Abstract
The crisis that hit the coffee market after the International Coffee Organization (ICO) agreement collapsed in 1989 led Italian company illycaffè to look beyond the typical business model that had characterized the coffee industry to date. illycaffè decided to embrace a new strategic challenge and focus on a direct-purchasing model. They would bypass the intermediaries and reward their chosen growers by paying them a premium over the market price.
Francesco Perrini and Angeloantonio Russo prepared this case study, as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation.
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About the Project
This case was written as part of a project on “Curriculum Development for Mainstreaming Corporate Responsibility,” coordinated by INSEAD and London Business School and supported by the European Academy of Business in Society (EABIS). The project aims to develop degree and executive programme designs and teaching materials that will assist the process of mainstreaming the area of corporate responsibility into core disciplines in management education and increasing its inter-disciplinarity. Within this context, EABIS members from across Europe have been invited through an open call to submit case proposals with the intention of developing a range of cases across a number of subject areas for use by mainstream faculty. The open call for case studies generated over 25 submissions from around Europe, from which a shortlist was selected, including this case study, on the grounds of their business relevance, academic rigour and potential for mainstreaming.
About The European Academy of Business in Society
Launched in 2002, EABIS is a unique growing alliance of currently more than 80 companies, business schools, academic institutions and other stakeholders, with the support of the European Commission, committed to integrating business in society issues into the the heart of business theory and practice in Europe. It is increasingly viewed as Europe’s reference point for corporate responsibility knowledge development and learning. For more information on members and activities visit www.eabis.org
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Notes
- 1.
Golding, K. and K. Peattie: 2005, ‘In Search of a Golden Blend: Perspectives on the Marketing of Fair Trade Coffee,’ Sustainable Development 13(3), 154–165.
- 2.
Coffee has its peculiarities, and the kind of bean grown and its location determines the flavour of the coffee. Various labels help traders identify the beans used in the coffee, thus assisting them in pricing it. There are, about 60 kinds of coffee plant, and each kind comes in several varieties. Of these varieties, only 10 are mass-produced throughout the world, the most popular being Arabica (Coffea Arabica) and the well-known Robusta coffee (Coffea Canephora). Arabica and Robusta coffees are classified, respectively, as the highest quality and most expensive and the lowest quality and least expensive coffees sold in the international market. The taste of an Arabica bean from Brazil will differ from that of an Arabica bean from Kenya.
- 3.
The Economist, ‘Face Value. Head Barista,’ Business, September 30th, 2006.
- 4.
Stein, N., ‘Crisis in a Coffee Cup The price of beans has crashed. Growers around the world are starving. And the quality of your morning cup is getting worse. So why is everyone blaming Vietnam?’, Fortune, December 9, 2002.
- 5.
See note 4.
- 6.
Vogel, D. 2005. The Market for Virtue: The Potential and Limits of Corporate Social Responsibility. Washington, D.C.: Brookings Institution Press.
- 7.
Business Week, ‘Basta With The Venti Frappuccinos. illycaffè is the anti-Starbucks, and it’s out to spread the espresso gospel to java heathens’, Global Business, August 7, 2006.
- 8.
FINE is an informal umbrella network established in 1998 within which representatives of the most important worldwide Fair Trade networks meet to share information and coordinate activities. The acronym FINE stands for the first letters of the following four Fair Trade networks: Fairtrade Labelling Organizations (FLO) International, the International Federation for Alternative Trade (IFAT), the Network of European World Shops (NEWS!), and the European Fair Trade Association (EFTA).
Acknowledgements
The development of this case and the overall project has been made possible due to the generous financial support of EABIS’ founding corporate partners: IBM, Johnson & Johnson, Microsoft, Shell and Unilever.
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Perrini, F., Russo, A. (2019). The Roots of Corporate Sustainability: the Art of Managing Innovation and Relationships by illycaffè. In: Lenssen, G.G., Smith, N.C. (eds) Managing Sustainable Business. Springer, Dordrecht. https://doi.org/10.1007/978-94-024-1144-7_18
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