Redalyc.The quality pillars of a certification process: the Coffee

Agroalimentaria
ISSN: 1316-0354
agroalimentaria@ula.ve
Universidad de los Andes
Venezuela
Leme, Paulo Henrique M. V.; Machado, Rosa T. M.
The quality pillars of a certification process: the Coffee Quality Program (CQP) in Brazil
Agroalimentaria, vol. 19, núm. 37, julio-diciembre, 2013, pp. 61-74
Universidad de los Andes
Mérida, Venezuela
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AGROALIMENTARIA
Vol. 19, Nº 37; julio-diciembre 2013
THE QUALITY PILLARS OF A
CERTIFICATION PROCESS:
THE COFFEE QUALITY PROGRAM (CQP)
IN BRAZIL
61
Leme, Paulo Henrique M. V.1
Machado, Rosa T. M.2
Recibido: 01-03-2012
Revisado: 06-05-2012
Aceptado: 21-06-2012
ABSTRACT
The aim of this study is to analyze the implementation process of the coffee quality program (CQP) and
its implications on R&G coffee companies in Brazil. First, a theoretical analysis model - the 3 “Quality
Pillars” - was build, based on the philosophy and objectives of the CQP and with the support of
Transactional Costs Economics (TCE) as well as concepts of the Quality Theory. Afterwards, a field
research with thirteen coffee roasters – adopters and non-adopters of the CQP - was conducted, in order
to analyze their raw material supply, theirs productive process and marketing strategies. The research data
were analyzed with support of the 3 “quality pillars” model: product quality, process quality and quality
signal, represented by CQP quality labels that communicate quality to consumers. Main results reveal that
to focus on quality issues was the main factor that increased vertical coordination among researched
companies and their suppliers/partners. Therefore, CQP implementation process lead companies to adopt
vertical coordination strategies with its suppliers and deliverers. On the other hand, all researched companies
have problems to maintain their products’ quality standards. Non-adopters have high difficulty to implement
traceability in their production process. It is possible to imply that traceability imposed by a certification
process is a competitive advantage for some CQP adopters in comparison to non-adopters. Moreover,
roasters that focus their businesses on product differentiation by quality attributes need as support a
certification label or a strong brand to transmit credibility to consumers.
Key-words: coffee, quality, certification, marketing, standard, Brazil
1 Agronomist (Universidade Federal de Lavras, UFLA, Brazil); Master in Business Administration (UFLA,
Brazil); Ph.D. Candidate in Business Administration (UFLA, Brazil). Professor (UFLA); Coordinator of
the Marketing and Consumer Behavior Group (GECOM, Federal University of Lavras, UFLA). Address:
Universidade Federal de Lavras - Departamento de Administração e Economia (DAE / UFLA). Caixa
Postal 3037. CEP 37200-000 – Lavras, MG – Brasil. Telephone: +55-35-38291548; e-mail:
lemeph@gmail.com; phleme@dae.ufla.br
2 University degree in Economics (Universidade Federal de Minas Gerais, UFMG, Brazil); Specialization
in Economics (Federal University of Pernambuco, UFPE, Brazil); Master in Rural Management
(Universidade Federal de Lavras, UFLA, Brazil); Ph.D. in Business Administration (FEA, Universidade
de São Paulo, USP, Brazil). Associate Professor (UFLA – MG); Ad hoc consultant for national and
international journals (Supply Chain Management, ISSN 1359-8546; RAUSP, ISSN 0080-2107); Editor
of the magazine “Organizações Rurais & Agroindustriais” (ISSN 1517-3879) between 2004-2008. Address:
Universidade Federal de Lavras – Departamento de Administração e Economia (DAE / UFLA). Caixa
Postal 3037. CEP 37200-000 – Lavras, MG – Brasil. Telephone: +55-35-3829-1763; e-mail:
rosateresa67@gmail.com
Leme, Paulo Henrique M. V. y Machado, Rosa T. M.
62
The quality pillars of a certification process: The Coffee Quality Program (CQP) in Brazil (61-74)
RESUMEN
La presente investigación tuvo como objetivo principal analizar el proceso de implementación del Programa de Calidad del Café (PCC) y sus implicaciones en las compañías de café tostado y molido T&M en
Brasil. En primer lugar, fue construido un modelo de análisis teórico –“los 3 pilares de calidad”– sobre la
base de la teoría y objetivos de la PCC y con el apoyo de la Economía de los Costos de Transacción (ECT)
y de los conceptos de la Teoría de la Calidad. Luego se llevó a cabo una investigación de campo con los
tostadores de café –con trece adoptantes y no adoptantes del PCC– para analizar su suministro de materia
prima, el proceso productivo y las estrategias de marketing. Los datos de la investigación se
analizaron con el apoyo del modelo de los “pilares de la calidad”: calidad del producto, calidad del proceso
y señal de calidad, representado por las etiquetas del PCC que comunican calidad a los consumidores. Los
principales resultados dan cuenta que el enfoque en los temas de calidad fue el factor principal para aumentar la coordinación vertical entre las empresas investigadas y sus proveedores y socios. Por lo tanto, el
proceso de implementación del PCC lleva a los tostadores a adoptar estrategias de coordinación vertical
con sus proveedores y repartidores. Por otro lado, todas las empresas investigadas presentaron problemas
para mantener los estándares de calidad de sus productos. Los tostadores no adoptantes tienen gran dificultad para aplicar la trazabilidad en sus procesos de producción. Es posible inferir que la trazabilidad,
impuesta por los procesos de certificación, constituye una ventaja competitiva para algunos adoptantes del
PCC en comparación con los no adoptantes. Además, los tostadores que centran su negocio en la diferenciación de productos por atributos de calidad necesitan como apoyo a una etiqueta de certificación o una
marca fuerte para transmitir credibilidad a los consumidores.
Palabras clave: café, calidad, certificación, mercadeo, normas, Brasil
RÉSUMÉ
La recherche suivante a eu comme principal objectif d’analyser le processus d’implantation du Programme
de Qualité du Café (PCC, en portuguese) et ses engagements dans les entreprises du café grillé et moulu
T&M au Brésil. En premier lieu, un modèle d’analyse théorique –«les trois piliers de qualité»– a été construit
sur la base de la théorie et sur les objectifs du PQC et avec l’appui de l’Économie des Coûts de Transaction
(ECT) et les concepts de la Théorie de la Qualité. Après une investigation sur le terrain que nous avons
menée à bonne fin avec ceux qui torréfient le café treize –adhérents et non-adhérents du PCC– afin
d’analyser le fournisseur de matière première, le processus de production et les stratégies du marketing.
Les données sur l’enquête ont été analysées avec l’appui des «Piliers de qualités» du modèle: la qualité du
produit, la qualité du procédé et le signe de qualité, représentée par les étiquettes du PCC qui informent
aux consommateurs sur la qualité. Comme résultats principaux on a laissé entendre qu’une réflexion en
termes de qualité a été le facteur principal pour l’augmentation de la coordination en amont parmi les
entreprises recherchées, leurs fournisseurs et associés. Donc, le processus d’implantation du PCC emmene
le commerçant qui vend du café qu’il torréfie lui-même à adopter des stratégies d’organisation verticale
avec ses fournisseurs et distributeurs. Autrement, toutes les entreprises interrogées auront des problèmes
pour maintenir des standards de leurs produits de qualité. Aussi, les commerçants qui vendent et torréfient
du café et qui ne sont pas adhérents ont une très grande difficulté à appliquer la traçabilité dans leurs
processus de production. Il est possible de concevoir que la traçabilité imposée par un processus de
certification est un avantage concurrentiel envers quelques adhérents du PCC en comparaison avec ceux
qui ne sont pas adhérents. Ceux qui torréfient le café et qui concentrent leurs affaires sur la différentiation
de produits par les attributs de qualité, ont besoin, comme appui, d’une étiquette d’attestation ou d’une
marque considérable afin d’être crédibles auprès des consomateurs.
Mots-clé: café, qualité, certificat, marché, normes, le Brésil
AGROALIMENTARIA
Vol. 19, Nº 37; julio-diciembre 2013
63
RESUMO
O presente estudo teve como objetivo principal analisar o processo de implementação do Programa de
Qualidade do Café (PQC) e suas implicações junto às empresas de café torrado e moído no Brasil. Foi
construído inicialmente um modelo teórico de análise – os três «Pilares da Qualidade» – baseado na filosofia
e nos objetivos do PQC, com apoio do referencial teórico da Economia dos Custos Transacionais (ECT)
e nos conceitos da Teoria da Qualidade. Em seguida, foi realizada uma pesquisa de campo com treze
torrefadoras de café – adotantes e não-adotantes do PQC – buscando analisar o fornecimento de matériaprima, o processo produtivo e as estratégias de marketing. Os dados da pesquisa foram analisados com
base no modelo dos três «pilares da qualidade»: qualidade do produto, qualidade do processo e sinal da
qualidade, representado pelos selos do PQC que comunicam este atributo aos consumidores. O foco em
questões relacionadas à qualidade foi o fator que principal que aumentou a coordenação vertical entre as
empresas pesquisadas, seus fornecedores e compradores. Por outro lado, todas as empresas pesquisadas
apresentaram dificuldade em manter os padrões de qualidade de seus produtos. As empresas não adotantes
da certificação demonstraram grande dificuldade em desenvolver a rastreabilidade em seu processo
produtivo. É possível inferir que a rastreabilidade, exigência da certificação, torna-se uma vantagem competitiva para os adotantes do PQC. Torrefadores que focam seu negócio em diferenciação de seus produtos
por atributos de qualidade necessitam do suporte de um selo de certificação ou de uma marca forte para
transmitir credibilidade aos seus consumidores.
Palavras-chave: café, qualidade, certificação, marketing, padronização, Brasil
1. INTRODUCTION
There are many examples of marketing
segmentation strategies by quality attributes.
Such growth is due to several factors, like a
high competitive market place and high
demanding consumers with greater concern on
social and environmental issues. This is also a
response to markets deregulation faced at the
end of 20th Century, and particularly chain
agents’ perception that their goals must be
focused to meet final consumers’ demands.
The Brazilian roasted and ground coffee
(R&G) market is a typical example. After a
long period of government regulation,
domestic consumption had declined to lowest
levels in history, because official policy favored
productivity and not quality of the coffee
produced. What was offered in domestic
market was low quality coffee, if not tampered
with impurities, such as shells and sticks, corn
and barley. Consumer response came soon, and
polls showed that their perception was that
coffee was «all the same» and worse, a very low
quality coffee.
However, actions focusing on quality began
to change this scenario. In the domestic
market, at the beginning of the 1990’s Brazilian
Coffee Roasters Association (ABIC) created
the «Purity seal», aiming to standardize
roaster’s coffee production and avoid fraud.
Consumer’s answer to those initiatives came
with a continuous increase in per capita
consumption of coffee in Brazil since 1990’s
(Saes & Farina, 1998).
On the other hand, consumers in developed
countries began to demand certified quality
coffees, either by means of production
processes (like organic or sustainable
initiatives) or by cup quality (like gourmets).
The search for certified quality made coffee
production of specialty coffees (differentiated
by production or cup quality) grow to meet
the demands of different consumers’ segments,
with Brazilian coffee growers included.
In 2004, ABIC decided to push coffee
market once again by starting the implementation of a new program, the Coffee Quality
Program (CQP). In fact, the great challenge
for such a quality program was to teach
Brazilian coffee consumers the different
quality issues that distinguish a regular coffee
from a high cup quality one.
From consumers’ point of view, coffee
quality is a relative concept; it depends on their
needs, interests and desires. Moreover, on an
industry point of view, a product has quality
when it meets product and/or process
standards previously established. The roaster
with ABIC’s CQP must attend a series of basic
program requirements. For ABIC, the basic
aspects are product quality, the cup taste
profile maintenance and good process
Leme, Paulo Henrique M. V. y Machado, Rosa T. M.
64
The quality pillars of a certification process: The Coffee Quality Program (CQP) in Brazil (61-74)
practices, that involves quality in all ways.
This research was important because it
shows how it is hard to start a new certification
program from the point of view of the adopters
and industry leaders. It also shows how quality
issues are important in organizing production
and changing the mind and market view of the
entrepreneurs certified.
Thus, the main objective of this study was
to investigate the implementation process of
the CQP and its implications on R&G coffee
companies in Brazil, relating this search with
the Transactional Costs Economics (TCE)
theory. It was researched a way to describe the
philosophy and goals that support CQP
concept through the construction of a
theoretical analysis model, the «quality pillars»,
with TCE and quality theory support.
To investigate how CQP goals were viewed
by roasters and the application of the quality
pillars model, effective actions toward quality
issues in their companies were studied,
regardless if he or she is an adopter or nonadopter at first sight. Those strategies and
difficulties identified on the CQP program
implementation were then analyzed by using
as support the «quality pillars» model.
2. THEORETICAL FRAMEWORK
2.1. STANDARDIZATION AND
CERTIFICATION WITHIN TRANSACTIONAL
COSTS ECONOMICS (TCE) PERSPECTIVE
TCE was systematized by Williamson (1985,
1991), but its origin dates back to 1930’s when
Coase (1988) showed a new concept –the
transaction costs–. Simply, the transaction cost
is the cost of making the economic system
work. These costs are associated with
economic activities’ coordination, such as ex
ante costs to acquire market information and
to do a business deal, and ex-post costs, which
are associated with monitoring and contracts
execution enforcement (Azevedo, 1997;
Farina, 1997, 2000).
According to TCE, contracts are drafted
under two behavioral assumptions: people have
bounded rationality and can act
opportunistically. As transactions differ from
each other, Williamson (1985, 1991) used
objective and observable elements to
characterize them: The transaction specific
investments, transactions frequency and
uncertainty. Under associating behavioral
assumptions with those three elements that
characterize transactions, it is possible to
identify some transactions that may be more
vulnerable to opportunistic actions by one or
more parties involved and their respective costs
to other parts. Specific assets investment is the
transaction attribute that weighs more in
transaction costs. So, depending on transaction
attributes, many costs can be incurred, which
requires a different organizational structure to
control them (Azevedo, 1997; Farina, 1997).
The most efficient coordination structure
for each type of transaction is the one able to
minimize transaction costs. These
coordination structures range from market
structures and vertical structures, although
hybrid forms are common. Briefly, an
important point for this study is how economic
actors will deal with information asymmetry
that can lead to opportunistic actions in their
business transactions of buying inputs and
selling products throughout supply chain, and
how certification structures coordinate the
relationships in this chain.
In this context, standards and certification
appear as important coordination tools in a
supply chain. They communicate information
to customers and consumers in a consistent
and reliable way, reducing transaction costs in
buyer/seller’s relationship since they eliminate
and reduce quality uncertainty and create
incentives for horizontal and vertical
cooperation between firms (Farina, 2003; Machado, 2000; Nassar, 2003). In order to a
certification to become effective, there must
be cooperation and coordination between
chain agents as well as incentives for staff
members to integrate themselves into a
certification system.
Thus, this study assumes that CQP act as a
certification tool that has the ability to play an
important role: Reducing information
asymmetry between agents of the coffee chain.
Therefore, it could gather those agents and
reduce uncertainty about certified R&G coffee
quality, so that consumers have a reliable
source of information to make a better purchasing decision.
For Machado (2000), certification is the
institutionalization of standardization, because
it represents the formal guarantee of
systematically establish and give reputation to
AGROALIMENTARIA
65
Vol. 19, Nº 37; julio-diciembre 2013
specific standards. She also points out that a
key issue is the credibility of a certification
process.
According to Machado (2000) to meet
segmented markets, behind tools such as labels,
certificates and trademarks, firms depend on
coordination strategies that are based not
simply on price to supply raw materials or even
to distribute clients’ products. In agribusiness
for example, vertical coordination occurs most
commonly through intermediary organizational structures located between market and
hierarchy. Those structures are commonly
based on cooperative actions such as strategic
partnerships and formal and informal contracts
with few participants. All strategies are in balance with free market competition (Machado, 2000).
Based on TCE principles and basic
assumptions, it is expected that the CQP
certification adoption by coffee roasters will
imply on:
• Increase their coordination activities with
their suppliers, seeking to purchase superior
quality raw material (green coffee), and also
to establish a minimum quality requirement in
their purchases in order to attend certification
standards;
• Use strategies like paying premium price
awards for quality, start partnership
investments together with growers or
guarantee the purchase of high quality green
coffee from some specific coffee growers.
• Another possible strategy is to start a
backward vertical integration, i.e., roasters
could acquire farms and aim to control the
supply of those quality beans;
• To deliver their superior quality coffees,
companies could adopt strategies in
partnership with retailers to achieve consumers
with higher purchasing power that could pay
for those coffees.
2.2. QUALITY THEORY AND ITS ROLE ON
CERTIFICATION STRUCTURES
Quality is a relative concept. According to
Reeves & Bednar (1994), none quality
definition can be considered as the best in all
situations, because each definition has both
strengths and weakness, depending on the
measuring criteria and generalization level,
management utility and importance to the
consumer (Maximiano, 2000). Table Nº 1
shows some quality definitions.
Due to this great variety of definitions,
there is a need to identify the quality vision that
CQP pretends to communicate to other agents
in the supply-chain, i.e., what is quality in
accordance to CQP parameters.
Slack, Chambers & Johnston (1996)
proposes a definition that summarizes many
quality approaches: «Quality is consistent
Table 1
Quality definitions
Definitions
Excellence
Value
• Quality as excellence m eans the best that can be done,
the higher perform ance standard in any activity or field.
• Quality means having more attributes, the usage of rare
materials or services that are more expensive.
• Quality and value are relative concepts that depend on
customer’s purchase power.
Specifications
• Planned quality; product design; definition of what the
product or service should be.
Compliance
• Product or service in accordance with project’s
specifications.
Regularity
• Uniform ity; identical goods or services.
Fitness for use
• Quality of a design: excellent design and product/service in
accordance w ith the project that fits a customer’s defined
purpose.
Source: Reeves & Bednar (1994), quoted by Maxim iano (2000, p. 185)
Leme, Paulo Henrique M. V. y Machado, Rosa T. M.
66
The quality pillars of a certification process: The Coffee Quality Program (CQP) in Brazil (61-74)
conformance to customers’ expectations» ,
where the word conformance indicates that
there is a need to meet a clear specification,
ensuring that a product or service complies
with specifications originally set. Consistent
means that materials, facilities and processes
have been designed and controlled to ensure
that product or service meets specifications,
using a set of measurable characteristics
throughout time. Finally, Customer’s
expectations recognize that a product or
service must satisfy customers and that they
might be influenced by product’s price (Slack
et al., 1996).
The authors also emphasize that
expectations of individual customers differ.
Thus, companies seek reconciliation between
customer’s expectations and customer’s
perceptions on quality. So, it is possible to introduce the “perceived quality” attribute that
can be defined as the suitable degree between
customer’s expectations and perceptions about
a product or service.
The perceived quality concept is a union
between consumers’ expectations and
perceptions about a product or service, as
shown inthe Figre Nº 1 below.
Taking the coffee roasters’ as example, they
aim to attend consumers’ expectations on their
coffee. So, they could use the CQP T
certification to achieve this objective, since
they believe that there are different market
segments among coffee consumers.
The CQP certification is also aligned with
a global trend, since consumers in developed
countries are demanding more quality and food
safety attributes in their purchases.
Machado (2000) says that a brand reduces
transaction costs helping to identify products
and ensure a quality pattern, regardless where
the acquisition took place. Private brands and
collective brands, coupled with origin
specifications and production, when recognized by consumers can add value to their
products.
«Consumers
perceive
quality
information contained in a product
label. Behind these more visible
elements, producers must be able to
produce in accordance with a given
standard and obtain a certification from
third party as guarantee» (Machado,
2000, p. 106).
The «iceberg effect» is an analogy proposed
by Machado (2000), in which a visible quality
sign for consumer is made of several signalizing
elements of the product quality. The non visible part of the iceberg, under sea level,
represents costs that a company and/or chain’s
agents must assume responsibility with.
3. THE COFFEE QUALITY PROGRAM
(CQP) AND ITS QUALITY PILLARS
The Brazilian Coffee Roasters Association
(ABIC) plays an important role in the national
coffee agri-system. It is a private interest group
that gathers Brazilian coffee roasters since
1973. But it’s most important action started in
the end of the 1980’s and beginning of 1990’s,
when it implemented actions to increase R&G
coffee consumption in Brazil.
In 1988 a poll to analyze the habits of the
Brazilian coffee consumer showed that 67% of
them believed that «pure coffee was only the
exported one –the one for the domestic market
was always adulterated–» (ABIC, 2010). As
reflect, coffee consumption reached its lowest
level in many years. This was the trigger for
the industry to start working together to
change this scene. One of its main strategies
Figure 1
Perceived Quality-gap between consumers’ expectations and
their perceptions about a product or service
Consumers’
expectations
about a product or
service
Source: Slack et al. (1996)
Perceived
Quality
Consumers’
perceptions about
a product or
service
AGROALIMENTARIA
Vol. 19, Nº 37; julio-diciembre 2013
was the launch of the «Purity Seal» program,
whose goal was to curb fraud and ensure
product purity, thus seeking to change
Brazilian consumer’s vision about coffee
quality (Mario, 2002; Saes, 1998).
But «coffee purity» does not mean cup
quality. So in 2006 ABIC tried to go a step
further and launched another initiative to
promote, this time, to change consumers’
perception on coffee cup quality.
Thus, the Coffee Quality Program is an
evolution of ABIC’s Purity program and aims
to give domestic coffee consumption a
continuous growth, fetched from 1990’s. For
this reason, ABIC bets on increasing quality
of the products offered, showing consumers
quality differences of R&G coffee using a label,
and by doing this, creating a product
segmentation and new consumption patterns
(ABIC, 2006).
By analyzing the program description, the
CQP intends to ensure R&G coffee quality
improvement through three major points: first
is the use of coffee beans equal or better than
type 8 (Brazilian Official Rank, the COB), with
strict limit to 20% of defective beans –PVA:
black (P), green (V), soar (A)– and certified
product purity. Another important aspect is
the preservation and control of coffee cup
attributes along time, which is verified every
year by the Program. The information of the
cup quality must be indicated by the roaster in
the coffee «flavor profile», another label on the
package. Product samples must be collected
annually to ensure the quality pattern.
To ensure a minimum quality standard
through a «global score» attributed to coffee
cup, the CQP raises the possibility of product
segmentation through quality attributes
according to cup characteristics. Depending on
the analysis outcome, obtained through
sensory tests (cup tests) conducted in certified
third party laboratories, the coffee acquires
different labels, or quality seals: traditional,
superior or gourmet.
The simple fact that the program has a
minimum certification requirement on cup
quality is important since it already shows a
worry, or a quality parameter, not only about
the cup, but also about the procedures and
process in the industry.
67
Finally, roasters must have a good process
practices guarantee. Those roaster’s qualities
must be certified by third party companies’
audits.
With the CQP implementation ABIC aims
to work on quality attributes in the whole
industry. From the certifying bodies’ data
collection, it intends to benchmark the roasters
practices, so this may help rise the Brazilian
R&G coffee quality standard. Overall, CQP
aims to satisfy Brazilian coffee consumers,
teaching them to demand certified quality
coffee thus enhancing their product
requirements in non-certified coffee (ABIC,
2006).
4. METHODOLOGY
This research was conducted during the
implementation stage of the Coffee Quality
Program, from 2006 and beginning of 2007.
Therefore, the best approach to achieve the
objectives of this study was to use an
exploratory qualitative research, since we have
few adopters and it was important to
understand the essence of the program
(Triviños, 1987). The objects of study are
roasting companies from the R&G coffee
industry in Brazil associated to the Brazilian
Coffee Roasters Association (ABIC).
Relevant data about the CQP were
surveyed by document analysis, internet and
in interviews with ABIC’s directors in charge
of CQP development and implementation. The
staff and directors of the selected companies
were interviewed to collect data on the
adoption of the program and about quality
practices of the non-adopters. The collection
method was the focused-interview (Alencar &
Gomes, 1998). In search for a connection
between these work whole theories, it is
proposed a theoretical analysis model to the
problem studied, as Figure Nº 2 shows.
The three CQP pillars are the model basis:
(1) The first pillar is «product quality»;
(2) The second pillar is «process quality»;
and
(3) The third pillar is the “quality signal”,
which means coffee has its characteristics
established by the certification maintained
throughout time, represented in reality by the
CQP label stamped on coffee packages (in
brown, silver and gold) and the «taste profile»
Leme, Paulo Henrique M. V. y Machado, Rosa T. M.
The quality pillars of a certification process: The Coffee Quality Program (CQP) in Brazil (61-74)
68
Figure Nº 2
The three CQP quality pillars, the “iceberg effect” and the quality vision
QUALITY
VIEW
Producer
Try to attend...
Consumer
Acquire the product...
Expectation – Perception =
VERTICAL COORDINATION
Quality
Expectation
of the Consumer
Product
Quality
Value
Compliance
Regularity
QUALITY GAP
Information assymetry
ECT
Consumer’s
quality
view
in theConsumer’s view
Quality
Perception
Quality
Signal
Process
Quality
Certification
Excellence
Specifications
Fitness for use
3rd Part
Standardization
Conformance to product and
process patterns
3 Quality
Pillars
Quality
definitions
Company
costs
$
ICEBERG EFFECT
Source: compiled by the author, based on Machado (2000), ABIC (2006), Maximiano (2000) and Slack
(1996)
Figure 3
Showing quality to consumers: Labels and quality standards of the CQP
Source: ABIC (2006)
AGROALIMENTARIA
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Vol. 19, Nº 37; julio-diciembre 2013
label (a clover, indicating different cup
attributes).
The quality signal establishes a link between
the three quality pillars and the «iceberg effect»
proposed by Machado (2000). According to
CQP basis, the «quality signal» and the «taste
profile» goals are to reach consumers and
transmit product information. However,
behind these visible symbols, roasters must
have the capacity of producing a R&G coffee
in accordance with patterns and they must
obtain a certification from a third party body.
Giving support to the other two pillars
(product quality and process quality), essential
for the third’s existence, we use the six quality
definitions summarized in Table Nº 1 by
Maximiano (2000).
In the first pillar, «product quality»:
• Value: roasters use of top quality green
coffee means higher acquisition costs.
• Compliance: R&G coffee must achieve
certain specifications (cup profile) determined
in the initial project.
• Regularity: products have to be uniform
and identical with no quality variation.
In the second pillar, “process quality”:
• Excellence: R&G coffee quality is the
best possible, resulting in the highest quality
patterns throughout production process.
• Specifications: ensure the initially
planned coffee quality pattern.
• Fitness for use: excellent design and
product/service in accordance with the project
that fits customer’s needs.
Vertical coordination based in TCE
assumptions enters in the model reassuring
that certification through quality attributes
requires higher integration between supply
chain agents.
The last part of the model refers to the final consumer. Accordingly, a company seeks
to meet consumer’s quality expectations on
coffee cup quality. On the other hand, when
consumers buy a product and use it, they create
their own product quality perception. If
consumers’ quality perception depends on
their product expectation, the more
information they have about coffee quality
attributes, lower will be the gap between their
product quality perception and expectation;
consequently, a satisfied consumer (Slack et al.,
1996).
At this point, we present the final link
between our theoretical model and practice.
With TCE support, the program objective is
therefore to reduce information asymmetry
between two players: final coffee consumers
and roasters.
5. RESULTS
Thirteen coffee roasters were surveyed in the
states of Minas Gerais and São Paulo. Of them,
seven were adopters of the CQP certification
and six were non-adopters. Their activities
focus were diverse, ranging from exports and
international market, gourmet coffees, the
institutional market, store’s own-brand retail
and to the traditional coffee market in Brazil.
We will call the companies as A, B, C, D, E,
F. G, H, I, J, K, L and M to protect their
confidentiality. We conclude based on the
Table Nº 2 that the sample was heterogeneous
and very representative of the reality of the
quality coffee market in Brazil. Table Nº 2
shows the sample characterization.
6. DISCUSSION
6.1. PRODUCT QUALITY PILLAR
First, we identified that the raw material supply
(green coffee) is crucial to achieve good cup
quality. So, we tried to identify whether the
CQP adopters have vertical coordination
structures to minimize market oscillations.
Roasters that match coffee processing
structures, storage warehouses and green
coffee trading companies with its roasting
factory (structure), even when they are
different companies (independent legal
persons), have good raw material supply. This
is very important to maintain quality, being an
adopter or a non-adopter that focus his/her
production on quality coffees.
Among the adopters, only the company H
has an independent green coffee processing
company that belongs to the group, but the
adopters used another strategy to have a good
supply of green coffee, in quality and quantity:
they are located in Brazil’s largest coffee
producing areas (Minas Gerais and São Paulo).
This also explains why there were no major
changes in the coffee purchasing process by
CQP adopters.
Some non-adopters, like the F, J and L
companies have high quality coffees and have
Leme, Paulo Henrique M. V. y Machado, Rosa T. M.
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The quality pillars of a certification process: The Coffee Quality Program (CQP) in Brazil (61-74)
2
Sample Table
characterization
Sample analysis
COMPANIES
Location: Minas Gerais
Location: São Paulo
Size: Small (S), Medium (M), Large (L)
Have CQP since the program began
Adopted CQP lately
Starting CQP implementation process
Prepared to adopt CQP
Adopter
A
X
S
B D H
X X X
M
X
L
X
X
L
X
Non-adopter
I
X
S
K
X
L
X
X
M
X
M
S
F
G J
X X
L
S
X
L
M
L
X
S
X
X
X
X
X
X
X
X
X
Plans to adequate its structure in the future
Presence of other certifications
C E
X X
X
X
X
X
X
X
X
Source: research data and ABIC (2006)
in common the fact that they have coffee
processing units, storage and exporting
companies under the same business group, that
work independently of the factory. The business groups also export high quality green
coffees to important companies worldwide and
this explains why they have good green coffee
to their roasting facilities.
The major question in this quality pillar was
the problem of maintaining a specific quality
pattern. A CQP requirement is that companies
have to maintain quality over time, offering
customers always the same quality standard
established by the certification initially. We can
conclude that this point is critical to roaster’s
strategies.
Quality standard maintenance is no
problem for CQP adopters surveyed, mainly
due to the fact that they have many supply
channels to purchase raw material and are also
located in major Brazil’s coffee producing
regions. Thus, we can conclude that the green
coffee acquisition cannot be considered a
specific asset according to TCE.
It is important to notice however the special
case of the CQP adopter D: Despite it is a large
company, with high production capacity,
despite it is producing high quality coffees for
the international market and it is having a high
quality control, the company chose not to
show the CQP label in its traditional coffee
line packages. There are two possible
explanations for this behavior: (1) the company
uses the same coffee in different brands
according to a local market situation; or, (2)
the company uses this specific product in
fighting brands and since this product must
fight for the lowest price, the company chooses
to adjust its quality according to the price of
green coffee, which makes impossible to
maintain a quality pattern.
For non-adopters, maintain a specific
quality pattern is more critical to justify not
joining CQP program, especially because some
of them have only a single coffee brand and
must adapt the coffee quality to regional tastes.
It is important to mention a sentence that
summarizes the thirteen interviewed roasters
vision about product quality: «As coffee quality
improves, total coffee consumed increases»
(Company F director).
6.2. PROCESS QUALITY PILLAR
The certification of the production process is
another important aspect for the CQP
program, since it is the one who guarantees
process standardization and the traceability of
the production. Like other certification
programs, the CQP uses as its basis the
standards and procedures of the ISO 9000 series.
Traceability was identified as the critical
point in this pillar, i.e. surveyed companies,
both adopters and non-adopters, had or have
difficulty in implementing traceability in their
production process. The main reason is that
they do not have an efficient system for
receiving, purchasing and documenting green
coffee input at the factory. Since CQP
implementation, all adopters acquired high
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control in their production process.
The most interesting point refers to
earnings with CQP adoption, especially with
waste reduction and consequently, costs
reduction. B, H and M companies’
representatives told that they adopted CQP as
an alternative to teach consumers; but, it was
clear for them that the CQP adoption showed
improvements in many areas of the companies.
The roaster B changed its product line and
intended to use the certification as an incentive
to launch new quality certified products.
Roasters H and M clearly presented gains with
traceability, more efficiency in the production
process and employee motivation. Often these
gains are not aimed when a company decides
to adopt the program.
The roaster H uses CQP as marketing tool
against competitors: «My product is certified,
and yours?» (Company H slogan).
For roasters A and I, CQP gains are related
to marketing strategies. The company A was
at the period answering to a big retail company
in Brazil that was demanding the CQP
certification for coffees on its shelves. For the
roaster I, whose objective is to outsource
roasting services, CQP attracts clients that
want to roast their own high quality coffees.
6.3. QUALITY SIGNAL PILLAR
Communicate credible information is one of
the CQP goals. Consumers must have ways
to identify their coffee’s preferences and based
on this data make their purchasing decisions.
There will not be a financial compensation for
the roaster if consumers do not recognize its
efforts throughout the production chain to
improve quality.
The label is a resume of all efforts made
during the certification and production
process. In doing so, it is important to analyze
marketing strategies and business relationships
of the adopters and non-adopters.
All adopters have gourmet coffees in their
portfolios. This reflects the need to
differentiate specialty coffees from others in
market through certification usage and
demonstrates the importance of transmitting
quality with credibility to consumers.
Analyzing adopters marketing strategies, it
is possible to imply that quality is part of
companies’ philosophy and of its
entrepreneur’s business behavior. The adopter
H has quality as its main objective and uses
CQP successfully to transmit this philosophy
to clients.
This is the objective of the roaster K, to
transform the constant search for quality
improvement in a marketing strategy to also
gain consumers’ loyalty. Some adopters like the
companies M and I bet that the gourmet coffee
market will be very important in the future.
The adopter D uses quality as a key to
achieve international market or to place its
coffee in the retail shelves of Pão de Açúcar (a
retail company) specialty coffee line and to be
present in the best stores of the country.
Among non-adopters, the quality search is
also present in some companies. The roaster J
uses quality as a strategy to conquer a large
metropolitan region market. The goal is to
show consumers that coffee quality does not
always need to be more expensive. The roaster
F seeks to give support to its «fancy» gourmet
coffee business, the specialty coffee and gourmet line, with institutional coffee production
and own-store coffee brands for retail.
Another non-adopter, the roaster L,
focuses on high cuisine, offering high quality
coffee in the Brazilian market. According to
the interviewee, origin certification is much
more important to its marketing strategy than
the quality certification offered by CQP.
His distribution channel has also a special
feature: Direct sales to final consumers via
internet. By using this strategy, the company
reaches a hierarchical governance structure
very difficult to be found in agribusiness: A
complete vertical integration.
Generally, companies are increasingly
searching for market segmentation as a
successful strategy. Thus, we can conclude that
CQP helps adopters in defining their marketing segments and the also the quality they
want to offer to their clients/consumers.
6.4. CQP IMPLEMENTATION PROCESS
ANALYSIS
Given the main objective of this research, it is
possible to identify which major points
concerning CQP implementation process
were, based on all surveyed data arranged in
the quality pillars model.
First, there is some resistance from some
companies to adopt CQP in a first moment.
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The quality pillars of a certification process: The Coffee Quality Program (CQP) in Brazil (61-74)
This fact can be considered normal, since the
program is complex and was –at the time of
the research– still in its implementation step.
A reactive behavior also reflects some
companies conduct to join the program only
when the market effectively demand it, or when
consumers and/or retail starts to identify CQP
as a rule for their coffee purchases.
Other companies (like roasters F and L)
rely on strong brands to transmit credibility
and quality to their customers, and they do not
identify CQP certification as a priority. It is a
clear case of certification label versus roasters’
private brand.
The maintenance of the coffee cup profile
over time as shown in the «profile taste» label,
avoiding quality variation, has been identified
as difficult to be implemented by most
companies because to compete at low prices
market they must search for low quality/low
price green coffee. This will ultimately limit
competitive capacity of roasters that already
have CQP against others that does not have
the certification.
Meanwhile, companies that have already
joined the program have some advantages to
maintain quality pattern: (1) they have a green
coffee trade company combined with its
roasting structure or, (2) are located in
producing areas and coffee commercialization
centers.
However, those evidences can be applied
not only for CQP adopters, the non-adopters
that have high quality patterns in its products
or production processes also present those
strategies.
There are companies that are using hybrid
governance structures, as pointed by Machado (2000), with high vertical coordination.
Consequently, they can minimize transaction
costs by reducing uncertainties about coffee
quality purchased or produced by its own farms
and/or partners.
In the research results it was possible to
identify that some respondents recognize that
CQP can become a competitive advantage in
near future; particularly, considering some
ABIC’s strategies to boost program
implementation, such as partnerships with
retailers, like the chain Pão de Açúcar, and the
requirement of certain government agencies to
include CQP quality patterns on public
auctions for coffee acquisitions. Since
government is a great institutional client, as
this coffee acquisition criteria starts to prevail,
finally cup quality will began to be a primary
factor for coffee purchasing, taking off the factor «price» as the only acquisition prerogative.
Beyond these actions, ABIC launched in
November 2006 a partnership that clear up its
intention to turn CQP into a coordination tool
in coffee agribusiness. The «Brazil’s Sustainable
Coffees» is a partnership between ABIC and
the Cerrado Coffee growers Associations
Council (CACCER)3, institution in charge of
“Café do Cerrado” certification. In 2008, as an
evolution of those partnerships, ABIC started
to gather other recognized certifications, such
as UTZ Certified, Rainforest Alliance, 4C,
Fairtrade, Organic, etc. It is interesting to
notice that those certificates association
reflects consumers’ wishes to pay an additional
value to products that contain all certification
benefits: from social-environment protection
with food safety, to products with higher sensorial attributes. The answer of the market is
no clear though.
«Top-down» strategies that pull certification demand from retail to industry seem to
have higher impact, and perhaps this should be
the way to do it, since to reach final consumers
in a strong and effective way, it would be
necessary a massive marketing investment,
something that is out of ABIC’s plans
nowadays.
7. CONCLUDING REMARKS
The work achieved its main objective, i.e., to
study CQP implementation process and its
implications in R&G coffee companies in
Brazil. The «quality pillars» theoretical model
was developed as an attempt to gather CQP
philosophy and goals with TCE basis and
quality theory.
The starting point was the theoretical
assumption that quality management focused
on R&G coffee quality requires vertical
coordination between agents in industry. Thus,
to ensure CQP effective implementation,
companies need strategies to create better
coordination tools with their suppliers and
3 Acronym of «Conselho das Associações dos
Cafeicultores do Cerrado», in Portuguese.
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deliverers. The key to increase coordination
among economic agents is therefore to
establish a quality pattern for roasters, what
requires a better coffee quality acquisition, even
if they have to pay an additional price for it.
Those demands demonstrate the importance
of «product quality» pillar for a certification
program to succeed.
It was identified that traceability has been
another critical point for surveyed roasters. All
adopters said they encountered difficulties in
implementing and documenting traceability of
their production process, and it is the
traceability absence that does not allow most
of the nonadopters to start certification. The
gains adopters identified with standardization
and traceability adoption shows “process
quality” pillar importance.
Roasters that need support to their marketing strategies for quality differentiation
needed a certificate or a strong brand to
transmit credibility to their consumers. This
explains why some companies do not want to
join CQP program, because they already have
a strong brand to communicate with
consumers and they do not need a label to
prove their quality to these latter. It is a clear
certification label versus roasters brand
conflict. On the other hand, roasters that link
their brands with CQP label are in search for a
marketing differentiation from competitors
that do not have this option. Those strategies
confirm the importance of the “quality signal”
pillar, namely the importance of using an
efficient way to transmit information,
searching for an information asymmetry
reduction between suppliers and customers.
This work contribution is the CQP
theoretical analysis model. It provides support
to better comprehend which are the
certification process critical points, although
we cannot widespread it, since it is a picture
that shows researcher’s perception about a
specific study object.
Overall, there is a clear perception that
CQP has potential to become an essential
program for Brazilian coffee market, it can also
acquire a status of a major coordination tool
in supply chain, placing ABIC as an important
coordination agent within coffee agribusiness.
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