Coffee_Tea_International_1-2013_EN_FREE by Coffee & Tea

ARABICA VS ROBUSTA: WHICH CLASS IS WHICH? HOT DRINKS IN UKRAINE GLOBAL COFFEE TRENDS MAX QUIRIN: "COFFEE QUALITY IS THE FUTURE!" 12–14 SEPTEMBER 2013 — MOSCOW

# 1 (102) 2013

contents

№ 1’2013

Champions are made, not born

Tasty notes from MICF 3

INTERVIEW

Hot drinks. Future Global Coffee

Trends

Max Quirin: "Coffee quality is the future!"

The volume of hot drinks retail market, 2009-2011 (Russia)

the competition

ECONOMICS

Three leaders of the Moscow coffee shop market are far ahead of

Arabica vs Robusta: which class is which?

Brazil. Another storm over the coffee ocean…

REVIEW&STATISTICS 32

6 PRESSING ISSUE

Moscow coffee shop market

EDITORIAL

5 CALENDAR OF EVENTS

Jasmine-scented reflections…

3 days at the Nordic Barista Cup

Hot drinks In Ukraine. The

Brazil. Another storm over the coffee ocean…

Ukrainian tea market keeps on

8 NEWS

growing

48 ADVERTISER INDEX

EDITORIAL

№ 1‘2013 Establisher ZAO INTERNATIONAL TEA HOUSE

ately, people have been asking me how we can

combine a tea magazine and a coffee maga-

zine into one publication. After all, from the botan-

Publisher ZAO INTERNATIONAL TEA HOUSE

ical point of view, tea and coffee are two separate

Chief Editor RAMAZ CHANTURIYA

plants, and the beverages made from them have

Deputy Chief Editor SVETLANA BELIKOVA

historically been competing with each other!

Computer aided makeup VALENTINA GUSKOVA

A fair question, and one answer to it lies right at

Advertising Director JULIA CHANTURIYA

the surface: it is obvious that these two traditional beverages, equally stimulating but also equally nat-

Advertising Manager ANNA ANTONOVA

ural and healthful, make the best allies. Not only do

Special Projects Manager ELENA TREGUB

many companies today work with both products

Promotion Manager OLGA DOLGACHEVA

(simply because it makes perfect business sense), but tea and coffee also have

THE EDITORIAL BOARD

many common “enemies” in the marketplace: other beverages that are fiercely

Chairman of the Editorial Board

fighting for their share of consumers’ daily fluid intake.

R.O. CHANTURIYA, general director of Rusteacoffee Association

But there is a deeper reason: in order to understand the usefulness of a publication such as ours, we need to realize that both industries can profit from studying

Members of the Editorial Board

each other, especially such things as the fundamentals of growing and processing,

deputy editor in chief of Coffee&Tea in Russia magazine, PhD of Philology, Editorial Board Secretary

S.G. BELIKOVA,

price formation mechanisms and, most importantly, marketing methods. I am

S.V. KASIANENKO, chairman of the board of directors of Orimi Trade company

confident that the most successful companies in the next few years will be the ones

I.V. LISINENKO, general director of May Company

that develop in both directions. It is not an accident that Starbucks, the largest

A. MALCHIC,

coffee chain in the world, purchased the Teavana chain of tea shops;

chief executive of Montana kofe company

R.D. PANZHAVA,

Tata Tea a while back acquired the American coffee brand Eight

Georgian Tea Producers Association

O’Clock; the well-known coffee giant Kraft Foods launched tea capsules

M. PEYRIS, International Tea Committee

into the market.

V.A. TUTELIAN,

To me the symbiosis of coffee and tea is a good example of the famous

Head of the Institute of Nutrition of Russian Academy of Medical Sciences, Member of the Academy

dialectical principle: progress is always the result of a struggle and the

G.V. SMIRNOV,

EDITORIAL

general director of SDC FOODS company

union of opposites.

A.V. ELSON, Photo on a cover:

not only on the pages of our magazine, but also through other channels;

Coffee and oranges. Maxim Zhuchkin

one example is www.coffeetea.net, a free multi-language electronic

Editorial Address: Russia, 123060, Moscow, Berzarina str., 36, building 2, of. 214 tel./fax: +7 495 935-87-07 E mail: magazine@coffeetea.ru, www.coffeetea.ru

directory of tea and coffee companies. In addition, we have come up with the idea of the United Coffee & Tea Industry Show, the largest industry event in the CIS (Commonwealth

Printed in

of Independent States), that will take place in Moscow in September –

Tipografia Mospoligraf LLC, Moscow

and we invite all our readers to join us. We will attempt to present a tan-

Distributed worldwide among coffee and tea producers, wholesale companies, shops, and restaurants. Printed in Russia. According to the registration certificate of mass media П И №77 7213 from 30th January, 2001. Reprinting of materials is allowed only by permission of the magazine. The reference to the magazine «Coffee and tea in Russia» is obligatory. The editors don't bear any responsibility for reliability of data placed in advertising blocks or announcements. The editor's point of view may not coincide with the author's point of view. All provided materials will not be returned or reviewed.

gible proof of the benefits of inter-industry dialogue. We always strive to publish a broad variety of materials, so whether you are a professional involved in both tea and coffee spheres or just starting out in one, you can be sure to find something of interest on the pages of our magazine. Ramaz Chanturiya Editor-in-Chief

general director of KLD Coffee Importers

This is why we strive to create a space for dialogue among specialists

COFFEE&TEA INTERNATIONAL # 1/2013

Coffee&Tea International magazine has been included in the VINITI (All Russian Institute of Scientific and Technical Information of the Academy of Sciences Vserossiisky Institut Nauchnoi i Tekhnicheskoi Informatsii (VINITI)) list of synopsis journals and the institute's data base. Information about the magazine will be annually pub lished in the «Ulrich's Periodicals Directory», international handbook of periodic magazines and ongoing publications. Coffee&Tea International is an appendix to the Coffee&Tea in Russia magazine.

– advertising materials

NEWS

The key industry event in Russia and other CIS countries will take place in Moscow on September 12–14, 2013 Russian United Coffee & Tea Industry Show is an international combined coffee and tea conference and industrial exhibition. Its three-day work includes already traditional Moscow International Coffee Forum (MICF) and Moscow International Tea Symposium (MITS). As the major exhibitors taking part in the Show there will be coffee and tea raw materials suppliers, coffee and tea producers, exporters, importers, distributers, manufacturers of all types of equipment, packaging, various ingredients, and accessories for industries. Organizing Committee of Russian United Coffee & Tea Industry Show expects the arrival of more than 2,500 visitors — representatives of all segments of coffee and tea markets in Russia and other CIS countries.

THE PROGRAM FOR THE WHOLE PRODUCTION CHAIN: FROM BEAN AND LEAF TO A CUP Business program of September 12 will be devoted to coffee, with conduction of Moscow International Coffee Forum and specialized seminars. September 13 - is a “tea day”. The main event of this day will be Moscow International Tea Symposium. For 5 years MICF and MITS have established a reputation of the events where the most actual and demanding issues of the coffee and tea markets are being discussed, forecasts are made and fresh ideas are suggested. MICF and MITS favors the development and promotion of coffee & tea industries in Russia and other CIS countries. Recognized international experts are invited to take part in the business program which covers a wide range of topics and is conducted in the format of presentations, panel discussions, round tables and seminars. Free educational seminars and workshops in the exhibition area may interest a wider audience in the various industry segments — manufacturers, distributors, specialized trade, retail and HoReCa. Seminars will be accompanied by tea & coffee tastings and competitions. For the first time everyone will have a unique opportunity to try oneself as a coffee roaster on the Roasting Factory. Roasting factory is an area where everyone can see the roasting machines in action, roast coffee on the spot at desired profile and comprehend the basis of the green coffee quality roasting under the strict guidance of experts. For the moment a desire to support the event as a general sponsor has already expressed Martin Bauer Group, and an official part-

COFFEE&TEA INTERNATIONAL # 1/2013

ner of Russian United Coffee & Tea Industry Show has become KLD Coffee Importers. A rich program of conferences and exhibitions will be crowned with a black & white reception — Moscow Coffee and Tea Dinner to be held in one of the most historically significant places of Moscow, namely at the Metropol hotel. The event is organized by business industry magazines Coffee & Tea in Russia and Coffee & Tea International and a non profit organization the Russian Association of Tea and Coffee Producers (Association Rusteacoffee). More detailed information on participation in Russian United Coffee & Tea Industry Show exhibition and conference is available at www.unitedcoffeetea.ru

CALENDAR OF EVENTS January–October 2013

All materials are provided by support of WWW.COFFEETEA.RU

29 January – 1 February 2013

14–16 March 2013

25–28 April 2013

UPAKOVKA/ UPAK ITALY

CAFE ASIA and INTERNATIONAL COFFEE & TEA INDUSTRY EXPO (ICT)

THE LONDON COFFEE FESTIVAL

Country: Russia City: Moscow Company Page: www.upakowka.ru

11–15 February 2013

PRODEXPO

Country: Singapore City: Singapore Company Page: www.cafeasia.com.sg www.intlcoffeeteaexpo.com

Country: Russia City: Moscow Company Page: www.prod-expo.ru

18–20 March 2013

14–16 February 2013 10th AFRICAN FINE COFFEE CONFERENCE & EXHIBITION Country: Uganda City: Kampala Company Page: www.eafca.org

INTERNATIONAL FAST FOOD FAIR (IFFF) Country: Russia City: Moscow Company Page: www.fastfoodexpo.ru

20–22 March 2013

15–17 February 2013

Country: UK City: London Company Page: www.londoncoffeefestival.com

23–26 May 2013

MELBOURNE INTERNATIONAL COFFEE EXPO Country: Australia City: Melbourne Company Page: internationalcoffeeexpo.com

26–28 June 2013

SCAE WORLD OF COFFEE Country: France City: Nice Company Page: www.scae.com

12–14 September 2013

VEND EXPO WORLD TEA&COFFEE EXPO Country: India City: Mumbai Company Page: worldteacoffeeexpo.com

28 February – 2 March 2013

TEA & COFFEE WORLD CUP SINGAPORE Country: Singapore City: Singapore Company Page: www.tcworldcup.com

1–3 March 2013

EXPOHORECA Country: Russia City: Saint Petersburg Company Page: www.farexpo.ru

Country: Russia City: Moscow Company Page: www.vendingexpo.ru

12–14 April 2013

SPECIALTY COFFEE EVENT OF THE YEAR Country: USA City: Boston Company Page: www.scaaevent.org

WORLD FOOD MOSCOW Country: Russia City: Moscow Company Page: www.world-food.ru

COFFEE FEST

19–21 September 2013

Country: Serbia City: Belgrade Company Page: www.coffeefest.rs

23–25 April 2013

Country: USA City: New York Company Page: www.coffeefest.com

16–19 September 2013

19–20 April 2013

8–10 March 2013

COFFEE FEST

Country: Russia City: Moscow Company Page: www.unitedcoffeetea.ru

SIRHA MOSCOW Country: Russia City: Moscow Company Page: www.sirha-moscow.com

EU’VEND & COFFEENA Country: Germany City: Koeln Company Page: www.euvend-coffeena.com

18–22 October 2013

HOST

Country: Italy City: Milan Company Page: www.host.fieramilano.it

NEWS

Pressing issue:

ARABICA VS ROBUSTA: which class is which?

Aliona Velichko

For many years the costs for Arabica have been much higher than for Robusta which have proved the higher status of Arabica. But recently the situation has started to change and the difference in price has become less. And some years ago there appeared the term "speciality Robusta" and in France there was created Alliance Mondiale des Robusta Gourmets, Pierre E. Leblache. What is the value of Robusta itself and what is the reason of such price changes? Isn’t this price change a sign that soon Robusta will change its position of second-class coffee? With this question we turned to the specialists in different spheres of coffee world. QUIRIN MAX, a president of SCAA:

— Frankly speaking the costs for producing Washed Arabica Coffees have always been higher than Robusta Coffees and to my mind will always be higher due to some reasons. Firstly mainly due to the farming practices that are required by an Arabica coffee plantation. If we compare these two types of trees, Arabica trees are more delicate and sensitive to sunlight exposure, soil nutrition, fungus diseases and nematodes than Robusta ones, so it is clear that the labor and different chemicals inputs need to be more intensive for an Arabica plantation. Secondly, the processing cost is also more expensive for a washed coffee than a natural coffee, this is another reason for the cost difference. Speaking about price difference yes, it is now less than a year ago, because Arabica prices had increased significantly and there has been now also a significant reduction for the Arabica prices. This does not mean that Robusta prices have increased significantly or dramatically. The price difference is now still higher than some years ago when there were lower prices for Arabica coffees. If we consider the average of this price difference for the last ten years compared to the current market prices, there is no reduction between the Arabica and Robusta prices. We all know that it is important to improve quality for all coffees, and in the recent years the quality for some Robusta coffees has improved, and these better quality Robusta coffees can be named fine Robusta or specialty Robusta. But is very important to point out that the cup attributes and taste profiles in Robusta coffees are different from the Arabica coffees. It would be a mistake to try to compare Robusta and

Arabica coffees. The taste expectations in specialty Arabica coffee are quite different from the expectations in a good quality Robusta coffee. So I would like to conclude with saying that the coffees are not the same and the markets are not the same.

VINCENZO SANDALJ, president of Sandalj Trading Company spa: — In Italy, in one of the traditional espresso drinking markets, we have always given good quality Robusta a high status because of its use in the espresso blends. It depends from region to region but a Robusta component in the blends provides for the necessary body in the mouthfeel and will also increase the thickness of the crema, both considered a must in a traditional Italian espresso cup. This preference evolved notwithstanding the price factor in Arabica and Robusta coffees. If we look in the past we can see that especially the washed Robusta from India and Indonesia have been considered for a long time really specialty coffees and have commanded a premium on the market often higher than some Arabica! I believe that to be considered a gourmet coffee the Robusta must have a completely clean and neutral taste, without any woodiness or earthiness, and such coffees are not produced in big quantities. And this coffee has nothing to share with the bulk of the natural Robusta that is used by the mainstream industry. As far as I know recently the surge in Arabica prices have prompted an increased demand for Robusta coffees worldwide, so the issue of specialty Robusta has become more popular also in markets that ignored this quality up till now. I think that, with the spread of espresso consumption, the integralistic view that only Arabica is to be considered a superior quality will partially be offset by different approaches, as happened years ago with Natural Arabica compared with Washed Arabica. It is also a fact that processing a properly washed Robusta is more difficult than processing a washed Arabica, so this

COFFEE&TEA INTERNATIONAL # 1/2013

NEWS

consideration will continue to play an important role in future. The discovery of washed Robusta by new markets and consumers is here to stay, so other producers will be tempted to increase the supply of these coffees to the market and bring with it pleasant surprises to connoisseurs worldwide.

PHAM THANH THUY, Chief Representative of Neumann Gruppe in Vietnam: — I can say that the quality of the Robusta has been improved a lot since the last five years. The proces-

sors/ exporters have been investing modern facilities for their factories. Until now they could process almost all kind of Robusta coffees, which could satisfy the buyer's demands. We consider that Arabica price became very expensive twothree years ago because many Arabica countries in the Central America got big losses in their productions. The industries had to find replacements in order to reduce their input costs. They could reduce the share of Arabica coffee in their blend and that part has been replaced by some good Robusta like Washed, Wet Polished or Clean and Color Sorted... Beside the traditional markets like Europe and America we could see a big growth in the new coffee consuming countries and in the producing countries: China, Indonesia, Thailand, Philippine. And what is the main product there? Yes, Robusta coffee. All these factors can help us understand the change in the difference in price between Arabica and Robusta.

JOSEPH RIVERA, a coffee scientist: — I strongly disagree with the movement of substituting Robusta for Arabica although there has been a gradual shift over the years in this direction. Yes, on the surface there are similarities between both species, but Robusta has a significantly different chemical composition profile than that of Arabica. Compounds such as sugars, caffeine, trigonelline, organic acids, lipids and chlorogenic acids vary significantly in Robusta to produce a beverage that is inferior in quality. These chemical differences are not only quantitative, but qualitative as well and ultimately play a role in the development of important flavor compounds during roasting. How can we expect to produce Arabica — like flavor attributes using Robusta with compounds that are not present — or worse, compounds that severely taint the overall taste experience?

WOLFGANG HEINRICY, Global Head of Marketing & Supply Chain Management Coffee Division of Louis Dreyfus Commodities Suisse SA: — Let us think about the fact that Robusta serves as a economical optimisation blend ingredient in the mature and highly competitive markets gaining market share in global and regional blends. At the same time robusta coffee is supporting the generic growth of global consumtion by their production increase, particularly in the emerging market. Increasing product differentiation within Robusta — less and less roasters are willing to accept bulk / faq Robusta. The resulting increased supply in black and brokens is easily absorbed by the soluble industry in producing countries increasing production of high grown washed Robusta, eg in Mexico and Guatemala. Interesting to see that differential volatility seen in India Robusta (cherry and parchment) illustrate hard demand and 'gourmet' character in the case of Parchment. India Parchment traded at premium to Colombia Arabica at one stage in 2012 which demonstrates the point widespread use of wet polishing increasing supply of 'clean' Robusta. Nespresso and Illy among the buyers of Indian Robusta illustrating its use among the highest quality espresso brands.

NEWS FROM RUSSIA

coffeetea.ru

Consultative Board Begins Work he Consultative Board on the development of specialty coffee market (CB), founded by the Rusteacoffee Association on July 17, 2012, began its work. The first meeting of the Board took place in Moscow in September, attended by representatives of CB member companies. The participants discussed the framework and general principles of the CB’s activity, as well as possible areas of focus. Another item on the agenda was the election of the CB Chairperson; the vote was won by Andrei Elson, General

Director of KLD Coffee Importers. During their discussions, the participants reached consensus on the high-level goals and methods of the Board. The main focus of the CB is the development of a robust market for specialty coffee. The two primary challenges are educating the general public and the business community about specialty coffee and involving as many specialty coffee market participants as possible in the work of the CB. Meeting these challenges will likely lead to growth in sales of high-quality coffee.

New Jardin Coffees orimitrade.ru everal new products under Jardin brand have just been introduced to the market. Specialty coffee line is extended with limited volume of the new product called Jardin Ethiopian Treasure – arabica from Gedeo region in Ethiopia. This coffee has original flavour profile with berry, flower and syrup notes that are unique only for coffee from this region. As a whole in Gedeo the coffee is grown in limited volume and this makes Jardin Ethiopian Treasure even more valuable. Second Jardin novelty is the collection of ground coffee with natural flavourings. The product line also comes in limited volumes and includes three splendid blends of excellent arabicas: Jardin Vanilla, Jardin Caramel and Jardin Cinnamon. Absolutely all flavourings are natural what makes this collection a truly special offering.

The Rusteacoffee Association strengthens ties with ICO coffeetea.ru • ico.org

During a regular session of the International Coffee Organization (ICO), the Rusteacoffee Association, which represents the Russian Federation, became a full member of the Private Sector Consultative Board (PSCB), an advisory body of the ICO. Among other members of this Board are such wellrespected national coffee industry organizations as Anacafe, AFCA, AJCA, FNC, NCA, SCAA, SCAE and others.

COFFEE&TEA INTERNATIONAL # 1/2013

NEWS FROM RUSSIA

Victorious Victoria ictoria Kashirtzeva, Russia, was the winner of the Latte Art world championship, held November 1—4 in Seoul, South Korea. Her first international competition — and she win! But how could it have been otherwise if even her name speaks of victory! Victoria gave an interview for our readers.

— Did you enjoy the competition? — During my whole stay in South Korea I felt at home. I was among friends! I spoke Russian with a Spaniard and we understood each other! So many familiar faces… it really lifts your spirits! — When you are at work in your coffee shop, do you enjoy watching people drink coffee with your design on top? — Yes, I love these moments! We used

to have a regular customer who always took pictures of my designs on his coffee and then came up to the bar and tell me about it. I was very pleased! Sometimes I draw something pretty and then watch as the waiter delivers the drink to the customer and how the customer reacts. It is important to me that people see not just white foam on top of their drink but something beautiful, like a lovely butterfly.

Champions are made, not born Aliona Velichko hen a barista becomes a world champion in preparing coffee with alcohol, no one will think that this was due to sheer luck. Behind each such win there is always extensive experience and love of one’s trade. It is this love that allows one to rise to the top, says Philip Leytes, a Russian barista who was named 2011 Person-of-the-Year by the Industry Board of the “Coffee and Tea in Russia” magazine for his contributions to the development of the coffee industry. Philip has a tough road behind him… and ahead of him – many opportunities inspired by his bright ideas about coffee. Here’s what Philip says about coffee: “When you work with coffee every day, you find yourself break away from certain preconceptions; your experience shows that things are at the same time simpler and more complicated than you have thought. When I was starting out, I was told that to prepare an espresso you need to run water through 8 grams of ground coffee to get 60 ml of the drink. But after a while, I realized: coffee is a living product, constantly changing. It has no rigid rules and comes out differently depending on who prepares it. And this is wonderful!

— What was the most memorable moment for you? — They misspelled my name! They wrote “Victori”, which, although incorrect, sounds just like the English word “victory”! So there was no doubt that I was destined to win. At first, I wanted to change my name tag, but then I thought, “Why?”. Evgenija Efimova

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What is the taste of quality coffee?

TASTY NOTES FROM THE MOSCOW INTERNATIONAL COFFEE FORUM (MICF) Aliona Velichko

The taste of meeting friends atching the participants arrive at the Forum early in the morning, one couldn’t help but ask: what makes this event stand out? Why do people choose MICF when they have so many other exhibitions and events to meet friends and colleagues? One answer to this question comes from Andrey Elson, Director, KLD Coffee Imports, Ltd.: “First of all, the MICF is the main coffee event in Russia, and it is very important for my Russian colleagues, who use this platform to discuss future directions and current world trends. For the foreign colleagues, this is a great opportunity to learn about our domestic coffee market and to figure out how to find the best models of cooperation. I have always supported such events and will continue to do so in the future.”

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3 M O S C O W I N T E R N AT I O N A L C O F F E E F O R U M The number of applications for participation in the Forum exceeded the expected 500 and reached the total of 579. There are good reasons for this: the growth of the market, the rich and unique experience of the organizers of this B2B event for the coffee industry, held in Russia for the third time, and, of course, the packed schedule of the Forum, featuring many events that would take place in Russia for the first time. The choice of September as the Forum month was not an accident: during this time, the business world is hard at work putting new ideas and plans into practice. The mission of the Forum was to set the tone for the coming year, to coordinate industry efforts, to evaluate current trends on the Russian and international markets. The Forum offered many interesting events that were happening in parallel in three locations. The guests had to decide where to go and which coffee to taste, but they also had to face larger questions. What is the future of coffee markets in Russia and in the world? The Forum did not provide straightforward answers, but participants raised questions, held discussions, learned new facts – and each tried to come up with his own answers.

The fact that the MICF attracts all types of market participants became clear as the venue was filling up with coffee industry professionals from different corners of the world. Andrey Savinov, SFT Trading Ltd., who was awaiting the opening ceremony standing by his company’s exhibit shared his thoughts with us: “It is with the help of such events that the industry can come together and make its knowledge and expertise available to the consumers, who need it very much right now.” Lively discussions started as participants were sipping their morning Black Carte, the official coffee of the Forum.

After registering, guests headed for the exhibition area of the Forum in order to see what was on offer. As the time of the opening bell drew near, there was an increasing concentration of distinguished guests in the audience: Max Quirin, President of the Specialty Coffee Association of America (SCAA), David Veal, Executive Director of the Specialty Coffee Association of Europe (SCAE), Alexey Komissarov, Head of the Moscow Government Department of Science, Industry and Business and many others. And then, at last, the MCIF 2012 officially began…

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The taste of reflection ectures and seminars were wonderful complements to the aroma of coffee. Imagine that your day begins with a survey of the Russian and European coffee markets by well-known worldclass specialists. You ponder over the numbers, trends and arguments. But the toughest question is left for last: shall the Russian market be driven by price or by quality? How often do you ask yourself: how long can my business depend on the exchange price of green coffee going up? How can I break out of this cycle? Ramaz Chanturiya shared his views on this issue and argued that the price market has no future and that those who want stability are better off following the path of increasing quality and chasing a more sophisticated consumer. David Veal outlined one possible future for the Russian coffee market – if it chooses to follow the path of quality, as Europe did 10—15 years ago.

The taste of different countries uring the discussion of the state of coffee industry in coffee-producing countries and the impact of these industries on the world coffee market, guests could chat with Max Quirin, President of the Specialty Coffee Association of America (SCAA), Abdulla Bagersh, Chairman of the Ethiopian Chapter of the African Fine Coffees Association (AFCA), Vincenzo Sandalj, Chairman of International Relations Committee of SCAE. Discussions continued even during breaks… All participants noted the high potential of the Russian market, shared their knowledge of the markets in their own countries and reflected on how all these factors can be used to foster cooperation. Coffee breaks were an integral part of the Forum, as discussions and questions for the speakers didn’t stop even then. There was only one door during the Forum that for the most part remained closed – and when it opened, it was only to let someone out, not in. Behind this door another interesting – and tasty – event was held,

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The taste of brewing coffee s the Latte Art competition started, a large crowd gathered around latte cups, watching the competitors work their wonders on the surface of the coffee. Nearby, a group of activists was promoting alternative methods of coffee brewing. Under the direction of Tatiana Elizarova, an independent expert on tea and coffee, and her colleague, Tatiana Guliaeva, a SCAE-sertified barista, visitors studied how different ways of brewing high quality coffee can help bring out all its exquisite characteristics. The large number of seminars connected in one way or another with coffee quality leaves no doubt: the taste of coffee is becoming more and more important, not just at the Forum, but outside its walls as well. And this is a real cause for joy.

one that, by its very nature, could not be open to the general public: the seminar on evaluating the quality of green coffee, organized by KLD Coffee Importers Ltd. Needless to say, participants signed up for this even months in advance, as the number of seats was limited, because judging coffee quality requires concentration, attention and a focus on the presenter. What were the reasons behind the success of this seminar? The topic, of course –but also Rob Steven, a unique specialist, certified Q-grading instructor. He turned out to be a lively, open and tremendously interesting person, ready to talk at great lengths about coffee quality. After several hours of presenting a system of grading green coffee, he let the participants try it for

themselves. “Always sigh your cupper’s protocols,” Rob urged them, “There is no such thing as an anonymous cupper. If something isn’t going well, other people will look at your protocol and know who needs help. And if everything goes perfectly, people will know whom to ask for help. And remember, when you enter this room to do cupping, you must leave your egos at the door.” Another engaging speaker – Joseph A. Rivera, an independent expert on the chemical properties of coffee – helped us understand the taste of coffee (and America) molecule by molecule. Together with other participants, Joseph experimented with various coffee tastes and factors that affect it.

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The taste of discussions e gustibus non disputandum est, as they say – but there is no disputing the importance of discussion. “Calm, civilized, open exchange of opinions is extremely important: you can see the other person, instead of reading anonymous posts on the internet”, said Anton Eine (Strauss CIS). Together with Alexander Borisov, the founder of the famous “Grand” brand and General Director of the Kruger-Grand company, they defended the view that the Home Consumption market is more important for the development of the coffee market in general and for shaping consumer tastes. On the other side of the isle, Ilya Savinov (SFT Trading) and Enver Chariyev (training center “Lavazza”) were convinced that the Out-of-Home market is the key. The consensus was that the arguments for the Out-of-Home market were stronger. Still, during a short interview after the discussion, Anton Eine remarked that although competition is tough, the relations between the retail market (which drives home consumption) and the HoReCa industry, the basis for the Out-of-Home segment, are more

The taste of cake s the Forum drew to a close, guests were getting ready for the gala-dinner, exchanging their impressions after a full day. Someone was delighted by the seminar given by Constanza MejRa de los RRos, who talked about Columbian coffee and the factors that contribute to its price formation; others discussed the advantages and disadvantages of coffee capsules and pods after a lecture by Roberto Francia of IMA Industries; still others simply relaxed, trying to sort out wonderful memories and bits of useful information. One of the young roasters remarked that roasting seminars were very important for him and that the Forum made him feel that he was among friends. There were proposals concerning topics for future Forums – special challenges for coffee producers in the HoReCa and retail segments (Viktor Portnov, Blues Coffee) or new technologies for producing instant coffee (Philip Blaber, Instant Products International). The gala-dinner gave Forum participants an extra bit of informal and tasty time to continue their discussions and the exchange of opinions. From time to time, the organizers announced tasty intermissions,

3 M O S C O W I N T E R N AT I O N A L C O F F E E F O R U M

complementary than competitive, as each of these two segments helps the development of the other. During the discussion of whether retail coffee outlets should invest in barista training or automated coffee equipment, proponents of both views agreed that both are necessary, and that each establishment should answer this question based on its own unique circumstances. Nonetheless, those who, during the second half of the day, managed to observe the skills of the competitors in the Latte Art competition, organized by the Barista Team and supported by RosTeaCoffee, probably felt inclined to place their bets on the barista. The winners of the competition were Margarita Dadayan (1st place,

Koffein), Rashid Khanov (2nd place, Coffeemania) and Polina Notik (3rd place, Koffein). The Forum organizers presented the winners with cash prizes and souvenirs, and the “Gourmet Style” company presented them with copies of the book “Espresso Coffee: Professional Techniques” by David Schomer. The first place winner also received the Cup and an ANFIM coffee grinder. A special prize was handed out by KLD Coffee Importers, Ltd.: the winner of the 2012 Russian Latte Art competition, Victoria Kashirtzeva, who went on to become the world Latte Art champion in Seoul, received the comprehensive volume titled “Coffee: Growing, Processing, Sustainable Production”, edited by J.N. Wintgens.

one of which was the presentation of a big and beautiful cake shaped like a coffee bean. One of the traditions at the Forum is the presentation of the Person-of-the-Year award by the Coffee and Tea International trade magazine. For 2011, the award went to Philip Leytes, (Coffee Workshop Ltd. and cafe “Bulka”), the winner of the “Coffee and Alcohol 2011” world competition, for his contributions to the development of the coffee industry. A touching moment came when members of the organizing committee presented a musical number – a jazzquartet-style performance of the popular tune “Java Jive (I love coffee, I love tea)”, which has already become another Forum tradition. One could easily have thought that they were professional musicians! It became clear that the feeling of unity and the desire to achieve the

highest level of cooperation – indispensable for this kind of performance – came naturally to members of the quartet. And this means that no task is too difficult for them and no challenge is insurmountable! At last, after the many tastes of the Forum, came the aftertaste of reflection, cherishing of new friends and making plans for the future. The next chance to check how these plans are coming along will be on September 12-14, 2013 – the dates of the United Coffee & Tea Industry Show, a B2B event that brings together the Coffee Forum and the Tea Symposium. The idea of this show is to offer its participants several days of events to cover both market segments. Opportunities for comfortable interaction, a large number of participants, new and unexpected event formats – all this is already fast approaching!

The MICF organizers wish to express their gratitude to all who supported this event: • Silver Sponsors: Buhler, Givaudan, Probat • Gold Sponsors: BuencafJ – Colombian Coffee Growers Federation • Bronze Sponsors: IMA Industries, Orimi Trade (FNC), KLD Coffee Importers Ltd. , SFT Trading Ltd. • Technical Sponsor: GOURMET STYLE • The Official Coffee of the Forum: Chernaya Karta, a Russian sub• With support from: Coffee-Service LLC., ALMAFOOD sidiary of the Strauss Group

RUSSIAN TEA AND COFFEE “Coffee and Tea in Russia”, a sister publication of “Coffee and Tea International” and the only Russian language magazine about coffee and tea, celebrated its 15th birthday. A decade and a half in publication and 99 issues of the magazine are behind us… Multiple interviews with interesting people, from industry professionals to those who simply love coffee and tea; stories about people who laid the foundations of the industry and continue to push it forward; authors who have been loyal contributors to the magazine; speakers who comment on many industry-relevant issues; advertisers who took the risk of supporting a trade publication about coffee and tea during its early stages and all those who joined them later on… Of course, our people are the main asset of this publication! And so, this date is significant for all who have contributed to our magazine during all these years. This editorial collage pictures some of the past and current contributors.

Adolf Kler

Michael Bunston Andrey Dozhdikov Michael Neumann

Andrey Savinov

Trigve Klingenberg

Alexander Malchik Upali Kahandawa

Alexander Borisov

Hatim Akbarally

Rudolph and Vera Meyer

Radhakrishnan Baskaran

MAGAZINE CELEBRATES 15th BIRTHDAY

Karen Cebreros

Sergey Kasyanenko

Premala Srikanta

Joseph Simrany

Hasita De Alvis

Astrid Nehlig

Otari Chanturiya

William Gorman

Peter Pasket Wolfgang Heinricy

Luise Roberge

Michael Opitz

Andrey Elson

Nestor Osorio

Vincenzo Sandalj

Tone Liavaag

Francesco Corsetti

Susie Spindler

Manuja Peiris

NEWS

economictimes.indiatimes.com

Indian coffee exporters worried as global prices tumble ndian coffee exporters are staring at a bleak year as global coffee prices tumble with Brazil and Vietnam, the two largest coffee producers, harvesting a bumper crop. Almost 70% of the Indian coffee production of over 320 thousand tons is exported. This year, economic woes in Europe, the main buyer of Indian coffee, have led to a drop in purchases. Coffee shipments from the country have declined by close to 10% by the first week of December in 2012. Brazil's coffee output for 2013 was a record 55 million bags (1 bag = 60 kg). Predictably, the prices of Arabica beans, which account for the bulk of production, are expected to slump by over 10%-12% in the coming months. Vietnam, the biggest producer of the Robusta variety, also had a great crop year with the output expected to reach 25 million bags. Rising demand for the variety due to a switch-over by roasters from Arabica when its prices zoomed last year had kept the prices more or less steady around $2,000 per ton. But Robusta prices, too, have started declining.

Indian Arabica prices have fallen by over Rs 60 to Rs 140 per kg in the last few months while Robusta prices have slid by 20% to Rs 115 per kg. But a shortfall in Robusta production, expected by the planters, may prevent further decline in prices.

Nespresso to face competition on machines from ethical coffee news.com.au thical Coffee Co., a Swiss coffee company, plans to introduce its first coffee machine as Chief Executive Officer JeanPaul Gaillard steps up competition against Nestle, his former employer. The machine will work with any single-serve capsules that fit into Nestle’s Nespresso system and will go on sale in France in February, Gaillard said in a phone interview. Ethical Coffee expects to ship between 150,000 and 250,000 units next year, he said.

“It’s an open system”, Gaillard said, adding it will work with capsules from Ethical Coffee or any other Nespresso-compatible coffee. Ethical Coffee will sell the machine under license with retailers, and the response has been “extremely positive”, Gaillard said. Gaillard ran Nespresso between 1988 and 1997. Nespresso, which generated 3.5 billion Swiss francs ($3.8 billion) in revenue in 2011, or about 4 percent of Nestle’s sales,

has been one of the company’s fastestgrowing major brands over the past decade. Ethical Coffee has fought a legal battle with Nestle since it began selling Nespressocompatible capsules in 2010. Retailers such as Casino Guichard-Perrachon SA (CO) sell the coffee under their own brands. The Ethical Coffee machine will be capable of making both espresso and milk-based coffee drinks, Gaillard said.

Starbucks pours less coffee in Japan bloomberg.com

tarbucks Coffee Japan Ltd. said it

“Customers complained that they spilled cof-

reduced the amount of drip coffee it

fee and got burned because cups were filled

pours into each cup by 9 millimeters (0.35

too high”, Norio Adachi, a Tokyo-based

inch), reflecting customers’ requests to

spokesman, said by phone. The move wasn’t

avoid spilling drinks and add room for milk.

prompted by cost cutting, he said.

The move risks angering consumers in a

“I have been feeling uneasy with the very full

country where a small cup of drip coffee

coffee”, Shuhei Sano, 32, said. “It’s difficult

costs 300 yen ($3.60), more than double

to drink if it’s full. I had to take an extra care

the $1.70 after tax in Seattle.

on the first sip.”

Spilled Drinks

Some customers questioned the move to

A short drip coffee purchased at a

serve less coffee at Starbucks’ current prices.

Starbucks store in Tokyo’s Marunouchi

“The company should have informed cus-

Building on Dec. 18 was filled 20 millimeters

tomers about the guideline changes”, said

from the top, lower than the new guideline

Yumiko Sakaue, 36. “They should go back to

of 15 millimeters. Previously, staff were told

the previous amount unless they lower the

to pour 6 millimeters from the rim.

price.”

COFFEE&TEA INTERNATIONAL # 1/2013

Фото: ITH

NEWS

COTECA 2012: OTECA (Coffee, Tea and Cocoa Global Industry Expo) is a European exhibition of coffee, tea and cocoa that covers the complete process chain from raw commodities to finished product. This year, the exhibition was held concurrently with a conference devoted to the future of tea, coffee and cocoa markets (September 20—22). COTECA has the support of the German Tea Association, the German Coffee Association and the German Cocoa Trade Association. Coffee, tea and cocoa industry representatives who took part in the three-day exhibition noted its superb level of organization. Everyone was especially impressed by the high percentage of international participants and guests and the overall high professional level of attendees. The total number of visitors was around 3000. "We are really pleased at how COTECA has developed since its launch in 2010", said Bernd Aufderheide, President and CEO of Hamburg Messe und Congress GmbH. "The 125 exhibitors we welcomed here in 2012 mean an increase of 20% – instead of 20 countries, 30 were represented among the exhibitors at this second COTECA, which makes us very positive about the future. There was

COFFEE&TEA INTERNATIONAL # 1/2013

NEWS

Great stimulus for future work

Anna Antonova

also a striking number of international visitors at the trade fair". About 30% of exhibition guests arrived from foreign countries such as Eastern European states, the Netherlands and Arab countries. Compared to 2010, the portion of the exhibition devoted to tea was much more comprehensive. In addition, COTECA has managed to cover the whole production spectrum from raw materials to the finished product: for example, presentations on coffee production involved coffee growers, green coffee producers and suppliers, roasters, processing industry specialists, etc. Guests of the exhibition enjoyed programme with tastings, workshops and roasting seminars. According to Holger Rehorik, General Secretary of the Deutsche Rostergilde e.V. (German Roasters Association), "The coffee campus at COTECA was very well received. The interactivity and being able to work on the machines themselves were the crucial factor for visitors. It gave them a place for learning and interacting. We are really very satisfied." "Our concept for COTECA worked out well," said Bernd Aufderheide at the end of the trade fair. "The feedback and encouragement we've received this year is an incentive for us for COTECA 2014."

Jasmine-scented e made our regular October visit to China in order to attend the International Jasmine Tea Conference that was held, quite naturally, in the birthplace of jasmine tea â&#x20AC;&#x201C; Fuzhou, Fujian province. The Tea Authority of the China Chamber of Commerce for Import & Export of Foodstuffs, Native Produce and Animal by-products (CFNA) has spared no expense organizing this event, and the Conference attracted

heads of tea organizations from many countries. Members of the international delegation, led by Michael Bunston, the wellrespected Chairman of the International Tea Committee (ITC), planted jasmine trees in Minrong and tea bushes in Kuliang, discussed the general outlook and challenges for the development of jasmine tea markets in different countries and experienced the ancient and unique culture of the Fujian province.

… s n o i t c refle Every visit to China is an occasion for reflection about the future – and not only the future of tea and coffee. This time, I must say that nothing new has been added to the general picture of the world. We are still seeing a rapid growth of coffee culture in China, an inconceivable presence of luxury shops in the most humble provincial centers, mind-blowing developments in infrastructure… It is evident that China will continue to

Ramaz Chanturiya

be a dominant influence on the world economy and every day it will continue to attract more and more high quality goods to its markets. The world is definitely becoming polarized: in one camp, we have developed countries, in the other – rapidly developing, densely populated regions: Asia and Latin America. And it is critically important to determine, with urgency and maximal precision, the place for Russia in this new world order.

NEWS

Liudmila Ivanova

3 DAYS AT THE NORDIC BARISTA CUP When you arrive at the Nordic Barista Cup (NBC) 1, you realize that the other famous competition, the World Barista Championship, is not the only way a competition among coffee preparation professionals can be organized. You are immediately overcome by the unique spirit of this event, by the way the participants love their trade, showing their emotions, skills and fascination with coffee, preparation of which, for many people, is just an insignificant part of their morning routine… It is safe to say that all who gather here spend a very happy time together. This is more than a competition: this is life itself, life with the aroma of coffee… and not just ordinary coffee! very year, the focus of the NBC is a particular coffee-producing country. This time, the Nordic baristas set their sights on Kenya, last year it was Indonesia, and before that – El Salvador, Costa Rica, Columbia. By the way, next year will be Brazil’s turn; that country certainly has some surprises in store for all of us. The guests were introduced to Kenya via their taste experiences: if words like karagoto, muchoki, kieni, mugaga, kapsokisio didn’t ring a bell for you before coming to the NBC, afterwards they will be associated with very particular tastes that are not easy to forget. One thing that sets this event apart is the fact that it is not, strictly speaking, a competition. You may even think that the organizers did not know anything about other barista competition formats, but decided to start from scratch and do what they thought was right… And right it was… Very well organized and very professional. I think that this demonstrates a uniquely Scandinavian approach: do everything your own way, paying attention to every detail. Each of the five participating countries – Finland, Sweden, Denmark, Norway and Iceland – gets its own tent, and any guest can stop by and taste the coffee. In addition to the competitors, the event usually attracts about 200 guests. Entry is by ticket only; you have to buy your tickets in advance, each costs an impressive 600 euro and they are usually sold out about 2 months before the event. This ensures that only those who are truly interested will come here, and everyone is maximally motivated to take part in as many events as possible. Every guest has special cards they can use to rate the coffees tasted. Each score can be from 1 to 10, and all individual scores get added up in the end to arrive at the final score. Every team has to have a member from the country that is featured during the competition. Every team prepares four drinks: espresso, cappuccino, a signature drink and a drink that uses an alternative brewing method (Chemex, dripper, AeroPress). In my opinion, the best tasting drinks were made by the teams from Finland and Sweden; but, honestly, it was really hard to give anything but high marks to any team. All competitors were so charming and so engrossed in the coffee-making process that rating them seemed irrelevant… In the end, the Finnish team got a deserved first prize, Sweden was in the second place and Iceland was the third. Another part of this event, besides the competition among Scandinavian barista teams, was the Nordic Roaster Cup, which focused on roasting coffee for espresso and filter coffee. The guests who

Photo: Liudmila Ivanova

COFFEE&TEA INTERNATIONAL # 1/2013

NEWS

rated the baristas also rated the roasters. For this event, the competitors presented coffee that had already been roasted for espresso and filter; the competition itself involved a series of cupping events, first for espresso and then for filter coffee. The guests did not need to rate every individual drink, but simply had to select the best-tasting one. They could also note the flavor characteristics they enjoyed the most. The winner of this competition was the Norwegian company Solberg & Hansen. An important part of the NBC is its lecture program; looking at the list of presenters, you simply cannot wait for the lectures to start. The following three presentations are, in my opinion, the three most memorable lectures at this event: • A lecture by David Walsh (R&D, Marko) on coffee extraction; • A lecture by Tim Wendelboe, a well-known barista from Norway, who addressed a very interesting topic of experimental methods of coffee bean processing and their impact on the taste of prepared coffee. This topic is fascinating, in part, because the opinions and recommendations of the barista – people who know all there is to know about the taste of prepared coffee – can really help coffee growers improve their harvesting and processing technologies. This opens up an array of possibilities for the producers as well as for the barista, who can apply their knowledge in an interesting and important way. • And, finally a lecture by Vince Fedele (VCT), who spoke about new developments in reflectometers and software that helps baristas prepare coffee. The superb organization of the Cup and attention to every guest were the glue that held the whole event together. The three days at the NBC gave us enough memories, knowledge and interaction to last a whole year. And we are already looking forward to the next meeting, in October of 2013. It will take place in Stockholm, where a most extraordinary company of the most extraordinary coffee fans will convene in a most extraordinary house on a most extraordinary street… and, quite possibly, a short, plump, overconfident man with a propeller on his back will appear on the roof of this house and, after meeting everybody, will say, “Please remain calm!” and start his little steam engine. Nordic Roaster Cup 2012

Liudmila Ivanova

Filter Competition

PLACE

ROASTER

FILTER

ESPRESSO

TOTAL

PLACE

ROASTER

VOTES

CUP #

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10

Solberg&Hansen Social Coffee Co. Tim Wendelboe Fika Fika Kaffa Kaffitar Coffee Libre Johan&Nystrom ST. ALi Kontra

39 38 20 17 12 5 10 8 5 3

38 36 37 38 30 36 22 17 20 7

77 74 57 55 42 41 32 25 25 10

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10

Solberg&Hansen Social Coffee Tim Wendelboe Fika Fika KAFFA Coffee Libre Johan&Nystrom Kaffitar ST. ALi Kontra Coffee

39 38 20 17 12 10 8 5 5 3

9 3 10 8 4 6 5 7 2 1

Espresso Competition – Finals PLACE

#1 #2 #3 #4 #5

ROASTER

Kaffitar Social Coffee Tim Wendelboe Fika Fika Solberg&Hansen

VOTES

36 32 30 19 13

27,69 24,61 23,07 14,61 10,00

Nordic Barista Cup is a barista competition that first took place in 2003. Its participants are baristas from the five Scandinavian countries: Finland, Sweden, Denmark, Norway and Iceland. This event has been so successful, that two years ago another team competition was started in Europe: European Barista Championship. This latter event, however, still lags the NBC in popularity. The NBC slogan – “Be together, Act together, Learn together” – sums up the main idea and purpose of the event: a place where people can meet, interact and exchange information about all things coffee.

NEWS

Tea-plucking machines threaten indian workers bbc.co.uk

he north-eastern Indian state of Assam is renowned for its tea the backbone of its economy. The traditions of the old estates, including hand-picking, make the tea expensive. But any drop in

quality would undermine the Assam brand. Deo Raj, a senior adviser to a company that owns a large tea estate in Assam, says workers are now "looked after from womb to tomb". Apart from their wages agreed by the government - and their homes - they get free rations, wood for cooking and electricity. There is a hospital and a school on the estate too. This old-fashioned, paternalistic style of management makes workers very expensive but Deo Raj opposes reducing their number by mechanizing the tea plucking. But now the Tea Estates that Deo Raj supervises may be forced to mechanize because there is a shortage of people willing to pluck tea and maintain the bushes. Another threat to the quality of Assam tea is the ever-increasing number of small-holders who grow tea. The small-holders beat the estates on price because they do not have the same high costs. The problem is that they do not match the estates' quality. Poor quality tea undermines the Assam brand, and it is only because of the brand's reputation for quality that the tea competes with the leaf produced in Kenya and Vietnam where costs are much lower.

washingtonpost.com

Climate change is making your coffee more expensive limate change has already been blamed for major storms and melting arctic ice, but now it may be coming after your morning cup of joe. Researchers have found that climate change will reduce the number of suitable growing locations for the Arabica coffee plant, which provides about 70 percent of the world’s coffee supply, according to a new study in the journal PLOS ONE. Using computer modeling, researchers at the Royal Botanic Gardens, Kew, in London predicted that the number of suitable growing locations for the coffee plant will drop from 65 percent to 99 percent by 2080. In South Sudan, for example, “the modeling predicted that Arabica could be extinct by the year 2020 due to climate change.” In Ethiopia, another prime Arabica growing area, “optimum cultivation conditions are likely to become increasingly difficult to achieve in many pre-existing coffee growing areas, leading to a reduction in productivity.” The researchers also partly blamed climate change for rising coffee prices, which have reached 30-year highs: “It is per-

ceived by various stakeholders that some of the poor harvests are due to changed climate conditions, thus linking price increases to climate change.”

Greek-Turkish Coffee Wars Ensnare UNESCO greece.greekreporter.com he age-old dispute over whether the thick coffee enjoyed by Greeks and Turks is Greek or Turkish has reached the United Nations Educational, Scientific and Cultural Organization (UNESCO). The earliest evidence of coffee drinking comes from 15th-Century Yemen and the practice soon spread to Cairo and Mecca. In the 1640 s, the Ottoman chronicler brahim PeHevi reported the opening of the first coffee house in Constantinople.

In the Arab world, “Turkish” coffee is the most common kind of coffee and is sometimes called Arabic coffee. Some argue that what is known as Turkish coffee is actually very close to coffee that has been made for ages in Yemen, parts of Oman and South Western Saudi Arabia. In any case, there is a very distinguished Arabic coffee that is very common in Saudi Arabia and it is very different from what is known as Turkish coffee in terms

COFFEE&TEA INTERNATIONAL # 1/2013

of taste, smell and color. Ankara, apart from coffee, wants the folk remedy “mesir” to be also included in the List of Immaterial Cultural Heritage. Mesir paste tradition is a very old tradition in the history of Manisa, an Anatolian city in the Aegean region, dating back almost 500 years. Mesir paste was started as a medicine invention during the Ottoman period but later on it became an important part of local festivity in this city.

NEWS

TRIESTE

retains the title of the coffee capital of Italy Anna Antonova and Olga Dolgacheva

Surrounded by mountains and bathed by the Adriatic Sea, the port of Trieste is the entry point of a lion’s share of all the coffee imported into Italy. Coffee is an integral part of the history, economy, service sector and traditions of Trieste. The city has even its own signature coffee drink: ”cappuccino in bicchieri” or ”capinbi”, espresso – sized cappuccino, served in a glass, rather than in a cup. All this history and culture made Trieste an ideal venue for the TriestEspresso Expo 2012, which took place here on October 25–27, 2012.

COFFEE&TEA INTERNATIONAL # 1/2013

NEWS

epresentatives of Italian coffee business and guests from all over the world gathered here in one place. More than 200 exhibitors from different countries represented various segments of the coffee industry that are integral parts of the contemporary world of coffee. Compared to 2010, the number of guests increased by 10%: around 10,000 people from 85 countries visited the expo during its three-day run. Vanusia Nogueira, General Director of the Brazilian Specialty Coffee Association (BSCA) gave the event the highest marks. According to Benjamin Monge, General Director of the Salvadoran Coffee Council (Consejo Salvadoreno del Cafe), the TriestEspresso Expo was a great opportunity for all participating coffee-producing countries. The guests enjoyed and greatly benefited from a full schedule of presentations, barista competitions and many other special events. Of special note was the Mumac coffee maker exhibition, presented by Gruppo Cimbali S.p.a. on the occasion of the company’s 100th anniversary. The guests also enjoyed various coffeeware collections – it was hard to miss the variety of designs and colors on coffee cups of all shapes and sizes. The most endearing exhibit was the collection of coffee cups by ANCAP S.p.A., featuring drawings by children (Insieme Together). At the colorful stand by Sandalj Trading Company S.p.a., coffee specialists had an occasion to taste Arabica Typica (also known as criollo), a Cuban coffee variety that had recently reappeared on the market. Visitors were also introduced to the new book by Fulvio Eccardi titled “Caffe, Meraviglia del Chiapas, Messico” (“Coffee, the Wonder of Chiapas, Mexico”). Also the presentation of “Cappuccino Italiano”, the latest book by the brothers Bazzara aroused interest of the audience.

NEWS

A popular spot at the exhibition was the Coffee Bar Tasting & Testing area, where guests were invited to taste and rate espresso made from 23 coffee varieties sold by different suppliers. TriestEspresso Expo has become a widely recognized European venue for the espresso culture promotion. Barista competitions and educational seminars are part of this mission. The semi-finals of the Italian Barista Championship have become another important contribution to promote quality coffee culture in general and espresso culture in particular. Another event at the expo was the 2nd Barista Open competition – Mittel European Barista Cup – that attracted national barista teams from Italy, the Czech Republic and Slovakia.

COFFEE&TEA INTERNATIONAL # 1/2013

The “Coffee & Tea International” and “Coffee and Tea in Russia” trade magazines stand attracted a lot of interest from both the exhibitors and guests: we have met old friends and partners as well as those who had no idea that a coffee and tea industry magazine has been published in Russia already for the last 15 years. Even the heavy rain that pounded Trieste during this time could not dampen the spirit of the Expo and interfere with its events: water pouring from the sky could not compete with the pouring of Italian wines, the serving of delicious tortellini, spaghetti, pizza, lasagna, seafood and tons and tons of exquisite coffee, all to the delight of the thousands of guests at the TriestEspresso Expo 2012!

Full version is available for subscribers only

HOT DRINKS

FUTURE GLOBAL COFFEE TRENDS

By Richard Haffner, Head of Beverages Research

SURVEYS AND STATISTICS

COFFEE&TEA INTERNATIONAL # 1/2013

SURVEYS AND STATISTICS

The volume of hot drinks retail market, 2009â&#x20AC;&#x201C;2011 (Russia) Distribution. Historic. Retail. Volume, % '2009

CATEGORIES

'2009

'2010

'2011

Full version is available for subscribers only Source: Euromonitor International

SURVEYS AND STATISTICS

Three leaders

of the Moscow coffee shop market are far ahead of the competition… Sergey Khitrov, Senior Analyst of RBC.research, RBC Consulting Department

Retail food establishments (RFE) in Russia are no longer part of the luxury market segment; this is the conclusion of a study conducted by RBC.research, a research agency of the RosBusinessConsulting company (RBC). 67.3% of the Russian citizens surveyed listed the opportunity to spend time with friends, colleagues and relatives as their primary reason for eating out. 33.5% stated that RFEs are their primary places to have lunch, 27.4% mentioned the convenience of not having to prepare food at home and 23.4% simply called RFEs “nice places to eat”. However, the RFE market in Russia still lags behind the markets in Western Europe, USA and Canada; the two main factors behind this are the low level of market development and the lack of a popular culture of eating out. For example, 33.7% of respondents view RFEs primarily as places for celebrating special occasions. As the Russian market is gradually recovering from the crisis of 2008-2009, the coffee and coffee/pastry shop segment stands out. New chains are appearing and old ones are expanding. According to the study “RFE chains in Russia in 2012” by RBC.research, today in Russia there are more than 80 coffee and coffee/pastry chains that run about 1340 retail outlets, and the number is steadily growing.

ased on the analysis of survey results, RBC.research* gained in-

Ekaterinburg, Rostov-on-Don, Chelyabinsk

are the least likely to visit coffee shops:

and Moscow. In these cities the frequency

only about 50% of Nizhni Novgorod res-

sight into the structure of the

of retail coffee shop visits exceeds the

idents and 52.8% of the Moscow Region

national average.

residents have visited a coffee shop in the

retail coffee market (by value). The research shows that Moscow and the

On the other hand, the residents of

6 months from November 2011 through

Greater Moscow Region account for

Nizhni Novgorod and the Moscow Region

April 2012. Although Saint-Petersburg has

35.1% of all retail coffee market (with Moscow accounting for 27%), while Saint-Petersburg accounts for 7.8%. Coffee shops have become popular desti-

Dynamics of coffee houses visitors share stores in different cities of Russia (November 2011 - April 2012.),% of respondents living in the following geographical zones

nations for many Russians: according to a country-wide survey by RBC.research, slightly more than 60% of respondents visit coffee shops regularly. The highest percentage of population visiting coffee and coffee/pastry shops is in Novosibirsk: there almost 3 out of 4 respondents have visited a coffee retail outlet in the last 6 months. Coffee shops are also popular with the residents of Omsk,

Saint-Petersburg,

Moscow

Moscow region

St. Petersburg

Other cities Cities with a popCities with a ulation from population from millionaires 500 000 to 100 000 to 1 000 000 people 500 000 people November 2011 - April 2012

Kazan, Source: RBC.research

* The study was conducted via online surveys with the target audience selected from an online panel built by OMI (Online Market Intelligence). This allowed adherence to the two main principles of quantitative statistical research: representative sampling, facilitated by the widespread internet access in Russia, and the ease and convenience of filling out electronic surveys, achieved by creating an intuitive and pleasant interface to access the survey portal and the absence of any pressure or interference from the research team. Among the disadvantages of the online method is a relative lack of participation by older people, but the researchers are confident that further spread of internet access will remedy that. The survey was conducted on April 20–25, 2012; the sample size was 4,168 participants.

COFFEE&TEA INTERNATIONAL # 1/2013

SURVEYS AND STATISTICS

a small lead in the percentage of residents visiting retail coffee establishments, the

Shares of respondents who visited coffee shops in the last six months (November 2011 - April 2012),% of total respondents in each of the geographic areas

most developed geographi-

Novosibirsk

cal segment of the retail

Omsk

food market in general, and

St. Petersburg

retail coffee market in partic-

Kazan

ular, is the Moscow Region.

Ekaterinburg

The three market leaders in

Rostov-on-Don Chelyabinsk Moscow

the retail coffee segment are Shocoladnitsa, Coffee House and Starbucks. The first two

Cities with a population from 500 000 to 1 000 000 people Cities with a population from 100 000 to 500 000 people

chains are far ahead of

Ufa Samara

Starbucks, but the latter is growing rapidly and has a good chance of catching up

Moscow region Nizhny Novgorod

to the two leaders. Source: RBC.research

Combined rating of the largest network coffee shops and pastry-shop in terms of their fame and popularity,% of respondents in Moscow and the Moscow region, visiting coffee houses and pastry-shops

The research shows that Shocoladnitsa, Coffee House and Starbucks were visited by 77.7%, 66.9% and 34.2% respectively of those who visited a retail coffee outlet in the last 6 months. The three chains are also ahead when it comes to the number of loyal cus-

Shokoladnitsa

tomers, although here the numbers are much lower. Shocoladnitsa is

Coffee House

the usual destination for 39.3% of respondents, Coffee House – for

Starbucks McCafe Costa Coffee

Structure of the market stores and tea rooms (in value terms),%

Dunkin Donuts Koffein Coffee Bean

Moscow

Pyshka Cinnabon

Moscow region

Coffeemania St. Petersburg

Paul Bakery Hleb&So

Other cities millionaires

CoffeeShop Company Sladkoezhka

Cities with a population from 500 000 to 1 000 000 people

Stolle

Cities with a population from 100 000 to 500 000 people

Ideal Cup Coffee Expert

Source: RBC.research

Bushe Zolotoj kolos Le Pain Quotidien

28.5% and Starbucks – for 13.0%. Far behind the leaders are such

Chajnikoff

chains as McCafe, Costa Coffee, Dunkin Donuts, Koffein and others.

Baltic Bread

Only 17.9% of respondents visited one of these coffee shops in the

Vermishel'

last 6 months, and their loyal customers comprise only 4.6% of the population surveyed.

Traveler’s coffee

These findings show that the “second-tier” chains have their work Percentage of people, visited public catering places at least once for the last half a year Source: RBC.research

cut out for them when it comes to catching up to the market leaders. According to RBC.research, in the next 2 to 3 years no significant changes at the top are likely to take place.

THE UKRAINIAN TEA MARKET KEEPS ON GROWING

HOT DRINKS

SURVEYS AND STATISTICS

COFFEE&TEA INTERNATIONAL # 1/2013

In 2011 the Ukrainian tea market passed the 24.9 thousand tons mark and showed the same growth rate as in the previous year (2010): just under 4%. In terms of value, the growth for 2011 was only 14%, compared to 17% in 2009/2010.

In the Ukraine, tea is a traditionally popular and a relatively inexpensive beverage, so even under the conditions of somewhat restrained consumer spending this market segment continues to compare favorably to other categories of non-alcoholic beverages. In addition, tea is a healthy, natural product free of toxins, dyes and other harmful ingredients. In the last few years these factors have become important for the Ukrainian consumer. Besides, today supermarket shelves stock teas of all imaginable colors and flavors, and this is an additional incentive for the consumer to buy tea instead of some other hot beverage. Within the segment the picture is as follows. Volume-wise, at the end of 2011 black tea continues to dominate, comprising about 70% of all retail sales. In this category, bulk tea has a higher rate of growth as consumers perceive it as being healthier (you can visually determine that it contains only tea leaves and you can gauge its quality) as well as more affordable. The second place goes to green tea (around 20%). The share of fruit teas is about 9%, and powder tea and others finish up with 1% of the market. The slowest growth occurs in the weight-loss tea category: it is too niche and requires additional efforts on behalf of the producers to drive growth (e.g. advertising, educating the consumer, working with the pharmaceutical industry, etc.). It needs to be noted that in 2011 the highest rate of growth was exhibited by fruit and herbal teas: around 9%. The consumers were interested in new and unusual flavors and also in additional healing properties of fruits and herbs. It is expected that in 2012 this category will continue to lead in terms of volume growth. It will be followed by bulk flavored black and green teas, also due to their relative novelty.

PRICES Compared to 2010, the retail price of tea has changed only slightly. In the tea category overall, the price growth was less than 2%, and in some subcategories we saw retail prices go down. Among the reasons for this are the stabilization of high wholesale prices

NEWS

for black tea in 2010-2011 and the flocking of consumers to the mid-range and economy segments. It is expected that in 2012 the retail price of tea will grow on average by 6%. The slowest growth will be seen in the powder tea subcategory, as such teas are not very popular with consumers. Producers of such teas, in their attempt to hold on to their

In Ukraine with different flavors and unusual innovative packaging. This product is also interesting because its packaging is comparable to the premium segment packaging, but

Sales of different types of tea in Ukraine

OUTLOOK

Million hryvnias

Black tea

Fruit/Herbal tea

Green Tea

Instant tea

Other tea Sourse: Euromonitor International

existing customers, will continue to hold back prices as they did in 2011. The opposite is true for the popular green tea subcategory, which is expected to exhibit the highest price growth in 2012. Among contributing factors are the growing popularity of green tea in the country and the consequent increase in demand. Also relevant are the trends on the global tea market: the drop in production volume in Kenya coupled with the growth of world-wide demand for tea.

COMPANIES AND PRODUCTS The Ukrainian tea market is dominated by companies whose market share exceeds 1%. There are slightly more than 10 such companies. The five leaders are Unilever Group, Ahmad Tea Ltd., Stoic Group, The May Company and Exim Trade (a subsidiary of Orimi Trade in the Ukraine). These companies became leaders due to the high brand recognition of their tea brands, their wide distribution networks and their long history on the Ukrainian market. In terms of brands, the most popular ones are Lipton, Ahmad Tea Ltd., Greenfield, May, Conversation, Batik and Askold. Among leaders in market share growth are private label brands, whose products represent different price segments. For example, one of the more interesting novelties on the tea market in 2011 was Fozzy Group’s private label “Premium Diamond Collection”. This is a series of premium black and green teabags

Ahmad Tea brand came out with a line of teas dedicated to the Olympic Games in London (Sport Collection) and also with a special Christmas collection of teas packaged in tins shaped like music boxes (Merry Christmas Collection).

because this is a private label, its position in the mid-price segment makes it affordable for large numbers of consumers. To some extent, the growth of private labels is due to the fact that they are relative newcomers to the Ukrainian tea market and their market share in 2012 is still relatively small. The majority of novelty items on the Ukrainian tea market in 2011-2012 appeared in the fruit and herbal tea category, which secured heightened consumer interest in these categories. In spite of the fact that there were no major innovations in terms of packaging, producers tried to attract consumer attention by varying packaging themes. Thus, for example, in 2012 the

In spite of the general economic slowdown, 2012 promises to be a successful year for retail tea sales in the Ukraine. According to estimates, retail volume growth will be around 3%. The weighted average sales volume growth will reach just above 2% by 2017. This figure is lower than the one for the previous 5-year period. However, given the fact that this category is traditional and relatively saturated, the next 5 years look promising for the market participants. The trend among Ukrainian consumers toward a healthier lifestyle and further increases in the variety of tea flavors will contribute to the positive dynamics of the tea market next year, as well as over a longer period. It is also expected that during the forecast period, due to the increased competition within the sector, companies will more actively promote novelty items, and retail prices, in constant terms (without accounting for inflation), will drop (assuming normal tea harvests and stable world-wide wholesale prices). Currently Ukraine holds the third place in the Eastern Europe, after Russia and Poland, in terms of per capita tea consumption. But even those latter countries lag far behind Turkey, which remains the undisputed world leader, with per capita annual consumption of about three kilos. It is expected that Ukraine will retain its position in this line-up through the end of the next 5-year period.

Dynamics of the tea market of Ukraine

Sourse: Euromonitor International

INTERVIEW

MAX QUIRIN:

"Coffee quality is the future!" Aliona Velichko

For Max Quirin, President of the Specialty Coffee Association of America (SCAA) and the head of a family coffee farm with a century of tradition in Coban, Guatemala, this visit to Moscow to take part in the work of the Moscow International Coffee Forum 2012 was his first. Mr. Quirin noted the saturated schedule of the Forum, the highly relevant discussion topics and a friendly, almost family-like atmosphere of the whole event; he also agreed to answer some questions from C&TI about the state of the specialty coffee market in America and a few other things. — Mr. Quirin, what does the term "specialty coffee" mean to you? — To be brief, specialty coffee for me is a source of great pleasure, the pleasure that stems from its unique origin and a special taste in the cup. But the true delight comes when you know how this particular coffee variety is grown and are able to discern the most exquisite and minute details of its taste and aroma! It is interesting to note that in the specialty coffee segment no individual player is more important than the others. Every link in the chain is crucial, from the farmer to the barista. Because if one link fails, the whole chain will be broken. — What is your judgment about the current state and the outlook for the specialty coffee market in Russia? — 6 years ago 85% of all coffee consumer in Russia was instant coffee, which is similar to the situation in Japan and Great Britain in the 1970s. It took these countries several decades to become consumers of high quality coffee. It looks like Russia is following the same path, only much more rapidly. The evidence is the growth of high quality green coffee imports into Russia during the last 5 years and also the fact that roasted whole-bean coffee makes up 35% of the market. I am also impressed by the increase in the number of coffee shops. This is why I think that Russia is well positioned to become a significant high quality coffee market. I am certain that ensuring the high quality is the right path to follow. By offering the consumers what they really need, i.e. good-tasting coffee, we open new horizons for the coffee market. The coffee connoisseur, who keeps discovering new product characteristics and who is able to truly appreciate them, is ready and able to pay a premium. We see the way forward through putting emphasis on improving coffee quality. For if you aim to lower prices by offering coffee of inferior quality, you will have a drop in demand and bring the market to a halt: it is obvious that people will not drink something they do not like, even if you try to lure them with low prices.

— What are some of the problems and challenges on the road to improving coffee quality? — In order to offer the consumer a good product, you need to educate him about many things, such as different methods of roasting and preparing coffee. This process takes time: first people need to learn how to choose the product, then they will need to learn how to properly prepare it. This is what happened in America, and it took a concerted effort of many professionals to bring about real change. The role of our Association is precisely to educate coffee professionals from other countries in order to speed up this process. We offer training programs by the best people in the industry. I think that it is wonderful when those who already have experience share it with people who are just starting out. We are also currently working with coffee farmers, because when they become interested in growing higher quality coffee, they also need to be educated about such aspects of coffee business as roasting, sales, etc. — Besides education, what are the objectives of the Specialty Coffee Association of America? — Our task is to promote production and consumption of specialty coffee. We strive to achieve this goal by following the path of sustainable development, taking into account all relevant economic, social and environmental factors. There exists a series of agreements that we signed with coffee associations of many countries, according to which we promise to run various programs to share our expertise and provide help with education. One example is the new “Coffee and Health” program that we have developed on the basis of the latest scientific findings; we are planning to launch it in America within a few months, and later in other countries. — What is the state of the specialty coffee market in America? What are the challenges? — It is hard to give exact numbers, because the “specialty coffee” concept is not so well defined. I would say that spe-

COFFEE&TEA INTERNATIONAL # 1/2013

cialty coffee makes up about 20% of the market today. Of all the cuppers that we trained last year, only 30% specialized in the gourmet coffee category, and this year this number has gone up to 52%. We are also seeing the trend of increasing consumption of high quality coffee by young people, and this is a very good sign. To be honest, dealing with young people is one of our greatest challenges. And we have only one way to get access to them: through the retail outlets where young people congregate to drink coffee. Even though members of the younger generation consume mostly milk-based coffee products, by doing so they still develop their taste, and coffee shops are indispensable for that. It is very important to us to nurture and develop young people’s interest in quality coffee. It is almost impossible to reach the specialty coffee consumer by way of the supermarket. Still, if people go to the supermarket after leaving a coffee shop, they are more likely to seek out a better quality coffee. Another challenge we are currently facing is how to make coffee quality information accessible to the consumer. As coffee industry professionals, you and I understand each other immediately; but conveying the same information to the general consumer in an accessible format is another matter entirely. — How does SCAA work with SCAE (Specialty Coffee Association of Europe)? — We have an established practice of working together. We jointly organize a big annual event called “The World of Coffee” that includes many events and barista competitions. In my opinion, when every coffee industry professional understands the importance of working together, great things are possible. — How do you see the future of the specialty coffee market? — I think that both the American and the Russian markets will continue to grow. But in Western Europe we are seeing a bit of a slowdown; however, there is a strong segment of coffee shops that is continuing to grow, and I think that this will push the whole European market in the positive direction.

NEWS

8 COLORS… 8 FEELINGS

UN ESPLOSIONE DI “COLORE” IN TAVOLA : new Ancap decor: main Actor is the COLOUR! A

After years of neutral colours, of grey and beige, we are back to colours: with their charge of vitality, happiness and energy. “Colours” is the new collection created by Ancap. It is a triumph of bright colours: it is such an effect that plates and cups seems to be painted in glaze

The absolute brightness: this is the step ahead made by Ancap. Only our know how in firing allows us to obtain the best refraction of light on our products. Enjoy the colours with Ancap. Our secre is the key point of Ancap. Only our know how in firing allows to obtain such a result. Ancap: a step ahead.

ECONOMICS

Andrei Savinov

BRAZIL. For the majority of consumers the words ‘Brazil’ and ‘coffee’ naturally go together. The history of coffee in Brazil began in 1727, when a sailor named Francisco de Melo Palheta brought the first coffee seeds into the country from French Guiana. As soon as 1731 the first shipment of coffee was sent to Portugal, and three years later the volume of exported coffee reached 135 tons. After independence was declared in 1822, the production of coffee in the Rio-de-Janeiro and Sao Paulo regions increased sharply, and Brazil became the world’s largest producer and exporter of coffee. In 1869 a railroad was built connecting Sao Paulo and the port town of Santos, which gave a further boost to coffee production in this region. Coffee has finally become the main output of the Sao Paulo state as well as of the country as a whole. The profits from coffee trade helped build roads, open banks and start schools. A steady stream of immigrants from Italy, Spain, Portugal began entering the country; these newcomers brought with them their skills and the desire to start their own businesses. The process of industrialization began, and the emergence of middle class gave the impetus to the development of an internal market. In the first half of the 20th century Brazilian coffee continued to dominate world markets, accounting for more than half of the country’s profits from exports. After WWII, the pace of industrialization picked up again, with the rapid development of oil industry, metallurgy and the production of industrial goods. Agriculture diversified, and coffee began to feel competition from other agricultural products, such as sugar cane, soy, etc.

The author wishes to thank the heads of Brazilian companies Ipanema Coffees and Carmo Coffees who shared their views on the issues discussed in this article. A special thanks to Ekaterina Pastukhova for the photos.

COFFEE&TEA INTERNATIONAL # 1/2013

ECONOMICS

STAYING IN THE LEAD Today coffee accounts for only 2% of Brazil’s foreign trade volume. But this is due not to the reduced production and export of coffee but to the increase in production of other goods. In spite of all the changes, Brazil remains the leader of the world coffee industry. Any drastic changes in the coffee production volume in Brazil may have serious consequences for the world coffee market for the current year, up until the next coffee harvest. According to estimates, world production of coffee in 2011/2012 was 135 mln sacs (1 sac=60 kilos), out of which 49.2 mln (36%) was produced in Brazil. When it comes to Arabica production, Brazil’s share was even higher: 43% (34.7 mln sacs out of the total world production of 80.6 mln). Brazil’s share in the world export of coffee was 32% – 34 mln sacs out of 106 mln (including the export of green, roasted, ground and instant coffee).

CONTRADICTIONS OF GROWTH An important question that is on the minds of all players in the world coffee market is: what can we expect from Brazil in the

coming years? Will it remain a stable source of relatively cheap green coffee that is used all over the world in the production of many coffee blends? The answer to this question, in my opinion, is not so obvious. The development of coffee production in Brazil in the last few years has been plagued with internal contradictions. There has been a sharp rise in wages and social guarantees for the low-wage part of the population. During peak harvesting periods there is a lack of workers; it is not easy to bring cheaper labor from remote parts of the country, and importing labor from abroad is out of the question. The cost of credit is relatively high, there is an increase in fuel and fertilizer prices, as well as a rise in transportation costs. Other agricultural products are competing with coffee: soy, sugar cane, maize, cotton, citrus fruits, eucalyptus, animal products. Many of these industries are more profitable than coffee while also being less labor-intensive. Coffee plantations today account for only 2% of all agricultural land, compared to 20% in 1980s. As the standard of living rises, so does the internal consumption of coffee, which is already approaching 20 mln sacs annually.

As a result, Brazil is now not only the world’s largest producer of coffee, but also the 2nd largest consumer, almost catching up to the USA. The quality of internally consumed coffee is also rising, albeit very slowly.

VOLUNTARY CERTIFICATION – A NEW LEVEL OF MARKET DEVELOPMENT The voluntary roasted and ground coffee certification initiative, undertaken by the Association of Brazilian Coffee Roasters (ABIC), deserves special attention. Beginning in 2004, 3 levels of quality have been established, with each one indicated by a special mark on the package (Quality Seal sample): • Traditional (100% coffee – Arabica/ Robusta/blend); • Superior (100% Arabica good to fine cup); • Gourmet (100% specialty Arabica). Naturally, the bulk of coffee production falls into the first category, because of its actual characteristics as well as due to low certification costs (only the final product needs to be certified). For the other two categories, the production process needs to be

Another storm over the coffee ocean…

ECONOMICS

certified as well. So far, not many producers volunteer to undergo certification, but there are some, and coffee products labeled “Superior” and “Gourmet” do appear on the market, although the volume of such products is still very limited.

— The use of modern agricultural technology. This impacts the selection of coffee varieties most suitable for a given area, the care of coffee plants and the application of fertilizers. On some more advanced farms, the latest technologies are being used, including the use of satellites.

Brazil as the largest and the most stable source of Arabica. Brazil itself will continue taking steps towards preserving its position on the world coffee markets. But prospective buyers can expect the rise in prices of Brazilian coffee as well as limited supply of some varieties from time to time.

BARRIERS THAT ARE GETTING HARDER TO OVERCOME

ADDENDUM

GROWTH RESERVES So – what is going to happen to Brazilian coffee exports? Are there reserves that will allow the country to retain its leadership position on the world coffee market, in spite of rapidly rising internal consumption? First of all, there is the increase in coffee yields. During the last 10 years the average yield has risen from 14 to 23 sacs per hectare. For the Conillion Robusta the yield surpassed 40 sacs per hectare, which has brought Robusta’s total share of Brazilian coffee production to 1/3. Several main factors contribute to increased yields. — Mechanization. Combines and manual harvesters are increasingly being used, which makes manual harvesting easier. As a rule, large companies have their own combine fleet, while smaller ones either lease them or buy one machine for several companies. Currently combines are used only in the Arabica production, but it is possible that in the future we will see machines designed for the production of Robusta. — The use of new high-yield coffee varieties. These varieties have greater resistance to weather and disease. Brazil is the world leader when it comes to investments in agricultural research. — Irrigation. While in 1970-80 frost was the main threat to coffee plants, today it is drought. Today only 10% of coffee-growing lands have access to irrigation, but that number is constantly growing. At the same time, we need to remember that installation of irrigation equipment is usually done when new coffee bushes are planted, so this process is relatively slow.

Everything said above doesn’t imply that opportunities for growth of Brazil’s coffee production are unlimited. As noted, the return on investment in coffee production is relatively low: when it comes to new “industrial” coffee plantations, it takes 10 years to recoup the initial investment and turn to profitability (and this doesn’t include the cost of the land). Therefore, we cannot expect a significant increase in coffee-growing land. Another dampening factor is the instability of the price of coffee on world exchanges, which negatively affects the long-term planning ability. Finally, there are natural limits to yield increases. The rise of production costs, including, first of all, the cost of labor, is pushing Brazilian producers towards varieties that require greater processing (washed and semi-washed coffee). Today such varieties already account for 10% of all Brazilian Arabica exports. Of course, 3-4 mln sacs is a small number for Brazil, but we need to remember that this number is comparable to the total annual production of countries such as Guatemala, Honduras, Mexico and is twice as high as the production in Nicaragua, let alone Costa Rica. Given the recent overall drop in Arabica production in Columbia and some Central American countries, some large transnational roasted and ground coffee producers are revising their view of Brazil as a source of mostly cheap, low-quality Arabica and are beginning to expand their purchases of higher quality coffee. One example is Nespresso, one of the world market leaders. It is certain that in the next few years the coffee world will continue counting on

COFFEE&TEA INTERNATIONAL # 1/2013

I wrote these notes in the beginning of June while visiting Brazil. Heavy rains started just at the peak of the harvest season. The work stopped. While the big farms managed to move coffee berries to storage facilities, others had to leave them on patios covered by plastic, letting them slowly ferment. The wild weather so characteristic of the recent past started to have an impact again. According to a preliminary estimate that came out in July, about 15% of ripe coffee berries fell to the ground because of the rains. Many people were concerned about the quality of the coming crop. This concern turned out to be justified. According to final estimates done at the end of 2012, about 9 mln bags (roughly 25% of all Arabica production) turned out to be of “Rio” quality suitable for local consumption only. Since normal local demand for this kind of coffee is 3 mln bags, we may say that Brazil “lost” 6 mln bags of good and fine quality coffee from the current crop – the quantity comparable to the annual production of such country as Honduras. Thus, there will continue to be downward pressure on the quantities of Brazilian coffee available for export, and the problem of quality will remain. However there is good news as well as far as 2013/14 crop is concerned. While it should be treated as an off-cycle year, preliminary estimates give production figures that are very close to those achieved in the current crop year. What will the weather be like over the coffee ocean? The answer continues to depend on Brazil…

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ELISENTAL

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COFFEE&TEA INTERNATIONAL # 1/2013

ORIMI TRADE, Llc.

ORIMI TRADE, Llc. 3, Tobolskaya str., St. Petersburg, 194044, Russia Phone: (812) 346 82 40 Fax: (812) 542 15 01 market@orimitrade.ru www.orimitrade.ru