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Jamaican Blue Mountain coffee breaks into UK market with Harvey Nichols contract

24 June 2012

In April 2012 it was announced the UK luxury retailer Harvey Nichols is to distribute Jamaican Blue Mountain coffee. The new deal forms part of efforts to boost European sales ‘from the current five per cent to about 15 to 20 per cent of total sales’ by 2020.

Jablum coffee, the signature Blue Mountain product marketed by the Mavis Bank coffee company, is currently sold in Japan, China, South Korea, the USA and the Caribbean, and now adds the UK to that list. Efforts have been in progress for some time to diversify and decrease dependence on the Japanese market, which has been registering sharp declines for this premium-priced coffee.

Mavis Bank, which is the largest local processor of Blue Mountain coffee, was sold in October 2011 to the Jamaica Producers Group (JPG) and Pan-Jamaican Investment Trust (Pan-Jam). In 2010, Mavis Bank made some 700 million Jamaican dollars (€6.4 million) in sales, down 30% on the previous year.

Editorial comment

Since the late 1990s, Caribbean agri-food exporters have been advised to diversify their exports to avoid dependence on the EU market. However, in the case of Jamaican Blue Mountain coffee, the EU, alongside the US and regional markets, now forms part of a market diversification strategy to reduce dependence on the traditional Japanese market. This highlights how market diversification is not a uni-directional process.

The recent experience of Blue Mountain coffee highlights the need to maintain diversified markets and constantly work at developing and maintaining relationships with premium retailer/users of quality-differentiated products.

Increasingly the issue is not the geographical location of the market, but the nature of the relationships established along the supply chain and the distribution of revenues secured. In the case of Blue Mountain coffee, traditionally this was not just about the final sale price, but also about pre-financing arrangements, whereby buyers paid a percentage of the contract up front, in advance of taking delivery. This is of particular importance in the CARICOM region since, as a rule, no country on its own or under collective marketing arrangements is competitive in volume-based markets (i.e. where economies of scale are essential for competitiveness).

The development of the Jablum label, which is promoted by Mavis Bank as ‘the most expensive coffee in the world’, is also instructive for a number of other reasons. It demonstrates that in today’s highly segmented, ‘consumerised’ and price-volatile food markets, traditional commodity boards (which still regulate production and marketing activities in a range of agricultural commodities, most notably in Jamaica) may no longer be the most appropriate or effective vehicle for industry development. Private sector companies, such as JPG and Pan-Jam, have proven their ability to invest in and expand international agribusinesses in a manner that state enterprises are not set up to do. This raises the issue of the redefinition of the roles of traditional commodity boards, since in most CARICOM countries commodity boards are the main available option for supporting economic activity in several traditional agri-industries (including two other commodities that attract premium prices in world markets – cocoa and nutmeg).

This redefinition of the role of commodity boards needs to embrace new forms of public–private sector partnership and the establishment of a supportive regulatory framework capable of strengthening the functioning of supply chains, in a context of price volatility and unequal power relationships along supply chains.


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