GCR Jan 2020 by Prime Group

JANUARY/FEBRUARY 2020

THE CONSOLIDATION OF COFFEE

Why increasing concentration means the big have gotten bigger

FIGHT FOR A LIVING WAGE Why discussion on price and future sustainability are critical to change

2020 VISION

Industry leaders weigh in on the challenges and trends set to change the game

REVIVAL OF THE FITTEST

Can support and a new government bring Zimbabwe back to life?

AN ACCADEMIA FOR

THE WORLD

ACCADEMIA DEL CAFFÃ&#x2C6; ESPRESSO GENERAL MANAGER MARTA KOKOSAR ON CREATING AN INDUSTRY ICON WHERE LEGACY MEETS VISION AND KNOWLEDGE CREATES INNOVATION www.gcrmag.com

CONTENTS January/February 2020

COVER STORY

AN ACCADEMIA FOR ALL

Accademia Del Caffè Espresso General Manager Marta Kokosar on embracing her mistakes in the photography and music industries in order to create a dedciated research and historical centre that must continue to evolve and stay relevant.

IN THIS ISSUE FEATURES

8 AN ACCADEMIA FOR ALL

Marta Kokosar, General Manager of Accademia del Caffè Espresso, on creating a universal space to nurture the future of coffee

12 CONSOLIDATION OF COFFEE

Experts and players weigh in on what the increasing concentration of the industry means as the big get bigger

16 FIGHT FOR A LIVING WAGE

How the living wage can guide discussions on price and the future sustainability of coffee

21 SHOCK TO THE SYSTEM

The International Coffee Organization on the impact on coffee production countries as low prices and socio-economic impact deepens

24 INDUSTRY LEADER PREDICTIONS Top industry influencers discuss their outlook on the year ahead and the challenges and trends of 2020

28 GOLD STANDARD

World Coffee Research releases new production guides for better farming practices

42 A GLIMPSE INTO THE FUTURE

50 MICE2020

Why the Product Innovation Awards are a gateway to the world and the start of new opportunities

GCR dissects the 41st edition of HostMilano and the most popular trends and technology

PROFILE

32 AN AUTOMATED FEATURE

A UCC Coffee UK & Ireland report analyses the increasing role of automation in coffee

ORIGIN

46 REVIVAL OF THE FITTEST

Can support from Nespresso and a new government bring Zimbabwe’s coffee industry back to life?

34 IT’S ALL ABOUT THE MOMENT Franke Coffee Systems puts memorable experiences at the centre of its brand identity and product development

OPINION

52 THE LONG BREATH GOODBYE

Eversys Chief Commercial Officer Kamal Bengougam on why greed, consumption, and cultivation are threats to the future

36 A NEW DAWN

New Rancilio CEO Ruggero Ferrari on an ice cream past and an automatic coffee future

38 HAIL TO THE CHIEF

The reimagined Faema President espresso machines take customisation and ergonomics to new heights

40 FOUNDATION FOCUS

Simonelli Group and the Specialty Coffee Association invest in the future understanding of espresso and launch the Coffee Science Foundation

“THE SECRET IS TO DIG DEEP INTO THE ROOTS OF YOUR HISTORY BUT LOOK TO THE FUTURE WITHOUT BEING SCARED.” Marta Kokosar

Accademia Del Caffè Espresso General Manager

LAST WORD

58 BUILDING BLOCKS

Civil engineering students from Australia’s RMIT University use coffee grounds in concrete to reduce landfill

REGULARS 04 06 54 56

EDITOR’S NOTE NEWS DRIP BY DRIP DIARY DASHBOARD MARKETPLACE

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EDITOR’S NOTE Global Coffee Report

PUBLISHER Christine Clancy christine.clancy@primecreative.com.au EDITOR Sarah Baker sarah.baker@primecreative.com.au JOURNALISTS Ethan Miller ethan.miller@primecreative.com.au

2020 VISION I WISH I HAD A crystal ball. If I did, I would discover if 2020 is the year I finally purchase a house, master the ukulele and watch my favourite football team win a premiership flag. Then again, would I like what I see? Attending Italy’s HostMilano, the biggest biennial foodservice expo in the world, was rather like a vision into the future of our industry. I saw that automation is not a matter of if, but when. I saw enough vending machines to challenge an underground subway. I saw how easily replaceable baristas are when robots can do the same job, sometimes with more precision and consistency – and minus the attitude. I saw that simple machines trump complex ones, and the value of data and technology to help deliver what the customer really wants. With these insights, it is clear that the industry is evolving and we must evolve with it. Accademia Del Caffè Espresso General Manager Marta Kokosar shares this sentiment. In her interview with Global Coffee Report for our cover story, she spoke openly about her successful careers in the photography and music industries, which fell when she failed to embrace the digital revolution. Maybe it was fear. Maybe it was a lack of understanding. But we live in such a rapidly changing world we can’t afford to be left behind. Maybe it’s time I forgo USB sticks and embrace “the cloud”. To help predict the year ahead, we asked our industry leaders to share their own presumptions. They range from consolidation to continuing high coffee prices, and increased

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Peter Papoulias peter.papoulias@primecreative.com.au DESIGN PRODUCTION MANAGER Michelle Weston michelle.weston@primecreative.com.au

youth consumption of coffee to the use of disruptive technology. We can only speculate what’s to come, but in some instances, such as climate change, we can no longer ponder the impact and wait for irreversible damage. Thankfully, the likes of World Coffee Research continue their plight to secure our industry for the future – and they’re not alone. A job this big demands a taskforce, including research by the newly formed Science Coffee Foundation, and Accademia Del Caffè Espresso, which is committed to ongoing research into traceability and sustainable processing practices at origin. When I asked Piero Bambi, son of La Marzocco Founder Giuseppe Bambi, his own vision for the research centre and industry, he finished making his own espresso and told me “the future is in safe hands”. With a beaming smile, firm handshake, and broken English, Bambi said he had observed a lot of change, and was happy to live in an era where the value of our coffee farmers is put first. “There’s still much more to come,” he said. And that, I believe, is true.

Sarah Baker Editor, Global Coffee Report

ART DIRECTOR Blake Storey blake.storey@primecreative.com.au DESIGN Madeline McCarty, Kerry Pert BUSINESS DEVELOPMENT AND MARKETING ACCOUNT MANAGER Camilo Molina camilo.molina@primecreative.com.au CLIENT SUCCESS MANAGER Janine Clements janine.clements@primecreative.com.au CONTRIBUTORS Lindsay Holloway, Kamal Bengougam PHOTOGRAPHY Lorenzo Ferroni, World Coffee Research, Nespresso HEAD OFFICE Prime Creative Pty Ltd 11-15 Buckhurst Street South Melbourne VIC 3205 Australia p: +61 3 9690 8766 f: +61 3 9682 0044 enquiries@primecreative.com.au www.gcrmag.com SUBSCRIPTIONS +61 3 9690 8766 subscriptions@primecreative.com.au

Global Coffee Report Magazine is available by subscription from the publisher. The rights of refusal are reserved by the publisher.

ARTICLES

All articles submitted for publication become the property of the publisher. The Editor reserves the right to adjust any article to conform with the magazine format.

Global Coffee Report is owned and published by Prime Creative Media. All material in Global Coffee Report Magazine is copyright and no part may be reproduced or copied in any form or by any means (graphic, electronic or mechanical including information and retrieval systems) without written permission of the publisher. The Editor welcomes contributions but reserves the right to accept or reject any material. While every effort has been made to ensure the accuracy of information Prime Creative Media will not accept responsibility for errors or omissions or for any consequences arising from reliance on information published. The opinions expressed in Global Coffee Report are not necessarily the opinions of, or endorsed by the publisher unless otherwise stated.

NEWS DRIPBYDRIP AFRICA During the past couple decades, the number of coffee farmers in Zimbabwe has dropped drastically, first due to massive government land reform in 2000 that forcibly transferred land ownership from white farmers to indigenous Zimbabweans and, second, due to coffee’s low earnings amid local inflation that have pushed farmers to switch to more economical crops. However, a project by Nespresso and TechnoServe has injected new life into the nation’s producers, with an increased focus on premium coffees. See page 46.

AMERICAS In 2017, the Global Living Wage Coalition determined that in Minas Gerais South, Brazil, a living wage is R$1629 (US$442) per month. Since coffee possesses a quality

World Coffee Research and Promecafe have launched two practice guides addressing seed traceability and genetic purity.

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differential and customers are already used to paying varying prices, it’s an ideal industry to present the importance of achieving a living wage with consumers. But before roasters and retailers discuss living wages with customers or suppliers, Living Wage On-Up Co-executive Director Michelle Bhattacharyya says it’s important they have their own house in order. See page 16. Low coffee prices are bad news for growers worldwide, many of whom struggle to break even. Lack of liquidity means that investment in the modernisation of farms is severely hampered. International Coffee Organization research has shown that in the high-cost origins of Central and South America, between 25 to 50 per cent of farmers cannot cover the full costs of production, negatively affecting farm incomes and putting livelihoods at risk. See page 21.

A lack of seed traceability, deficient safeguards, and an absence of information are causing coffee plants around the world to underperform, leaving producers at risk. To help farmers grow productive plants and make informed decisions, World Coffee Research has partnered with Promecafe to launch two practice guides: Seed Production and Coffee Nursery Management. The guides address seed traceability and genetic purity to ensure plants are of the correct varieties, as well as the essential techniques to produce healthy plants. See page 28.

ASIA PACIFIC Australia is often cited as a trendsetter in the coffee world. The 2020 Melbourne International Coffee Expo will highlight the nation’s latest developments, as well as those from around the world,

in its Product Innovation Awards. With nearly 200 brands set to be on display and more product categories, organisers expect the next awards to be the most competitive and impressive yet. See page 50.

EUROPE Accademia Del Caffè Espresso was La Marzocco’s original industrial factory from 1959 to 2009. Now, the site is dedicated to building a sustainable future for espresso coffee. Accademia is already involved in two lines of research with University of Florence Professor Stefano Mancuso. One is focused on sustainable methods for farming coffee at origin. The other is in partnership with the Cup of Excellence, who is sending beans and soil samples for analysis. See page 8. Nearly eight years ago JAB Holding Company acquired Peet’s Coffee, kickstarting a coffee shopping spree for the company and within the greater coffee industry. Three years later it would buy Keurig Green Mountain, which would then go on to purchase Dr Pepper Snapple. Within three more years, Nestlé would buy Starbucks’ retail division, and Coca-Cola would buy UK coffee shop chain Costa Coffee. Meanwhile, indie roasters were getting snatched up, coffeeadjacent brands entered the mix, and the acquired became acquirers themselves. In recent years, there has been an increasing number of acquisitions throughout the coffee value chain, from green coffee buying to

NEWS In brief

equipment manufacturing. See page 12. Industry leaders share their 2020 vision with predictions from International Coffee Organization Executive Director José Sette, Buencafé Director Constanza Mejía, World Coffee Research CEO Jennifer “Vern” Long, Neuhaus Neotec Managing Director Dr. Victoria Behrmann, Brazil Specialty Coffee Association Executive Director Vanusia Nogueira, Solidaridad Network Founder Nico Roozen, and Simonelli Group CEO Fabio Ceccarani. Sette says even though the market is at its highest levels since the last quarter of 2018, producers are still unable to cover their production costs in many origins, calling into question the economic sustainability of the world coffee sector. See page 24. UCC Coffee UK & Ireland has conducted a study and released a comprehensive report, titled The Future of Automation to understand how automation is changing the coffee industry. This involved a survey of 2000 UK consumers, which found that convenience and efficiency were the most important factors in their buying practices. Half of respondents would be happy to serve themselves from a beanto-cup machine in a coffee shop, while 44 per cent would rather use one than be served from a traditional machine if it meant they did not have to queue. See page 32. Franke Coffee Systems launched its new brand identity at HostMilano in October, highlighting the need to provide more than coffee quality. The Swiss automatic manufacturer also previewed a slate of new equipment, including the compact A300 superautomatic, diverse SB1200, and an iced coffee module compatible with its A-line range. See page 34.

Faema has launched the President, a reimagining of the classic 1960s model.

Italian manufacturer Rancilio Group appointed Ruggero Ferrari as its Chief Executive Officer in September 2019. Ferrari says “the modern coffee industry is centred on creating an experience for the consumer and developing a spirit of appreciation for coffee quality”. One of his key focuses will be achieving this through Rancilio’s super-automatic espresso machine arm, Egro. See page 36. Faema’s latest espresso machine is a reinvention of the 1960s’ Faema President, with the company turning to the past to create something new for the present. The new model emphasises customisation and ergonomics to suit a wide variety of venues. The option of a traditional thermic system or Faema’s Group Thermal Infusion technology provides even greater control, consistency, and flexibility. See page 38. A new partnership between Italian coffee machine manufacturer Simonelli Group and the Specialty Coffee Association has formed to advance the industry’s understanding of coffee. For the next four years, the SCA and

Simonelli will collaborate on sensory evaluation and technical and data analysis using modern techniques, and consumer research tools to create a scientific understanding of the connection between extraction parameters and flavour. See page 40. HostMilano is a universal gathering of the coffee world. A record-breaking crowd of more than 200,000 visitors flocked to Rho Fiera over the course of the expo from 17 to 22 October. Inside the gigantic trade halls, 2249 exhibitors from 177 countries represented roasting, and processing equipment, espresso and grinding technology, and endless vending machines. See page 42. With the effects of climate change an ever-pressing issue to the global coffee industry, Eversys Chief Commercial Officer Kamal Bengougam says the entire value chain needs to assess its contribution. Ecological practices require further investment, which local farmers can ill afford to make, in view of plunging revenues. To continue to grow sustainably, the industry will need to put greed aside. See page 52.

200K+

The number of visitors who passed through the doors of Rho Fiera during HostMilano 2019.

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COVER STORY Accademia

An Accademia for the world PARIS HAS THE LOUVRE, NEW YORK HAS THE METROPOLITAN MUSEUM OF MODERN ART, LONDON HAS THE BRITISH MUSEUM, AND NOW FLORENCE HAS ACCADEMIA DEL CAFFÈ ESPRESSO, A PLACE WHERE LEGACY MEETS VISION.

tanding in the entrance to Accademia Del Caffè Espresso, visitors to the centre for espresso excellence could liken the establishment to a Guggenheim museum with its crisp white interior and artistic displays. But Accademia is not devoted to the arts. It’s dedicated to building a sustainable future for espresso coffee in the heart of Tuscany, Italy. “Welcome,” exclaimed Accademia Del Caffè Espresso General Manager Marta Kokosar at the exclusive media preview following HostMilano 2019. “This is a magical place for everyone to enjoy, dedicated to research, innovation, and exchange of information. Accademia will create value for the entire coffee industry. It was a concept on paper a long time ago, and now we have created a special place here in Florence that puts the history of La Marzocco, and the world of coffee, in the spotlight.” A photographer and music producer for many years, Kokosar is talented at bringing her subjects to life from behind the lens or backstage – and Accademia is no different. Her first job as a photojournalist saw her travel throughout South-East Asia and parts of Central America. She recalls travelling to Vietnam in 1994 when then-United States President Bill Clinton lifted the 19-year trade embargo on Vietnam, opening the door for more Western travellers. “I was living the dream job. I was super young and ambitious, but I made a terrible mistake. The photography industry was the first to be seriously affected by digitalisation and I didn’t understand it. I was conservative. I wanted to keep my artisan approach and develop my own photos, but everyone started doing better than me. My career ended because I couldn’t adapt to change,” Kokosar says. She was determined not to let that happen again. When Kokosar went back to Italy, she started taking digital photos for events, concerts, and recording houses, and forged a career in the music industry. Before long she was working as an MTV producer for live shows, meeting musicians including Amy Winehouse, for whom Kokosar produced the last live recorded performance before her death. “When you’re a producer you have to understand how to create the best environment for the artist to perform and connect with the audience. When you achieve that, the result is magical,” Kokosar says. “You have to choose the venue, how many people to attend, and consider every part of the chain, from the support act to the design of the stage. Everything you choose has to tell a story.” For more than 10 years, Kokosar also worked as Marketing and Communications Director for

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MTV’s direct competitor, Gruppo Editoriale L’Espresso, an Italian media conglomerate. In 2009 the digital revolution of the music business again altered the course of Kokosar’s career. Nine free-to-air TV channels became 2000, and Kokosar could no longer continue to produce the same volume of live music concerts with the same impact. This time, she left the industry to start her family, having daughters Neva and Nina in the space of two years. When she re-joined the industry, Kokosar did so as a consultant. She met with Italian espresso machine manufacturer La Marzocco who was looking for someone in the entertainment industry to produce its 2013 Out of the Box event to unite industry members with thoughtprovoking lectures. “I fell in love with the company and the coffee industry. It opened my mind. I knew nothing about the specialty coffee industry, but I wanted to learn. I called Guido [Bernardinelli, CEO] and Chris [Salierno, Marketing Director] and told them I wanted to be part of this industry Kokosar recalls. They agreed. Kokosar produced Out of the Box in Milan, followed by the World AeroPress Championship in Rimini. Guido and Chris told Kokosar they had an idea for a project that would become an icon for the coffee industry

Images: Lorenzo Ferroni

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COVER STORY Accademia

and a place of history, but they didn’t know how to do it. Kokosar next heard of the idea in Seattle during the 2018 Specialty Coffee Association Expo. La Marzocco’s board members told her Accademia was no longer just a concept on a piece of paper, and that she would be the one to lead it. “When I was asked to be General Manager of Accademia, I was shocked. I am the first woman in the company to cover a GM role. I felt very happy and proud of my myself,” Kokosar says. “I’ve learnt that to be a woman in male-oriented industries – first in photography, then music, and, in some ways, coffee – you have to try not to be conservative. You need to embrace change, network, have important conversations, and be passionate about what you do. Having this role on a more international level now gives me the chance to have a huge impact on an industry I’ve fallen in love with.” Kokosar says it’s also a credit to the La

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Marzocco board that they saw the value in hiring a non-industry representative for the role, a decision she thinks more businesses should consider. “The strength of working with people from other industries is immense. They can bring a different skillset and level of expertise. There’s always a little risk, but the world is changing. There’s no more ‘female and male, black and white’. Everything is more fluid, so we have to be part of it, embrace it, and move forward,” she says. To extend this outlook, the first person Kokosar bought into her team to bring Accademia to life was Eleonora Angela Maria Ignazzi. Ignazzi had experience running an art gallery in New York and is now Accademia’s Content Curator. Then came Silvia Bartoloni, who knows the culture of La Marzocco inside out. She is in charge of alliances and partnerships with universities, schools, and institutes to help Accademia stay relevant. Already, Accademia is involved in two lines of research with the University of Florence. One focuses on finding more sustainable methods of coffee farming to help smallholder producers improve their quality and sell their coffee at a higher price. The other line discovers more objective measures of traceability in partnership with the Cup of Excellence, which is sending green bean and soil samples from different plantations to the university for analysis. Leading the projects is Professor Stefano Mancuso, a leading authority on plant neurobiology. In 2014, he was put in the spotlight for claiming that “plants are intelligent” and in 2015, The New Yorker named Mancuso as one of 20 game-changers in the world. “I remember reading the list and I saw Stefano was the only Italian. I Googled him, saw he was the same age as me, and that he was running the science department here in Florence. So, I went and knocked on his door,” Kokosar says. “I told him about our coffee plant projects, and he was interested. Together, we’ve started this partnership that The glasshouse grows mature red and yellow will hopefully help the industry as a whole by creating caturra shrubs, banana trees, and shade plants. more innovation. There are so many buzz words like traceability, sustainability, and transparency, but they are the fields we need to drive innovation in the most, and that’s what we want Accademia to do.” Kokosar says there’s already outcomes from the research, with Accademia invited to present the findings to the Accademia dei Georgofili, the world’s oldest accademia. “Italy has a huge culture around coffee, but it’s in trouble. Italians think they know everything, but it’s the contrary. It’s hard to make them understand that there’s a whole world behind it. If Accademia can help educate the Italians and strengthen their understanding, it will create value for the entire industry. It’s how I feel about the opening of Starbucks Reserve in Milan too – it’s helping to spread awareness about coffee to Italians, and we need that.” The past two years have been a journey of research and discovery for Kokosar as she expanded her coffee knowledge and helped build Academia bit by bit. This includes the dome structure of the building, La Marzocco’s original industrial factory from 1959 to 2009. Back then, the company’s founding fathers, Giuseppe and Bruno Bambi, managed and designed the so-called “officina” or workshop alongside a small group of craftsmen. The officina was later led by Piero Bambi. Inside Accademia are treasures old and new, such as an original Bambi Bar from 1959 which Kokosar says “is like seeing a portrait of an era in Italy after the war”,

Accademia features a historial company and world timeline, and original La Marzocco machines.

and a newly commissioned bronze replica of the Marzocco statue, the heraldic lion and symbol of Florence. It is an ode to Italy’s republic era in the late 14th century. As it turns out, the sculptor is the only person with the license to replicate the Marzocco from the original Donatello drawing. Each room has a purpose. Accademia’s Cluster Centre focuses on innovation. Holograms demonstrate the advancements of barista ergonomics and a deconstructed La Marzocco Linea Mini is turned into wall art to help visitors understand the intricacies involved in assembling a machine by hand. One of the most impressive and magical structures in the museum is a kinetic sculpture created by artist Charles Morgan made entirely Marta Kokosar from spare espresso machine parts. The Accademia Del Caffè Espresso mesmerising structure represents the production General Manager of La Marzocco coffee machines and the many layers involved in its creation, from factory workers to the classic Bambi delivery bus. A historical timeline maps important dates in La Marzocco’s history and matches them with important world events: the launch of the La Marzocco home range in 2014 – the year Malala Yousafzai won the Nobel Peace Prize – and the launch of the KB90 in 2019, the year the NASA released the first image of a black hole. The Coffee Cluster room is a space to learn about the many elements impacting coffee production, such as climate change, and a chance to “reduce the gap” about consumers’ geographic knowledge of coffee production. The pièce de résistance is the dedicated glasshouse. It is filled with a forest of coffee plants, including mature red and yellow caturra shrubs, banana trees, and shade plants. Resident Head of Operations Massimo Battaglia controls the greenhouse’s temperature, humidity, and irrigation. The largest room in the building is the Accademia Bar, showcasing La Marzocco’s best technology

“I THINK THE SECRET IS TO DIG DEEP INTO THE ROOTS OF YOUR HISTORY BUT LOOK TO THE FUTURE WITHOUT BEING SCARED.”

and products with a striking glass wall of Leva machines stacked three deep. Around the parameters are sensory and cupping rooms and dedicated training spaces for international courses and certifications. Each lab shares views of the United Nations Educational, Scientific, and Cultural Organisation-protected hills, the subject of many renaissance paintings. “The one tagline I kept in mind when building Accademia was that it should be a place where legacy meets vision, and where artisanship and knowledge can create innovation,” Kokosar says. “I think the secret is to dig deep into the roots of your history but look to the future without being scared. Maybe it was fear that stopped me before. It’s fear that can cause an individual or a company to collapse, such as recording houses. They collapsed because they didn’t understand the world was changing around them. They were hiring lawyers to protect the copyright of music, but technology was moving forward too fast.” Kokosar learnt that lesson the hard way and is committed to helping Accademia evolve through collaborations and partnerships that will help it stay relevant for years to come. “I have to continue to keep in mind that we are telling the stories of artisans, but we are also running research to try to innovate the industry. If we can combine all these different opposites like legacy and history and artistry and technology, and help them work together, it’s a win-win,” she says. “It might sound presumptuous, but we feel a real commitment to the industry. Our approach is very authentic.” The official opening of Accademia is scheduled for April 2020, but the space is already operating as a platform to champion the international coffee community towards a sustainable future. All that’s left is for visitors to enter the Accademia with a little curiosity and an open mind. “We can’t wait to share this magical masterpiece with the world, which we hope will contribute to the future health and longevity of our industry,” Kokosar says. “We want Accademia to become a destination because this place is about more than just coffee.” GCR

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FEATURE Consolidation

The consolidation of coffee FOR NEARLY A DECADE, THE GLOBAL COFFEE INDUSTRY HAS BECOME INCREASINGLY CONCENTRATED AS THE BIG HAVE GOTTEN BIGGER. EXPERTS AND PLAYERS WEIGH IN ON WHAT IT MEANS.

early eight years ago, German conglomerate JAB Holding Company acquired San Francisco-based Peet’s Coffee, kickstarting a coffee shopping spree for the company and within the greater coffee industry. Three years later it would buy Keurig Green Mountain, which would then go on to purchase Dr Pepper Snapple. Within three more years, Nestlé would buy Starbucks’ retail division, and Coca-Cola would buy UK coffee shop chain Costa Coffee. Meanwhile, indie roasters were getting snatched up, coffee-adjacent brands entered the mix, and the acquired became acquirers themselves. Global tech giant Amazon even joined the action in August 2017 through its purchase of Whole Foods, which owns the Allegro brand of coffee and its in-store coffee counters. In the midst of all this activity two years ago, when Global Coffee Report first covered this

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rampant feeding frenzy, the industry was abuzz. Experts projected that the merger and acquisition activity would continue – and it did. In addition to the Dr Pepper Snapple, Starbucks, and Costa deals, other notable transactions since GCR’s first report in 2017 include JAB’s purchase of UK café chain Pret a Manger, Kraft Heinz’s purchase of Ethical Bean, Lavazza’s purchase of Mars Inc.’s drinks division, and Jollibee Foods’ purchase of Coffee Bean & Tea Leaf.

In recent years, there has also been an increasing number of transactions at more varied stages of the coffee value chain. In green coffee buying, Sustainable Harvest purchased Twin Trading in November 2019 after learning the UK business was closing its doors. Further down the chain, in-home espresso machine maker De’Longhi purchased a 40 per cent share of professional-grade espresso machine maker Eversys in 2017, with the option of acquiring the remaining 60 per cent within four years. De’Longhi, which is open to similar opportunities as part of its growth strategy, will finalise the deal in 2021. Jeffrey Young, CEO of global research firm Allegra World Coffee Portal, was one of those aforementioned experts who expected the industry to continue consolidating. “The big are getting bigger, and so now we see this coalescence of four main entities that are really starting to control a huge amount of the world’s coffee,” he tells Global Coffee Report. “This is the rise of big business in coffee.”

From June 2015 to October 2018, Lavazza has acquired seven industry operators including French brand Carte Noir.

partnerships and acquisitions. Additionally, over the years, coffee-adjacent businesses, such as cafés, baked goods, and complementary beverages, have become popular targets. Since 2014, JAB bought Mighty Leaf Tea, Einstein Brothers Bagels, Krispy Kreme, Panera, and Revive Kombucha (via Peet’s). WHAT’S IN IT FOR ME? The other factor is that the big multinationals, which are often too slow to stay at the Not unlike two years ago, there are a few big forefront of changing consumer trends, are looking for ways to both counteract their slowing factors at play. Coffee is currently one of the volume growth and diversify their portfolios. fastest-growing consumer spending categories “The largest consumer packaged goods companies of the world are finding themselves needing right now, according to Euromonitor, and new brands to put in their retail distribution systems, premium brands that are increasingly forming in other areas,” explained Euromonitor Global Lead of Food & Beverage Research companies big and small are vying for their Michael Schaefer in a podcast about the Coca-Cola and Costa deal. “For the biggest drinks shares of the space. With its myriad of companies and nonalcoholic beverage companies, because volume growth is slowing in a lot subcategories and extensions, from origins of their largest markets, value growth has become paramount and premiumisation has become to formats to additives, the coffee space has paramount. So having a connection to high-margin, away-from-home channels and brands is massive opportunities for new entrants, going to become more important going forward, as is the need to innovate and the need to build new brands faster.” The alliance between Nestlé and Starbucks strengthens Nestlé’s presence in North American For the acquirers, they gain access to the front line of the fast-moving premium and ready-to-drink coffee spaces. industry through small, nimble innovators with loyal followers. For the acquired, they gain access to the resources and distribution networks of their massive parent companies, which can mean more money behind innovation and promotion and introductions to new markets. Through Costa, Coca-Cola is making coffee a bigger part of its portfolio and gaining a global retail footprint through one of the top five coffee shop chains in the world. In return, Costa gains access to Coca-Cola’s bottled beverage prowess and distribution network. “This acquisition will give Coca-Cola a strong backbone in the hot beverage business across parts of Europe, Africa, the Middle East, and Asia-Pacific. Costa brings us a brand, supply chain, roastery, retail network, vending system, and much more,” Coca-Cola CEO James Quincey said in a video announcement last year. “The opportunities to create more value are tremendous. For example, Costa has a vending operation with the potential for expansion with Coca-Cola customers worldwide. And the Costa brand can grow into ready-to-drink (RTD) products, which of

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FEATURE Consolidation

At the 2019 Ernesto Illy International Coffee Awards, illycaffé Chairman Andrea Illy expressed his concern over concentrated control in the coffee industry.

course is one of the great global strengths of Coca-Cola.” The “global alliance” between Nestlé and Starbucks significantly strengthens Nestlé’s coffee portfolio in the North American premium roast and ground coffee business, as well as in the RTD sector. For Starbucks, it means expansion into other global grocery and foodservice markets through Nestlé’s expansive reach and reputation. In the De’Longhi and Eversys deal, it meant an opportunity for De’Longhi to enter the professional market without having to invest the excessive time and resources into creating a new machine from scratch. It also meant that Eversys’s innovations would now extend to the lower end of the professional market, a space the company couldn’t access individually without compromising its brand quality, Eversys’s then Deputy CEO Kamal Bengougam told GCR in 2017.

CONSOLIDATION: OPPORTUNITY OR THREAT? On the consumer side, Allegra’s Young says the positive to all the merger and acquisition activity is “the dissemination of more quality coffee to the mass market, so we’re all drinking better coffee than we were 20 years ago”. This, in turn, is driving greater demand for higher-quality and specialty coffees, he says: “So the more people who want higher-quality coffee, the more opportunity there is for the farmers who grow it.” He speculates, however, that the opportunity is likely limited to the very best and most organised growers or those who have multinationals leading programs and pumping money into them. Young also believes this is the case on a larger scale, with only a small share of industry players reaping the benefits of consolidation activity. Rather, he sees it as “a threat to the industry more than as an opportunity. There’s never been so much control over the coffee market and power has never been so concentrated, so we’re

G C R | J A N UA R Y / F E B R UA RY 2020

in uncharted territory. Regardless of whether we think we’re going to have cheaper or better coffee, usually in economics, it’s not healthy to have so much control across so few.” And this seems to be the consensus from a growing number of people in the global industry. In his keynote speech at the Ernesto Illy International Coffee Award in New York City in October 2019, Illycaffé Chairman Andrea Illy also expressed his concern for this threat and then introduced his precompetitive concept of “co-opetition”, where industry players first cooperate – and even collaborate – on economic, social, and environmental sustainability before competing. “Co-opetition means cooperating with industry stakeholders and institutions that are involved in order to create a better coffee market, a more sustainable and dynamic market,” he said. “And then, co-opetition is about competing for our own specific missions and strategies, of which illycaffé is leading in quality.”

WHAT’S THE ALTERNATIVE? Illycaffé CEO Massimiliano Pogliani emphasises the fact that illycaffé remains independent, something the Italian familyowned company takes pride in and intends to maintain. He echoed Andrea Illy’s sentiments

Coca-Cola CEO James Quincey says acquiring Costa Coffee will give Coca-Cola a “strong backbone” in the hot beverage business.

regarding collaboration, pointing to illycaffé’s recent partnership with JAB to produce its compatible coffee capsules (different from illycaffé’s iperEspresso proprietary capsule system for home and professional use). “Co-opetition doesn’t mean that we cannot collaborate with these giants, and one of the most evident examples is the partnership and licensing agreement with JAB,” Pogliani tells GCR . “We each remain independent, but we brought together our strengths in collaboration, and that is another way to grow a company, even in this competitive, consolidating environment.” He says that remaining independent, as the alternative to merger and acquisition growth strategies, is not possible for all companies. “In order to do that, you need to have a proposition that stands out and is able to break through the clutter,” Pogliani explains. “You need to have certain characteristics, including strong and unique positioning, strong and unique product heritage, the capability of growing a business financially and sustainably

without external support. These are all boxes we tick at Illy, allowing us to sustain our own growth. We are not a company that needs to consolidate with others or grow through acquisitions.” Italy’s Lavazza and Germany’s Tchibo also tick many of those boxes and, thus, are able to remain independent. Similar to illycaffé, Lavazza has a partnership with a beverage giant, PepsiCo, for its RTD division. However, Lavazza has been very active in the merger and acquisition space on the buying side. From June 2015 to October 2018, Lavazza acquired seven other operators. “These are very long-established family businesses with a lot of family pride and presumably a lot of family funds with low debt, so there’s more conviction and they have a good chance [of remaining independent],” estimates Young. “They don’t have investors that are champing at the bit to maximise an exit, so there’s no absolute need to sell.” At the end of the day, though, “I think everyone comes at a price,” he tells GCR . “With the broader trend of the industry, it’ll only be a matter of time before one or more of them succumb to what is a major offer.” Though on a smaller scale, he points to Nestlé’s purchase of indie roaster Blue Bottle as an example of selling when “the price is right”. No different than two years ago, the experts forecast the consolidation activity to continue for the foreseeable future, with increased activity across different links of the supply chain and coffee-adjacent markets. “I think in the next five to 10 years, we’re going to see more of these tie-ups with foodservice brands and away-from-home brands as a way to bridge the gap between production, marketing, and that consumer relationship,” Schaefer estimated in the Euromonitor podcast. “Many of the very high-profile deals have happened, so now we’re going to be digging deeper into some of the smaller ones,” forecasts Young. “It’s only going to get more and more concentrated and the gulf between the small and the really big is only going to get wider and wider.” G C R

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FEATURE Living wage

FIGHT FOR A LIVING WAGE GLOBAL COFFEE REPORT LOOKS AT HOW THE LIVING WAGE CAN GUIDE DISCUSSIONS ON PRICE AND THE FUTURE SUSTAINABILITY OF COFFEE.

hen low international coffee prices are discussed, it is often in comparison to the cost of production. However, there is a higher benchmark that needs to be addressed – the living income of coffee producers or living wage of their workers. Michelle Bhattacharyya, Co-executive Director of Living Wage On-Up and former Coordinator of the Global Living Wage Coalition, identifies a living wage as the dollar amount a person needs to earn to afford a basic but decent life for themselves and their family, which differs from country to country. “That’s meeting just enough nutrition, having a house over your head, making sure your kids can go to school, and having basic healthcare – very basic things,” Bhattacharyya tells Global Coffee Report. “ But right now, the incomes for coffee farmers are so low that whenever prices drop, they are suddenly not able to eat as much. You’re going to have a more sustainable business if we

G C R | J A N UA R Y / F E B R UARY 2020

make the fluctuations in prices easier for farmers to absorb.” Bhattacharyya says not being able to achieve a living wage in coffee farming is contributing to many of the challenges the coffee industry is currently facing. “There’s a lot of things that we look at as major human rights issues. Not earning a living wage is a big motivator for child labour, because families are having trouble feeding their kids, so they send them off to work,” she says. “Then there’s health considerations, like access to water or basic sanitation.

“In coffee specifically, there’s a lot of concern about younger generations not taking up farming after their parents. The question is, if you knew you couldn’t support yourself and your family off of farming, is that a career field you want to go into? If you’re invested in making an industry sustainable – keeping supply chains and production running for commodities like coffee – then you need to think: ‘Are we creating a situation where it’s even possible for people to live a decent life on what they’re earning?’ “Living wages are a matter of human rights and incumbent on everyone, but it’s also one of sustaining business and making sure that it’s able to continue on in a way that helps everybody.” Bhattacharyya says while many roasters and traders want to pay a living income directly to their producers, being the only company to increase prices could make them uncompetitive in the marketplace. Roadblocks may also exist that limit the ability to take joint action. “One of the major issues is you can’t expect farmers to pay their workers a living wage or have a living income for themselves and their family, unless you increase what you’re paying for their product,” Bhattacharyya says. “If coffee companies do this collectively, it will likely mean increasing prices to the consumer and then you’re really wading into antitrust issues. So everyone gets really nervous and says, ‘we can’t have any discussions on price, because we don’t want to violate any laws’.”

THE ANTITRUST ISSUE Antitrust laws exist to regulate the conduct of businesses to promote competition for the benefit of consumers. This can include banning competing businesses from collectively agreeing to charge higher prices for their products, called price fixing or price setting. In 2016, Inara Scott of the College of Business at Oregon State University, published ‘Antitrust and Socially Responsible Collaboration: A Chilling Combination?’ in the American Business Law Journal. The paper describes how antitrust laws in the United States can unintentionally prevent businesses from making sustainable business decisions. “Antitrust law in the US has a couple categories of behaviour or agreement that are considered ‘per se’ violations, which are blanket prohibited. If the courts see this kind of activity,

“WE HAD COMPANIES THAT WERE TELLING THEIR PRODUCERS TO PAY LIVING WAGES TO THEIR WORKERS, BUT THE VALUE CHAIN DISTRIBUTION SHOWED THAT IT’S NOT POSSIBLE ON THE AMOUNT OF MONEY THEY’RE EARNING.” Michelle Bhattacharyya

Co-executive Director of Living Wage On-Up

they won’t inquire into the facts or motive behind it,” Scott tells GCR . “Price fixing is one of the clearest of those categories of behaviour. If the goal is to create some kind of agreement resulting in higher prices, courts will not pause before finding that the behaviour violates antitrust.” These laws can result in companies declining to take part in collaborations with other businesses that would not outright break antitrust laws. “There are certain types of collaborations that don’t violate antitrust law, but because of the potential for violation, particularly in areas where the outcome is unclear, generally, businesses will generally avoid engaging in that type of behaviour,” Scott says. One example Scott gives of socially responsible collaboration being discouraged by antitrust is the Designated Supplier Program of the Worker Rights Consortium, an attempt to create mandatory standards that avoid having athletic goods made in sweatshops. After the Department of Justice raised concerns with the Designated Supplier Program over potential antitrust violations, the Worker Rights Consortium had to reform the program from a set of mandatory standards to voluntary conditions. “There’s certainly examples of antitrust cases sending a message, that has been received by businesses, that this kind of behaviour can’t be engaged in,” Scott says. “Courts need to instead consider not just short-term but long-term price impacts to the consumer and on supply. There is room for them to look at the status of the market, how it functions, and failures of the market before making assumptions about whether a collaboration benefits or hurts the consumer.” While roasters and traders may face hurdles setting higher prices among themselves, Scott says independent standard setting organisations or fair trade certifications can provide avenues for socially responsible collaboration. “Those certifications can lead to higher prices for growers but aren’t tied directly to higher prices being paid by consumers,” she says. “Antitrust laws can put coffee growers and buyers in a difficult position and there are limited ways to react but signing up to voluntary certifications can be one of the best.”

GOING BANANAS Coffee is not the first industry to face this living wage dilemma or the antitrust barrier. Bhattacharyya says others have made progress by taking the conversation in a different direction. “Similarly to coffee, [the World Banana Forum] was finding that banana farmers were turning away from the industry, saying ‘this is just not a productive career where we can we can live anymore’,” Bhattacharyya says. “They started really talking about how they were going to cover a sustainable cost of production, that will support the industry long term, and ensure people were paid a living wage.” The World Banana Forum conducted a value chain study, which looked how much of the value a banana is sold for instore is distributed to each player in the supply chain – the retailer, brand,

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

FEATURE Living wage

distributor, and farmer. The figure the farmer receives was then compared to the living wages of various producing countries, which the Global Living Wage Coalition determined using the Ankler methodology. This entails economists, usually from local universities, going into an area and determining the costs of a nutritious diet, rent, and decent housing, other essential items such as clothing and sanitary products, healthcare, childcare, transportation, and taxes. Then, a five per cent margin is added to cover unexpected events, such as funerals or fire. This figure can differ between regions. For instance, the Global Living Wage Coalition determined that in Minas Gerais South, Brazil, a living wage is R$1629 (US$442) per month, whereas in northwest Nicaragua it is C$8048 (US$264) per month. “I think everyone was a little bit shocked at the gap between a living wage and what people actually earn,” Bhattacharyya says. “We had companies that were telling their producers to pay living wages to their workers, but the value chain distribution showed that it’s not possible on the amount of money they’re earning. “The value chain study meant the banana industry could leap from discussing pricing to talking about the sustainable cost of production and how to cover it. Retailers and buyers have been much more comfortable with having that conversation because in no way is it price setting. It’s just asking: ‘are you able to cover this, so that producers can earn a living income and pay their workers a living wage?’ But one of the biggest barriers is that the producer doesn’t have the power to argue for this themselves. That power lives with the buyer.”

have the idea that if it’s a certified product, or from a reputable coffeehouse, that everyone is being paid what they need to be paid. That’s not necessarily the case right now.” Since coffee possesses a quality differential and customers are already used to paying varying prices, Bhattacharyya says it’s an ideal industry to present the importance of achieving a living wage with consumers. “With products like bananas, customers don’t usually know one from the next. In terms of quality, they seem the same. The argument from retailers and buyers is that if they raise their price to make sure paying a living wage is possible, they can’t do it without everyone else doing it too, otherwise customers will just go somewhere cheaper,” she says. “Whereas coffee already has a large variation in pricing due to the quality of the coffee that you’re buying and the location you’re buying it from. It’s a little bit easier for a lot of players to come together and assess with their individual suppliers if a living wage is achievable on current prices, and if not, communicate to the consumer why they need to be raised.”

ENGAGING THE CUSTOMER

LIVING WAGE AT HOME...

In order to address the living wage issue, Bhattacharyya says the industry needs to educate and engage the consumer. “Generally, customers are willing to pay more for a product if they can afford to, and if they know it will allow someone to have a basic level of decency in their livelihood,’ she says. “But they often don’t know anything about where their coffee comes from or how much those farmers are really making. They

Before roasters and retailers discuss living wages with customers or suppliers, Bhattacharyya says it’s important they have their own house in order. “The first line of conversation with customers in the coffee industry is often baristas. In the US, most of those baristas aren’t earning a living wage themselves. How do you expect someone who is struggling with the same thing in their own daily life to really talk about and advocate for why paying a living wage to other people is important?” she asks. “It’s important people in the roaster/retail end of the supply chain ensure their own employees are paid a living wage. Then, when they work with their producers or throughout the supply chain, they come from a sense of understanding and are able to make the case about why this is valuable.”

G C R | J A N UA R Y / F E B R UARY 2020

The World Banana Forum conducted a value chain study to determine if it was possible for a living wage to be achieved with current banana prices.

Outside of bettering the lives of individual workers, achieving a living wage has been shown to improve conditions for the community and even profitability of businesses. “There’s a lot of data that shows when you pay living wages, you have higher productivity, lower turnover, and less turnover costs. Your recruitment is also much better as you get better candidates because you’re a more appealing employer,” Bhattacharyya says. “One company I worked with in the fast-casual food industry almost doubled the wages of all their workers and actually saw their profits increase, because their workers talked to their consumers about how much it meant to them.”

...AND ABROAD In order to achieve a living wage across the supply chain, Bhattacharyya says an industry-wide commitment is needed to conduct a value chain study to determine how much money goes to each industry sector and then take action to close the gaps. “Companies don’t ever have to agree on or talk about what prices should be. It’s just a matter of all looking at the cost of production and living wages, and how those are covered in their prices,” she says. “People aren’t aware of what it really means to not earn a living wage and the sacrifices people have to make or the conditions that they’re sort of forced to live in. When different players in the value chain can see the contributions they make to the situation, it becomes easier for everyone to sign on and say ‘this is not going to work long-term’.” G C R

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FEATURE ICO report

Shock to the system AS COFFEE PRICES REMAIN RELATIVELY LOW, CONCERNS ABOUT THE SOCIO-ECONOMIC IMPACT ON COFFEE PRODUCING COUNTRIES CONTINUE. INTERNATIONAL COFFEE ORGANIZATION RESEARCH UNCOVERS THE WIDER IMPLICATIONS FOR SUSTAINABLE DEVELOPMENT.

ow coffee prices are bad news for growers worldwide, many of whom struggle to break even. Lack of liquidity means investment in the modernisation of farms is severely hampered. International Coffee Organization (ICO) research has shown that in the high-cost origins of Central and South America, between 25 to 50 per cent of farmers cannot cover the full costs of production, negatively affecting farm incomes and putting livelihoods at risk. But what are the wider implications for sustainable development in the economies of coffee-producing countries? The ICO’s new economic flagship publication, the Coffee Development Report 2019, sheds light on this question and provides new empirical evidence on the relation between fluctuations in international coffee prices and socio-economic indicators at country level. We know that as an export commodity, coffee realised important foreign exchange earnings amounting to US$20 billion globally in 2017-18. However, while coffee may be an important sector in one country, its contribution in a well-diversified economy may be comparably small. This needs to be taken into account in any thorough analysis. The economic significance can be measured, for example, by the share of coffee in total merchandise exports. Typically, the share varies across countries. Today, Brazil, Vietnam and Colombia – the three largest coffee-producing countries – show relatively low dependence on coffee with a share in total exports of 3, 2, and 6 per cent respectively. In some medium-sized producing countries such

as Honduras and Ethiopia, this share exceeds 20 per cent. Other smaller producers, such as Burundi, Rwanda and Uganda, are also highly dependent on coffee exports. A lack of diversification of the economy and an overreliance on coffee exposes countries to significant commodity market risks. At the macro level, fluctuations of capital flows resulting from changes in commodity prices can affect countries’ balance of payments and public revenues. Hence, the volatility of commodity markets can directly affect governments’ fiscal stability and scope for public spending. At the enterprise level, the unpredictability of highly volatile international prices makes financial planning for rural households and agricultural producers difficult. A drop in international prices for export crops can result in financial

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

FEATURE ICO report

FIGURE 1: RELATIONSHIP BETWEEN A ONE PER CENT INCREASE IN COFFEE PRICES AND ECONOMIC AND SOCIAL DEVELOPMENT INDICATORS IN COFFEE-PRODUCING COUNTRIES (A) ECONOMIC AND SOCIAL DEVELOPMENT RURAL EMPLOYMENT RATE

AGRICULTURE VALUE ADDED % OF GDP

POVERTY HEADCOUNT RATIO AT $1.90 A DAY

-4%

(B) FOOD SECURITY SUPPLY OF PROTEIN OF ANIMAL ORIGIN*

10%

NUMBER OF PEOPLE UNDERNOURISHED*

-9%

0.08%

distress for farming households, the majority of which are smallholdings, due to lack of savings and limited access to finance. Coffee-producing countries predominantly rank low in economic and social development metrics, with 18 out of 44 exporting members of the ICO falling in the category of Least Developed Countries. These countries are characterised by low per-capita Gross Domestic Product (GDP) and lag behind in United Nations Human Development Index scores. Around 20 per cent of coffeeproducing countries record a low Human Development Index (less than 0.5), compared to 4 per cent of countries that do not produce coffee. This implies that coffee-producing countries are particularly vulnerable to commodity price shocks. To trace the impact of price variations from farm level to rural communities and the wider economy, ICO economists have assembled a dataset based on ICO statistics and data from other sources for 56 coffee-producing countries over a period of 28 years, from 1990 to 2017 inclusive. Such a large dataset captures the diversity of coffee sectors between countries and across time, covering multiple phases of boom and bust in the coffee market. Statistical analyses are used to identify correlations between changes in the coffee price in one year and socio-economic indicators in the following year, filtering out â&#x20AC;&#x2DC;noiseâ&#x20AC;&#x2122; created by other factors including country- or time-specific characteristics such as level of development or the effect of a global recession. Furthermore, the analysis takes into account if the coffee price changes from a high or low level. The socio-economic indicators analysed are grouped in three categories: economic and social impact, food security, and political stability. Each category comprises one or more indicators that can be easily linked to the United Nations Sustainable Development Goals.

ECONOMIC AND SOCIAL DEVELOPMENT The analysis revealed a statistically significant relation between changes in the price of coffee and employment, value addition, as well as poverty rates. A 1 per cent increase in the price of coffee is associated with a 3 per cent increment in the rural employment rate (Figure 1a). This sizeable positive effect on the non-urban labour market suggests that the coffee value chain provides employment for workers at the farm level (e.g. during harvest) and beyond (processing, handling, export). A rise in international prices of 1 US cent per pound has a positive knock-on effect of the same magnitude on the contribution of agriculture to the GDP of producing countries. These effects on the rural economy translate into a reduction of poverty. A 1 per cent increase in coffee prices is correlated with a 4 per cent decrease in the World Bank poverty headcount ratio (at US$1.90 a day), thereby suggesting a relevant contribution to Sustainable Development Goal 1: End poverty in all its forms everywhere.

FOOD SECURITY GINI INDEX

-0.02%

Note: The sample of countries included in the analysis comprises all ICO member countries. Results are statistically significant at least at the 10 per cent level. Results are significant for countries which are highly dependent on coffee (share of coffee in total export value). Data is obtained from World Bank, Food and Agriculture Organization, Penn World Table, and Federal Reserve Economic Data. Sourced by the ICO.

G C R | J A N UA R Y / F E B R UARY 2020

The quantitative analysis shows a significant positive correlation of higher coffee prices with food security in producing countries that are highly dependent on coffee (Figure 1b). A 1 per cent increase in the international prices of coffee is associated with a 10 per cent higher supply of animal-based protein, a proxy for dietary quality. The prevalence of some forms of hunger, as measured by the share of the undernourished in the overall population, would decrease by 9 per cent. The results are statistically significant only for the subset of countries that are highly dependent on coffee. The results confirm the critical contribution of the coffee sector in achieving Sustainable Development Goal 2: Zero Hunger.

POLITICAL STABILITY The ICO analysis reveals a significantly positive relationship between higher coffee prices and income equality as well as political stability (Figure 1c). The Gini coefficient, an indicator of statistical dispersion, measures income equality that ranges from 0 to 1, where 0 describes a state of full equality and 1 a state of absolute inequality. A 1 per cent increase in the international price of coffee reduces the Gini by 0.02 across all coffee-producing countries on average. This finding shows that the positive economic benefits of coffee production on employment and agriculture

reach the poor, and thereby reduce inequality. Hence, higher coffee prices are associated with equitable outcomes, contrasting the potential benefits from price increases in other non-agricultural commodities such as oil, which are often accrued by elites, depending on the governance of states. Political stability is expressed by an index of the Worldwide Governance Indicator family of the World Bank, which measures perceptions of the likelihood of political instability and/or politically motivated violence, including terrorism. The index ranges from -2.5 to 2.5 with lower values indicating less political stability. The empirical analysis finds a statistically significant relationship between coffee prices and political stability in producing countries. A 1 per cent increase in coffee prices is correlated with a 0.08-point increase in the political stability index. Hence, higher coffee prices – through their impact on economic development – are likely to have positive indirect effects on social coherence, that is, the rule of law and business environment, in producing countries. Falling coffee prices, on the other hand, could result in instability in those communities that are economically dependent on coffee sales. With this analysis, we show that changes in international coffee prices represent an external shock to coffee-producing economies that has repercussions for economic and social development, including poverty and equality, food security, and political stability. Hence, policies that help increasing and stabilising income levels of coffee-producing households are a catalyst for broader growth and development. While sustainable coffee livelihoods are not a sufficient condition for a sector that is inclusive, fair, and environmentally friendly, they certainly are a necessary condition. If rural households engaged in coffee production are lifted out of poverty and obtain an income that allows a decent standard of living, social objectives such as gender equality and eradication of child labour are more likely to be reached. Environmentally detrimental practices, such as deforestation, would be significantly reduced. G C R

About us • This article is written by Christoph Sänger, a Senior Economist at the International Coffee Organization (ICO) in London. He conducts research on coffee value chains in Africa, Asia, and Latin America. Prior to joining the ICO, Sänger was an economist at the European Bank for Reconstruction and Development. • The ICO is the main intergovernmental organisation for coffee, bringing together exporting and importing governments to tackle the challenges facing the world coffee sector through international cooperation. Its Member Governments represent 98 per cent of world coffee production and 67 per cent of world consumption.

For more information, visit www.ico.org

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

REPORT Industry predictions

2 02 0 VI S I O N

GCR PETITIONS INDUSTRY LEADERS ON THE YEAR AHEAD: THE OPPORTUNITIES, CHALLENGES, AND TRENDS SET TO CHANGE THE GAME AND DEMAND OUR ATTENTION IN 2020.

JOSĂ&#x2030; SETTE

EXECUTIVE DIRECTOR, INTERNATIONAL COFFEE ORGANIZATION In the first 10 months of 2019, the coffee market fluctuated in a tight range between 93 and 101 US cents per pound, as measured by the monthly average of the International Coffee Organization (ICO) composite indicator price. However, in November 2019 the market broke out of this range and the ICO indicator reached its highest level of the year at 107.23 US cents per pound, amid expectations of a global deficit in coffee year 2019-20 preliminarily estimated at 502,000 bags. A significant slowdown in exports and adverse weather in

G C R | J A N UA R Y / F E B R UARY 2020

parts of Central America and Asia have also helped to support the market. Even though the market is at its highest levels since the last quarter of 2018, we must continue to bear in mind that growers are still unable to cover their production costs in many origins, calling into question the economic sustainability of the world coffee sector. On the other hand, the recent weakness of the Brazilian Real as well as the upcoming onyear crop in Brazil may limit any gains as we move forward. Although we can be cautiously optimistic that the sustained fall in coffee prices since the end of 2016 is drawing to a close, this should not be a motive for commemoration. Much hard work remains to be done until we can consider the world coffee sector to be truly economically sustainable.

CONSTANZA MEJÍA DIRECTOR, BUENCAFÉ

According to our estimates and research, in 2020 global coffee consumption will continue growing at steady rates. I believe that beyond supply and demand fluctuations, we must understand new consumption patterns and trends. This includes higher consumer expectations, the search for “authentic and different” products, and the desire to create experiences with which consumers can express their individuality. In order to meet such demands, many companies are looking to expand their product portfolio from instant coffee to whole beans, and ground coffee and capsules to ready-to-drink cans. In Colombia, this translates to an increased demand for high-quality products. As such, the industry has begun to incorporate origin coffees and premium brands into its portfolio.

JENNIFER “VERN” LONG

CEO, WORLD COFFEE RESEARCH We are squarely in the middle of a major transformation of the coffee sector. Climate change, low prices, and structural change in coffee-producing origins are driving shifts that have become increasingly visible over the past year. We can now see clearly that this drama ends – in the absence of a common agenda to address it – with significant erosion of origin diversity. In my prior work, I oversaw a portfolio of United States government investment in agricultural research programs for 18 commodities around the world, with US$140 million in annual investment. From my experience, I have never seen a commodity as vulnerable as coffee. The threat to origin diversity is significant, and it will take collaborative muscle to address it. It will be critical for the industry to keep in view which producing countries are investing in their coffee sectors, as those investments and the systematic plans that lead to them can have an enormous impact on how countries are positioned in this shifting

We also have to take into account that the future demand for coffee – despite the global trend towards premiumisation – is linked to specific conditions. In highincome countries, there is a shift towards better quality processes. In regions where the population tends to increase, growth of affordable formats is expected, and countries where tea has traditionally been consumed show an increase in coffee consumption. I think it is important to plan ahead and apply global strategies to encourage growth of the coffee industry and consumption. Market surveys with local consumers must be conducted to ensure supply can meet each region’s needs and taste preferences. We have also seen a growing number of young consumers spend their money in specialty coffee shops if the product is part of “an experience”. This includes when the product features unconventional images or shapes, or because of a combination of exotic flavours. Young people no longer drink “only”

landscape. Across Africa, for example, at least five countries are integrating coffee in their national agricultural investment plans. The continent has tremendous potential for both quality and production growth – and countries are mobilising investment with the US$950 million Africa Coffee Facility.

black coffee and at breakfast. It is part of their morning or afternoon in cold, milky, or bubble brews, among others. Consumption moments are changing.

On the consumption side, we expect this transformation to continue to drive difficult conversations about the meaning of sustainability, especially the economic sustainability of coffee as a livelihood. For other commodity crops in which there has been a lasting negative price trend, evidence clearly shows that the only way for producers to stay in the game is to improve productivity and profitability, making agricultural innovation investments a critical foundation. We have been gratified to see a growing consensus about the importance of agricultural research and development for the long-term economic and environmental sustainability of coffee, and for the sustainable growth of supply. In 2020, we expect to see the solidification of a shared, global research agenda around protecting origin diversity, and the mobilisation of private and public sector resources to advance it. In the coming year, World Coffee Research’s global trial network will begin posting a critical mass of results and data that can inform and activate that agenda. Those results will be shared widely with national programs, researchers, supply chain, and the industry as a whole. The biggest challenge is coffee’s perennial challenge: to ensure that the fruits of all this work reach farmers.

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

REPORT Industry predictions

DR. VICTORIA BEHRMANN

is developing both technologies to offer roasters high-end technology. In Asia, Vietnam is leading growth in instant coffee production for export. This is in response to government support designed to offset a drop in the price of green coffee and boost added value in the country. Investment in European manufacturing equipment is

steady for industrial-scale roasting and instant coffee production. The largest Vietnamese roasters favour Rotating Fluidised Bed technology, and Neuhaus Neotec is proud to be the leading supplier in this market segment. The Chinese market, as any other tea-dominated country, is developing fast and we see large potential for the next few years. There’s a growing need for regional service hubs to help clients. The Internet of Things leads the push globally to improve production capabilities. Neuhaus Neotec invests in innovative control systems to allow operators better oversight and more user-friendly operation. State-ofthe-art hardware such as iO links instead of extensive cabling allow not only for reduced installation efforts, but also for improved use of signal control. Predictive maintenance of main components provides potential to reduce stocking of spare parts and avoids downtimes. Improved software also allows for easier operation in making straightforward changes to roast profiles and recipes. Those developments are only the start, and Neuhaus Neotec will be at the centre of these new opportunities in the coffee roaster community.

year. The country consumes roughly half of what it produces and exports the other half. This trend will continue. Brazilians are also drinking increasingly better coffee with the growth rate in specialty coffee markedly higher than conventional coffee. The quality of Brazilian specialty coffee, in particular, continues to improve. Uniform rainfall during the Brazilian spring led to uniform flowerings, thus, we expect cherry ripening to be uniform too. We also believe the upcoming harvest will be significantly less troublesome for producers than 2019. We see Brazil as the vanguard of exciting advances in the world of coffee. This is largely attributed to cutting-edge research and development, harvest, and post-harvest processing techniques, fermentation processes that result in unique sensory profiles, and a vibrant coffee community who share their experiences. Abroad, we see China as the most compelling, dynamic market. The country’s

large, young, affluent population consumes more coffee every day. The young populations in Eastern Europe and the Middle East also present exciting opportunities for new and increased trade. The mature markets of North America, Western Europe, Oceania, Japan, and South Korea will continue to be important to Brazil’s exports.

MANAGING DIRECTOR, NEUHAUS NEOTEC

For 2020 and the mid-term, we expect high levels of investment globally in coffee handling and roasting facilities. In Europe, supermarkets are spending on proliferating their own brands, which range from green coffee handling to capsule production and meet growing consumer demand. In the specialty coffee market, there’s a new generation of roasters – in a development similar to the craft beer scene – with a focus on new aroma profiles and an openness to new technologies. Neuhaus challenges conventional drum roasting technology with the Neoroast, which offers a much broader range of roasting varieties. The hot air system opens up new roasting potential without impacting the aroma. The roaster concept “Le belle sorelle”, shown at HostMilano, combines a conventional drum with hot air technology. Drum roasters are also having a renaissance. As such, Neuhaus Neotec

VANUSIA NOGUEIRA EXECUTIVE DIRECTOR, BRAZIL SPECIALTY COFFEE ASSOCIATION

For Brazil, 2019 has been a year of many challenges and many opportunities. Various climatic troubles such as irregular rainfall and frost generally hindered bean quality, although Brazil produced some rare treasures of exceptional coffees. Historically low prices added to producers’ woes in an already difficult year. In 2020, the Brazil Specialty Coffee Association foresees continuing challenges from the price crisis, which may be exacerbated by a significantly larger 2020 Brazil harvest. In 2018, Brazil produced approximately 60 million bags, followed by around 49 million last year. We expect a harvest in line with 2018’s for the following crop year. In addition to being the world’s top coffee producer, Brazil is a major consumer. Brazilians drink more than 20 million bags of coffee per

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NICO ROOZEN

FOUNDER, SOLIDARIDAD NETWORK AND FIRST FAIR TRADE LABELLING SCHEME “Unboring” the coffee sector has to be our ambition for the decade to come. No more traditional thinking and boring debates leading to more of the same without real change. We will see a lot of talk about sustainability and inclusivity, but I fear there won’t be effective action to turn the picture. 2020 will be a year of continued low prices, which will be challenging for smaller producers and traders. Consolidation at both ends of the value chain will be further stimulated by the introduction of processed cold beverages in the consumer market. Roasters will continue to use their traders as their banks with tightened terms of payment of up to 360 days, further stimulating concentration of trading companies. It is time to protect competition in a freer market place, pushing back monopolies. From a different end, new concepts of forwards integration will be introduced. What we also foresee is the growth of private, corporate sustainability programs at

FABIO CECCARANI CEO, SIMONELLI GROUP

Coffee is becoming a lifestyle choice, perfectly integrated into the daily habits and routines of a rising number of consumers. This is the democratisation of coffee. The consumer is more aware of the quality in the cup and has a higher expectation of the experience they want to enjoy, be it in a chain or small independent coffee shop. Coffee has become a significant social phenomenon. The entire industry should seize this opportunity and provide extra attention to the user and customer experience. The key words to this challenge are “experience excellence”, which goes beyond our senses and emotions to touch the most profound values of our conscience. That is why, amid this sophisticated experience, stakeholders should share the same values of sustainability,

the cost of so-called Voluntary Sustainability Standards. Assurance of supply will be the leading motive narrowing the sustainability agenda down to its economic dimension. For 4C, the year 2020 will turn out to be a crucial one to survive because its programs highly overlap with private programs. Apparently a winning entry point will be the upcoming concept of a true price and living income. With rather complicated tools and huge

simplicity, and excellence. The coffee machine plays a significant role in this whole picture. It is the centrepiece of the coffee shop, where efficiency meets design, and is the instrument the barista uses to create the sought-after consumer experience. It is fundamental to provide a simple machine with innovative technology that is able to guarantee a constant workflow and produce excellence in the cup. Combined with a contemporary design, the machine must be easily adaptable to the different and complex moods of coffee shops. Stakeholders should also look towards a sustainable future, as we do at Simonelli Group. This means creating environmentally friendly machines that meet our environmental, social and governance criteria. If consumers recognised this commitment, I believe they would value their experience more. I also believe that the increased awareness and coffee culture are pushing the consumer to pursue excellence

payments to overpaid consultants, an endless flow of country-specific true price calculations will be discussed in international fora. In my view, non-government organisations will run the risk just to justify low famer income based on debatable living income definitions and calculations. Creating an upwards trend in pricing and farmer income requires much more than building awareness and mobilising voluntary commitments. This living income debate will sharply contrast with the realities in markets with continued price pressure and unbalanced supply chains. Jeffrey Sachs’ convincing report Ensuring economic viability and sustainability of coffee production promises a more promising pathway. The strong combination of the development of National Coffee Sustainability Plans and a Global Coffee Fund underpinned by a multistakeholder approach could be a change-maker. A key strategy includes moving from voluntary to mandatory commitments, regulatory frameworks offering “good governance”, and increasing producer profits transforming business models. Hopefully, we will go from boring years to a new exciting decade of change. We can do it.

in their own home, opening the door to a whole new market. As such, Simonelli is using professional technology and design to cater to this domestic demand. This is why we need to create an intelligent system using innovative technologies that integrates machine, grinder, and coffee.

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

FEATURE World Coffee Research

Gold standard

WORLD COFFEE RESEARCH HAS LAUNCHED TWO BEST-PRACTICE GUIDES DESIGNED TO EMPOWER COFFEE NURSERIES WITH THE KNOWLEDGE TO GROW HEALTHY AND PRODUCTIVE PLANTS.

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Farmers are ‘playing roulette’ when buying seeds due to a lack of traceability.

ccording to World Coffee Research (WCR), there is a hidden crisis threatening the coffee sector. A lack of seed traceability, deficient safeguards, and an absence of information are causing coffee plants around the world to underperform – leaving farmers at risk. “Things are not always what they seem to be. If you do the genetic testing and look really closely at what farmers are purchasing, most of the time it’s not what they think they are getting,” says Dr. Kraig Kraft, Global Programs Director at WCR. “Purchasing a plant is the single most important investment a farmer can make. They need to remove as much risk as possible from disease, weather, and other factors to recuperate the investment and make profit over the years.” To help farmers grow productive plants and make informed decisions, WCR has partnered with Promecafe to launch two guides: Seed Production and Coffee Nursery Management. The guides address seed traceability and genetic purity to ensure plants are of the correct varieties, as well as the essential techniques to produce healthy plants. The guides, released in November 2019, are available in English and Spanish and are entirely free to access online. “Our goal is to identify the best practices for managing seed lots and plants so farmers can improve the probability of having productive plants and reduce loss. It’s meant to be a high-level reference and our hope is that different groups will take these and incorporate them into their own training and outreach programs,” Kraft tells Global Coffee Report. To understand how the issue has escalated into a “hidden crisis”, Kraft and his colleague Emilia Umaña, Nursery Development Specialist at WCR, say it is important to recognise the fundamentals of coffee plant production. “A coffee tree stays with you for many years. Every decision a farmer makes will affect their plantation and it all begins with identifying the right seeds,” Umaña says. “There are so many uncontrollable variables that affect a harvest like soil, climate, natural disasters, and disease. It’s imperative to start with high-quality plants that are resilient. If you start with the wrong plant, or a sick plant, you lock in underperformance for years, even decades to come.” According to WCR, Arabica coffee is predominately self-pollinating, which should mean that genetic purity is easy to maintain. A majority of coffee seed lots around the world, however, commonly produce impure varieties. “Typically, if you take seeds from the mother plant, you’ll get plants just like the mother. However, there is a low level of outcrossing so if you don’t isolate the mother plant, there is a higher probability that you’ll get a genetic mixture in there,” Kraft adds. “Continual outcrossing over time means that seedlings get further and further away from the

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

FEATURE World Coffee Research

original source and develop undesirable genetic features. It turns out this is rampant in the coffee industry.” It is normal for plants of the same variety to have slight variations from one another, but there is a threshold of how far the extent of the variation can occur before the quality of the crops is compromised. According to the WCR Seed Production guide, best practice for isolating plants is to place seed lots 500 metres from any other plant variety in the farm. In smaller nurseries, 50 to 200 metres can also be acceptable if additional measures are taken into account. These distances will ensure a safeguard from wind and pollinating insects that can lead to outcrossing.

Nurseries should seperate different plant varieties to avoid high levels of outcrossing.

“Many of the varieties that people are planting today are actually populations, which means their genetic components aren’t ‘fixed’ yet. When that’s the case, you’ll tend to see a lot of heterogeneity in the plants once they develop, which is why we see such strange mixes of plants in farmers’ fields,” Kraft says. Other common problems causing genetic impurity include simple mislabelling and accidental mixing. Genetic purity isn’t the only problem. Umaña, who is currently based in Costa Rica, has seen first-hand the devastation that a lack of quality control is having on farmers. “It’s like farmers are playing roulette when

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they buy seeds now. I’ve seen cases where farms have a 20 to 30 per cent mortality rate because the plants were not healthy. It’s a huge financial burden to replant the coffee. This gets compounded by the sunk costs of investing time and resources to grow and nurture the plant over years. Overall, it’s a tremendous waste of resources and can devastate a farmer’s livelihood,” she says. “The majority of nurseries around the world are small and the operators don’t have formal training. They don’t have access to the right knowledge.” Hanna Neuschwander, Director of Communications at WCR, says it is hard to measure the exact level of damage this crisis has caused due to a lack of official data and research. “There’s no reliable global data or figures because the problem has only garnered attention recently. There’s huge disorganisation and fragmentation in the sector. There is, however, substantial anecdotal evidence that coffee farmers everywhere are being impacted by poor plant quality,” Neuschwander says. “It’s easy to think about this as a problem that’s far away, but it’s a universal issue. It’s affecting crops everywhere. DNA testing is very new in the industry and is not cheap or easily accessible, so farmers don’t know what they are buying. In other forms of agriculture, farmers take healthy, pure seeds for granted. But, sadly, coffee farmers can’t.” According to WCR, extensive knowledge about coffee production exists, but accessibility has traditionally been an issue. “There’s so much knowledge out there about pest control, disease, nutrition, soil, and so on, but it’s traditionally been very centralised and in the hands of the few. This means that a lot of information that farmers and nursery managers rely on is outdated. Some of it has been published more than 30 or 40 years ago,” Neuschwander says. WCR has tapped into the knowledge of nursery experts, elite nurseries, and farming programs in the Americas to develop the best-practice guides. After gathering the information, WCR compiled it into a user-friendly and visually engaging format. “One thing we focused on in the guides is how to identify critical points. Basically, if X isn’t happening with your plant, then you need to do Y to fix it. The guides are structured and easy to follow so nurseries can easily self-evaluate their operations. It’s really important to emphasise the importance of reducing risk and maximising the opportunity to have productive plants,” Neuschwander says. The guides have adopted a three-tiered approach with bronze, silver, and gold levels to define best practice. This format was intentionally designed to ensure the information in the manuals can be applied to operations of all sizes and financial positions. “Farms and nurseries come in different sizes and with varied resources, so the aim was to create an approach that is equally valuable for small-scale nurseries all the way through to huge operations,” Neuschwander says. “If you can’t realistically attain gold standard due to resources, then a silver or bronze level may be achievable, which will still produce improved results, but with reduced costs.” Nursery Development Specialist Umaña was part of the hands-on team involved in the development of the manuals. She had an opportunity to work with nursery operators in Puerto Rico to run training sessions and test the best-practice guides in a practical environment to gain feedback. “We invited farmers to a nursery that they hadn’t been to before to trial the guides. They used the material in the manuals to identify quality, nutritional deficiencies, and perform other exercises with coffee plants,” Umaña says.

“They then took these learnings back to their own nurseries and came up with an action plan for the upcoming year’s cycle. We got some really positive feedback and it was fantastic to see the manuals be effective in a practical environment.” Sintercafe in Costa Rica hosted an event to launch the manuals on 14 November 2019. According to Umaña, the launch was a success and brought key stakeholders together. “It’s reactivating the conversation around seed traceability,” Umaña says. “Factors like climate change are also heaping pressure onto farmers, so we need to get people in the industry on board to get things in order. We have received great support so far. People are realising that they need to act or we are going to lose a lot of farmers and countless families will be affected. It’s tragic.” Neuschwander agrees that raising awareness is important and says that the lack of good systems for getting healthy, pure plants into farmers’ hands is a shared problem for the coffee industry.

Farmers in Puerto Rico attended practical training sessions to trial WCR’s guides.

She adds that the audience for the manuals isn’t just seed and nursery producers. It’s the entire supply chain including farmers, roasters, regional bodies, and governments. “No-one succeeds when plants that should be healthy are sick. The whole traceability issue is a beautiful mess. Beautiful, because it’s coffee, but, oh boy, it’s a mess,” Neuschwander says. “Partners like Promecafe are really important for spreading awareness. It’s daunting how large the problem is, but we’re confident that raising awareness and putting better tools in the hands of the industry will make a difference in the long term.” G C R

IT’S ALL ABOUT THE MOMENT when great beans become great business.

Whatever business you are in, at Franke, we know it’s about more than coffee. It’s about the moment you create an amazing coffee experience for your customers. We have the experience and knowledge to help you achieve moments like this, no matter the scale of your ambitions.

It’s all about the moment. We can help you make it wonderful.

Want to know more? coffee.franke.com

PROFILE UCC Coffee

An automated future UCC COFFEE UK & IRELAND HAS ANALYSED THE INCREASING ROLE OF AUTOMATION IN COFFEE AND HOW CONSUMERS FEEL ABOUT IT.

rom self-driving cars to human-free production lines, automation is spreading across multiple industries and coffee is no exception. As super-automatic espresso machines become more advanced, speculation continues to grow around the future role of the barista in coffee production. However, this customer-facing career is not the only link in the supply chain automation is impacting. Some farmers are using machines to harvest their crops and roasters are taking advantage of advanced equipment to repeat set profiles. To understand how automation is changing the coffee industry and discover what groundwork has been laid for future technology, UCC Coffee UK & Ireland has conducted a study and released a comprehensive report titled The Future of Automation. “Not many people in the coffee industry have looked at automation in a celebratory fashion or in terms of how good it can be,” says Phil Smith, Head of Category and Insight at UCC Coffee UK & Ireland. “This paper let us explore how not only the coffee machine but how automation is changing the face of coffee.” At the farm level, new technology is providing smallholder producers with greater access to information. According to the report, in Africa, drones gather farming data with 93 per cent accuracy, collecting the same amount of geographical information in 10 minutes that would take farmers eight hours on foot. Automation has also been implemented in the production of coffee machines and equipment. Opening in 2020, Swiss manufacturer Thermoplan’s fully automated shuttle warehouse in Switzerland will ensure production parts automatically flow from the warehouse to assembly workstations around the site. One hundred high-performance robots will work simultaneously to produce machines, covering approximately seven kilometres of automated conveyor technology within the warehouse and one kilometre outside. Once the super-automatic machines like the Thermoplan Black&White4 are delivered to the coffeeshop, they provide their users with benefits including higher consistency and increased access to information. “A challenge businesses face when they produce large amounts of coffee is achieving consistency time after time. With automatic coffee machines, you’re going to get that consistency,” Smith says. “You can then concentrate on selling the coffee rather than making it.” The Future of Automation states advanced equipment can use telemetry systems to ease the day-to-day operation of coffee machines by collecting and utilising service operations data. This offers benefits such as preventative maintenance alerts, real-time performance analysis, remotely implemented system updates, and minimal wastage. Gemma Andrew, Service Operations Manager at UCC Coffee UK & Ireland, says technology in service is only going to get smarter. “Several new telemetry features are currently in testing stages, [to be] available in 2020,” Andrew says.

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“Future telemetry will also be used as an engagement and marketing tool. From November 2019, operators [can] ‘push’ messages to consumers’ devices, such as targeted marketing, offers, and videos.” Smith says although there is an idea that increased automation could have a negative effect on the customer experience, it actually provides benefits that can enhance it. “Coffee is an experience, not a commodity. We need to be careful not to lose sight of that. Automation frees up staff to interact with customers, sell up wherever they can, and give

The Future of Automation report looks at the increasing role of automation in coffee.

Thermoplan’s fully automated shuttle warehouse is planned to open in 2020.

a more human service than they would keeping their back to the customer while operating a traditional machine,” he says. Super-automatic manufacturers are not the only ones in the industry introducing automation to their models. Nuova Simonelli in particular has introduced features to its machines that minimise human error and increase ease of use. This includes automatic purging of the group head, a step the report states baristas often forget, and Easy Cream to ensure consistency of milk quality. Other equipment such as Puqpress’ automatic tamping device reduce variations and increase consistency in taste and quality. “There’s always going to be a role for the barista, but it will become more about customer service and not just making coffee,” Smith says. “Barista-style coffee shops are very different to places where coffee is really on the rise – pubs and bars, restaurants, fast food chains – where employing a barista solely to make coffee doesn’t fit in their wage costs. Consumers want a good cup of coffee, and automation will not only guarantee that, but can do it consistently wherever they are.” Turning from the barista to the customer, the report states ordering and delivery are

being reimagined to be more convenient than ever before. Coffee brands such as Dunkin’, Starbucks, and Luckin Coffee are exploring new delivery methods, and in 2018, IBM patented a drone to deliver coffee to offices. Smith says in the future, automated delivery could go beyond simply dropping off an order to include coffee cup recycling pickups or customer feedback via voice recordings. “In the Asian markets, for example, delivery is really at the forefront of coffee service. The delivery side of automation is going to be critical going forward, whether that’s by drone or some method not even thought of yet,” he says. To discover how customers perceive the role of automation in coffee, UCC Coffee surveyed 2000 UK consumers on what they expect when drinking coffee out of home. The survey found that convenience and efficiency were the most important factors in the consumers’ coffee-buying practices. Eight in 10 consumers expect consistency across all sites of a coffee chain and 72 per cent expect to pay less than £2.99 (about US$3.90) for a good quality coffee. Seeing a queue puts 68 per cent of people off ordering coffee and if a machine is out of order, 61 per cent are less likely to return to that venue in future. The survey found half of its respondents would be happy to serve themselves from a bean-tocup machine in a coffee shop, while 44 per cent would rather use a bean-to-cup machine than be served from a traditional machine if it meant they did not have to queue. “Customers will only queue for about three minutes before they start getting grumbly or are not happy with the service,” Smith says. “They will use self-serve fully automatic machines to avoid queueing and it provides a second station where you can generate income in a high footfall location.” With no shortage of coffee options, Smith says customers can afford to be selective, and automation can make it easier for operators to meet their demands with speed, consistency, and price. “What the survey shows is that any kind of stigma over bean-to-cup machines from a consumer perspective really is something in the past,” Smith says. “Consumers now fully understand that the coffee they get from an automatic machine is a good quality, and it’s almost like a seal of approval that automation can help businesses going forward.” G C R

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

PROFILE Franke

It’s all about the moment SWISS COFFEE MACHINE MANUFACTURER FRANKE COFFEE SYSTEMS IS FOCUSED ON CREATING A MEMORABLE EXPERIENCE AND PUTS THIS AT THE CENTRE OF ITS BRAND IDENTITY AND PRODUCT DEVELOPMENT.

Franke unveiled a suite of new features and machines at HostMilano 2019.

here are plenty of great coffee machines on the market – however, Franke Coffee Systems Chief Marketing and Digital Innovation Officer Patrick Koller says quality alone is not enough to stand out in today’s marketplace. “Consumers are far more confident about expressing what they want – premium, choice, and convenience – which puts more pressure on our customers, who must find ways to meet these demands,” Koller tells Global Coffee Report. “To be successful in the long run, they need to be able to solve challenges, meet high standards of quality, and provide the best possible experience every single time.” Franke Coffee Systems has put this line of thinking front and centre with its new brand identity, encapsulated with the concept line “it’s all about the moment”. “It takes more than just a good coffee machine and beans to create a great customer experience. We want to enable our partners to create and co-create the most inspiring and rewarding coffee experiences,” Koller says. “For us, it’s about consistency, reliability, and understanding the various challenges our customers face based on their individual consumption requirements. We see ourselves as a partner who understands our customers’ needs.”

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To Franke, this entails providing services and benefits beyond the physical coffee machine. Koller says the company operates less like an equipment supplier and more like a coffee and customer experience solutions provider. “To create that experience, it takes outstanding equipment, but also coffee competence, expertise, and the support of digital services to give our customers full control over their coffee operations,” Koller says. “No matter where they want to take their business next, or whether they serve 50 or 1000 customers per day, we provide solutions for them to create the most rewarding coffee experience.” “It’s all about the moment” was launched at HostMilano in October 2019, along with Franke’s enhanced digital services offering and three new product developments. “We went to long-term customers and partners early on in the journey to also understand what they expect from a partner like Franke,” Koller says. “That gave us good insight into what they expect and the confidence that our new brand identity and products will resonate well with them.” Franke’s new fully automatic machine is the compact A300, measuring only 270 by 465 millimetres with a capacity of 80 cups per day. The expansion of Franke’s A-line series features an automatic descaling system, lowering the cost of ownership and maintenance, and a patented heating system, setting temperatures for different products and reducing energy consumption. The A300 will be available starting in mid-2020. The A300 is configurable to fit multiple environments, such as the option of using an inbuilt water tank or direct connection to a water main. Koller says the unit serves as an

“IT TAKES MORE THAN JUST A GOOD COFFEE MACHINE AND BEANS TO CREATE A GREAT CUSTOMER EXPERIENCE.” Patrick Koller

Chief Marketing and Digital Innovation Officer

entry point for new customers. “The A300 offers premium coffee quality with a small footprint. Customers without much counterspace or experienced personnel – offices, bakeries, smaller venues, and hotel lobbies – will be able to offer the same experience as those using our larger A-line models,” he says. “The office space in particular is a new target segment for us. Bringing that experience into a workplace environment drives employee satisfaction and productivity because people don’t have to leave the office anymore to grab a good cup of coffee.” Another recent focus of Franke’s has been the North American and Asian markets, with the new Speciality Beverage Station SB1200 designed to capitalise on growing trends in these regions. “The SB1200 was a development triggered in discussions with some of our key accounts in America and Asia. We were specifically asked how we could bring beverages like iced coffee, cold brew, and flavoured drinks into one concept that combines traditional coffee beverages as well,” Koller says. “It was a cooperative approach to its development where we took their requirements to heart and developed a solution.” Thanks to the patented Franke technology, cold brew beverages can be easily created without additional nitrogen equipment, both

with or without crema and cascading. When combined with milk or syrup, Koller says this makes for a seemingly endless variety of beverages, which have a more appealing aroma and consistent quality thanks to the Franke’s iQFlow technology integrated as standard. “The SB1200 allows our customers to create a real experience. It was literally designed to address emerging consumer trends towards more drink variety, choice, and convenience without compromising on beverage quality,” Koller says. “And it won’t just appeal to North America and Asia. When a trend emerges in the United States, it tends to pick up not long after in Europe too.” Franke will be able to increase the variety offered by its current range of automatics – the A-line and semi-automatic S700 – thanks to an Iced Coffee Module also debuted at Host. With this optional addition, iced coffee is brewed from freshly ground beans and cooled immediately as required. Koller says demand for variety is only one of the trends Franke is addressing with its new product and service line. He singles out payment and loyalty program integration as becoming more important for their retail customers, and Franke has incorporated this into its offering. “For venues operating in a retail environment, they face challenges getting customers into their store and providing a great experience once they’re there. That goes from beverage quality to the end transaction,” Koller says. “We make this possible through our open API architecture and enable our customers to incorporate existing loyalty programs into their machines or allow consumers to pay with a QR code at the machine without having to go to the cashier.” This is only one benefit of the enhanced features of Franke’s Digital Services 2.0 telemetry system. Koller says the new platform is a move from one-way telemetry, taking information from a machine, to two-way, where data can be uploaded as well. “Digital Services 2.0 takes fleet management to a whole new level. You can remotely manage your data, employ new software, drink menus, or promotional pictures, and see which machines require what intervention. If a machine requires restocking or cleaning, the Operations Manager receives an alert and can react instantly so the customer experience – or their bottom line – is not compromised,” he says. “You can also monitor the performance of your machines and drive profits through real time commercial insights. One example would be seeing across your fleet of machines what drinks perform best and adjusting the drinks menu to highlight what’s popular.” Koller says each of these product and service developments were developed with Franke Coffee System’s new brand identity in mind. “All of these innovations will enable our customers to take their business further,” he says. “It’s all about the moment when our customers can create that inspiring and Patrick Koller is the Chief rewarding coffee experience. We are Marketing and Digital Innovation Officer at Franke Coffee Systems. there to help them along the way.” G C R

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

PROFILE Egro

A new dawn NEW RANCILIO CEO RUGGERO FERRARI REFLECTS ON HIS FIRST MONTHS WITH EGRO, THE IMPORTANCE OF INVESTING IN PEOPLE, AND HIS HOPES TO LEAD THE COFFEE INDUSTRY TOWARDS A MORE SUSTAINABLE FUTURE.

usiness, fashion, gardening, and gelato. Ruggero Ferrari’s professional journey has taken him down many paths. So, when the opportunity to lead Italian espresso machine manufacturer Rancilio arose in September 2019, Ferrari grasped it with both hands. “I’m a curious person and I enjoy challenges. Applying my experience to help grow this organisation is really exciting. The modern coffee industry is centred on creating an experience for consumers and developing a spirit of appreciation for coffee quality,” says Ruggero Ferrari, Chief Executive Officer of Rancilio Group. Ferrari was announced as the new head of Rancilio Group on 1 September 2019, replacing Giorgio Rancilio, who held the position since 2017. A challenge that immediately garnered Ferrari’s interest in taking on the CEO role was the opportunity to grow the organisation’s super-automatic espresso machine arm, Egro. “Egro is a high-quality brand. Our core values are reliability, performance, quality, and a willingness to provide support, both before and after the sale,” Ferrari says. “I’ve seen super-automation in the coffee industry evolve over the years and it’s continuing to advance at such a fast pace. Super-automatic espresso machines used to Ruggero Ferrari was appointed Rancilio be able to produce a limited offering at an acceptable quality, but now, these machines CEO after nine years with Carpigiani. can create consistently excellent drinks.” Ferrari’s colourful professional history started in 1991 with Max Mara Fashion Group before he joined gardening equipment company Emak in 1999. After 11 years at Emak, Ferrari left “It’s important for the organisation to the business for ice cream machine manufacturer Carpigiani in 2010 as a Business Development have an effective strategy, but we also need Officer. He went on to become CEO in 2017. to challenge people on an individual level to “The coffee business has a lot of similarities to gelato. The quality of output in both industries perform at their best and all work towards depends on systems, equipment, the quality of raw ingredients, and, of course, the people,” he says. a common goal.” “My role at Rancilio Group is to understand the value of all of these individual factors and After his appointment in September, one combine them to create the perfect product and service for our customers.” of Ferrari’s first major projects was to drive Ferrari adds that his education and personal experiences have also helped to shape his management Egro’s presence at HostMilano 2019 from 18 to 22 October. style. He has formal training in Classical Latin and Greek studies and economics, and a passion for culture and history. “Egro is a global brand with a vast reach “I love to read and am hugely passionate about art. It feeds my hunger for culture and helps keep – we operate in all corners of the world. The me informed on what is happening around the word,” Ferrari says. super-automatic industry is very competitive “Fly fishing is one of my pastimes, although I don’t get much time to practice anymore. It’s a though, so it’s important to stay on top of trends perfect metaphor for business in a way. You need to study the environment, train hard, and stay and showcase our products to the industry,” updated on technique, but the result can still be influenced heavily by uncontrollable factors. You Ferrari says. have to build resilience and learn to persevere against adversity.” The Egro Kiosk and Egro’s newest superautomatic, the Next Touch Coffee, headlined Ferrari says empowering and investing in people can go a long way to achieving collective success. the brand’s booth at HostMilano. “I am logical and rational. Business starts and finishes with numbers, but I also give great value to people. I believe that it’s the people that make the difference in any organisation. I aim to create According to Ferrari, the Egro Kiosk a culture that values teamwork, commitment, understanding, and empathy,” he says. was a project specially designed to showcase

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“IT’S IMPORTANT FOR THE ORGANISATION TO HAVE AN EFFECTIVE STRATEGY, BUT WE ALSO NEED TO CHALLENGE PEOPLE ON AN INDIVIDUAL LEVEL TO PERFORM AT THEIR BEST AND ALL WORK TOWARDS A COMMON GOAL.” Ruggero Ferrari

Chief Executive Officer of Rancilio Group

Egro as a top-quality option in the coffee vending sector. The display at HostMilano also included Egro’s new NMS+ milk system, automatic iSteam+ foaming wand, Connect telemetry system’s new interface, and Tea Brewer accessory. “We saw the opportunity to feature several novelties at HostMilano to grow the Egro brand. The positive feedback we received from clients was really gratifying,” Ferrari says. He adds that among the many highlights of the exhibition was presenting the Next Touch Coffee’s highly sophisticated coffee filter system. “We actually had a highly skilled barista setup in our booth. People could compare the cappuccinos and filter coffees made manually by the barista to the ones produced with Egro’s technology. Very few people were able to distinguish the difference between the two, so it was a great success,” Ferrari says. “People also had the opportunity to meet our Coffee Competence Team in our Extraction Lab. The team ran workshops, led tasting experiences, and showed attendees various extraction methods on both our traditional

and fully automated machines.” Looking forward , Ferrari is optimistic that Egro can build on its post-HostMilano momentum and continue to strengthen its market position. “We are really looking to invest in our people. We recently launched the Egro Service Competence Centre , or ESCC, in our Swiss office. This is an entirely new department designed to promote training for internal staff. Through the ESCC we are also offering technical courses for our partners,” Ferrari says. “A n o t h e r important investment is in the aftersale support service for our customers. It’s integral to ensure our customers can rely on us after they purchased a product. We want that dependability to be a trademark of our organisation.” In addition to empowering his people, Ferrari says that sustainability is an essential value to Egro and the wider Rancilio group. He wants to incorporate environmental awareness into the company’s daily habits, as well as its overarching strategic decisions. “Climate change is on our doorstep. It’s vital to distribute equitable profits throughout the entire supply chain and all of the stakeholders in the industry. We have to think about the world we are The Next Touch Coffee headlined leaving behind for the future generations,” Egro’s booth at HostMilano 2019. Ferrari says. “We are using a photovoltaic system for renewable energy which currently produces 50 per cent of our energy. Overall, 90 per cent of our waste is currently being recycled. We use fully recycled packaging and choose our equipment components to ensure they are designed to be recycled as well.” Egro has also installed a company garden to complement its sustainable practices. More than 1000 kilograms of coffee grounds that are used to test espresso machines are recycled in the garden each year. Ferrari adds that as technology continues to evolve in the super-automatic sector, telemetry, connectivity, and a quality end-product are shaping the future of the industry. “Coffee consumers are changing their perception of quality. Standards are rising and this is opening opportunities for players in the industry who are willing to adapt,” Ferrari says. “At Egro we are willing to listen to consumers. We will evolve with the market, empower our people, and continue to operate sustainably and ethically.” G C R

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PROFILE Faema

Hail to the Chief THE REIMAGINED FAEMA PRESIDENT ESPRESSO MACHINES TAKE CUSTOMISATION AND ERGONOMICS TO NEW LEVELS. GCR FINDS OUT HOW. The new Faema President features a customisable rear panel to suit multiple venues.

aema has a long history in coffee manufacturing. Among other achievements, it is best known for creating the now-standard E61 group head. For the past 60 years, the Italian manufacturer has continued to develop new features and machines, with its recent E71E model winning a Red Dot Design Award in 2019. Its latest model is a reinvention of the 1960s’ Faema President, with the company turning to the past to create something new for the present. “We realised there is a market trend towards industrial-style designs. We wanted to combine that look with a sense of our identity,” says Maria Vittoria, Product Marketing Manager at Faema. “We looked at the history of our company for inspiration and realised our past President model – which was a big success at the time – had the perfect style to re-actualise with new technology.” The influence from the 60s President is most obvious in the model’s façade, featuring a familiar yet updated layout, rear panel, and logo. Filippo Mazzoni, Coffee Technology Specialist at Faema, says

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this results in a look that is “modern and vintage at the same time, with a shape that in some way remembers the classic Faema President”. “But the technology is not at all like in the past and includes many considerations of the current market,” Mazzoni says. “For example, it features a low profile so it can be installed on the front of the espresso bar and still facilitate conversation with the customer.” Another contemporary feature available in the Faema President is the Italian manufacturer’s Group Thermo-controlled with Infusion (GTI)

system. GTI uses heat-controlled, independent boilers to manage temperatures and infusion times for each group head. Faema provides two versions of the President – one with GTI, the other with a traditional thermosyphonic system – to cater to the requirements of different venues. “The traditional version is really for customers that want a machine that is easy to use, is consistent, and can produce high volumes of commercial coffee,” Mazzoni says. “However, the GTI technology was developed with the specialty market in mind. It’s really the ‘barista model’ and allows them to finetune the temperature and pre-infusion.” GTI’s process begins with blooming, which uses a high flow rate of coffee and can be set from zero to three seconds to control the amount of coffee to involve in the infusion phase. Once blooming is complete, the machine starts pre-infusion. During this stage, the machine lowers the flow rate so the user has greater control and can determine the length of pre-infusion. Mazzoni says this stage can range from one to 10 seconds, which, combined with blooming, equates total infusion time. “You could set one second for blooming and four seconds for pre-infusion to maximise acidity. Or you could set 1.5 seconds for blooming and nine seconds for pre-infusion, wetting the entire cake for a longer time in order to have more bodied coffee,” Mazzoni says. These extraction settings as well as dose can easily be adjusted at the group head. The President comes in three-button, five-button, and touchscreen variants, each providing different degrees of control and catering to different skill levels. “The wider coffee market is moving towards specialty. Everyone wants to be a specialty barista, even if they haven’t received all the training,” Vittoria says. “Using a machine with the best technology means anyone and any shop can achieve that level of quality.” Making the President adaptable to different environments was a key consideration in the espresso machine’s development, from performance to visuals. “Faema knows that as well as making great coffee, an espresso machine is a decorative product that must be in perfect coordination with the place it is installed – whether that be a coffee shop, restaurant, or lounge,” Vittoria says. Black matte and stainless steel dominate the Faema President’s exterior, while the Faema President GTI features satin and chrome-plated steel alternates with a pewter finish and wooden details. The thermosyphonic version also allows for customisation with an easy-to-remove base and bodywork. “Faema provides the ability to customise the President either with our suggestions and guidance or by yourself,” Vittoria says. “The same size and shape of screw is used throughout the machine. With one screwdriver, it’s possible disassemble the [outer panels] without compromising the layout or functionality of the machine.” In the President GTI, it is also possible to customise the rear panel with different materials and graphics. This provides the user the opportunity to make the machine unique to them. “We offer an additional seven panels so the machine can be customised to fit its location, and with easy disassembly, make it possible for the machine’s owner to paint its components whatever colour they want,” Vittoria says. Design considerations did not end at customisation. Mazzoni says many steps were taken to improve the user-friendliness of the President. For instance, the group handle – available with a wooden finish or made with soft touch plastic – was crafted to sit comfortably in the hand of a barista. “We have done more than 100 barista tests in order to guarantee the best ergonomics of the handle, especially over repetitive daily use,” Mazzoni says. “We are confident the handle is one of the best on the market, and that there is no issue in terms of safety or injury.”

The Faema President is available in five-button, three-button, and touchscreen models.

To further reduce strain, the filter holder bottom has been made completely flat to ease the pressure of tamping. The micrometric spout ensures that extracted coffee is equally divided into two cups. The spout can be modified and drip tray height adjusted with a knob on the side of the machine to accommodate most cups. “This allows the barista to conveniently fit anything from a 16-ounce takeaway cup to a small china cup for espresso under the spout at the desired height,” Mazzoni says. Once the barista has extracted the coffee and it’s time to steam the milk, they can simply flick the lever down to initiate a purge, which occurs internally thanks to a new steam wand valve. “The purge doesn’t come out from the wand tip and instead goes back into the machine. This way, the customer cannot see the purge, providing a ‘cleaner’ experience,” Mazzoni says. “Then, the barista can move the lever up to open the valve and work on the milk.” With its focus on customisation and ergonomics, Mazzoni says the revitalised Faema President is able to cater to a wide variety of users. “We have designed a very flexible system in order to achieve the best result in the cup in any circumstance,” he says. “A good coffee machine must be constant, but it also needs to be able to adapt to different coffees and requirements you find in the market.” G C R

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PROFILE CSF

Foundation focus FORMER GHANAIAN DIPLOMAT KOFI ANNAN ONCE SAID ‘KNOWLEDGE IS POWER, INFORMATION IS LIBERATING, AND EDUCATION IS THE PREMISE OF PROGRESS IN EVERY SOCIETY’. SIMONELLI GROUP LEADERS EXPLAIN HOW IT PLANS TO SUPPORT THE SAME SENTIMENT IN 2020.

hile research bodies continue to invest in important environmental studies to help secure the future production of the coffee industry, a new partnership between Italian coffee machine manufacturer Simonelli Group and the Specialty Coffee Association (SCA) has formed to advance the understanding of coffee. The SCA entity, titled the Coffee Science Foundation (CSF), was formally launched in April 2019, but Simonelli’s partnership was only made public in October 2019 at HostMilano in front of hundreds of supporters. “We believe this foundation will benefit the wider coffee community and unlock the answers to many unanswered questions in the scientific evolution of our industry,” says Lauro Fioretti, Simonelli

Group Project Manager. Simonelli started its commitment to research seven years ago. It began through a partnership of Italy’s University of Ancona and its mechanical engineering department, followed by the University of Camerino and its chemistry faculty. This collaboration then saw the unveiling of the International Hub for Coffee Research and Innovation, a centre for research and studies in the academic world and Simonelli Group Project Manager Lauro Fioretti hopes new reseach by the Coffee Science Foundation will unlock the secrets to espresso parameters and flavour.

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SIMONELLI GROUP HAS LONG BEEN COMMITTED TO SUPPORTING THE GLOBAL SPECIALTY COFFEE COMMUNITY THROUGH THE SCA AND WORLD BARISTA CHAMPIONSHIPS TO MAKE COFFEE BETTER. Yannis Apostolopoulos CEO of the SCA

in the coffee machine sector. Going forward, however, Fioretti says Simonelli wanted to make its commitment to research even more global, resulting in the signing of a contract to become CSF’s first major research partner of specific new projects. “Simonelli Group has long been committed to supporting the global specialty coffee community through the SCA and World Barista Championships to make coffee better. This contribution is a testament to that commitment, particularly in the field of science and research,” says Yannis Apostolopoulos, CEO of the SCA. Executive Director of the CSF Peter Giuliano adds that Simonelli Group’s partnership is a “pioneering and visionary contribution” that comes at a critical time. “Science and research are more important than ever in keeping our industry sustainable,” Giuliano said in a statement. Simonelli Group acknowledges the importance of industry contribution in empowering the progression of research projects, but Fioretti says such support fits perfectly with Simonelli’s company values. “One of the three pillars of Simonelli is innovation, but it’s impossible to innovate, improve the quality of a product, or be an

SCA CEO Yannis Apostolopoulos and Simonelli Group CEO Fabio Ceccarani announce their partnership of the Coffee Science Foundation.

industry leader without a commitment to research,” Fioretti tells Global Coffee Report. The first major project for 2020 will be titled “Towards a deeper understanding of espresso extraction”. For the next four years, the SCA and Simonelli Group will collaborate on sensory evaluation, technical and data analysis using modern techniques to create a scientific understanding on the connection between extraction parameters and flavour. It will also explore espresso extraction standards, and the resulting effects on brewed coffee flavour. From 2017 to 2019, the CSF completed research on “A deeper understanding of coffee extraction” for filter application and received positive feedback on its results. Simonelli Group CEO Fabio Ceccarani says the CSF will take a similar approach to espresso extraction, which is already a core investment for the machine manufacturer on a daily basis. “This partnership with CSF represents our deep commitment to the scientific process, our love for espresso, and our desire to understand it better,” he says.  “In terms of sensory analysis, we want to be as global as possible so we are looking for active participants in Europe, the Americas, and Asia Pacific so that globally we can have representation by a range of different cultures and countries.” Once a business plan is approved and research is underway, the CSF aims to have quarterly meetings with Simonelli to assess the results and disseminate the information across SCA channels and published resources. This includes integrating the findings into the SCA education system, coffee skills programs, and Roasters Guild. When asked what information he hopes to uncover in the research, Fioretti’s expression indicates he’s got a fairly good idea already. “I know what I hope to find from the results, but there’s always a little trepidation with new experiments and what we will find,” he says. “Every time you dive into an area of the unknown, you discover something new, something more than what we already knew. “This project is part of a bigger project, something very exiting that’s still to be unveiled. But what we do know is that it will open doors for more projects on espresso and its future.” While Simonelli is passionate about the pillar of innovation, Fioretti says its greatest focus leading into 2020 is the consumer. “The consumer is king. We’ve addressed their needs in the development of the Victoria Arduino Eagle One and Nuova Simonelli Appia Life machines, and now we’re moving the idea of innovation into a new area of development,” Fioretti says. “We must work together to drive knowledge and improve our products. We’re only at stage one on this important project and there’s much more to come, but the future of research begins now.” G C R

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EVENTS HostMilano

A glimpse into the future GLOBAL COFFEE REPORT DISSECTS HOSTMILANO AND EXPLORES A TRADE SHOW DEVOTED TO TECHNOLOGY, INNOVATION, AND FASHION – IN MORE WAYS THAN ONE.

ostMilano is a universal gathering of the coffee world. The biennial event was the talk of the industry months ahead of its 41st edition in the Italian fashion capital, with chatter among businesses on what to expect, who was attending, and the necessity to take comfortable walking shoes. When the expo finally arrived, no longer was the Duomo, shopping strip of Corso

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Genova, or risotto the centrepiece of the Italian city: it was coffee. For a full immersive experience, international guests toured Milan’s historical coffee houses around the city centre, watching baristas smartly dressed in white blazers and bow ties serving espressos in a 10-second drink-and-go experience. Others took the opportunity to discover newer coffees in the form of Starbucks Reserve in the Palazzo Delle Poste building. When day one of the expo arrived, train stations were full of blue suits, briefcases and umbrellas as a record-breaking crowd of more than 200,000 visitors flocked to Rho Fiera over the course of the expo from 17 to 22 October 2019. Milan’s wet weather forecast wasn’t favourable, but it didn’t stop the international crowd from more than 171 countries, totalling 40 per cent of attendees, strutting on the three-kilometre aqua carpet all the way to coffee-dedicated halls: 14, 18, 22, and 24. Inside, 2249 exhibitors from 177 countries represented roasting and processing equipment,

Eversys unveiled the Cameo X from its Super T range of super-automatic machines at HostMilano.

espresso and grinding technology, and endless vending machines. HostMilano is a feast of technological innovation, future out-of-home and consumer trends, and hardcore industry networking, and this year’s event didn’t disappoint. The prominent theme and dominating trend at this year’s show was undoubtedly automation and quick-service coffee, followed by the integration of Internet of Things (IoT), sensor technology, the importance of data collection, and partnerships and services that put the customer first.

said. “We believe the balance of power from traditional to super-automatics will shift by 20 to 30 per cent over the next five years. We must keep on driving innovation forward, but first, consolidate our new technology, and then we’ll need to elevate again.” Along with the Cameo X, which includes the new e’leveling system to optimise the quality of extraction, Eversys launched the eGhost tap-and-go machine, powered by German company iovent. This machine from Eversys’ Super T category embraces attractive design, emotion, and the ability to create quality products without fuss. The fascination with automation continued. Over on the Schaerer stand, phones were out in force snapping away at its new Premium Coffee Corner, a freestanding coffee unit with 32-inch display screen, putting IoT, convenience, and flexibility in the spotlight. The manufacturer also unveiled its Soul Select super-automatics range and put the emphasis on tailored solutions and professionalism to meet the growing needs of its customers. “Schaerer has a 127-year history. The next step for us is beverage diversity and real innovation with IoT technology, which we can do with our Premium Coffee Corner,” said Jörg Schwartze, CEO of Schaerer. “All you need for a consistently quality coffee is a credit card to tap and go. We want a premium offer in vending machines and now it’s possible. There are still lots of sceptics but for businesses interested in moving into the future of coffee, the message is that you can be successful with a self-service machine.” Over at WMF Professional Coffee Machines, expo visitors became part of the interactive experience at each WMF demo point. Guests could participate in tasting sessions and try WMF’s chilled coffee using the WMF 5000 S+ or the new Fresh Filtered Coffee technology option on the 1500 S+ and 5000 S+ fully automatic machines. The German manufacturing company of 160 years also showcased the latest innovations in its WMF CoffeeConnect telemetry solution, which aims to provide its growing community with a key basis to optimise and develop their business. WMF Professional Coffee Machines celebrated the Italian city of Milan in its range of machines.

AUTOMATED FOCUS To that end, Eversys unveiled its limitededition Cameo X machine at the company’s 10th anniversary party the evening before HostMilano. Eversys Chief Commercial Officer Kamal Bengougam spoke about the vision of Eversys and its story of determination, courage, and talent. He highlighted the danger of changing course, that companies must remain true to their strategic roadmap – their DNA – in order to maintain success. He also talked about the company’s “blue ocean” approach and company vision to further bridge the gap between traditional coffee equipment and intelligent super-automatic coffee machines. “We want to humanise the coffee machine and produce bespoke solutions without compromise to in-cup quality,” Bengougam

Franke Coffee Systems put its new branding on display with the concept line “it’s all about the moment”, demonstrating how its new range of machines successfully combine tradition with progress. Its first proud moment was the unveiling of the new Franke A300, an expansion of Franke’s successful A-line with a smaller footprint. It also presented its Digital Services 2.0 to demonstrate the advantages of central coffee machine management in addition to its patented Iced Coffee

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EVENTS HostMilano

Franke’s new Specialty Beverage Station produces cold coffee without additional nitrogen.

NMS+ milk system, automatic iSteam+ wand, revised Connect telemetry system interface, and Tea Brewer. Also demonstrating its connection to the vending sector, Egro revealed its Egro Kiosk protype. “The market demands high quality products and cutting-edge technologies, and that’s what we are here for,” said Rancilio Group’s new CEO Ruggero Ferrari.

TRADITION TALKS

Module. Taking aim at current and future coffee trends, this module can expand the standard range of hot beverages into chilled coffees. Franke also presented its new Specialty Beverage Station. This device is all about cold coffees thanks to an integrated Media Pump Module and patented Franke technology, which creatres cold brew beverages without additional nitrogen. “We wanted a machine that can provide an experience for our customers, and if we can help our customers stand out from the crowd, then we want to with this machine,” said new division head Marco Zancolò. Egro presented the new Next Touch Coffee – a fully automatic coffee machine designed for filter coffee – with four coffee bean hoppers. It also displayed the new

Over at Simonelli Group, the stand was big and so were the crowds. To begin the tour, most visitors made a beeline for the brew bar featuring the official 2019 World Barista Championship Black Eagle Machine in Boston. Around the corner, the new Eagle One range in recycled wooden materials dipped in resin had visitors transported to an art exhibition. “Eagle One brings digital innovation to the industry in a simple way. The market is looking for simplicity, so in this machine, less is definitely more,” said Fabio Ceccarani, CEO of Simonelli Group. “We are at the stage where you cannot impact the market with big technology to break the industry, but rather we want to focus on harnessing data and platforms that put the focus on the end user and delivers exactly what the barista wants. The market is changing. It’s volatile and complex, so the more connected we are, the better.” Also new to the Nuova Simonelli line-up was the Appia Life machine. Ceccarani says this model embodies Simonelli’s focus on sustainability, with a 20 per cent reduction in environmental impact compared to the Appia II. France-based manufacturer Unic took guests on a trip down memory lane by highlighting espresso machine engineering from the past 100 years. On display was two-group Perco Express from 1930, original one-group Stella from 1954, and E3 from 1972. Centre stage was Unic’s full line of espresso solutions including its Tango super-automatic machine and latest release multi-boilers model Stella Epic. Melitta showed off its new-generation range of fully automatic coffee machines, including the XT6. La Cimbali went back to the 1960s to revamp its Faema President espresso machine, Wega Macchine per Caffè presented the Nexa, WBar, and Nova coffee machines, and Slayer Espresso had visitors pulling out their smartphones for photos of its “Catwoman”, “Pink Panther”, and “Host Milan blue” customised machines. Growds gathered for Ima’s daily Coffee Hub lectures to learn the importance of coffee handling, processing, and packaging. The Storm Profilo and its music-mixer-like control panel demonstrating its manual ability turned heads. Carimali’s boilerless espresso machine, using induction heat, was also a strong talking point, as were La Marzocco’s new one-group Leva and Modbar models, but it was the company’s announcement of its venture into grinding equipment that had people interested with its Swift Mini and Swan grinders.

GRINDER GROWTH

Simonelli Group showcased the new Eagle One in recycled wooden materials dipped in resin.

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Mahlkönig’s E80 Supreme was also impressive. The heavy-duty machine was what Hemro Group Product Manager Ansgar Bitz considers the “fastest grinder in its class” thanks to its large engine and 80-millimetre flat burrs. The other new Mahlkönig Grind-by-Weight grinder, the E65S GbW, is equally as impressive,

electrostatic charge reduction feature keeps grounds from getting on the counter while getting uniform coffee grounds into the portafilter.

ONE FOR ALL In the cleaning space, it was specialty coffee machine cleaning agent Cafetto that gained plenty of attention for its range of supplies. Its products remove coffee oils and stains from brew baskets, group handles, servers, coffee pots, and blender jugs. Cafetto also presented its organic range and milk cleaners, suitable for sanitising and removing milk residue and hard water scale from milk lines and frothers. “We’re here not only as Australians flying the flag for the innovation we’re pushing in our own country, but to show the international market our complete range that really does have something to complement every coffee machine, brewer, or cup,” says Cafetto CEO Christopher Short.

UPWARDS CURVE

Mahlkönig’s E65S Grind-by-Weight technology enables weight-based dosing.

thanks to its ability to eliminate scales in the grinding process. “This is the biggest improvement in grinding technology because it’s no longer grind by time, but grind by weight. If I measure the weight of the dispensed coffee on a scale to compare the dose, you can see it’s extremely accurate and consistent,” Ansgar says. This model, set for release in May 2020, features integrated scales and 65-millimetre burrs. Using the Mahlkönig app, users can also monitor how many shots they’ve ground in a day or a month, and will be able to use that data to help improve their grinders, because, as Bitz points out, “the more data available, the more interesting the next few years of grinder development will be”. Another highlight was Mazzer’s orange Major V grinder, a flexible device with flat burrs suited to high-to-medium-volume coffee shops that want to make the leap to the next level of grinding technology. Mazzer’s Grind Flow Control system includes a new

In the roaster hall, Brambati displayed its BR5 roaster, which can be managed remotely, but all eyes were on its latest generation 600-kilogram batch roaster, the BR6000. Brambati’s interactive stand had visitors carrying out remote roasting tests in predetermined times with its Advanced Specialty Software. Samples of each visitor’s roast batch could be collected the next day at the show. Probat showcased its new Px120, a 120-kilogram drum roaster that resembles a shop roaster, only a little larger. This model can produce up to 480 kilograms of roasted coffee an hour, catering for midsize capacity requirements. “The Px120 roaster is the perfect choice for roasters who want a consistent drum roaster with accuracy and flexibility,” said Probat CEO Wim Abbing. Fabscale, a new joint venture between Probat and Cropster, was also a highlight of the stand. Fabscale CEO Christian von Craushaar presented the first dashboard that displays all the data from the roaster and an overview of the entire plant. The application can be used with any roasting machine and plant technology to help users make informed decisions. Host is as much a game of endurance and physical stamina as it is a fun fair of new machines. Come the afternoon of 22 October, scooters flew down the aisles, step-counters were monitored one last time, and there was no shame in roaming the gelato pavilions for a few samples followed by a classic, palate-cleansing Aperol Spritz. HostMilano 2019 was an interesting glimpse of what’s to come in the global coffee industry, and judging by the innovation in technology and design, the next two Probat’s new Px120 roaster resembles a shop years will prove an interesting space roaster, only a little larger with 120-kilogram capacity. to watch. G C R

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Images: Nespresso

ORIGIN Zimbabwe

Revival of the fittest AT THE RECEIVING END OF ECONOMIC, POLITICAL AND ENVIRONMENTAL TURMOIL, ZIMBABWE’S COFFEE INDUSTRY IS ON THE BRINK OF EXTINCTION. BUT CAN SUPPORT FROM NESPRESSO AND A NEW GOVERNMENT BRING IT BACK TO LIFE?

n 2017, 92-year-old Zimbabwean coffee farmer Samuel Nyakuchena was considering retirement – but not because of his age. He had been farming coffee since 1981, but the economic downturn hit his farm hard. Nyakuchena was struggling to bring in enough income to cover production costs, a common challenge for the country’s coffee farmers, so he began preparing to retire. However, through work Nespresso was doing with other local farmers, Nyakuchena saw that he could get higher prices, technical support and a long-term buying commitment for high-quality coffee. So, he halted his retirement plans, says Midway Bhunu, Coffee Program Manager in Zimbabwe with TechnoServe, Nespresso’s on-theground partner carrying out the AAA Sustainable Quality Program. Today, Nyakuchena is one of many coffee farmers who have decided to stay in the industry, despite the odds stacked against them. In fact, thanks in large part to Nespresso’s project in Zimbabwe, and in small part to recent efforts by the local government, some coffee farmers are even returning to the industry. “Many of the farmers we work with have fond memories of growing coffee alongside their

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parents years ago, but they had to abandon it after the economic downturn,” he tells Global Coffee Report. “Now they tell us how excited they are to share the coffee again with the outside world.” During the past couple decades, the number of local coffee farmers has dropped drastically, first due to massive government land reform in 2000 that forcibly transferred land ownership from white farmers to indigenous Zimbabweans and, second, due to coffee’s low earnings amid local inflation that have pushed farmers to switch to more economical crops.

“A combination of volatile [and low] In 2017, production fell to its lowest point at only 6000 60-kilogram bags. prices on the global markets and high local production costs has led to a decline in the industry,” explains Dumisani Kutywayo, Director of Crops Research at the Ministry of Agriculture’s Department of Research and Specialist Services. “Farmers have diversified into macadamia nuts and avocado pears, which are seemingly easier to manage compared to coffee.” Conditions for some farmers have been exacerbated by the country’s worst drought in 40 years and the repercussions of intense tropical Cyclone Idai in March 2019. Agriculture aside, Zimbabwe is also in the midst of an economic crisis, with inflation and poverty climbing in tandem. According to World Bank, annual inflation reached 230 per cent last July, with food prices hit the hardest, and extreme poverty was estimated at 34 per cent in 2019, up from 29 per cent in 2018. Even still, Nyakuchena has chosen to remain in the coffee industry, specifically focusing on the premium tiers. By doing so, “he got almost the equivalent of the average income in Zimbabwe by selling his coffee to Nespresso”, Bhunu says. “Farmers are now doubling and even tripling their incomes from coffee. They have used the money to send their children to school, improve their homes, and buy household goods, farm supplies, and equipment.” Nespresso pays farmers substantially above market rate for their high-quality coffee. “What else does one need on earth? We have bought 15 bags of fertiliser, some food to celebrate our hard work, and of course a special wardrobe for my wife,” says Nyakuchena. Nespresso officially announced its investment in Zimbabwe in September 2018, teaming up Nespresso has commited to paying Zimbabwe farmers premiums for high-quality coffee.

with international nonprofit TechnoServe. This particular project is part of the AAA Sustainable Quality Program’s Reviving Origins efforts, which are designed to revive coffee farming in regions throughout the world where the industry is on the verge of extinction as a result of conflict, economic hardship, or environmental disasters. For the aforementioned reasons, Zimbabwe was a strong candidate for Reviving Origins. “When we went to Zimbabwe, we discovered that it was a big producing country 20 years ago but because of climatic and political issues, there has been a significant production decrease,” says Yann De Pietro, Nespresso AAA Sustainable Quality Program Manager overseeing Zimbabwe. “Due to these issues, there was no market for the coffee anymore and so there was no interest in coffee. And as prices and production went down, the quality went down. We saw this as a good challenge, because there is a strong history of coffee in Zimbabwe and there were still skilled coffee growers there we could work with.” Nespresso and TechnoServe have worked together on various projects in other countries, including work specifically related to Reviving Origins. As part of the efforts in Zimbabwe, they rolled out the program’s AAA Academy, a two-year training program for smallholder farmers that is used across other AAA program

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

ORIGIN Zimbabwe

countries. “They learn the basics of coffee, one topic per month following the coffee calendar,” Pietro tells GCR . “Every month, depending on the season, they learn topics that they can practice in the field, not only in the demo farm, but also in their own farms.” Topics include shade, pest, and disease management, coffee harvesting and processing, pruning and rejuvenation, and sustainable practices that help protect against climate threats, such as improving soil health through erosion control and the application of compost and mulch. In the preliminary stages, which occurred in 2017, Nespresso identified two larger estates, which were producing most of the coffee exported out of Zimbabwe, and about 450 smallholder farmers, who were together producing less than 10 per cent of total output. With these producers, the project’s objectives were twofold, says De Pietro: increase the quality and sustainability of the estates while keeping volumes strong, and improve quality and productivity with the smallholders in hopes of bringing more farmers back into the industry. For more than a year, TechnoServe agronomists and locally trained A A A agronomists have been teaching “farmers everything they need to know about coffee farming and processing through the AAA TechnoServe agronomists are teaching producers about better farming practices through its AAA Academy.

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High altitude, cool climate, steady rainfall, and rich soil contribute to Zimbabwe’s high-quality arabicas.

Academy”, Bhunu says. “Farmers come together once a month on a coffee farm in small, villagebased groups for hands-on training so that farmers learn by seeing and doing. We also teach farmers important business skills, such as recordkeeping, that helps them manage their farms and improve their incomes.” Although it’s still early days, both reception and results of the project have been positive. In addition to slowing the trend of farmers leaving the industry – and even encouraging some to return – production volumes and quality have increased. Bhunu estimates that the area under cultivation has expanded more than 30 per cent since the project began. De Pietro says the share of high-quality coffee that specifically meets Nespresso’s quality standards has increased by nearly 50 per cent. Though small in scale, these achievements represent a glimmer of hope for a country that used to be famous for its high-quality Arabicas and high volumes relative to the country’s small size. “It was known for very high-profile coffee of a quality that was not very common in Africa, or really anywhere in the world,” describes De Pietro, noting its high acidity and unique fruitiness. This extraordinary profile and high quality are thanks to Zimbabwe’s ideal coffee growing conditions: high altitude, cool climate, steady rainfall, and rich soil. The Zimbabwean coffee industry hit its stride in the 1980s and 1990s, peaking in 1991 with 252,000 60-kilogram bags, according to the International Coffee Organization. But since 2004, production has been on a strong downward trend, falling to its lowest point in 2017 at only 6000 bags. Harvest year 2018 saw a very small increase to 8000 60-kilogram bags, and the same is anticipated for 2019. Aside from Nespresso and TechnoServe, Ministry of Agriculture’s Kutywayo says there aren’t any other organisations currently leading efforts in Zimbabwe’s coffee industry. Previous quality and capacity building initiatives through organisations like World Vision and the United Nations Food & Agriculture Organisation ended or fizzled out long ago. The government, however,

“is finalising a coffee strategy that will be used to develop the sector as a key foreign exchange generating commodity”, he tells GCR . “The government recognises the importance of coffee as a key commodity, hence, the development of a strategy to revitalise the sector.” He says the strategy will be submitted for approval early this year and set into motion in the following months. Additionally, the new Zimbabwean government has pledged to revive the economy and specifically the agriculture sector. To start, it promises to restore property rights and has set aside millions of dollars in funding to compensate thousands of white farmers who were evicted from their properties during Mugabe’s land reform. TechnoServe has been working closely with the Zimbabwean government on the national coffee strategy, including helping develop it, participating in the National Coffee Working

“FARMERS ARE NOW DOUBLING AND EVEN TRIPLING THEIR INCOMES FROM COFFEE. THEY HAVE USED THE MONEY TO SEND THEIR CHILDREN TO SCHOOL, IMPROVE THEIR HOMES, AND BUY HOUSEHOLD GOODS, FARM SUPPLIES, AND EQUIPMENT.” Midway Bhunu

TechnoServe Zimbabwe Coffee Program Manager

Group, and training Agritex government extension officers in coffee agronomy. “Our vision is for coffee to be an engine of sustainable development in Zimbabwe, enabling people in the country’s hard-hit rural areas to improve their incomes and their lives,” Bhunu says. “We believe that if this progress continues in the next few years, Zimbabwe could eventually double its coffee production.” G C R

The Zimbabwean government has pledged to revive the economy and its agriculture sector. JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

FEATURE MICE

MICE to meet you

THE MELBOURNE INTERNATIONAL COFFEE EXPO’S PRODUCT INNOVATION AWARDS CELEBRATE CREATIVITY AND WILL LAUNCH PRODUCTS ONTO THE WORLD STAGE.

nnovation is at the heart of the coffee industry. Across the entire supply chain, ambitious minds explore strategies to improve flavour, increase productivity, and create better value for customers. “Roasters, farmers, engineers, and everyone in between are on this collective journey to achieve perfection. Of course, there is no end to this pursuit; however, it is the journey that drives us. Innovation is what drives the market forward,” says Paul O’Brien, Australasia Area Manager, Rancilio Group. The Melbourne International Coffee Expo’s (MICE) Product Innovation Awards bring some of the brightest new products together under one roof to celebrate ingenuity in the coffee industry. “Melbourne is arguably one of the most mature and innovative coffee markets in the world. Winning a MICE Product Innovation Award speaks volumes globally,” O’Brien says. “I’ve been lucky enough to work throughout Europe and America – everyone speaks so highly about the Australian market, particularly Melbourne. Being recognised on the Melbourne coffee scene holds extra weight.” O’Brien experienced this firsthand with the launch of the Rancilio Specialty RS1, which finished runner-up in the 2019 MICE Product Innovation Awards. RS1 made its Australian debut at the same time as the exhibition. O’Brien says entering the competition was an ideal way to expose the product to an international audience. Ona Coffee is collaborating with Zurich University of Applied Science to continue to improve the OCD.

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“At Rancilio we stand for innovation. This is the role we play in the journey towards perfection. With RS1, our mission was to present something truly unique and innovative. Our cutting-edge brewing technology delivers world-class temperature stability and patented advanced temperature profiling empowers the barista with almost limitless flavour profiles,” O’Brien says. “RS1 was developed by the industry, for the industry. We wanted to showcase it directly to the market and MICE was the perfect platform. The RS1 received a lot of interest and positive attention after it featured in the awards.” Following MICE, Rancilio offered the machine to the open market to trial. O’Brien says Rancilio attracted considerable curious people in the coffee industry wanting to test the machine’s innovative features for themselves. “It was really important for us to showcase at MICE. It gave us the platform to launch our product and we have since taken the RS1 overseas to Europe and America,” he says. “At Rancilio, we talk about innovation all the time. I can’t emphasise enough how important it is to us as a brand to present at these awards and receive a positive reaction.” The MICE Product Innovation Awards are split into four categories: coffee preparation equipment, ancillary electrical equipment, coffee accessories, and specialty beverages. During the judging, a panel of industry leaders adjudicate the entrants based on three factors: the product’s ability to create value for the industry and its customers, the design’s incorporation of sustainable materials or methods, and how the product contributes to the overall knowledge of the Australian coffee industry.

Rancilio used MICE as a platform to launch the RS1 to the Australian market.

Contestants have between three to five minutes to demonstrate their product to judges, who will only visit a stand once. In addition to the innovation award, MICE attendees have an opportunity to cast their vote in a separate segment, the People’s Choice Award. The prestige of the awards has risen over time as MICE has grown to become the largest dedicated coffee event in the Asia Pacific. Almost 12,000 people flocked to last year’s event and show organisers expect this to increase in 2020. “MICE2020 is already a sell-out. There’s been an unprecedented demand for space and there will be a greater international presence than ever before,” says Lauren Winterbottom, Show Director at MICE. “The expo brings people from all ends of the supply chain together in one place – from top industry decision-makers to local business owners.” One such company is Ona Coffee, which experienced the momentum of winning MICE’s Product Innovation Award for its Ona Coffee Distributor (OCD). Former World Barista Champion (WBC) Sasa Sestic devised the idea for the OCD in 2012 and launched the first design in 2016. The improved OCD 2.0 won the 2017 MICE Product Innovation Awards and has since expanded into international markets.

“After I won the WBC in 2015, Ona Coffee was cast into the international spotlight. At first, many people around the world just wanted to try our coffee and the coffee I used for my WBC performance. After the awards, people began to see all the innovative things we were developing,” Sestic says. “It happened quite naturally and now we work with distributors all across the world to share the OCD tool.” The OCD is a device created to evenly distribute coffee for preparation as espresso. It’s designed to minimise the risk of channelling and coffee being over- or under-extracted, a result of uneven distribution. The second edition also features an adjustable base and an adjustable locking mechanism. Sestic says launching the second version of the OCD just before MICE was a strategic, if not fortunate, decision. “MICE is our nation’s largest celebration of coffee and the specialty coffee industry, so we saw immense value in entering its awards program. We attend MICE every year and to receive this award in front of our friends and colleagues was unforgettable,” Sestic says. He adds that winning the MICE Innovation Award set off a chain of events for Ona Coffee. Several Ona Coffee employees won their respective barista and brewers competitions and the team travelled to Seoul, South Korea to compete in the World Barista Championships. “Winning the award was a real confidence boost for us. It is one thing to have a product, be proud of it, and share it across the world, but it is quite special to receive praise from your peers and friends. We put so much effort into it over years to make it accessible and easy to use. The award is something we’ve held onto since,” Sestic says. The Ona Coffee team has been collaborating with Zurich University of Applied Sciences’ Coffee Excellence Centre, headed by Professor Chahan Yeretzian, to continue to improve the product. The OCD is now in its third iteration. The OCD V3 incorporates lighter material and has a lower centre of gravity, as well as Ona Coffee’s patented static-reducing coating. “We are working with Professor Chahan and his team to find the best shape and material to minimise negative compounds while achieving full extraction of desired compounds. Using the OCD, we can now proudly say that we can reduce negative acids and compounds in coffee,” Sestic says. “We definitely feel that the MICE Innovation Award has helped us to keep researching and has given us credit to reach out to universities to continue improving our tool.” As Sestic continues to seek innovative methods to improve his product, he reflects on his experiences at MICE and encourages people to use the expo as a platform to expand. “2020 will be the fourth year in which Ona Coffee has been exhibiting at MICE and we have seen the expo grow immensely. We love being amongst the leaders and inspiring individuals of our industry. It helps us to grow and inspires us to do what we love,” he says. “We absolutely encourage people and businesses to use MICE as a platform to grow. Australia has one of the most innovative and energetic specialty coffee scenes in the world. To showcase a product at this event is really special and can lead to all sorts of opportunities.” G C R MICE2020 will take place from 4 to 7 May at the Melbourne Convention and Exhibition Centre. For more information, visit www.internationalcoffeexpo.com

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

OPINION Kamal Bengougam

The long breath goodbye EVERSYS COMMERCIAL DIRECTOR KAMAL BENGOUGAM ON WHY GREED, CONSUMPTION, AND CULTIVATION ARE ARCHENEMIES TO MOTHER NATURE AND A THREAT TO OUR FUTURE.

“

I breathe in the same particles of air that gave voices to humpback whales, and that lifted the wings of bald eagles, the same particles of air that rushed over the sea in storms, whirled in high mountain snows…air that has passed continually through life on earth. I breathe it in, pass it on, share it in equal measure with billions of other living things, endlessly, infinitely.” – Richard Nelson, The Island Within

When we are born, we inhale and then give that breath back, exhale, at the point of death. Life is but a sequence of breaths, some shallow, some deep, bringing us a step closer to eternity. We never possess the air that we breathe. We merely borrow it, lease it during our adventure on this planet we call Earth. At a 2019 United Nations summit, Swedish teenage climate activist Greta Thunberg delivered the following message to global leaders through their inertia over the climate crisis: “You have stolen my dreams and my childhood with your empty words. The eyes of all future generations are upon FIGURE 1: A PROCESS OVERVIEW OF THE COFFEE INDUSTRY COFFEE CULTIVATION TRANSPORT CRUDE COFFEE STORING, CLEANING ETC

WASTE

ROASTING

WASTE

COOLING PACKAGING MANUFACTURE

BLENDING

ROASTED COFFEE TRANSPORT

PACKAGING TRANSPORT

PACKAGING

PROCESSING EXTERNAL INDUSTRIES

TRANSPORT WITH CARRIER

TRANSPORT - COMPANY

TREATED COFFEE TRANSPORT

GRINDING

DISTRIBUTION CONSUMPTION WASTE WASTE MANAGEMENT

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Credit: Adam Carr, Seven Miles Coffee Roasters

you. And if you choose to fail us, I say we will never forgive you. We will not let you get away with this. Right here, right now is where we draw the line.” Over the past few years, as our world examines a future without fossil fuels, climate change has captured headlines. Deforestation and fires have challenged our ability to recycle air with the Amazon being exploited for economic reasons. And, while countries do have a mandate to utilise their resources for the common good of their people, there lies a greater reality on the edge of our consciousness. How will future generations judge us? What will be our legacy as stewards of our little planet, this tiny object we call home, being propelled through time and space at unbelievable pace? Do we, as the people of today, carry a responsibility to provide or hand over a world in at least as good a shape as we found it, to the people of tomorrow? Or, do we just focus on our generation, our selfish wellbeing and say “to hell with the rest”? “Après moi le deluge” as the French would say. And yet, underneath the shell of our blue horizon, life as we know it goes on as if decisions had no consequences. However, within the confines of this azure wonder, it is the air that we breathe that links the whole of creation. It is the only commodity we share with all of humanity without prejudice or hierarchy. When it comes to breathing, we are truly all equal. Even in our little coffee world, the forces of Mammon have infected the air that we breathe. In times gone by, coffee plants grew among trees, in the shade, as part of a balanced ecosystem linking insects and birds to people and trees. However, it has now been deemed to be more productive to grow coffee plants under the sun, leading to deforestation and a serious

FIGURE 2: ENVIRONMENTAL IMPACT OF EACH PROCESS IN THE COFFEE INDUSTRY ECOPOINT TOTAL: COFFEE SUPPLY CHAIN 35000 30000 25000 20000 15000 10000 5000 0 CULTIVATION Kamal Bengougam says today’s society values success at the expense of social responsibility.

compromise to the air that we breathe, as coffee is mainly produced in rainforest dominated regions. While we appreciate the notion that plants require sunshine for photosynthesis and oxygen production, coffee has been traditionally grown under a lush canopy of trees where rich soils removed the need for chemically produced fertilisers and, more importantly, dangerous pesticides. However, sun cultivation was introduced in the 70s to increase the yield, which led to economic improvements of the regions. This unfortunately required the introduction of synthetic fertilisers and pesticides as well as initiating the deforestation of large swathes of random rainforest, which was replaced with symmetrical rows of coffee plants. In figure 1 you can see all of the parameters that impact the coffee value chain. Of all of the factors that impact the environment, there are two that provide most of the negative ramifications: cultivation and consumption (see figure 2). Beyond this, the fact that the average cup requires approximately 140 litres of water to be produced, from irrigation through to processing, is concerning. Coffee also produces an inordinate amount of waste derived from separating the coffee beans from the cherries to produce a pulp. This pulp used to just be dumped into local rivers, contaminating the environment with significant amounts of waste, disrupting delicate ecosystems with organic contaminants. However, greater awareness as well as technological advancements have led to the reutilisation of the pulp to produce new beverages, as well as flour for baking. So, where does this leave organisations involved in the world of coffee, trying to promote fair trade as well as a social conscience? Ecological practices require further investment, which local farmers can ill afford to make, in view of plunging revenues. Can we increase productivity and yield without detrimental environmental impact? I would hasten to doubt it, as history dictates that every gain has an inherent cost or compromise attached to it. If the only way to increase production is deforestation or the use of fertilisers or pesticides, does the end, once again, justify the means. If not, how do we escape this self-destructive cycle, this yin and yang tension that separates our economic reality from the voice of reason? This morning, while walking my dog Rocco among the sunny Hertfordshire rolling hills, I started thinking about life encompassing three potential phases of wealth- survival, prosperity, and, ultimately, greed. As my predatory Doberman was sniffing around for prey, survival of the species became a comprehensible urge. It made sense to me. Prosperity is having the ability to own property, have holidays, and live a life beyond bare necessities without dabbling into luxury. That also made sense to me. Greed, on the other hand, is this relentless aspiration for more, the unquenchable thirst that seeks to accumulate wealth with neither rhyme nor reason. That did not make sense to me. Actions devoid of life-giving purpose lead to the destruction of the soul and nothing more. Greed for the sake of greed is a dark force that negates the human spirit, the common good. Greed leads to economic disparity and social inequity that, in turn, gives birth to a loss of hope,

TRANSPORT

CONSUMPTION

BREAKDOWN OF WHAT’S CAUSING THE ENVIRONMENTAL IMPACT (FROM FIG 2). CULTIVATION ECO TOXICITY (COPPER) EUTROPHICATION (PHOSPHATES) GREENHOUSE EFFECT (CO2)

CONSUMPTION AIR ACIDIFICATION (SOx) GREENHOUSE EFFECT (CO2) HUMAN TOXICITY (SOx) PHOTOCHEMICAL OXIDANTS (HYDROCARBONS)

fear, and eventually, civil unrest we can witness the world over today. Greta Thunberg was right to be angry, but the environment is nothing more than a symptom of our age, a fruit not a tree. The root cause, the tree of it all, is human greed: the desire to acquire and accumulate wealth for the sake of wealth, to live with the false sense of belief that we are better than the rest of the tribe, winning the rat race at any cost, and becoming top rat. Today’s society values success above all else, even if in the process of this eponymous victory, we lose our social responsibility, our consciousness, and, in the end, our humanity. Unlike the movie Wall Street in which Gordon Gekko uttered the famous words, that “greed is good” and “money never sleeps”, greed is not only bad, but it is destructive. Ultimately, greed leads to death … the final breath. G C R

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

DIARY Dashboard COFFEE COFFEE AROUND AROUND THE THE GLOBE GLOBE

GLOBAL COFFEE EVENTS

S I G E P

RIMINI, ITALY

18 – 22 JANUARY Sigep is a 129-square-kilometre showcase of the best and latest in the global market for coffee, gelato, pastry, chocolate, and baked goods. It includes five thematic routes, one for each business sector, interconnecting and integrating in a single, unifying vision for excellence. www.sigep.it

MELBOURNE INTERNATIONAL COFFEE EXPO 2020

MELBOURNE, AUSTRALIA

4–7 MAY Now in its ninth year, the Melbourne International Coffee Expo (MICE) is known throughout the Asia Pacific as the largest and most exciting dedicated coffee event. Each year, café owners, roasters, baristas, equipment manufacturers, service providers, and more gather at this trade-oriented event to network and do business. MICE2020 will take place at the Melbourne Convention and Exhibition Centre. It will host the 2020 World Barista Championship and World Brewers Cup. www.internationalcoffeeexpo.com

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18TH AFRICAN FINE COFFEE CONFERENCE

MOMBASA, KENYA

12-14 FEBRUARY The African Fine Coffee Conference & Exhibition is Africa’s largest coffee trade platform that – over the three days of the event – brings more than 2000 regional and international coffee roasters, traders, producers, professionals, and connoisseurs under one roof. The event will feature an impressive line-up of speakers, programs, coffee field visits, and recreational activities. www.afca.coffee/conference

THAIFEX – ANUGA ASIA BANGKOK, THAILAND

2 6-3 0 M AY Officially rebranded as Thaifex – Anuga Asia, the trade show presents stronger global recognition for exhibitors, visitors, and buyers. By bringing the Anuga brand to Asia, the stage is set to propel the food and beverage community into the future of food and unrivalled market connectivity. www.thaifex-anuga.com

NCA ANNUAL CONVENTION 2020

AUSTIN, UNITED STATES

5-7 M A R C H The National Coffee Association Annual Convention is a premier event for professionals and executives in the US coffee market. With so many challenges facing the industry – from coffee and health to sustainability and the continued struggle of coffee farmers – collaboration, conversation, and education matter now more than ever. www.ncausa.org

WORLD OF COFFEE WARSAW

WARSAW, POLAND

18–20 JUNE Travelling to a different European city each June, World of Coffee is an essential event for coffee professionals – drawing a loyal audience from the global specialty coffee community. Organised by the Specialty Coffee Association, next year’s event will host hundreds of exhibitors and feature Best New Product and Design Lab awards, and the World Latte Art, Coffee in Good Spirits, and Cup Tasters Championships. www.worldofcoffee.org

SPECIALTY COFFEE EXPO

PORTLAND, UNITED STATES

23–2 6 APR I L The Specialty Coffee Expo was designed to be the coffee professional’s one-stop-shop for everything they need to succeed. The Specialty Coffee Association (SCA) has built a solid reputation over the past 30 years of providing its members with the most up-to-date, qualified information. Roasters and retailers have the opportunity to exhibit their products on the show floor, network with decision makers, and participate in the SCA’s numerous lectures, labs, or certificate programs. www.coffeeexpo.org

EUVEND & COFFEENA COLOGNE, GERMANY

2 9–3 1 O CTO B E R Euvend & Coffeena is a meeting place for key players in vending machines and coffee. Euvend & Coffeena provides a unique platform for automated sales solutions, professional coffee systems, coffee, hot and cold beverages, snacks and filling products, multi-payment solutions, cups, and services. Event organisers say the most important innovations and trends in office coffee service, unattended retail, and micro markets are presented here. www.euvend-coffeena.com

JANUARY/FEBRUARY 2020 | GCR

PRODUCTS Marketplace

BRAMBATI ECODESIGN Ecodesign represents organisation in respect of the environment, which requires the valuation and minimisation of the negative impact that each product or service causes during its entire life, from the beginning of its existence through to its dissolution. For its coffee-roasting plants, Brambati evaluates the energy that will be used, air emissions that will be produced, spares and consumables required for well-functioning, maintenance and activity operations, dissolution at the end of their life stage, recycle or reuse wherever possible, and recovery and decontamination of areas where machines are operated. This objective evaluation and comparison to possible alternatives allows Brambati and its customers be aware of its environmental impact and the best choice for the most ecological solutions. For more information, visit www.brambati.it/en

Traditional antivibrator: It is vulcanised rubber pasted with steel. It is a difficult part to separate and consequently the recyle is difficult and expensive.

Antivibrator reviewed with Ecodesign: The used rubber is easily separable from the steel, and consequently the separation and recycle becomes easy and economical.

Rubber sheet

EVERSYS CAMEO X Designed to empower consumers to create what they desire, the Cameo X machine is the precursor to super traditional equipment, a combination of automation and tradition with the embodiment of conventional espresso design. Using materials such as copper-painted metal and natural materials, the design boasts semi-transparent side panels that become a source of theatre for customers, allowing them to watch the inner machine from behind the scenes. New technology includes the e’levelling system, which uses a patented powder homogenisation system for consistent quality of extraction. It also includes the new 1.5 milk option, which dispenses a controlled dosage of frothed milk through the wand at the same time that the brewed espresso hits the cup, allowing for the finishing touch of latte art design, created without trained barista skill. The Cameo X is limited to 250 units and each machine is sold with a certificate of authenticity as well as engraved numbers of the chassis to mark their uniqueness. For more information, visit www.eversys.com/en/news/cameo-x

CAFETTO EVO Cafetto Evo cleans like no other espresso machine cleaner. It is recommended for removing coffee oils, grounds, and stains from espresso machine delivery groups, group handles, and filters. Cafetto Evo is certified for organic use by three independent certification bodies: National Sanitation Foundation, Organic Materials Review Institute, and Australian Certified Organic. This means that if venues are using organic coffee beans and milk, they’re ensuring an organic experience for their customers from end to end. All Evo ingredients are rapidly biodegradable and free from phosphate, chlorine, and genetically modified organisms. Evo is safe to use, non-corrosive to coffee machines, and leaves no harmful residues. Cafetto Evo will improve the taste and aroma of espresso after the machine is cleaned, while leaving no trace of odour. For more information, visit www.cafetto.com

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EGRO NEXT TOUCH COFFEE The new Egro Next Touch Coffee is a latest generation fully automatic coffee machine designed for drip coffee, and the only one on the market that can be configured with four onekilogram bean hoppers. Egro Next Touch Coffee delivers fresh drip coffee, ground and brewed on demand from bean to cup in all cup sizes or in carafes of up to one litre per cycle. It guarantees quality and variety thanks to four different base coffees and more than 10 customisable coffee blends, easy to select via the touchscreen interface. For more information, visit www.ranciliogroup.com

ROASTMASTER240 With an hourly capacity of 1000 kilograms of green coffee per hour, the RoastMaster240 is the latest and biggest addition in the Buhler RoastMaster product family. The drum is designed for the best possible interaction between hot air and beans, guaranteeing a homogeneous roast. Whether the user prefers air recirculation or open system configuration, a fully variable burner and air flow provide the process flexibility to get the best out the beans. The multistep profile process control system with user-friendly human-machine interface includes monitoring, reporting, and recipe management, and assures operational excellence in production. The extra-large cooling tray allows for rapid and homogeneous cooling of roasted beans. Customised solutions for feeding, product discharge, emission control, as well as safe water supply complete the system and make it the new heart and soul of a high-performing coffee factory. For more information, visit www.buhlergroup.com

NUOVA SIMONELLI APPIA LIFE UCC Coffee United Kingdom & Ireland and Nuova Simonelli have introduced the next generation of Appia, a coffee machine loved by thousands of baristas worldwide. The Appia Life features the same proven technology for consistent espresso quality as previous generation Appia models but with new, enhanced features and a baristafriendly design. Created by Italian espresso experts Nuova Simonelli, with more than 80 years of espresso manufacturing and design experience, Appia Life introduces improved technology going beyond the barista-friendly features and ergonomic design to include energy-saving credentials, making the Appia Life more advanced and even easier to use. The Appia Life is distributed in the UK and Ireland by UCC Coffee. For more information, visit www.ucc-coffee.co.uk/our-equipment/appia-life

JA N UA R Y /FE B R UA R Y 2 0 2 0 | GCR

LAST WORD Coffee in concrete

Building blocks CIVIL ENGINEERING STUDENTS FROM AUSTRALIA’S RMIT UNIVERSITY ARE USING COFFEE GROUNDS IN CONCRETE TO REDUCE LANDFILL AND RAISE ENVIRONMENTAL AWARENESS.

usiness leaders, consumers, governments, and institutions are steering the coffee Last year, Venkatesan, Kohombange, industry towards a more sustainable future. and Abiad presented the project at RMIT’s Among many worldwide examples of ingenuity, Ford is incorporating McDonald’s Engenius 2019, an exhibition for students to coffee chaffs into car headlights, HuskeeCup is reducing landfill with reusable cups, showcase their innovations. and Taiwanese textile company Singtex is using recycled coffee grounds in clothing. According to Kohombange, the civil construction field hasn’t seen major Melbourne-based university RMIT is aiming to continue the trend by replacing portions of sand in concrete mixture with coffee grinds. improvements in sustainability over the past “The world produces 7.4 million tonnes of highly organic spent coffee grounds annually. This 20 years. He adds that it is important to number is expected to rise and most of it goes to landfill,” says Dr. Srikanth Venkatesan of RMIT research environmentally friendly practices University in Melbourne, Australia. as demand for infrastructure grows, but Venkatesan is a Senior Lecturer in Civil and Infrastructure Engineering. He collaborated with civil materials have largely remained the same. “Materials such as concrete are vital for engineering students Senura Kohombange and Anthony Abiad to launch the initiative in October 2019. construction and require a large amount of “This project aims to replace a natural resource in concrete construction, sand, with coffee grounds. As a coffee drinker, the idea was born when naturally when I was brainstorming on ways manual resources such as sand and aggregate. to reduce landfill,” Venkatesan says. Any research into reducing our dependency Kohombange adds that the idea is tackling two environmental issues simultaneously. on finite natural resources will go a long way “Sand is a finite natural resource. It comes from dredging our beaches and seashores. This is to reduce our impact on the environment,” causing depletion of natural sand deposits and significant damage to the environment,” he says. Kohombange says. A challenge for the team was determining the quantity of coffee grounds that could be used to “Some people are apprehensive about replace the sand, without compromising the concrete’s strength. using coffee grounds in concrete, but “We were unsure at first whether this idea could lead to anything. We spent some time looking the feedback we received was really positive. at existing and past research, and the potential issues the project could address,” Kohombange says. Many people have showed interested in the “With the guidance of Dr. Venkatesan, we were able to come up with some potential project and we are happy to continue this designs. Over time we started to gain more confidence that the project could be a success.” research to improve sustainability.” G C R Kohombange and Abiad spent several weeks in RMIT’s structural laboratories to cast samples and conduct tests. The Venkatesan, Kohombange, and Abiad presented the project at EnGenius 2019. aim was to determine the strength and durability of the coffeeinfused concrete. “Our most interesting observation was that replacing sand with coffee grounds can reduce the strength of the concrete, but there are ways to circumvent this,” Kohombange says. “We constructed different test specimens replacing five per cent, 10 per cent, and 20 per cent of sand with coffee grounds. We compared these to normal concrete cubes which showed the allowable limits of usage. It’s a common engineering technique adopted to analyse the mechanical properties of concrete.” The team conducted testing under Australia’s formal concrete mixing and testing standards. They found they could safely replace up to 10 per cent of sand with the coffee grinds.

G C R | J A N UA R Y / F E B R UARY 2020

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