Essays on specialty coffee procurement

Specialty coffees distinguish themselves by the quality of the coffee beans from what it is made. The demand for specialty coffees is growing consistent with the general trend in food upgrading (more quality less quantity). Specialty coffees are a differentiated product with complex and variable quality. This poses the challenge of coordinating the supply of premium quality beans with the consequent opportunity of capturing the specialty demand and increasing revenue of supply chain participants. This dissertation studies the coordination of procurement in the supply chain; in particular, product differentiation and valuation and the choice of procurement strategies in three separate papers.;The first paper analyzes the determinants of specialty coffee prices traded at e-auctions by estimating a hedonic price function on 541 coffees from the 'Cup of Excellence'. The analysis tests the hypothesis that specialty coffee prices are determined by both sensory and reputation attributes, as evidence from other specialty products suggests. Results show that specialty coffee prices are influenced by both sensory attributes, capture in the quality rating, and reputation attributes captured by quality rankings, country of origin, coffee variety and quantity available of a coffee lot.;The second paper analyses the economic impact of e-auctions under conditions of uncertainty by comparing the optimal strategies in a benchmark case solely based on relationships to a case in which auctions can be utilized, this paper analyzes the economic impact of auctions under conditions of demand uncertainty. Results indicate that auctions are especially beneficial for smaller roasters and in more uncertain environments. Moreover, auctions greatly aid in the discovery process of new sources of product.;The third paper proposes a 'differentiation measure' for calculating the degree of differentiation vis-a-vis quality ratings at the procurement level of the specialty coffee. The empirical analysis is based on cross-entropy analysis from information economics on 653 observations from the Cup of Excellence and 59 observations from the Q auction. The measure is a proposition to measuring value creation in supply chains.;The dissertation argues that specialty coffee roasters are achieving coordination of supply chains with scope for simultaneously increasing consumers' satisfaction and producers' income. This explicit, high level coordination of the complex coffee supply chain signify a profound change of the management role and the potential benefits to all participants.