26 August 2010

After the Non-Fatwa, Kopi Luwak Farming...

Simple economics would suggest that the best way of keeping a price high is to ensure that there is limited supply. So, the decision to move towards mass production of Kopi Luwak by farming the civets that eat the coffee beans and excrete them partially digested appears to be a recipe for market disaster.

I am not an economist. However, in my mind, it is pretty simple. If you increase supply without a commensurate increase in demand then it will not be too long before there is oversupply and downward pressure on the price of the product.

Anyways, the idea is that civets are going to be bred in captivity and then force-fed the coffee beans. This is supposedly a sure-fire money spinner as collectors of the valuable civet dung need go no further than scampering up and down under the civet cages. The image that comes to mind is egg farming; the rows upon rows of caged chickens popping out eggs.

It is interesting that the decision to start small-scale farming comes on the heels of the recent decision by the Indonesian Ulema Council (MUI) not to issue a fatwa prohibiting Muslims from drinking the coffee. According to the MUI, Kopi Luwak is halal (permitted for consumption) if it has been thoroughly and properly washed. I wonder what the quality assurance procedure is on this "thorough" cleaning arrangement? After all, the whole point of Civet Coffee is that the beans are partially digested by the stomach enzymes of the civet.

The non-fatwa has inspired PT Perkebunan Nusantara XII to see an opportunity to ramp up production and presumably ratchet up profits into the bargain.

The current price range for a cup of the Kopi Luwak in Jakarta is somewhere between IDR 90,000 and IDR 110,000, so it is not cheap. Or for those that drink their coffee at the franchise havens of Gloria Jeans or Starbucks, it is the equivalent of a couple of the biggest and most expensive brews on offer at those franchises.

Kopi Luwak is an acquired taste, kind of like Durien (Duren), some people love it and some people hate it. Kopi Luwak is a nice coffee, but I have never been convinced that it was ever worth the price charged.

5 comments:

tikno said...

Kopi Luwak is very lucky getting extraordinary free ads via the MUI Fatwa.

Rob Baiton said...

@ Tikno...

Don't be such a cynic! :)

The best way to get free advertising is to get yourself on the possible "fatwa list".

Weird how it works, isn't it?

tikno said...

Yup, it's weird, as weird as its fatwa itself

Anonymous said...

Few Indonesian muslims could afford to drink kopi luwak. The obvious response to this daft proposal would be to drink Legendee coffee from Viet-Nam instead. It is made from enzymatically treated cofee beans, tastes very much the same as kopi luwak, and costs a fraction of the price. You can purchase it online at here.

Rob Baiton said...

@ Tikno...

I don't know on the fatwa front. The MUI is a bunch of crazy old fellas, nothing surprises me on that front ;)