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The coffee is originally from Indonesia, which means from the Island of Sumatra, Java and Sulawesi.
The name Kopi Luwak is originally from the indensian word "Kopi" which stands for the word Coffee. Luwak is on hand a region on the Island Java as well as the word for a cat which lives in the jungle.
A cat! 
The Paradoxurus hermaphroditus are probably the biggest supporter of coffee cherries and therefore the real "producer" of this delicious coffee.
These cats do it so much of the coffee cherries, that they are unable to keep them. They live in the forrests of indonesia and come in the nights to eat coffee cherries. und kommen in der Nacht, um die Kaffeekirschen zu fressen. In the morning the have to just pick up and dry it.
Protein makes the coffee bitter tasty. Due to the small amount of protein this coffee tastes milder and a little caramel/chocolate.
(Quelle: http://de.wikipedia.org/wiki)