Coffee is the third most consumed drink worldwide and is the favorite drink of Americans. The drink has been shown when consumed correctly to have positive impacts on productivity and most commercial districts worldwide have a place where you can buy a cup of coffee.
Perhaps inevitably fintech is influencing how we buy and consume our coffee and the supply chains of big, small, and medium players in the industry.
For some time, Starbucks has facilitated customers being able to pay digitally for their caffeine hit. This includes an app and a prepaid digital balance, together with compatibility with an Apple watch. There is no need to queue for coffee just order, collect it and you’re done. No doubt as the various facets of fintech come together and become more widely accepted, Starbucks offering will develop and grow with competitors following suit.
Supply Chain Revolution
It is not just how customers buy coffee that fintech is influencing. The supply chains are becoming more blockchain influenced as well. The potential here for faster and more accurate transactions and better transparency is already being realised.
To get a cup of coffee in the hands of a customer suppliers at all levels have to manage a fairly complex supply chain involving farmers, processors, shippers, and retailers on a global scale. Add on to this various state bureaucracies and this is more of a migraine than a headache for every player in the coffee industry.
From big hitters such as Nestle to up and coming stars like the Gourmesso the supply chain issue is one that begs to be addressed.
There are several key problems in the current supply chain that leads to the farmer only seeing a small profit percentage for his or her hard work, and the consumer, the end user, who pays a premium price for their caffeine. On average, it takes six months for coffee to make it into a cup. Over this time the coffee degrades. Speeding up the supply chain and removing layers of bureaucracy should result in better coffee at a cheaper price and one that is fairer to farmers who actually labour to grow the stuff.
With this in mind good use of blockchain and fintech it is not inconceivable that:
Payments could be speeded up considerably using blockchain. Moreover, it could remove the middlemen that add their cut to each transaction driving up the costs of coffee production. This is one of the reasons that drive up coffee to the consumer and eat into the profits of the farmers.
Smart contracts could see an end to interoperability and the endless piles of paper used to move coffee from farm to retailer. Blockchain’s strength is that it can be trusted and business can be conducted faster. This streamlining will not only make transactions more direct and transparent, it will also see fewer errors occurring along the way. This should not only speed up lead times, this should see the need for middlemen become obsolete.
In addition, every transaction is recorded digitally and is secure. This can be retrieved for auditing and traceability very easily and quickly.
Logistics should see improvements as well. Like coffee farmers and producers, bureaucracy is enormous and clumsy. This results in delays, errors, and costs that could be streamlined by using blockchain.
The information needed for the goods to clear customers would be tied into the block together with necessary payments. If implemented correctly this could lead to reducing lead times, resulting in better quality coffee delivered at a fairer price.
Similarly, it is not inconceivable that speciality coffee farmers could negotiate their own deals for coffee using blockchain direct with the distributor. Gourmesso, and other companies like this, who place a strong emphasis on fair trade and sustainability in their supply chain could leverage this to their advantage. This would make Gourmesso coffee pods very competitive and provide additional selling points for the brand.
How long before we See the Coffee Revolution?
The fact is that it is already happening. Supply chains are being streamlined all the time across industries. Recently, Tradeshift, release
It is the first product of its kind that unifies supply chain payments, finance, and blockchain based payments together in an end to end solution. The cloud platform will make processes more accessible and faster.
Tradeshift developed the system to tackle the global supply chain problems business face. According to the company there is an estimated $9 trillion global capital tied up in third party accounts receivable that make their money from skimming a little off each transaction.
Imagine how much sweeter coffee will taste if it is cheaper to buy and the consumer knows that the farmer is seeing a good return for their labours.