PhD

Attempts were made to examine and design coffee export marketing strategies of India and
Ethiopia with specific objectives of analysing the trends and composition of coffee exports;
identifying the major determinants of coffee export; examining the coffee export marketing
strategies of India and Ethiopia and suggesting appropriate coffee export marketing
strategies for the two countries.
Primary data was collected using pre-tested questionnaire from 20 percent of the total
Indian and Ethiopian coffee exporters. The samples were drawn using simple random
sampling technique. In order to triangulate the findings of the study interviews were made
with the Secretary of Coffee Board of India and the Ethiopian Commodity Exchange, Chief
Strategy Officer. Additionally, time series secondary data Viz., production, export volume
and monetary value, domestic consumption, prices paid to coffee growers, value added
products of coffee were collected from different authenticated sources like International
Coffee Organizations, World Bank, Coffee Board of India and Observatory of Economic
Complexity from the year 1980-2010. Analytical models such as exponential compound
annual growth rate, Instability analysis of linear coefficient of variation, Auto Regressive
Conditional Heteroskedasticity and Generalised Auto Regressive Conditional
Heteroscedasticity, Johanson Cointegration, Market share and Market growth model,
Herfindahl–Hirschman Index, Markove Chain model of transitional probability matrix,
Kendall’s Wallis Coefficient of Concordance and simple descriptive statistics such as
percentage and frequency were computed to analyse the data. Economic views (EVIEWS),
Lingo Programming-Optimisation, Statistical Package for Social Sciences (SPSS), and
Advanced Excel computer packages were used to generate results.
Accordingly, with regard to the trend in production, domestic consumption, exports, prices
paid to coffee growers in India and Ethiopia from 1980-2010 the followings are the major
findings.
The Indian coffee sector witnessed a significant positive incremental growth in production,
domestic consumption, export and prices paid to coffee growers throughout the study period;
the incremental growth noted during pre-liberalization period was not significant. On the
other hand, with the exception of a negative incremental growth noted in the production and
export volume of coffee from 1980-1990, the Ethiopian coffee sector witnessed a positive
incremental growth in production, domestic consumption, export and prices paid to coffee
growers throughout the study period (1980-2010).
The increase in the volume of coffee production in India had a direct implication in the rise
or drop in the volume of coffee export and domestic consumption of coffee during preliberalization
period; this relation did not reflect on the rise or drop in the volume of
domestic consumption of coffee during post-liberalization period. Likewise, the increase in
the volume of coffee production in Ethiopia has reflected in the rise or drop of export
volume of coffee; the volume of domestic consumption of coffee was found to be
independent of production throughout the study period.
The trend in country wise export Italy and Russian Federation export target markets of
Indian coffee and Germany and USA for Ethiopian coffee were found to be the most stable
market with high retention potential; Japan and Germany export target markets for Indian
coffee; and France and Other export target markets for Ethiopian coffee were found as the
most unstable market.
With the exception of Russian Federation, USA and Japan export target markets, the
growth in the volume of coffee export from India witnessed a positive and significant
incremental growth in the major Indian coffee export destinations viz., Italy, Germany and
Others. Similarly, with the exception of USA coffee export target market the growth in the
volume of coffee export from Ethiopia has witnessed a positive and significant incremental
growth in the major Ethiopian coffee export destinations viz., Germany, France, Japan
,Saudi Arabia and Others (based on the result generated by the Market share and Market
growth).
Among the targeted markets of Indian coffee exporters Italy, Germany, USA and Japan
markets were found being highly competitive market (characterized by perfect competition);
while, Among the targeted markets of Ethiopian coffee exporters France, Saudi Arabia,
USA, and Japan target markets were found being highly competitive market.
Among the targeted markets of Indian coffee exporters the Russian Federation market was
found being monopoly market (characterized by highly concentrated market); while, among
the targeted markets of Ethiopian coffee exporters Germany market was found being
monopoly market.
In attempts made to identify the determinants of coffee export market in Indian and
Ethiopia the geographic location and the proximity of coffee export firms to major ports
were found to be the major determinants of coffee export marketing in India. Similarly, the
geographic location and export and import duty protection imposed by the Government of
Ethiopia were found to be the major determinants of coffee export marketing in Ethiopia.
With the objectives of assessing the existing coffee export marketing strategies and design
the future coffee export marketing strategies for Indian and Ethiopian coffee exporters
providing leaflet, pamphlet, poster about their product (coffee) and offering direct mailing
promotion to international customers were found to be the two major promotional strategies
presently being implemented by Indian coffee exporters. Whereas, deliberately featuring the
brand of Indian coffee in the film and/ or television programs found as the future export
promotional strategies of Indian coffee exporters.
Participation of coffee exporters in business-expo in representing the export firms and
offering coffee for new customer for user trial were found as the existing promotional
strategies of Ethiopian coffee exporters. Whereas, deliberately featuring of the brand of
Ethiopian coffee in film and or television program was found to be the future promotional
strategies of Ethiopian coffee exporters.
Reaching customers via their mail order, meeting customers demand without compromising
the quality of coffee throughout the market supply chain by using appropriate logistics were
found as the existing export distribution strategies of Indian coffee exporters. While,
creating on line application for receiving purchase order as well distributing products
accordingly was found to be the future export distribution strategy for Indian coffee
exporters.
Reaching customers via their mail order, meeting customers demand without compromising
quality throughout the supply chain by using appropriate logistics and inventory system and
distributing using wholesalers were found as the major export distributions strategies of
Ethiopian coffee exporters. Whereas, using distribution channel coverage better than
competing coffee exporter countries was found to be the future export distributions (place)
strategies for Ethiopian coffee exporters.
Supplying preferable coffee variety by international customers and supplying specialty
coffee were found as the two major export product marketing strategies presently followed
by Indian coffee exporters. On the other hand, supplying certified organic coffee was found
to be the future export product marketing strategy of Indian coffee exporters.
Providing preferable variety of coffee, offering specialty coffee and maintaining the good
image of the brand of Ethiopian coffee at the international market was found as the major
export product strategies being implemented by the Ethiopian coffee exporters. On the other
hand, offering of certified organic coffee was found as the existing and future export product
strategy of Ethiopian coffee exporters.
Following premium pricing and offering credit term to the customers were found as the
current and future export pricing strategies of Indian coffee exporters. Similarly, following
premium pricing strategy was found as the most practically implemented export pricing
strategies by Ethiopian coffee exporters. However, offering credit term to customers was
found to be the future export pricing strategy of Ethiopian coffee exporters.
Employing export market targeting better than competing coffee exporter countries was
found as areas where marketing efforts were made to position the brand of Indian coffee in
the international customers’ mind.
Supplying quality coffee at the right price better than competing coffee exporter countries
was found as an area where marketing efforts were made to position the brand of Ethiopian
coffee in the international customers mind.
Providing complete details of exportable coffee which are being sold including,
participating on trade show, providing indicative price lists, photographs or actual products
to show at a trade show were found as the major marketing strategies employed to build the
brand of Indian coffee in the international customers’ mind.
Providing of complete details of product being sold by Ethiopian coffee exporters and
participating in trade shows and exhibitions were found as strategies employed to build the
brand image of Ethiopian coffee in the international customer mind.
The competitive advantage Indian coffee exporters was found in collecting of market
information in the export market; whereas, the competitive advantage Ethiopian coffee
exporters was found to be both collecting of market information in the export market and
product quality
Marketing strategies required for the Indian coffee industry to improve their export
competitiveness in the export market as it was descriptively suggested by Indian coffee
exporters are organizing of coffee exporters conference, provide financial incentives for
coffee exporters for procuring quality coffee, providing more up-to-dated market
intelligence service, coordinating and allowing coffee exporters to using export containers
on sharing basis to reduce their operational cost, organizing coffee expo in India, arranging
coffee expo visit for Indian coffee exporters in different countries, organizing awareness
creation program on the importance of coffee quality for all stakeholders throughout the
coffee supply chain, promotion of quality as a product positioning theme for Indian coffee
and increasing the publicity of Indian coffee through different mass media.
Marketing strategies required for the Ethiopian coffee industry to improve their export
competitiveness in the export market as it was suggested by Ethiopian coffee exporters are
shortening the coffee supply chain by removing uncontrolled participants in the export
marketing system, launching of private quality inspection institute, maintaining quality
throughout the supply chain, following international market price, employing intensive and
effective generic promotion of Ethiopian coffee, streamlining effective export facilitating
system and logistics, providing training on the knowledge of international trade to coffee
exporters, intensifying the use of well organized warehouse management also improve their
operation, providing technical and managerial support for exporters, coffee exporter firms
should equip themselves with educated person, providing best cup quality coffee,
compliance to purchase order, increasing supply without compromising quality and
providing training for farmers on continuous basis.
Less awareness of coffee growers on the importance of coffee quality, unfavorable climatic
condition, coffee diseases, lack of extension support, lack of skilled laborers, lack of
consistent agro-processing firms, lack of logistics facility during monsoons season,
unfavorable weather condition to maintain quality, difficulty to advertise individual product,
high price seasonality, high competition of exporters and export agents, high operational
cost and high price fluctuation were found as the major responsible factors attributed for
reducing the quality of exportable Indian coffee.
Lack of modern agricultural inputs, increasing number of contraband businesses, poor farm
practice including post harvest practices, poor inventory and logistics system, lack of
training for farmers and exporters, less involvement of coffee specialist with coffee growers,
poor handling and packaging of different origins of coffee, less awareness of coffee growers
on importance of coffee quality, lower prices being paid to coffee grower and less attention
for the prevention of indigenous breeds as well as introduction of new breeds were found as
the major responsible factors reducing the quality of exportable Ethiopian coffee.
High processing and operational cost, high cost of planting coffee processing technology,
low and inconsistent demand for processed value added products of coffee in the export
market, lack of high quality coffee for further value addition, high labor cost and high cost
of packaging materials were found as the major challenge for Indian coffee exporters to
diversify into marketing of value added products of coffee in the export market.
It is necessary to organize “Cup of excellence” international competition within the country
to identify and support geographic areas with comparative advantage for the production of
quality coffee in the two countries; this would result in receiving premium prices for high
quality coffee.
Finding export partner from Ethiopian coffee consumer countries, high cost of planting
coffee processing technologies, lack of the required skill and knowledge for value addition
of coffee, lack of finance and lack of policy that would encourage stakeholders to penetrate
the value added products of coffee export market were found as the inhibiting factors for
Ethiopian coffee exporter to diversify in to value added products of coffee.
Conclusively, despite the incremental growth noted in the volume of coffee production,
domestic consumption, export and the prices paid to coffee growers it was found that there
were different factors that come into play in determining the export marketing of coffee in
India and Ethiopia. Accordingly, in response to the finding of the present study, marketing
strategies which were sought to be appropriate in addressing the major challenges exhibited
in the export marketing of coffee in India and Ethiopia were drawn in the form of general and
policy recommendations.
General and Policy Recommendations
The study suggests that Indian and Ethiopian to pursue new marketing strategies that
involve market segmentation, value-adding activities, and strengthening local and global
organizations to establish direct market links with consumers and stabilize prices.
Easing the import duty on modern coffee processing technologies to motivate local
investors in the coffee industry is necessary.
Breeders across the two countries should work with more synergy with the international
collaborative projects like the International Multi Location Variety Trial (IMLVT) to come
up with next generation variety with exceptional quality, high yield, diseases resistance and
climate resiliency also strengthening of extension services to increase in production and
productivity.
Generic promotional role for introducing and building the brand of Indian and Ethiopian
coffee in the global market through frequent media coverage in the world press and television
and creating occurrence of extraordinary events which may affect international perceptions of
the countries in building the brand of Indian and Ethiopian coffee is necessary.
The Coffee Board of India and the Government of Ethiopia have to look for partners to help
with the expansion of local coffee processing and product packaging capacity to improve
export of processed coffee to the emerging foreign coffee markets.
Incorporating education to farmers in varies coffee stakeholders websites on how to
improve the quality of coffee and standards of quality coffee through dissemination of
technical knowledge, pest control and disease control mechanisms is necessary
Fostering the relationship with international buyers is necessary especially India with Japan
and Germany; while Ethiopia with France and Saudi Arabia since these markets were found
to be unstable coffee export targets markets. Hence organizing visit in India and Ethiopia,
respectively to match the need of consumers with the type and quality expectations, thus
stabilize the instability of the target market and increase their loyalty.
The Ethiopian Commodity Exchange [ECX] need to create a transparent Coffee marketing
system and strengthening coffee marketing service to ensure quality throughout the supply
chain.
Simplification of Government policies particularly in structuring of the Ethiopian coffee
industry to be under one organizational structure is necessary.