the role that intangible assets play in value creation from both the supply and demand perspective; and c) the current and potential role of intellectual property tools in creating and retaining value, as well as providing economic upgrade options