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The economics of quality in the specialty coffee industry: insights from the Cup of Excellence auction programs

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  • Adam P. Wilson
  • Norbert L.W. Wilson

Abstract

This study estimates price determinants for specialty green coffee auctions using records from the 2004–2010 Cup of Excellence programs hosted by the Alliance for Coffee Excellence. While some literature on coffee has focused on certifications and sustainability labels, the discussion of price determinants has been limited. This article replicates one of the first publications on price determinants and formulates a new model to more accurately describe the market. We include the necessary additional variables and estimate the model using a truncated maximum likelihood estimation technique. While sensory quality has a strong effect on price, the highest premiums stem from obtaining a top rank compared to other coffees from the same country, and North American buyers are more responsive to sensory quality than buyers in Asian and European markets.

Suggested Citation

  • Adam P. Wilson & Norbert L.W. Wilson, 2014. "The economics of quality in the specialty coffee industry: insights from the Cup of Excellence auction programs," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 91-105, November.
    • Handle: RePEc:bla:agecon:v:45:y:2014:i:s1:p:91-105
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    3. Eilson, Norbert L.W., 2015. "When Higher Quality Does Not Translate to Higher Prices: A Case of Quality and Specialty Coffees from the Cup of Excellence Auctions," 2015 Conference, August 9-14, 2015, Milan, Italy 211898, International Association of Agricultural Economists.
    4. Lauren Rosenberg & Mark Swilling & Walter J V Vermeulen, 2018. "Practices of Third Wave Coffee: A Burundian Producer's Perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 27(2), pages 199-214, February.
    5. Stavrakoudis, Athanassios & Panagiotou, Dimitrios, 2016. "Price dependence between coffee qualities: a copula model to evaluate asymmetric responses," MPRA Paper 75994, University Library of Munich, Germany.
    6. Jones, Eugene, 2014. "An Empirical Assessment of Consumers’ Preferences for Coffee," Journal of Food Distribution Research, Food Distribution Research Society, vol. 45(2), pages 1-26, July.
    7. Hendrik Feyaerts & Goedele Van den Broeck & Miet Maertens, 2020. "Global and local food value chains in Africa: A review," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 143-157, January.
    8. Ashton, John K. & Hudson, Robert S., 2017. "The price, quality and distribution of mortgage payment protection insurance: A hedonic pricing approach," The British Accounting Review, Elsevier, vol. 49(2), pages 242-255.
    9. Janina Grabs, 2020. "Assessing the institutionalization of private sustainability governance in a changing coffee sector," Regulation & Governance, John Wiley & Sons, vol. 14(2), pages 362-387, April.
    10. Aldott, Zoltan, 2021. "Predicting Specialty Coffee Auction Prices Using Machine Learning," Warwick-Monash Economics Student Papers 15, Warwick Monash Economics Student Papers.
    11. Villegas, Laura, 2017. "Shady Business: Why do Puerto Rican Coffee Farmers Adopt Conservation Agriculture Practices?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 259136, Agricultural and Applied Economics Association.
    12. Hoehn, John P, 2016. "Costly Choices: Does the U.S. Retail Market Reward Coffee Origin Labeling?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235891, Agricultural and Applied Economics Association.

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