Table Speech

History and Economy of Coffee

June 5, 2013

Mr. Loïc Réthoré
President, Nestle Nespresso K. K.

 Coffee beans have the second largest trading volume in the commodities market, after petroleum. The London market trades Robusta coffees, while Arabica is traded in New York. Coffee beans have a major impact on the economy and fluctuations in their prices reflect various unstable factors, including “demand and supply,” “investors’ knowledge,” “weather conditions” and “political situations.”

 The coffee beans market was turbulent between 1977 and 2000, affected by droughts and frost damages. I’m afraid coffee vendors will continue to be susceptible to price fluctuations.

 Coffee beans are cultivated at 20 million to 25 million plantations spread along the so-called “coffee belt” across more than 60 countries in South America, Africa and Asia. The scale and cultivation area depend on countries and regions. In Costa Rica, for example, coffee is harvested by small family-run plantations with an average area of one hectare, while large-scale plantations in Brazil use machines and they hire many laborers. Ripe coffee cherries are either plucked by hand, a traditional method taken in majority of plantations, or picked by machines, an economical method seen in Brazil.

 Coffee beans are mainly cultivated in developing countries using traditional method. Although consumption is spreading to many parts of the world, developed countries remain the dominant consumers.

■History of Coffee
 The “Legend of Kaldi” is the most famous regarding the discovery of coffee beans that dates back to the 8th century. A goat herdsman Kaldi discovered his goats became suspiciously noisy and enthusiastic after eating red cherries. A Superior at the local monastery made a drink from the red berries, said to be the first coffee, and named it “Kawa” that meant power, stimulation and vitality. Coffee beans first emerged in the highlands of the Kaffa region in Ethiopia, then brought to Yemen that was the economic center of the Middle East back then. Coffee beans made their way to Europe over time. Vessels loaded with coffee beans docked at Istanbul by the 16th century, where over 500 cafés flourished in just a few years. Vessels travelled further to Venice and the first café opened at St. Mark’s Square in 1645. Popularity of coffee expanded throughout Europe in the 17th century.

 It is recorded that the first vessel came to Japan in 1690. The Tokugawa Shogunate assisted promotion of coffee and it gradually spread across the country. Yet coffee started to gain popularity only after the end of the 19th century when Japanese people emigrated to Brazil. By 1936, as many as 18,000 cafés existed in Japan. History of coffee is a proof of friendship between Japan and Brazil. In 1901, Dr. Satori Kato invented the world’s first instant coffee. In 1948, Achille Gaggia of Italy invented the espresso machine.

 Coffee has a long history that evolved with diplomacy, wars and science. From the Middle East to Europe and to Japan, innovative ideas keep developing.

How to Become a Value-Creating Leader

June 5, 2013

Mr. Yoshiharu Hayakawa
President, Kasumi Institute of Management Co., Ltd.

 The forum “Value Creation 21” has undertaken an extensive research on quality management since its foundation in April 1998. Based on “Win the Value Revolution” written by Robert B. Tucker in 1997 when businesses in the US underwent generational changes, the Forum has studied value creation marketing, collaboration, partnering and co-evolution, one-to-one correspondence as well as empowerment over 15 years.

 Our interpretation of value is profound and includes social and cultural values. We learnt there exist two prerequisites for sustainable business of value-creating companies; one is “corporate gene for quality management” and the other is “A leader who creates and deepens basic value.”

 We also learnt value-creating leadership is shifting “from comparative competition towards absolute competition.” Leaders are expected to depart from the traditional scramble for created values towards creating improved market value itself.

 Leaders of today can be classified into two groups, depending on whether they have basic value or instrumental value. The groups are further subdivided into five, including intellectual eagle-type leaders capable of creating business models as well as intelligent ostrich-type leaders. In my opinion, “eagle-type leaders with basic value” qualify to be value-creating leaders, backed by their profound and far-reaching conceptual ability and philosophical leadership. “Ostrich-type leaders with basic value” are down-to-earth strategists who ensure steady implementation of business value set out by eagle-type leaders.

 Jack Welch who developed a new business model in the US is a typical “eagle-type leader with instrumental value.” “Ostrich-type leaders with instrumental value” focus on efficiency. Recent educational system tends to overemphasize intelligence and produce “broiler-type leaders with instrumental value.”

 Through my encounter with senior business managers, I learnt that there were three ways to become a “value-creating leader.” Firstly, they are managers who evolve with their customers and take a lead in merchandizing reform with a goal to balance out sensibility and infrastructure. Secondly, they are managers with a science background who base their management on scientific logic, market principles and human principles. Lastly, they are CHO-type managers with phronetic leadership, who serve as the CEO’s right-hand man with clear strategy.

 As I mentioned earlier, the shift “from comparative competition towards absolute competition” forms the common basis of the three ways to become a “value-creating leader.” Together with another element, “fusion of market principles and human principles”, value-creating leaders endowed with personal charm and attractiveness are exercising strong leadership in various fields.