Diamond Model of Colombia Coffee

The Diamond model

To understand the influence of GI among Colombia the following four elements represent its national advantage in coffee industry.

Factor conditions

Due to the uniqueness of topographical factors and two rainfall seasons creates strongly national advantages. 6.4% of total area of Colombia is cultivation zones, and 12% of coffee production area producing "GI coffee". It provides 11 to 12 million production possibility per year. In addition, in 2010, there were 990 airports with 196 thousand air transport carriers, 6 ports and terminals with 2 million port container traffic, 874 km railway routes, 141,374 km roadways (CIA 2010 and The World Bank 2010). 18% of total 22.5 million labour force involving agriculture, there have been an increasing number of producers after joining GI (Figure1) (Gomez, 2007) as well as foreign direct investment with 6.7 billion in 2010 (The World Bank 2010).

Demand conditions

The demand of domestic market is one of important forces for development of industry. Compared to other countries, Colombia had lower needs of domestic market, which has low per capita consumption with 2.8 kg only 5% of total national coffee production ( Benni, N.E. and Reviron, S. 2009). The domestic consumption did not increase even joining GI system, maintained at 1,400 thousands bags from 2007 to 2010 (Figure 2).

Related and supporting industries

In this factor, Colombian coffee industry has lower related and supporting industries. These industries and processes are mostly run by family or small businesses, due to the relatively simple methods and low investments needed.

Firm strategy, structure and rivalry

As one of well know coffee producer, Colombia has successfully increased its competitiveness via sophisticated marketing strategies of the FNC. It applies trademark and certification mark to protect Colombian coffee. Since registered GI it has increased consumer's awareness and creates better advantage against other competitors.

Chance and Government

The forecast of world coffee consumption is rising by1.3% per year (Figure 3), more consumers tend to high quality and specialty coffee. The total sales of high quality coffee were increased by 38% in 2010. This trend is resulting in a great chance for Colombia especially joining GI. In addition, coffee industry is one of the biggest export businesses in Colombia, its government offers lots of supports to improve its development, for instance, providing capital to assist with technological development of coffee as well as building the national coffee found to help famers (The FNC 2010).