GCR Feb 2012

January/February 2012

LOOKING AHEAD

Industry leaders on what to expect in 2012

MECHANICAL HARVESTING

The development debate

INDIA’S ROBUSTAS

Quality moves forward

DRYING TIMES

Drought hits the farms

EXACTING EXTRACTIONS

EAST AFRICA’S

VST’s scientific approach

COFFEE

BLOCK

DORMAN’S CHAIRMAN ON BREWING AND TRADING AT THE SOURCE

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CONTENTS January/February 2012

COVER STORY ON THE COFFEE MAP

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Dorman’s Chairman Jeremy Block has taken full control of the regional roaster, trader and coffee chain, and has big plans for the company to become synonymous with quality East African coffee.

46

IN THIS ISSUE FEATURES

COFFEENOMICS

PLANTATION

10 DORMAN’S ON THE

COFFEE MAP

28 BOOM & BUST

46 MECHANISATION AT

THE FARM

Chairman Jeremy Block speaks up on taking full control of the East African coffee industry leader that’s bringing vertical integration to a new level.

14 INDUSTRY LEADERS

ON THE YEAR AHEAD

GCR petitions the big names – Starbucks, Costa, Volcafé and more – on what trends to look out for in 2012.

20 SURVIVAL OF THE FITTEST

Nicaragua’s coffee industry comes back from a history of political, economic and natural disaster setbacks.

24 THE LAST DROP

East Africa’s Drought hasn’t spared the coffee sector, as farmers get pushed to their limits.

A historial look at the forces driving coffee price movements.

RESEARCH & TECHNOLOGY 33 PACKAGING

Goglio’s one-way degassing valves has revolutionised the coffee industry.

40 A QUALITY HYPOTHESIS

UNLESS YOU CAN TASTE A COFFEE, YOU CAN’T ­U NDERSTAND THE VALUE. IT WAS AN IMPORTANT PART OF THE EQUATION. Jeremy Block Chairman, Dorman’s

Industry experts argue why technology in picking is inevitable when economies of scale take hold.

24

50 INDIA’S ROBUS MOVE

TOWARDS QUALITY

An overview of how India’s Robustas are setting new standards of quality

VST Inc.’s Vince Fedele lends his inventive savvy to improving the quality of coffee and espresso

58 MECHANISING EXTRACTIONS

The latest innovation in commerical espresso machines is a step towards foolproofing extractions.

INDUSTRY PROFILE 36 INTERNATIONAL ENDEAVOURS

Neuhaus Neotec’s Managing Director Gustav Lührs tells of the vital role of market adaptation.

REGULARS 4 EDITOR’S NOTE 7 NEWS DRIP BY DRIP 54 DIARY DASHBOARD 56 MARKETPLACE

56

50 28

58 LAST WORD

JANUARY/FEBRUARY 2012 | GCR

3

EDITOR’S NOTE Global Coffee Review

Global CoffeeReview The intelligent industry resource magazine

PUBLISHER John Murphy john.murphy@primecreative.com.au GROUP EDITOR Jane O’Connor jane.oconnor@primecreative.com.au



EDITOR Christine Grimard christine.grimard@primecreative.com.au

TECHNOLOGY AND DEVELOPMENT

JOURNALIST Sarah Baker sarah.baker@primecreative.com.au ART DIRECTOR Joel Parke DESIGN Blake Storey, Alice Ewen, Karen Sloane, Michelle Weston, Sarah Doyle GROUP SALES MANAGER Brad Buchanan brad.buchanan@primecreative.com.au

MECHANISATION, industrialisation, and automation are welcome words in the world of manufacturing, but when it comes to agriculture they seem to take a slightly negative connotation.

Those active in agricultural industries, however, know all too well that these practices are the norm. While companies aren’t overly eager to market “mechanically harvested, conveyor belt” vegetables, consumers aren’t exactly willing to pay the US$50 a tomato it would take to keep the family farm in business in a developed country.

Where land is becoming scarce and labour prices are soaring, efficiency has meant the adaptation of technological solutions. World Trade Organisation battles over agricultural subsidies will continue to happen where developed countries insist on producing their food domestically, even though labour costs and land costs make the industry unsustainable.

As Carlos Brando points out in our feature Mechanisation at the Farm (see page 46) coffee has largely been spared industrialisation.

Brando points out that this is not because coffee has some magical, inherent value where hand-picking is the only option. As coffee is largely grown in developing countries, labour costs are simply so low that hand-picking is sustainable.

But as aspirations increase, so will costs of labour. For these reasons, technology in the field has to be welcomed to help these nations lift out of poverty.

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G C R | J A N UA R Y / F E B R UA R Y 2012

After all, technology is being welcomed with open arms on the consumption end of the market. Vince Fedele’s work in analysing extraction yields has materialised into better tasting coffee in a relatively short period (see page 40). The artisan view of the barista is becoming increasingly technical, with gadgets galore to help them improve their craft.

MacchiaValley’s latest innovation with an expandable brew chamber similarly shows just how much technology can simplify the brewing process.

With research and technology dollars largely concentrated in developed nations, it makes sense that these countries benefit the most from innovation. Surely we can afford to grant the same privilege of development to the poorest areas in the world.

PUBLICATION CO-ORDINATOR Hayley Blain hayley.blain@primecreative.com.au PHOTOGRAPHY James Quest Slayer Espresso Oxfam East Africa CONTRIBUTORS Scott Harris Daniel Howden Nishant Girjer 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.globalcoffeereview.com SUBSCRIPTIONS +61 3 9690 8766 subscriptions@primecreative.com.au

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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.

COPYRIGHT

Christine Grimard Editor

Global Coffee Review is owned by Prime Creative Media and published by John Murphy. All material in Global Coffee Review 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 Review are not necessarily the opinions of, or endorsed by the publisher unless otherwise stated.

We are engineers and love good coffee. We are manufacturers and enjoy perfect roasting.

We live tradition yet understand the necessity of progress.

WE LOVE THE TASTE OF GOOD COFFEE

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NEWS In Brief

NEWS DRIPBYDRIP 

The Nicaraguan coffee industry is experiencing a revival, following programs including the Cup of Excellence. The country’s coffee production dropped by more than half following historical civil war and natural disaster. Production dropped even after the coffee price crisis in the early 21st Century. Programs are now helping growers move towards a more specialty market. See pages 20 – 23.



VST Inc. has entered into a collaboration with espresso machine manufacturer Nuova Simonelli to produce custom 20gram precision competition baskets for the World Barista Championship events.

VST Inc. released their precision baskets at the Specialty Coffee Association of America last year. The work is the brainchild of CEO Vince Fedele, inspired by his efforts in analysing current baskets with the use of imaging technology developed for the FBI to scan and code fingerprints.

In Fedele’s experience running VST, VST Power Systems and VST Technologies, he has a long list of contributions to the computer world.

From the world’s first Smart Battery Chargers, USB products for iMac, the notebook versions of the Zip drive and the some of the first multiple format flash memory reader integrated with USB, the list is an impressive contribution to the way we interact with our computers today. See pages 42 – 45

ASIA PACIFIC

AFRICA

The drought in East Africa is being felt in the region’s coffee farms, where some farmers are switching to Khat, a drought-resistant mild narcotic.

The 2011 drought across the horn of Africa saw more than 10 million people at risk of starvation at the height of the crisis, according to the United Nations. As little as one-third of the usual precipitation hit the region during the typically wet months.

For coffee farmers who lack adequate irrigation, this led to dying plants, and poor quality output.

Where prices were reaching record highs, many farmers weren’t able to produce a quality product. While the results are mixed according to the reason, the drop in production will add further strains to already tight supply. See pages 24 – 27.

Mechanical harvesting has virtually replaced all other harvesting methods in Australia, where high labour costs make hand-picking impossible.

Carlos Brando of P&A International Marketing says a similar trend will hopefully occur the world over, as farmers’ aspirations and costs of living increase, technology will be necessary in the field to increase productivity.

Other than Brazil and Australia, Hawaii is the main other coffee producer where mechanical harvesting occurs, three countries all with high labour costs. One specialty coffee farmer in Hawaii, however, tells GCR how a strong premium for their coffee, thanks to their space in the specialty coffee market, helps them afford hand-pickers.

See pages 46 – 49.

Nearly two thirds of India’s coffee is now shade-grown Robusta, as the country has taken a massive step away from Arabica in the last decade and a half.

Specialty Coffee Grower Nishant R Gurjer says that India’s Robustas are now being recognised as some of the best in the world, scoring high points in the specialty coffee space.

The shift initially came about from the need to diversity crops to deal with pests destroying the plants. These days, the country is making a name for itself in the high quality of this varietal that is typically used in lower grade products.

See pages 50 – 53.



AMERICAS

500x

Jeremy Block, Chairman of C Dorman’s, acquired the controlling share of the company’s he’s run for two and a half decades from ED&F Man. The Dorman’s group is a vertically integrated trader, roaster and coffee chain in the East Africa region. Block finalised the deal last June.

See pages 10 –12.

Mechanical harvesters can pick at 500 times what a person can. Where labour costs increase, farmers have little choice but to mechanise.

See page 46.

JANUARY/FEBRUARY 2012 | GCR

7

NEWS In Brief



EUROPE

Neuhaus Neotec has invested US$1 million into a pilot plant to keep up with the fast evolving single-serve market, among other market trends.

Managing Director Gustav Lührs tells GCR he expects the market to continue to boom, especially in the United States’ market.

Earlier this year, the company opened a new office in the Georgia to cater to the growing American market.

See pages 38 – 41.

German espresso machine manufacturers MacchiaValley have released a machine with an expandable brew chamber that can automatically adjust for improper tampering, or no tampering at all.

The machine, released at the HOST exposition in Milan last October, can produce the same quality of shot even where the brew chamber is under or over filled. See page 58.

LETTER TO THE EDITOR Dear Madam,

Costa Coffee was named the Best Branded Coffee Shop Chain in Europe at the 2011 European Coffee Awards.

Allegra Strategies’ named the UK coffee chain the market leader at a ceremony held in conjunction with the 2011 European Coffee Symposium, that took place from 23 – 24 November 2011 in Berlin. Other notable winners for the European region include Starbucks, who took home the title as Most Ethical Company and La Cimbali, who were named Best Coffee Supplier.

These nominations were made by more than 300 senior industry peers, who took part in the Allegra European Coffee Leader Survey in August/ September 2011.

The UK branded coffee chain market, including companies such as Costa Coffee, Starbucks Coffee Company, Caffè Nero, Pret A Manger 8

G C R | J A N UA R Y / F E B R UA R Y 2012

and EAT, has shown incredible resilience, growing sales by 10 per cent to an estimated turnover of £2.1 billion, with the market doubling since 2005.

Consumers are embracing the growing coffee culture trend and demonstrating their love of coffee, enabling the sector to substantially outperform the wider retail market.

Allegra Strategies released the findings in their Project Café11 UK report. The report, however, does highlight some concerns. Weaker mid-sized chains and low quality independents are suffering as the major brands expand. Consumers have also started to spend slightly less per visit from US$5.40 in 2009 to US$4.94 in 2011, reducing their food purchases from coffee shops, and 69 per cent of consumers purchase food in coffee shops compared with 71 per cent in 2010.

With specific regard to the article in your recent issue in which I am quoted, “Living the American Coffee Dream,” (September/ October 2011) I believe it is crucial for me to note that I intended a specific context for my statement, “McDonald’s has really improved the quality of its coffee. They’ve darkened the roast and strengthened the brew.”

In improving their coffee, McDonald’s has reacted to an environment in which consumers are more responsive to a better cup of coffee; many of today’s coffee drinkers will seek out establishments in which better coffee is served. Further, they will more heavily weight their restaurant choices based on the perceived quality of the coffee served in a particular food outlet.

The improvements and changes that McDonald’s has made to their coffee program are real, but I don’t believe they would have been made had not specialty coffee industry pioneers, such as Los Angeles-based Coffee Bean & Tea Leaf (also mentioned in the article), lead the way by providing a consistently better cup of coffee to their customers.

Timothy J. Castle Author The Perfect Cup, Perseus Books

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COVER STORY Dorman’s

PUTTING DORMAN’S O N TH E

COFFEE MAP FROM MILLING, TRADING, ROASTING AND NOW BREWING, THE NAME DORMAN’S IS BECOMING SYNONYMOUS WITH QUALITY KENYAN COFFEE. CHAIRMAN, JEREMY BLOCK, SPEAKS TO GCR ON BRINGING THE ENTERPRISE FORWARD, NOW THAT HE HAS FULL CONTROL OF THE COMPANY HE’S BEEN LEADING FOR LAST TWO AND A HALF DECADES.

O

n 17 June 2011, Dorman’s Chairman, Jeremy Block, had a glass of Champagne he could scarcely afford.

Block was celebrating the acquisition of the controlling share of a company he’s been leading since 1986. With Dorman’s under ED&F Man’s umbrella for the last two and a half decades, Block has spent the last two years, and most of his resources, purchasing their controlling share.

“It’s like a new lease on life,” the Kenyan citizen tells GCR from his farm in the East African countryside. “I’m thrilled to be back in control.”

Block’s management of Dorman’s dates back to ED&F Man’s purchase of the company in 1986. He recounts that after enabling the international group to purchase a controlling stake in Dorman’s from its founder Charles Dorman’s widow Ellen, ED&F Man ran it for just a few months before handing Block the reigns. It was a move that saw him go from a shareholder to Managing Director. “It was a matter of being in the right place at the right time ,” he says. “I thought about it, and figured I would just try and run it.”

Block’s first instinct was to start in the accounts department. At a time before computers, he sat down with accounts and went over the hand-filled ledgers to get an idea of the company’s financials.

“The first thing I noticed was that the numbers weren’t all adding up,” he says. “They were buying and processing coffee and paying 60 per cent more than if they had bought some of the finest coffee they could buy at the auction.”

From his early number crunching, however, Block’s attention quickly turned to the quality of the coffee. He initially had two tasters on the staff and was happy to delegate the task of identifying

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G C R | J A N UA R Y / F E B R UARY 2012

quality to them. As he got to know the industry, however, it became clear that to work in quality coffee, he would have to recognise exactly what quality is. It’s in discussions of a passion for quality that Block most remembers his relationship with Ellen Dorman.

Up until ED&F Man’s purchase, Ellen, a German refugee, had run the company after taking over when her husband Charles passed away. Charles had established the company following his involvement in the coffee industry before the Second World War (as Chairman of the Mild Coffee Trade Association of East Africa in 1939 and 1940). After his death, Ellen took an active role in running the company. Even on her death bed, it’s said she insisted on being updated on the particulars of the day’s cupping and roasting results. Today, Ellen’s memory lives on as the ‘Grand Old Dame of Kenya Coffee’.

Before her death, Ellen had taken Block under her wing and into the tasting room.

“I realised then that the key to the business was understanding value,” he says. “Unless you can taste a coffee, you can’t understand the value. It was an important part of the equation, that unless I understood the value it would be difficult to communicate with customers and understand their needs.”

When Block took the reigns, the company was exporting just 12,000 bags of coffee a year. His first step to increasing business was to expand the portfolio of what the company offered. Using ED&F Man’s connections as one of the top five traders in the world, Block worked closely with their London Arabica traders, looking to offer a range of quality.

“Customers had enough faith and trust to be prepared to buy from us,” he says. “From there we just expanded.”

The key was not just in increasing volume, but taking from the lessons of his first days in the accounts department and ensuring that what they did sell was profitable.

“There was coffee that they thought was profitable that was actually selling at a loss,” he says.

“We had to sell not just more coffee, but ensure it was all profitable.”

From those early years, Block has seen the company grow exponentially. In 1989, Block bought Merali out of Sirima General Trading and formed Dorman’s (Tanzania) Ltd with ED&F Man. In 1993, when Tanzania liberalised its coffee sector, Dorman’s was the first company to build and run a private coffee mill. The Tanzanian operation grew from three employees to over 300 within two years and they acquired or built offices in Moshi, Mbeya, Mbozi and Mbinga, and even built an airstrip to facilitate transport of cash near Mbozi. In 1993 the group formed Dorman’s Uganda. Before they withdrew from Uganda a few years later, in 1996 Dorman’s was

exporting 500,000 bags of coffee a year – a 40-fold increase in business in 10 years.

While ED&F Man provided the financial backing, Block remained a shareholder throughout the process and managed the expansion. Block says that last year’s decision to purchase the controlling share was for him a big step in moving the company away from focusing on green bean trading, and towards his vision of a fully-vertically integrated coffee company.

Dorman’s has been marketing its own roasted coffee from early on. The final step in full vertical integration was the launch of Dorman’s coffee shops, an exercise that for Block has helped every part of the business.

“The idea behind Dorman’s coffee shops is fairly simple. We felt that Kenya, as a producer of the best coffees in the world, should understand its coffees and be able to appreciate them,” Block says.

JA N UA R Y /FE B R UA R Y 2012 | GCR

11

COVER STORY Dorman’s

While he’d had the idea for a while, Block initially thought the shops wouldn’t work because Kenya is mainly a tea-drinking nation. After seeing another shop open with some success, he decided it was time to turn ideas into reality. Without any personal experience in coffee shops, he paired up with a friend who owned a famous local restaurant chain, the Tamarind Group, and a consultant recommended by the Chairman of an American chain, Peet’s Coffee & Tea, to develop the business.

Running a coffee chain, Block soon learned, was a far different experience than dealing in green and roasting coffee. But, it proved to be a vital step in helping them grow the business.

“It’s been very useful in getting to understand both sides of the equation,” says Block.

Dorman’s now has 11 shops around Nairobi and Mombasa, and three franchised units that cover delivery service, office service and outside catering. It’s just the beginning, however, of a business that Block sees rapidly expanding. As the region’s middle class grows, more and more consumers can afford to purchase coffee and the drink is being touted as a positive alternative to alcohol. As such, Block is positioning the coffee chain to put Dorman’s on the map as the pride of Kenyan coffee.

“Let me put it this way. In North America, you have Starbucks, Caribou Coffee, Peet’s and so on. In Europe, you also have Starbucks as well as Costa Coffee. In India you have Coffee Day. In Africa – you just don’t have anything,” he says. “There’s a gap there, a vacuum. I think Dorman’s is there and ready to lead the charge into that vacuum.”

The move will come sooner rather than later, along every part of the chain. With operations already in place in Kenya and Tanzania, Dorman’s Coffee Management Services Ltd (CMS) operations, a service provider and marketing agent, already has a presence in Rwanda, and they are in talks to expand their operations in Uganda, Ethiopia and

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G C R | J A N UA R Y / F E B R UA RY 2012

VOLUMEFACT When ED&F Man first purchased Dorman’s in 1986, the company was trading 12,000 bags of coffee a year. With rapid ­expansion, by 1996 Dorman’s was exporting 500,000 bags of coffee a year – an over 40-fold increase in business.

Burundi. Dorman’s recently engaged Christopher Jordan as a Director to manage the expansion. Jordan brings his experience as a former Regional Director at TechnoServe and Director of Quality at Starbucks Coffee Trading.

In their surge forward, Block says the future will require a fresh approach, as modern coffee trade has changed drastically from when he first started.

“When I took over at Dorman’s, I think less than 5 per cent of the coffee community knew anything about coffee futures and hedging,” he says. “The understanding of risk management was minimal. These days, I’d say 95 per cent of the market understands risk management.”

While Block expects direct trade to continue, in his experience at the region’s coffee auctions, he says these auctions are the best way for farmers to get a fair price in an efficient system.

“Both Kenya and Tanzania are trying to promote direct selling, and we’re seeing an increase in direct sales, but the auction system still works better as a whole,” he says.

“Direct trade doesn’t really work for coffee that’s of average quality or less. Buyers need an incentive to buy, and at the auction you see buyers fight over the coffee and it creates a higher price.”

The availability of world prices to farmers and buyers alike is part of the greater trend of transparency that Block has noticed along the chain.

Buyers want to know if a price is valid and justifiable. They want to know the margins, Block says, and they want to follow coffee from the grower to the cup.

Certifications have emerged as one way to ensure this transparency and in this regard C Dorman, the company’s trading arm, has led certification efforts in the region.

In 2006, the company was the first in Kenya to be accredited with ISO

22000 and HACCP (food safety provisions); Utz Kapeh (now Utz Certified, a sustainability certification); Rainforest Alliance (RFA) and FLO Fairtrade.

While Dorman’s promotes the certifications to farmers as a way to ensure transparency and sustainability, he says that the biggest advantage of certifying coffee is simple – it makes good business sense.

“Certification gives more people to sell to,” he says. “Whatever the certification, they are all initiatives that promote sustainability and many roasters are demanding them. If you’re not involved, than you decrease the number of customers you can sell to.”

While the company does their best to help farmers with funding, communicating this market reality to them has proven a good incentive to encourage farmers to gain certification.

For Block, certification is just one step forward in further entrenching the company’s regional market leading position.

“We are also helping all the other East African countries to improve their qualities and

“IT’S ALL ABOUT CREATING PRIDE IN THE INDUSTRY WE HAVE HERE. ANY COFFEE TASTER AROUND THE WORLD, ANY ROASTER, ANY BUYER, WILL TELL YOU THAT WE PRODUCE SOME OF THE BEST COFFEES IN THE WORLD.” Jeremy Block

Dorman’s Chairman

hence generate better earnings for their farmers. This will ensure Dorman’s maintains it’s leading position in the region, both with customers and the producers and not forgetting the regulators,” he says.

“We’re putting Dorman’s on the Kenyan map in promoting the region’s coffee. It’s all about creating pride in the industry we have here. While Kenya has some good tea, it’s nothing special.

But, our coffee sells from 20 to 500 per cent more than other coffees and for a good reason. Any coffee taster around the world, any roaster, any buyer, will tell you that we produce some of the best coffees in the world.” GCR

JA N UA R Y /FE B R UA R Y 2012 | GCR

13

FEATURE Industry Leaders

DRIVING GROWTH IN

2012

TO START OFF THE NEW YEAR, GLOBAL COFFEE REVIEW PETITIONED INTERNATIONAL COFFEE LEADERS WHAT TRENDS THEY EXPECT WILL SET THE PACE FOR THE YEAR AHEAD. THESE ARE THEIR RESPONSES.

 STARBUCKS GLOBAL COFFEE AUTHORITY 14

G C R | J A N UA R Y / F E B R UARY 2012

Over the past three years, premium single-cup coffee has continued to drive growth in the coffee category. In fact, the premium single-cup category has grown 168 per cent in the past year alone. Recognising the consumer demand and significant growth potential, retailers continue to dedicate more shelf space down the grocery aisle to support growth.

Just over two years ago, we introduced Starbucks VIA Ready Brew, a breakthrough innovation in instant coffee and our first entry in the growing premium single-cup category. Designed to be a single-cup solution, Starbucks VIA went on to generate US$250 million in system-wide sales in fiscal 2011. On the heels of its success, we expanded our presence in the premium single-cup category with the introduction of Starbucks K-Cup Packs in partnership with Green Mountain. In November 2011, nearly 30 million Starbucks K-Cup Packs hit store shelves at major retailers throughout the United States. As with our successful entry into

AS WITH OUR SUCCESSFUL ENTRY INTO THE PREMIUM SINGLECUP CATEGORY, WE’VE ALSO RECOGNIZED THE OPPORTUNITY TO ATTRACT NEW CUSTOMERS. Dub Hay

Senior Vice President, Starbucks Global Coffee Authority

the premium single-cup category, we’ve also recognized the opportunity to attract new customers and meet the needs of existing ones looking for a lighter roast coffee. According to our consumer research, more than 40 per cent of United States coffee drinkers, or approximately 54 million consumers, prefer a lighter roast coffee.

Knowing this, we worked to develop Starbucks Blonde Roast, an offering that appeared in Starbucks retail stores and grocery aisles in the United States beginning January 2012.

VOLCAFE The year we just left behind proved that volatility in commodity markets is here to stay and coffee is no exception. On the contrary, the coffee market’s tight supply will be a catalyst for further volatile behaviour and at Volcafe we see it as the function of the market to bring the balance back into supply and demand.

If we take a step back, we can conclude that despite the so called resistance to the recession of coffee, there has been a stagnation of growth in the established markets such as North America and Europe. However there is good growth in the countries of origin such as Brazil as well as growth in the Asian region. The effects of emerging market economic growth has profoundly affected both demand and production of coffee in these countries.

I often get the question, so why doesn’t the world grow more coffee? Simple economics have demonstrated that there was not and maybe still isn’t enough incentive for the farmer to keep farming or to invest in becoming more efficient.

If the coffee industry is really committed to making a cup of coffee, be it brewed at home or consumed out of home, there is only one solution available. We collectively need to embrace the sustainable sourcing of coffee.

At Volcafe, we don’t make a moral judgment towards any of the programs available in the market, it is our function to provide our customer with the program desired by them, and to put our vast origin network at work to procure the coffee, whether it is 4C, UTZ, Rainforest Alliance, or company-specific programs.

By educating the smallholder farmer, and paying him a premium for the certification, we will enable him to farm more efficiently and increase his output per hectare. At Volcafe we are convinced that the only way we can satisfy the growing demand of coffee drinkers is by increased productivity. Our ability to pay a little more in the short-term will maintain long-term growth.

Our global footprint not only adds value to nearby sourcing solutions, it is also advantageous for longer-term planning with our partners in a coffee market with the above-mentioned fundamentals. In both commercial and niche segments of coffee, planning for long-term sustainable supply growth is key for everybody, and is a crucial issue for us now and in years to come.



BY EDUCATING THE SMALLHOLDER FARMER, AND PAYING HIM A PREMIUM FOR THE CERTIFICATION, WE WILL ENABLE HIM TO FARM MORE EFFICIENTLY AND INCREASE HIS OUTPUT PER HECTARE Jan Kees van der Wild

Divisional Managing Director, Volcafe

Briefly touching on price and price outlook, the past year we have seen a large move upwards in coffee to above US$3.00 a pound for it to face a relatively hard landing closer to $2.00 a pound.

The industry was leaning towards blaming hedgefunds and managed money for this large rise, but facts demonstrate clearly that the “fund” activity was relatively subdued and that prices went up to ensure farmer selling, specifically in Brazil.

Due to the disappointing crops of mild Arabicas, specifically Colombia, the roasting community is more and more depending on Brazil Arabicas to fill the gap.

We have concluded our first crop tour in Brazil.

While we initially estimated 60 million bags on the first plant count, we now estimate it to be just 56 million. We will need to work harder to get our coffee in time prepared for our customers.

Allow me to take this opportunity to thank our clients for their support and to wish them a good 2012.

JA N UA R Y /FE B R UA R Y 2012 | GCR

15

FEATURE Industry Leaders

TATA COFFEE India has been primarily, a nation of tea drinkers resulting in over 80 per cent of the coffee grown here being exported. But this scenario has been changing steadily over the last decade as coffee has made inroads into the cups of consumers.

Consumption has grown or rather, multiplied from a low base of 50,000 tonnes – a level at which it stagnated for decades, to 100,000 tonnes in the last two decades. Much of this growth has been in the instant coffee segment, a pattern typically seen when a country moves from tea drinking to coffee. As coffee is seen as a luxury drink which is more complicated to prepare compared to tea, the early converts consume instant coffee owing to the convenience in preparation and the cost factor.

India, has simultaneously also seen the mushrooming of cafés and this has been across the country and not restricted to the Southern coffee consuming heartland. The cafés have been driving growth in high end quality roast and ground coffees. With growing per capita incomes and Westernisation of lifestyles including palates, this segment is seeing good growth.

COSTA COFFEE 16

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In such a scenario, the entrance of a globally recognised brand such as Starbucks which everybody is familiar with, will give much required fillip to driving roast and ground consumption further. The ensuing competition will be good for stakeholders across the board from growers, to roaster retailers, to consumers in terms of widening the range of quality. offerings and widening the market base.

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EARLY CONVERTS CONSUME INSTANT COFFEE OWING TO THE CONVENIENCE IN PREPARATION. Hameed Huq

Managing Director, Tata Coffee

There is no doubt that 2012 will be a difficult year for everybody operating in the hospitality industry. In most markets, consumer spending will be under significant pressure because of low economic growth and the threat of rising unemployment, particularly in developed countries. In the coffee shop and restaurant industries, we also face the prospect of significant cost inflation.

Against this less-than-positive background it’s even more important that businesses focus on those things which matter most to our guests: providing excellent products, outstanding service and an attractive environment. This is the time to redouble our efforts to offer quality and superior service rather than to retrench, cut costs and cheapen the customer experience to improve margins.

At Costa, we have a long history of innovating in products, in store design and in service initiatives, to provide a better experience for our customers. That’s why we remain, by far, the preferred coffee shop brand in our home market of the UK. This is evidenced by the latest Allegra Strategy research which shows that 40 per cent of coffee shop customers rate Costa as their first choice.

Innovations like Flat White, Ice Cold Costa, Costa Lite and the Coffee Club card have enabled us to maintain healthy like-for-like sales growth and to continue to open successful new outlets. These initiatives – and others currently in development – are now being rolled out across our international markets, to great effect. This creates a strong platform for future

growth, despite the economic pressures we predict for 2012.

Despite a difficult trading environment, it seems that the recipe for success remains unchanged. To maintain a premium positioning, compete effectively with lower-priced QSR brands and gain continued customer loyalty, we need to ensure that the experience of visiting our stores is made better and better, and it’s our firm intention to do just that.

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THIS IS THE TIME TO REDOUBLE OUR EFFORTS TO OFFER QUALITY AND SUPERIOR SERVICE RATHER THAN TO RETRENCH, CUT COSTS… TO IMPROVE MARGINS John Derkach

Managing Director, Costa Coffee

INTERNATIONAL COFFEE ORGANISATION  While global consumption is expected to continue its year-on-year growth, possibly slowing slightly to 1.5 to 2 per cent, global production in crop year 2011/12 is expected to be around 127.4 million bags, down from 133.6 million bags in 2010/11.

Production in Brazil is estimated to decline to 43 million bags in 2011/12, down from 48 million in 2010/11. Moreover the impact of historically high levels of production in Brazil on the global coffee trade will continue to be offset by rising domestic consumption.

Based on the above market fundamentals, the global supply/demand balance will continue to be fairly tight. Furthermore, with stocks at historically low levels and a restricted supply of fine quality Arabica coffee, world coffee prices look set to continue to be firm.

WITH STOCKS AT HISTORICALLY LOW LEVELS… WORLD COFFEE PRICES LOOK SET TO CONTINUE TO BE FIRM. Roberio Silva

Executive Director, International Coffee Organisation

ALLEGRA STRATEGIES  In 2012 we’re going to see a big focus on educating consumers. They are becoming more savvy all across the world, and smart companies are learning to meet that thought process in teaching them more about coffee and drawing them in.

A company’s success will likely depend on how they’re able to explain to their customers what they’re doing that’s different. Stories will need to be told in a compelling way, and they will need to be genuine. Consumers are the champion of a product, and they need to be given the knowledge to make their decisions. This must be delivered in different mediums, in the store environment; via the web and direct promotions; through staff who are taught how to teach their customers.

Customers want to know the whole process of coffee, and companies will be required to provide greater transparency in sharing their information.

Before, coffee was just a product in a cup, but now there are a lot of customers out there who want to know the story behind their coffee. There are of course millions of customers who don’t know the story, and this is where the opportunity lies in bringing those customers around.

In educating customers we’re going to see

CONSUMERS ARE THE CHAMPION OF A PRODUCT, AND THEY NEED TO BE GIVEN THE KNOWLEDGE TO MAKE THEIR DECISIONS. Jeffrey Young

Managing Director, Allegra Strategies

more direct communication in the use of databases and social media. But the communication won’t just be one way, companies will enter into a dialogue with their customers and promote feedback from their customers and their staff.

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FEATURE Industry Leaders

PROBAT The question of coffee grinding has gained considerably in importance during the past few years. Among other things, this is largely due to the increasing sale of single portion products like capsules and soft pads. A high degree of accuracy, as well as reproducibility of grind, is mandatory to achieve the required quality consistency. As this market grows, this topic will certainly keep us busy in 2012. Other products in industrial coffee processing, however, are also making increasing demands on quality. The latest trend is micro-grinding, where the roasted coffee is ground extremely fine and mixed with instant coffee to upgrade the taste of the hot beverage. Instant coffees produced that way can come quite close to a freshly brewed filter coffee.

Current roasting systems are optimised according to the duration of their roasting times: short-term or slow roasting.

Short-term roasters of today can also be used for slower roasting, however this can cause losses in efficiency. Roasting results can also not be compared with those produced on a slow roaster – for example on our Neptune drum roaster.

We have developed a roaster which can perform both roasting time ranges with the corresponding characteristic taste profiles. The Jupiter Hybrid tangential roaster will, in the future, combine both capabilities in one machine and thus maximise flexibility in regards to the potential roast profiles. Our new technology centre will be equipped with a Jupiter Hybrid machine which will be available for test and trial roasts.

Modern-day increase in the diversity of variants, as well as the changing habits of consumption, is making it difficult to produce roasted coffee for stock. It is the coffee producers’ objective to produce on-demand when possible, reducing storage costs and ensuring freshness. This objective requires, on the one hand, roasting machines as flexible as possible to

MICRO-ROASTING IS A TREND CREATED BY THE ROASTERS’ ENTHUSIASM FOR THE PERFECT CUP OF COFFEE. Thomas Koziorowski

Director Product Technology and R&D, Probat

provide a broad spectrum of roasting profiles. On the other hand a perfectly matching plant technology and control system.

As far as control is concerned, connecting software to the coffee producer’s enterprise resource planning system is important so that orders coming in directly release the roasting required.

In addition, conveying systems, weighing scales, roasting machines and grinders must be clocked for an optimal flow from the green to the ground coffee. We at Probat develop our own plant control systems, based on our extensive experience.

All over the world, the number of small shop roasters is increasing. Micro-roasting stems from roasters’ enthusiasm for the perfect cup of coffee. To serve our customers in this segment even better in the future, we’ve established a separate department. We are also expanding our manufacturing capacities so that we can react quicker and with more flexibility to inquiries.

SPECIALTY COFFEE ASSOCIATION OF AMERICA

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There are three clear issues that I believe will dominate. First is supply. Washed A ­ rabica coffees will continue to be in high demand and supplies will continue to be tight. Tightness in supplys will p ­ revail until new crop Brazil coffees arrive, but washed coffees will drive the

THE MARKET MUST ATTEND TO CONSUMER PERCEPTIONS AND DESIRES. Ric Rhinehart

Executive Director, Specialty Coffee Association of America 18

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market dynamic. This issue will require serious attention from the i­ndustry.

Second is price. After two years of high green coffee prices one would expect the trade to have positioned itself for a new reality, but many still believe that current pricing is inflated or overstated due to speculative intervention. There is a real case to be made for inefficient price discovery being the real issue as prices between the three distinct underlying commodities (Robustas, natural Arabicas, and washed Arabicas) are served by just two exchanges. The trade must come to grips with the real price/value equation for coffee.

Third, the market must attend to consumer perceptions and desires. Consumer demand is beginning to flag in reaction to increasing price without an offsetting increase in quality.

The mid market and specialty market players should take note of this and drive perceptible upward movement in quality.

NUOVA SIMONELLI

A major trend that has been developing in the last few years, and will be of major influence in the year ahead, is that consumers are becoming increasingly educated and starting to demand better quality coffee.

While they’re not technicians, in that they may not yet be able to express exactly what they are tasting, they are able to discern what they like. The industry is going to have to listen to customers and be responsive to their demands.

This will affect everyone from the top end of the corporation down to the barista, who will be affected by changing behaviours. Customers are now looking for an experience-centric coffee. It’s something an Italian sociologist tagged as the ‘theory of immediate pleasure’. Customers want something, and they expect to receive it instantly, rather than working up to it. If they want a Chanel bag they’ll go out and rent it, if they want a Ferrari they can just lease it for the day. Even though economies are stagnating, you still see everyone around with an iPhone. The economy isn’t going to affect the profitability of these luxury items that people perceive that they want.

As coffee becomes an experience centric item, the drink fits into this category and the industry will grow as a result.

The key for businesses will be to find the right equation to create a great consumer experience, the right mix of service, environment and menus, and importantly the coffee. Consumers now

want to know the story behind their coffee, they want to trace coffee back to its origin.

Much of this work will fall in the barista’s hands, who has the ultimate control over the quality of the coffee and a consumer’s experience, as they are the final point of contact. This will require companies to invest not only in training, but put some effort into customer service.

Baristas have to be not only technicians of coffee, but service-oriented. While this is not a new trend, it’s going to be even more important next year. As the official machine sponsor of the World Barista Championships, we recognise this trend and see this competition as driving the inspiration to recognise this vital role of the barista in meeting consumers expectations.

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BARISTAS HAVE TO BE NOT ONLY TECHNICIANS OF COFFEE, BUT SERVICE-ORIENTED. Cosimo Libardo

Managing Director, Nuova Simonelli

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FEATURE Nicaragua

SURVIVAL OF THE

FITTEST PLAGUED BY INDUSTRIALISATION, WAR AND AN UNSTABLE CLIMATE, NICARAGUA’S COFFEE GROWING INDUSTRY BEARS A HISTORY OF POLITICAL AND ECONOMIC SETBACKS. NOW THE RESILIENT COUNTRY IS FIGHTING ITS WAY BACK ON THE WORLD STAGE AS A DEVELOPING COFFEE GROWING NATION. Story by NICOLA HEATH

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I

t was the sweet, clean and complex fruit profile that drew Fraser Lovell from New Zealand’s Coffee Supreme to Finca Santa’s Maragogype.

The Maragogype was grown by farmer Mario Urbina at his farm, Finca Santa Gema in the verdant Nueva Segovia highland region.

“I have a soft spot for good quality Maragogype from Nicaragua,” says Lovell. “They tend to display exceptional sweetness.”

Lovell travelled to Nicaragua in 2008 as a Cup of Excellence judge, and was struck by the warmth of the hardworking farmers he met. “They made me feel completely welcome on their farms and in their country,” he says.

“The main growing regions of Nicaragua are in the mountains in the north of the county. When I was there I stayed in a small town called Jinotega. It was a beautiful place surrounded by lakes and home to a number of different types of coffee production, ranging from large family estates to small cooperatives.”

The common theme among the different producers, says Lovell, “was the farmers’ passion for coffee and the struggles that they had been through”.

These struggles have encompassed a civil war, global coffee market crises, and more than one natural disaster. Nicaragua’s growing reputation as a producer of premium quality coffee reflects the resilience of its industry.

The story of coffee in Nicaragua begins with Christopher Columbus, who arrived in the area in 1502. Spanish colonisation followed, with the first permanent Spanish settlement, Granada, founded in 1524 by Conquistador Francisco Hernández de Córdoba. Córdoba is considered to be the founder of modern Nicaragua and gives his name to the national currency. By 1529 the Spanish invaders had overcome the local Indigenous population, who were treated cruelly by the foreigners, and settled the region.

The Californian Gold Rush of 1848 brought a flood of foreigners looking for a new life to the Americas, and it was enterprising German settlers who first developed the coffee industry around this time in Nicaragua. Their descendants still farm land in the highlands around the northern city of Matagalpa. Among them is the Kühl family, who run the Selva Negra Coffee Estate, a picturesque organic farm set among wild cloud forest at around 1200 metres elevation.

By the 1870s the coffee industry in Nicaragua was booming, but it was heavily subsidised by foreign investment – the Subsidy Laws passed in 1879 gave large landowners five US cents a tree – which meant that by the end of the 19th Century, Nicaragua was effectively a banana republic. Few taxes were placed on the coffee industry, and the significant foreign ownership of coffee farms saw profits flow offshore unchecked.

Economic diversification in the years following the Second World War lessened Nicaragua’s dependence on coffee. Nicaraguan cotton found an insatiable market in the Korean War, and industrialisation pushed the economy forward until the Central American Common Market collapsed at the end of the sixties.

The next decade saw an economic decline caused in part by indebtedness exacerbated by the 1972 earthquake that devastated the capital Managua, as well as an increasing concentration of the country’s wealth into the hands of a few.

It was this economic disparity that set the scene for the Sandinista Revolution of the late seventies.

The powerful Somoza family dominated Nicaragua’s political and economic life throughout the 20th Century, until anti-Somoza forces replaced the government in 1979 after a draining civil war that left up to 50,000 dead and the country’s economy and infrastructure in ruins. The left-leaning Sandinistas stayed in government until 1990, and after confiscating the Somoza’s land after taking power, undertook a program of wealth redistribution. However

a trade embargo set in 1985 by the US, Nicaragua’s biggest trading partner until that point, stifled any further economic growth in the 1980s.

Eddy Kühl, who has published a book about coffee in Nicaragua, recalls the decline of the coffee industry in the 1980s. “By 1978, the last year before the 1979 revolution, Nicaragua was getting to export almost 2 million hundredweight sacks,” he says. “By 1986 it dropped to 600,000.”

No coffee was exported to the US, Eddy says. Most was sold to communistaligned countries in Eastern Europe such as East Germany and Soviet Russia, who often paid with trucks and other goods.

The moribund state of the Nicaraguan economy in the 1980s was put under further stress by the 1989 coffee crisis, triggered by the collapse of the International Coffee Agreement, which until that time had regulated the global coffee market with an export quota system that was designed to limit overproduction.

Coffee prices dropped from 124 cents per pound in December 1988 to 62 cents in December the following year, and continued to fall until the market hit a record low in 1999.

During this time new producers including Vietnam and Indonesia entered the market. Vietnam’s production of mainly Robusta beans rose from 2 million bags in the 1990s to 15 million bags in the early 2000s. This abundance of cheap coffee further depressed coffee prices, until global oversupply caused the price of coffee to drop to its lowest level in 30 years.

Central American coffee exports suffered a 44 per cent decline in revenue in 12 months. In Nicaragua, exports dropped from US$170 million in 1999/2000 to $85 million in 2000/2001. At the same time, production was increasing, doubling in the decade between 1990 and 2000.

Nicaragua’s coffee industry was delivered a further hit when Hurricane Mitch struck Central America in the last few days of October in 1998. While it never landed in Nicaragua, the storm

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FEATURE Nicaragua

dropped 127 centimetres of rain on the country. The deluge caused an enormous mudslide at the Casita volcano and widespread flooding around the country, and as well as causing an estimated US$1 billion worth of damage. Mitch cost at least 3800 lives in Nicaragua and left thousands homeless. It was the deadliest Atlantic hurricane to hit the Americas in 200 years.

The effect on the coffee industry was terrible, with up to 30 per cent of the coffee crop destroyed. Roads and bridges were washed away, hindering the coffee growers’ attempts to tend to what was left of their harvest and to rebuild.

This quick succession of blows to the coffee industry laid even lower a rural population already living in poverty.

“A lot of Nicaraguan families are dependent on coffee,” says Peter Ross, Senior Lecturer at Australia’s University of NSW’s Americas Studies Program.

“Just witness the dire conditions, including starvation, created by the crises of the late 1990s early 2000s, in part caused by hurricane and droughts, but also due to the collapse of world coffee prices – a result of the World Bank encouraging Vietnam to get into coffee production in a big way.”

Today the coffee industry is still an important player in the Nicaraguan economy. According to the International Coffee Organisation (ICO), in 2009 Nicaragua produced 1.925 million bags of coffee. Coffee accounted for 18 per cent of all exports (valued at US$251.27 million) and 4 per cent of the GDP. The recovery from the 2001 crisis required the implementation of one of two strategies, or a mix of the two.

One is increased competitiveness, which may be achieved through improved production and postharvest technologies, or moving into differentiated markets. The second is diversification, which may mean farmers supplement their income with different crops, or non-competitive farmers leaving the industry entirely.

Programmes like Cup of Excellence, an annual auction which promotes the production of premium coffee, are part of the strategy aiming to improve the

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DAMAGEFACT Hurricane Mitch dropped 127 centimetres of rain on Nicaragua over just a few days in October 1998, causing an enormous mudslide at the Casita volcano and widespread flooding, as well as causing an estimated US$1 billion worth of damage.

economic prospects of farmers through increased competition. In 2010, for example, the winning Nicaraguan coffee grown by Norlan Daniel Matute Tercero at El Esfuerzo sold for US$35.65 a pound, exponentially higher than market value.

In a travel diary he kept when he visited Nicaragua in 2005 as a COE judge, Steve Leighton, who owns UK roaster Has Bean, noted that “the Cup of Excellence is the opportunity for the roasters and customers to give something back, without it being charity. Rewarding the farmer who goes that extra mile is the perfect way to encourage everyone to try that little bit harder.”

Leighton returned to Nicaragua in 2008 to visit Erwin Mierisch, a coffee farmer whose family has been growing coffee in Nicaragua for over 100 years. In 2007 Leighton bought Finca Mierisch’s Limoncillo, a coffee that the next year won second place at the Cup of Excellence. Leighton loved Mierisch’s coffee and clearly respected the Mierisch family operation.

“I think they need more growers like Erwin,” he says. “He is a progressive producer who understands that it’s good to produce small interesting lots along with the bigger lots that make money. He is constantly questioning what is good and always tasting his coffee.

“Importantly he also looks after his employees, with healthcare, education and paying a good wage, trying to make things better for everyone – including me and my customers.”

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TODAY THE COFFEE INDUSTRY IS STILL AN IMPORTANT PLAYER IN THE NICARAGUAN ECONOMY. ACCORDING TO THE INTERNATIONAL COFFEE ORGANISATION, IN 2009 NICARAGUA PRODUCED 1.925 MILLION BAGS OF COFFEE.

Fraser Lovell echoes Leighton’s positive assessment of the Cup of Excellence. Of the investment in award-winning beans that he says: “absolutely pays off, in a number of ways”.

“Firstly the farmer receives 80 per cent of the total auction price which is significantly more than any other mode of coffee trade. This not only financially rewards him for all the hard work he put into producing his coffee but it also gives him recognition amongst his peers and exposure to coffee buyers such as ourselves who may of not heard of him otherwise,” Lovell says. “This is one of the great things about Cup of Excellence – it builds relationships between producers and roasters that otherwise might have never existed.”

For farmers looking to diversify, tourism is an increasingly viable option. Coffee and eco-tourism offers coffee growers, usually the owners of larger estates, a reprieve from the vagaries of the global coffee market. The Kühl family have diversified into tourism and run a successful ecolodge at their estate, Selva Negra.

“The resort was started in 1975 and is now about 40 per cent of our business,” says Karen Kühl, who helps run the estate with her parents Eddy and Mausi, and her four sisters.

Selva Negra’s sustainable practices and nature preservation are strong selling points to tourists visiting Nicaragua. Visitors can go on hikes into the secondary and primary rainforest, go horseback riding in the coffee plantation, and take educational tours covering the coffee industry, sustainable practices and cattle ranching.

The Kühls have capitalised on their farm’s beautiful rainforest setting, and guests are housed in bungalows built from fallen plantation timber or simple hotel-style rooms, which are serviced by solar water heaters and spring water.

Looking forward, one of the most serious challenges facing coffee growers in Nicaragua is the threat of climate change. The Kühls at Selva Negra are conscious of the changes that may be wrought by climate change, and have started to plan for it.

“We have been planting alternative crops at the lower area of the farm, such as avocado as shade and cacao as crop,” says Karen. “This will give us a continuity of crop in areas where coffee will not yield the quality that is expected out of Selva Negra coffee.”

The Kühls are also planting more high altitude trees such as oaks, Karen says, to add an upper layer of shade that will cool the coffee under it. These extra trees will also help with the strong winds that are expected to accompany the changing climate.

Worldwide demand for coffee is growing, at the moment 2.5 per cent a year, and the Nicaraguan coffee industry is well-positioned to build on its place as a major producer of a quality product. The resilience of the industry will, however, ultimately be tested by the whims of the weather. GCR

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FEATURE East Africa Drought

THE LAST

DROP 24

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EAST AFRICA’S DROUGHT HASN’T ESCAPED THE REGION’S COFFEE FARMERS, WHO ARE SEEING THEIR CROPS DRY UP JUST AS PRICES REACH AN ALL-TIME HIGH. FOR SOME, IT’S THE LAST STEP THAT WILL SEE THEM SWITCH TO OTHER CROPS, FURTHER TIGHTENING THE WORLD’S COFFEE SUPPLY. Story by DANIEL HOWDEN

T

he 2011 drought across the Horn of Africa will be remembered for the appalling statistics it generated and the harrowing images left behind.

Tens of thousands of famished Somalis walking out the desert to reach refugee camps in northern Kenya. More than 10 million people estimated by the United Nations to be at risk of starvation at the height of the crisis. The bleached carcasses of livestock littering the dried up pastures around Lake Turkana in Kenya and across the Ogaden in Ethiopia.

What began with an unusually strong La Nina weather system over the Pacific (in which the surface of the ocean cools and reduces moisture in the atmosphere) played out as a second consecutive year of failed rains across much of East Africa. As little as one-third of the typical precipitation was witnessed in the usually wet months from March to May. Among the many victims of what has become known as the worst drought in 60 years, the region’s coffee sector has been comparatively ignored by the media.

While aid agencies were sounding alarm bells around Easter, Michael Chege was witnessing his own horror show. The 43-year-old’s coffee plantation in the verdant hills of Kenya’s central province was drying out, with dire consequences as coffee boring insects such as thrips attacked the bushes already damaged by fungal infections like coffee leaf rust.

“With the dry spell comes all of the pests and diseases so we’re having a real battle,” says Chege.

But the biggest problem was the size of the cherries themselves: “The beans need a lot of water and since we don’t irrigate when the drought came, our coffee was so light.”

A medium-scale coffee farmer with 28 acres near Kiambu, about two hours’ drive north of the capital Nairobi, his

KHATFACT With their coffee trees ­suffering from the drought, many farmers in the Sidamo ­region in Ethiopia are ­considering switching to the more drought-resistant khat – a mild narcotic that is legal in much of the Horn of Africa.

experience of the impact of the failed rains was typical of what others were living through in the rest of the country.

Most of Kenya’s coffee growers rely on rain-fed agriculture, as only the really big estates can afford to irrigate. The changing weather patterns across the country have caught many by surprise.

“We’ve thought about irrigation but the unit cost of water is so high that we can’t afford it,” says Chege.

The biggest impact at the local Kianjuri co-operative was the virtual disappearance of high grade coffee which had been fetching record prices the previous year.

It was a grim picture, he says.

Even though there was a tempting US$20 per kilo on offer for AA beans, out of 5000 kilograms, only 100 from the March harvest made the grade.

“Previously we’d been getting about 60 per cent AA so obviously our earnings were really badly affected,” says Chege.

Over at the Komothai co-op, Nahashon Nyanga was having the same experience, with small cherries and a siege of pests.

“The drought slashed our output substantially,” he says.

At Nairobi’s Coffee Exchange the drought was immediately obvious in the prices and volumes in the first half of the year. Acting CEO David Murithi says

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there was a feeling of a lost opportunity for many cheated out of record prices by the weather.

“We felt the impact of the drought in terms of lower volumes, but meanwhile we were getting the highest prices in 10 years,” he says.

The auction handled 33,680 tonnes this year compared with 36,197 tonnes in 2009/2010, while the average price rose to $329 per 50-kilogram bag from $237 the previous year.

Across the border in Ethiopia, where more than 4 million people are employed in the coffee sector, farmers like Tamnae Pafsa were having it even harder than their Kenyan counterparts.

A grower for the last 20 years in the Sidamo district, Pafsa thinks 2011 may have been his last in the business.

“This year the long drought killed my plants. All the leaves fell off and there were no flowers at all,” he says. “And it’s all down to this drought.”

What was left was so useless he ripped out most of it to build a fence.

It was a hungry year for the 42-year-old, his wife and four children. Like many of the growers in their region, they’re now thinking of switching to the more drought-resistant khat – a mild narcotic that is legal in much of the Horn of Africa.

“A lot are also deciding to produce khat,” says Pafsa. “Whole fields are covered in khat, where coffee once grew. You can also harvest khat about three times

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PHOTO: Oxfam East Africa

PHOTO: Oxfam East Africa

FEATURE East Africa Drought

FARMERFACT

By July, the International Coffee Organisation was warning that the failure of the March-May rains would mean a slump in coffee output on the continent from 17.5 million bags in 2010 to 14.4 million bags – the ­lowest output for four years.

a year and it makes a lot more money for the farmer.”

Nigussi Bumicha, an accountant at the local coffee co-op in Sidamo, says that the erratic weather was partly to blame for the closure of one of the two pulping mills in the area.

“Last year (2010) there was excessive rain, this year there was no rain and an extended drought,” Bumicha says. “The long dry spell killed the immature coffee plants, as well as the flowers on the plant and as a result, coffee is highly reduced in this region.”

Coffee for export went down from 100,000 tonnes to 60,000 tonnes. Nearly half the production has translated into a serious threat to half the jobs at the factory, but the co-op is working hard with government help to fight back.

“We’re going to cut the coffee crop which is no longer bearing fruit in order to renew the plants,” Bumicha says, as well as introduce disease resistant coffee plants and use by-products from the factory for manure.

“It’s high quality, organic coffee that we produce. We can’t use fertiliser.”

By July, the International Coffee Organisation (ICO) was warning that the failure of the March – May rains, coming after the similar no-show of late-year rains, would mean a slump in coffee output on the continent from 17.5 million bags in 2010 to 14.4 million bags – the lowest output for four years.

The ICO blamed its negative forecast “mainly to the poorer performance in Ethiopia”, Africa’s top coffee producing nation, where rainfall was “late and erratic”.

PHOTO: Oxfam East Africa

With Kenya’s biggest foreign currency earnings coming from tea and coffee-dominated agriculture, the Kenyan Shilling began 2011 by plummeting against the dollar. By July, it was the worst performing currency in the world.

However, by the end of 2011 the outlines of a different picture began to emerge. At time of print, there were no complete figures for production in 2011, with data only available until October – showing a downward trend in both Kenya and Ethiopia. There is anecdotal evidence to suggest that both countries may have escaped the worst case scenario being predicted earlier in the year.

Heleanna Georgalis, the head of Moplaco, one of the major exporters in the Ethiopian capital Addis Ababa, believes that the impact of the drought has been overstated.

She observed that while farmers had a hard time in the lower-lying areas like Sidamo, the drought had in fact been worse in the last quarter of 2010. Three months of heavy rains later in the year meant increased production in other highland areas, which would more than compensate for early year losses.

“The crop this year is going to be a huge one,” she predicts. “One of the biggest the country has seen, but it will mature a bit late since the rain only stopped recently, so the berries have not had the time to ripen.”

Georgalis says the main effect of the drought had been felt in pastoral lands rather and that the highlands where most of the coffee is grown had been comparatively unaffected.

Fellow Addis exporter, Hailu Gebrihiwot, agrees with the Moplaco manager’s outlook: “Contrary to earlier reports of reduced production, we now hear that this year’s washed coffee production will be as good as any average year, if not better.”

He says that last year’s drought was blamed for the fact that they

did not wash coffee at their station in the Sidamo region because there were not enough cherries to pulp.

“This year however, we have already bought a couple hundred kilos of cherries in two weeks and expect to continue processing for a couple more months,” Gebrihiwot says. “This is thanks to ample rains in the coffee growing regions.”

Provisional figures from the Coffee Board of Kenya showed exports worth around US$310 million for 2011, up from around US$191 million a year earlier. While industry observers wait for the final figures to settle the argument, there is general agreement that more needs to be done to “weather-proof ” a sector that provides vital jobs and export earnings in a region that badly needs both if it is to sustain economic growth rates and cut poverty.

Kenyan grower Chege says that the issue of climate change is rarely far from the thoughts of his fellow coffee farmers. The UN climate summit at Durban – which would have passed the average Kenyan farmer by in previous years – has been a staple of conversations in Kiambu district and elsewhere in the country.

“Most coffee farmers are old school and they don’t understand the climate science but they know something is wrong,” Chege says.

Issues like agro-forestry, deforestation, greenhouse gases and water catchments are slowly becoming better known among the people whose livelihoods are most directly affected by changing weather patterns.

“We watch the news from the talks in Durban and there is frustration sometimes that the people talking don’t seem to be the people who see what is happening on the ground,” Chege adds.

“We can’t predict the weather anymore. When we were supposed to have rains in March – we didn’t have any. Then, in December when it’s not supposed to rain it pours. There’s no pattern.”

Like many growers, though, he has not despaired and a strong dollar has meant improved buying power with his otherwise reduced earnings.

“Personally I can’t change the weather but there are things that we can do,” says Chege.

He has become a passionate advocate at his Kianjuri co-op for the planting of indigenous trees – particularly a hardwood species known locally as the Muringa tree.

He lists the benefits of mixing Muringas with his coffee bushes with well practiced fluency: they provide shade; their leaves make a fertile natural mulch; they’re a haven for productive insects like ladybirds; and help to feed nitrogen to the water table.

“We’re doing a little local forestation I guess you would say,” he says.

Lidamo Hrbora a small-scale coffee farmer, in the drought-affected Shebedino area in Southern Ethiopia has a similarly can-do mentality.

With the help of a UK-based charity Plan International, she has been digging special horizontal trenches to improve water retention and helping other farmers in her area to do likewise.

“We have to make the most of the rains we do get,” she says.

Together with other smallholders she is trying to construct more than 200 kilometres of trenches.

“The soil will be more fertile and the coffee production will go up. This is a long term solution to improve our coffee crops and our lives.” GCR

JA N UA R Y /FE B R UA R Y 2012 | GCR

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COFFEENOMICS Boom and Bust

& BOOM BUST AS THE YEAR CLOSED OFF, COFFEE PRICES SHOWED NO SIGNS OF COOLING DOWN, WITH CONSUMPTION CONTINUING TO GROW JUST AS PRODUCTION FIGURES DROP. SCOTT DUKE HARRIS TAKES A HISTORICAL LOOK AT PRICES MOVEMENTS TO DRAW WHAT LESSONS CAN BE LEARNED AROUND PRICE VOLATILITY.

V

iewed from a distance – from Jupiter, say – the coffee industry of planet Earth may appear to be a cheerful phenomenon of growth, ever onward and upward.

But the global forest is one thing, the regional plantations quite another. Perspectives also diverge within the various sectors of the industry’s value chain, and among speculators as well. To coffee growers, traders, roasters and retailers – as well national policymakers – the

industry is rarely consistent and predictable.

Charts that describe production in various regions can look as jittery as the EKG of a patient enduring cardiac arrest.

Not that everybody thinks this is a bad thing – certainly not commodity traders. “Volatility helps the business as customers look to hedge or punt,” explains Kona Haque, a commodity specialist with Macquarie Bank in London.

“But it does make my role in predicting prices quite tough!”

Boom and busts are facts of life in the

coffee industry. Heavy rain, harsh frost, disease, political turmoil, gyrating markets – all pose risks that must be addressed for businesses to succeed. Volatility may be an evergreen topic, but interest in it also intensifying – one reason the International Coffee Organisation recently hosted a conference expressly to discuss strategies for coping with all the ups and downs.

Coffee has long been the world’s second most traded commodity, after petroleum. Today, business decisions are further complicated by what the Financial Times calls a “super-cycle”

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United States lifts trade embargo against Vietnam

$71.53

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$134.45

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United States pulls out of ICO. Coffee prices enter free market, following collapse of International Coffee Agreement.

$66.80 $53.35

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$61.63

1994

ICO abandons system of quotas, waivers and trigger mechanisms to regulate coffee exports.

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of investor interest in commodities. Investors who don’t care to drink coffee still want it in their portfolio – or they want to short it – affecting costs across the industry day by day. And beyond these questions, the threat of climate change looms as a wild card for the long term.

“There is no question that the coffee market has changed, and may never again return to the levels that we considered normal just a couple of short years ago,” says Jay Isais, Senior Director of Coffee and manufacturing at the Coffee Bean & Tea Leaf. “ We will need to remain flexible and resourceful to develop new strategies that are fair to the producers and the roasters alike.”

To put it another way, normal volatility has now become abnormal volatility.

“The unfortunate part,” Isais continues, “is that volatility and the level of the coffee market is now influenced by global investment activity, rather than the direct transactions of growers and roasters. This makes for a very uncertain environment for all of us in the industry.”

Europe’s economic wrangling was cited in a 13 December report to investors by commodity analyst Rob Kurzatkowsk. He wrote: “Coffee futures continued their slump due to an increasingly negative bias toward food commodities. The recent exuberance seen in the equity markets may be coming to the end in the wake of the seemingly inevitable downgrades of France and Germany.”

And at a recent conference in Ho Chi Minh City, industry forecasters warned that global coffee production will decline by 4 per cent in 2012, while consumption is expected to remain resilient. While acknowledging some “worry” about production, Roberio Oliveira Silva, Executive Director of the International Coffee Organisation, expressed confidence that consumption would continue to rise despite the broader globally economic turbulence, with Russia and China representing growing markets. Silva told Reuters he expect global consumption to equal

SUPPLYFACT The latest production records to close off the year show a clear drop in production, with a recent conference similarly predicting that next year’s coffee supply with drop by 4 per cent. ­Meanwhile, consumption has doubled in the last 40 years.

the 2.5 per cent increase of 2009, the 2.5 per cent annual average growth seen in the past decade. “Consumption is going to be very well despite the economic turbulence,” he says.

Speculators may be viewed with disdain industry players, but they weren’t the source of trouble that befell Juan Valdez, the proud, mythic symbol of Colombia’s coffee growers.

Valdez, it could be said, is still recovering from the epic coronary he endured from a confluence of trouble pummelled the country’s Arabica production at the turn of the century.

Columbia’s troubles started with unfortunate timing. Swathes of groves were being rejuvenated with new plantings – a strategic decision that would temporarily hold down the yield. Then came heavy rains and disease that was exacerbated by the wet weather – and all in the midst of a recession.

While Colombia’s farmers struggled, growers in Guatemala and Kenya benefited from the increase demand for their premium Arabica.

Underscoring the regional aspect of booms and busts, Colombia’s hard times represented opportunity and profits for growers as far away as Kenya. A few years earlier, though, it was Colombia that profited from a damaging frost in Brazil.

2000

Vietnam starts to produce record levels of coffee thanks to funding from the World Trade Organisation funding

$133.91 $102.07

1997

$108.95 $85.71

1999

$64.24

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1997

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Coffee prices spike due to supply disruptions, to be followed by five years of a bear market leading up to the 2001/02 price crisis

2000

$138.42

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COFFEENOMICS Boom and Bust

While Colombia went bust, Vietnam was booming with a Robusta crop fertilised by World Bank loans. While Vietnam would supplant Colombia as the world’s No. 2 coffee producer, Vietnamese growers (and the World Bank) would also be faulted for creating an oversupply that dropped the cost of coffee to crisis levels. Meagre profits were blamed for a downward cycle of lower quality and lower pay for workers.

One constant amid the volatility, perhaps, is that the greatest uncertainty and risk lies with the growers. Nestor Osorio, who is now Colombia’s ambassador to the United Nations, described the ripple effects in a 2002 report titled “The Global Coffee Crisis: A Threat to Sustainable Development.” At the time, Osorio was the Executive Director of the International Coffee Organization.

“The coffee industry in developed countries is generally perceived as prosperous and uncontroversial.” Osorio observed. “But, although the coffee business is booming in consuming developed countries, current rock bottom prices are causing immense hardship to countries where coffee is a key economic activity, as well as to the farmers who produce it.”

Today, coffee prices are near record highs. But a decade ago, the global demand was growing at 1.5 per cent, while supply was growing by 3.6 per

200

cent – a glut attributed not only to Vietnam but also to a record yield in Brazil. The price of coffee had then fallen to about 50 cents a pound, “the lowest in real terms for 100 years,” Osorio noted.

In the early 1990s, earnings by coffee producing countries ranged from US$10 billion to US$12 billion, derived from retail sales of US$30 billion. But during this crisis period, earnings by producing nations had fallen to US$5.5 billion even though retail sales had soared above $70 billion. And the amount of earnings that went to farmers from the sale of a typical cup of coffee at a coffee shop “is probably less that 2 per cent,“ Osorio said.

In recent months, coffee prices have been hovering at high levels, with the New York C market for Arabica hovering at about US$2.30.

Growers still face the usual risks from weather and disease, but the cost of premium specialty beans from Sumatra and Colombia in recent months have been priced at about US$1 more per pound than New York C market price for Arabica – about $2.30 per pound at time of writing, or double-to-triple the historic differentials. This puts more pressure on roasters and retailers to find ways to hold down the cost to consumers or risk losing their business.

Coffee’s volatile nature creates headaches throughout the value chain.

At one extreme are growers in poor countries where coffee is a leading export crop and a critical element in the nation’s economy as a major source of employment. Trouble in these regions can create desperation. During the past crisis, Osorio noted the move from coffee to alternative crops that “may include proscribed drugs like coca….

In Colombia, coca plantations can now be found in coffee areas.”

Rock-bottom prices for growers also meant that workers were paid less and more likely to move into cities. In Guatemala, the harvest labour force was reduced from 500,000 to 250,000 for the 2001/02 crop. At the most dire extreme, there were reports of indebted coffee farmers in India committing suicide, and others in Mexico who abandoned farms. Some died in the desert trying to illegally enter the US. More typically, however, growers find ways to cope. Farmers who would normally send pickers into fields three times per season to pick only ripened cherries would instead instruct them to pick them all at once, ripe or not. This reduced upfront costs but degraded the quality and depressed the price.

Nations whose economies are heavily reliant on coffee have generally stepped up efforts to provide educational, financial and technological support from growers. But Colombia’s crisis

2001

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Brazil and Vietnam hit record yields, Guatemala harvest labour force was reduced from 500,000 to 250,000, Reports emerge of Indian coffee plantation owners committing suicide.

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International Coffee Organisation tables report: The Global Coffee Crisis: A Threat to Sustainable Development.”

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Coffee consumption in Russia and China starts to rise as the BRIC nations economies post record-level growth.

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illustrated that even countries with a highly developed coffee industry can have problems. The country’s dependency on coffee is such that the government would commit US$150 million to helping Juan Valdez recover.

While farmers are subject to nature’s caprice, players up the value chain have more ready alternatives to react to market conditions. Roasters and retailers can opt to replace pricey premium Arabicas with lesser beans – one of the industry’s dirty little not-so-secrets that are not advertised to consumers. “Coffee is fungible, so companies can change their blends when these things happen,” explains one industry insider who ask not to be identified. “It’s unlikely roasters will want to go on the record saying that they deliberately downgraded the quality of their coffee.“ A lowering of quality may alienate consumers with discriminating palates, but perhaps not those who order something like a macchiato with extra whip.

Meanwhile, many big-name roasters and retailers have learned that long-term contracts with growers are a key to providing stability for the industry as a whole CBTL, for example, has established long-term commitments with some suppliers at a fixed price to minimise the impact of fluctuations on the open market.

“Our first priority across all market conditions is to secure an adequate physical supply of top quality coffees from each country.” Isais explains.

“We do this by careful forecasting based on our product mix and expected growth, and then work with our core group of suppliers to put in supply agreements and contracts to cover those specific physical needs. We have been extremely fortunate to have very reliable suppliers.”

But the ability to strike long-term deals, insiders say, is now being complicated by the growing roles of commodity investors. And looming in the future is the uncertain impact of climate change, with predictions of more erratic and extreme weather patterns.

LABOURFACT Rock-bottom prices for ­growers also meant that ­workers were paid less and more likely to move into cities.

In Guatemala, the harvest labour force was ­reduced from 500,000 to 250,000 for the 2001/02 crop.

In Haque’s view: “Climate change is yet to be confirmed. But, certainly the recent bouts of La Nina and El Nino have had major impacts on production and yields and quality in the last few seasons for a variety of producers.“ And while Vietnam has been stockpiling Robusta, the global picture shows that coffee stocks over all are at uncomfortably low levels. “The fact that stocks globally are at historically lows just means that any supply disruption as we have seen has a greater than normal impact on prices and volatility in genera,” Haque says. “But futures markets are increasingly being influenced by speculators, who in turn are taking cues from the global macro economic uncertainty.”

Perhaps, then, only one thing about the future of the coffee industry is clear: it’s sure to be volatile. GCR

$286.00

$147.24 $115.67

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The ICO reports that world consumption has doubled in the last 40 years, with the steepest growth from exporting countries.

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Colombian coffee production continues to drop due to what most consider the effects of global warming

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g ri s t a n i st Ba s Ho ia’s ship al pion r t s Au Cham

A WORLD CLASS

COFFEE SHOW is coming to Australia

8000 SQUARE METRES NETWORK WITH AUSTRALASIA’S COFFEE ELITE BUSINESS OPPORTUNITIES EXHIBITION ALREADY 70% SOLD

“COFFEE IS NOT JUST A DRINK, IT’S A GLOBAL TRADE. IT HAS AFFORDED ME THE OPPORTUNITY TO ENGAGE WITH AMAZING PEOPLE - PRODUCERS, TRADERS, ROASTERS AND EQUIPMENT MANUFACTURERS. IT IS EXCITING TO SEE AN EVENT THAT WILL BRING TOGETHER ALL OF THESE STAKE HOLDERS IN A WORLD-CLASS ENVIRONMENT, RIGHT HERE IN AUSTRALIA.” Scottie Callaghan World Latte Champion, Australian Barista Champion and Brand Ambassador Belaroma Coffee

MAY 4TH-6TH, 2012 MELBOURNE SHOWGROUNDS

2012 Melbourne International Coffee Expo promises to be a premium experience unlike any other. With 100 coffee industry exhibitors, the 2012 M.I.C.E is the largest dedicated coffee tradeshow ever to be staged in Australia.

The event will engage all sectors of the coffee industry, including; green bean traders, wholesale roasters, commercial and domestic equipment, cafés and franchises, coffee equipment, accessories and education and training.

The event will host the Australasian Specialty Coffee Association (AASCA) Australian Barista Championships, The Royal Agricultural Society of Victoria (RASV) international coffee awards and other competitions.

@ MelbCoffeeExpo

www.internationalcoffeeexpo.com

Scan tag to visit our website

PACKAGING FEATURE///////////

LEADING THE PACK FOR FIVE GENERATIONS, ITALIAN COMPANY GOGLIO HAS LIVED THE HISTORY OF PACKAGING AND REMAINS A MARKET LEADER OF MATERIALS AND MACHINES THAT HAVE AS MUCH RELEVANCE TODAY AS THEY DID 50 YEARS AGO.

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\\\\\\\\\\PACKAGING FEATURE

Phases of Goglio’s one-way degassing valve

O

ver the years, coffee bags have evolved from simple paper structures, offering little to no protection from moisture, light and oxygen, to today’s high barrier films that are often comprised of three to four layers.

Founded in Milan in 1850, Goglio has ridden the wave of changing packaging materials to be recognised today as one of the leaders in flexible packaging, rigid plastic accessories and packaging machines that have combined both traditional concepts and refined solutions.

When Goglio came up with a one-way degassing valve in the 1960s, they couldn’t have foreseen that it would not only change the way coffee is packaged internationally, but that it would not be rapidly superseded.

This often unnoticed component is a little plastic addition inserted into the inside top face of a packet of coffee, where the supplier is intent on providing the freshest possible product. There are more than 1 billion a year produced by Goglio for the global market.

Through an evolutionary process, the product that was invented 50 years ago has greatly contributed to the growth of Goglio and continues to be an important component in the company’s line of coffee packaging materials.

Designed to release carbon dioxide gasses while eliminating the entry of any external atmosphere, the concept of the one-way degassing valve may be simple, but its creation, however, was far more complex.

Firstly, the product needed to ensure that packaging remained airtight. Once coffee beans are roasted, essential oils travel to the surface of the bean, becoming sensitive to oxidisation. Secondly, the product had to provide an outlet to avoid over-pressure within the packaging. As roasting expands the size of the coffee bean, micro-cells continually release carbon dioxide and aromas become trapped within the packaging once it is sealed.

If the valve wasn’t one way in its design or the bag was designed to permit atmosphere inside, the result would be the spoiling of the coffee’s natural aroma, oxidising of the natural oils and beans and stale or poor quality coffee.

While both of these aspects may seem easy enough in isolation, tackling the combination of the two proved far more complex. Initially, when any product is packed, the inner and outer pressures are equal, but airtightness doesn’t allow carbon dioxide and aromas to escape from the bag, thus causing it to inflate and possibly burst.

Before Goglio, many coffee packagers were forced to puncture a hole in the gusset,

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 GOGLIO HAS TAKEN A STRONG COMMITMENT TOWARDS INNOVATION AND RESPECT OF THE ENVIRONMENT, WITH FULL CONTROL OF EMISSIONS CREATED DURING THE PRODUCTION PROCESS AND REUSE OF MATERIALS.

which allowed for the natural degassing of the coffee beans. The problem, though, that once complete, external contaminants were able to enter the bag, resulting in negative oxidising action and affecting the freshness of the beans. Thanks to Goglio now people can buy bags and be sure that all coffee properties are preserved.

Developed and manufactured in Milan, the patented Goglio one-way degassing valve solved the problem by allowing natural gasses to pass through in one direction only – from inside the bag without any atmosphere entering.

The degassing process causes pressure from within the package, thus causing the flexible rubber washer to deform, allowing the trapped natural gasses to escape.

When the degassing phase is complete, the innerouter pressure balance is re-established and the rubber washer returns to its original flat configuration, sealing the package.

Goglio also manufactures valve appliers that can be installed on any packaging equipment. Once the valves are loaded into the machine, they are automatically positioned and heat-sealed on the inside laminate of the package. A manual alternative is also available for laboratories and low volume production of premade bags.

This packaging innovation quickly developed international acclaim and was awarded the Italian Packaging Oscar and Eurostar in 1968 and the World Packaging Organisation ‘World Star’ in 1970.

Since its initial introduction, the one-way degassing valve has continued to evolve and several variants are now available, including the original outer valve, the inner valve, a thinner and smaller variant, and the revolutionary USS, high pressure, hi-flow valve.

The Goglio valve is comprised of five components: a polyethylene cap, a rubber elastic disc, a silicone oil viscous layer, a polyethylene plate and a paper filter.

These components are manufactured and assembled on high speed lines at Goglio’s machine division in Zeccone, Italy.

In the same period that the one-way degassing valve came to life, Goglio gave rise to the Fres-co System® – a complete packaging solution to integrate a flexible, high-barrier container with a degassing valve, packaging machine, technology and technical assistance.

This service represents the solution to the problem of packing, whereby the characteristics of the machine and the packaging is synergistically enhanced to the benefit of the presentation and preservation.

The Fres-co System® was integrated to The Netherlands, Spain and the United States throughout the 1980s and now offers a wide-array of packaging solutions for various product types, including coffee, sterilised food, aseptically packaged foods and detergents.

Alongside Goglio’s valves, the company branches into other service arms, including packaging and machines for a range of food and beverage products. In particular, Goglio continues to develop packaging solutions to ensure coffee aroma and fragrance is upheld in its whole state, ground, instant coffee and pods. Goglio’s range of coffee packaging includes the Double Wall bag, for wrinkle-free vacuum packs, the Conor “flexible can”, and the bag with four sealed edges.

Goglio has taken a strong commitment towards

Goglio one-way degassing valves

VALVEFACT Italian packaging manufacturers Goglio produce more than 1 billion degassing valves for the global market annually.

innovation and respect of the environment, with full control of emissions created during the production process and reuse of materials, meaning a sophisticated solvent recovery system. Evidence of their commitment to sustainability, in addition to winning the 2011 Italian Packaging Oscar, Goglio won the World Star Awards 2011/2012 for the EcoTruck. Representing the Fresco System® concept, proposed by Goglio, the 4-litre stand-up pouch is a car-additive that reduces toxic emission from truck engines. It’s made out of high barrier multilayer laminates and thanks to its light weight, the new EcoTruck is considered Goglio’s “environmental best friend”, because of its easy disposal. It has as a flexible spout with opening tear notch, practical handle for safety, handiness and cleanness.

Goglio is now operational across the world in the US, Europe and Asia through its manufacturing facilities and sales and services offices.

With a significant presence in Italy, Spain, France, the Netherlands, Poland, the US, Brazil, China and Japan, the future is promising for this universal packaging company, with the expectation that Goglio concepts and solutions will withstand at least another 50 years in the industry.

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FEATURE Neuhaus Neotec

I N T E R N AT I O N A L

ENDEAVOURS

NEUHAUS NEOTEC’S MANAGING DIRECTOR GUSTAV LÜHRS TELLS GCR OF THE VITAL ROLE OF MARKET ADAPTATION, AND HIS VISION OF THE FUTURE OF COFFEE.

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or Neuhaus Neotec, entering the United States was an exercise in understanding that one business approach does not fit all.

The German-based company specialises in setting up full production lines for the coffee industry, all out of one hand. With an already established reputation for quality and reliability in Europe, Managing Director, Gustav Lührs, says that Neuhaus Neotec was keen to establish the same following in the United States.

Maintaining their standards in this new market, they quickly learned, would require a change in their approach. This is because, dissimilar to the European work week, Americans believe in running their factories seven days a week – an important detail for a company responsible for the full setup, operation and service of a location.

“In the United States, there is a big importance put on this shift work philosophy, they run their machines around the clock,” Lührs says.

“We had to prepare some pretty strong support to do this, to ensure to find spare parts when they needed them and emergency support.”

Lührs explains that establishing a support network is the first step the company takes in entering foreign markets. Rather than testing the waters before a significant investment, at the level of service they offer, Neuhaus Neotec needs to ensure they are entering the market at full-steam.

“As soon as we get a good foot in the door, we’re also in there giving support,” Lührs says.

The philosophy stems from the company’s roots when it was only half its current self as Neuhaus. In 1931, Heinrich Neuhaus founded the company in the German town of Delmenhorst. Back then, Heinrich built machines for the grain milling and compound feeds industry.

Neotec came into the picture in 1967, as a licensee of the American manufacturer of roasters, Burns. When Lührs joined Neotec in the early 1980s and the company shifted its activities towards the coffee industry, he decided to develop their own roasting and grinding process before the company eventually merged with Neuhaus in 1987.

Today the family-owned company Neuhaus Neotec is an independent member of the KAHL-Group. In bringing these two businesses together – processing and roasting equipment – Neuhaus Neotec became globally renowned as a company offering full plant production services, from green coffee receiving, right up to packaging.

“We’re able to offer all these services out of the one hand,” says Lührs. “It’s a big advantage in that companies only have to deal with one supplier… we can coordinate between the architect and the consumer; we can source all the materials and determine what they can purchase locally. We take full responsibility for the complete set-up – from the beginning to the end of production.”

One of the first steps Neuhaus Neotec took after the merger was to build a small pilot plant, to not only show their customers what they were capable of producing, but also to provide themselves with a medium for research and development.

From that first “small but beautiful” pilot plant, the company landed some big accounts, including Nespresso in Switzerland, Spar Regio in Austria, Marvelo in the Netherlands, Kraft Foods in the United States, and so forth. Neuhaus Neotec now builds a new plant around every two years, an impressive figure considering the scale of investment a single plant requires.

“The growth has been unbelievable,” says Lührs. The push into the Unites States has been one of their most significant moves. In 2011 Neuhaus Neotec opened a new office in Altanta, Georgia, with a large conference room and warehouse. The office allows their American operations to offer business hours in the Unites States time zone.

Working with major multinationals has naturally been a big advantage in fuelling their expansion, meeting with European contacts to coordinate American operations. Lührs says that the company has also invested heavily in trade shows and marketing to get their name out into the market. As their brand has gained recognition, and their second headquarters now in place, Neuhaus Neotec has secured contracts with most of the “big names” in the United States, including Kraft, Folgers and Segafredo.

In addition to demanding quality and reliability, Lührs says the American market also requires a large amount of flexibility in their production. Unlike certain markets that have a preference of either dark roasted coffee for espresso machines, or lighter roast for filter, or mainly instant and powder mixes, coffee consumption in the United States demands the whole range of production capability.

Lührs expects this demand for flexible production will continue to grow as markets change the world over – and companies that are prepared will be the ones who stay on top.

“That is the big question everyone is

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 “IT’S NO LONGER ABOUT JUST SELLING A MACHINE, BUT FOCUSING ON THE FINAL PRODUCT… WE LIKE TO THINK OF OUR MACHINES LIKE A PIANO. JUST LIKE COMPOSERS CAN CREATE THEIR OWN MELODY, OUR ROASTERS CAN COMPOSE THEIR OWN UNIQUE AROMAS.” Gustav Lührs

Managing Director

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FEATURE Neuhaus Neotec

asking: where is the market going?” says Lührs. He points to the single-serve, or coffee capsule, systems as the most evident area for growth. In Europe, the Nespresso system has demonstrated a staggering rise in popularity in the last decade, and demand for the Keurig system in the United States has kept Green Mountain Coffee Roasters’ shares soaring.

Even with at current success rates, Lührs thinks the single-serve system in the United States still has plenty of room to grow. Different to the expansion of the coffee chain, which originated in the United States with Starbucks, Lührs points out that the single-serve system originates from Europe. As such, he says the American system is still in its infancy, and he expects further growth yet. He also says Americans will likely see an expansion in the whole bean market.

To keep ahead of these evolving market trends, Neuhaus Neotec recently invested in a US$1 million pilot plant, demonstrating their capabilities in everything from super-fine grinding to capsule grinding and advanced roasting. One major development the company is leading is in agglomeration: flavour-coating superfine particles which are used in cappuccino powders and other products. The company is also investing heavily into capsule grinding technology to help improve the quality of the final results.

For a plant production company to concern itself with the quality of the final product of coffee is a big step forward from 20 years ago, Lührs points out. Decades ago, a company like Neuhaus Neotec would be interested solely in selling equipment, before quickly moving on to the next sale. These days, Neuhaus Neotec invests heavily into supporting the final product. They even employ in-house coffee experts who can help clients in the cupping and blending processes.

“It’s no longer about just selling a machine, but focusing on the final product,” says Lührs. “We like to think of our machines like a piano.

COMPANYFACT Neuhaus Neotec recently ­invested in a US$1 ­million pilot plant, the second they’ve built, to demonstrate their capabilities in ­everything from super-fine grinding to capsule grinding and ­advanced roasting.

Just like composers can create their own melody, our roasters can compose their own unique aromas.”

In addition to improving the quality and flexibility of their products, the company has invested significantly into minimising the environmental footprint of their plants by limiting energy wastage. For instance, they’ve most recently developed a system which uses the heat from exhaust to preheat their beans. The heat is kept below 90 degrees Celsius so as to not affect the structure of the beans, but the preheating process can reduce the roast time. This can save anywhere from 10 to 20 per cent in energy costs – helping the planet and profit margins alike.

In addition to looking at the most pertinent industry needs, Lührs has maintained a long-term vision of the future of the global coffee scene that he says will develop significantly in the near future.

“I don’t have a glass ball or anything, but I really think we are not at the end of what we’ll see in terms of the European and American markets,” he says.

“Specialty coffee is developing to such a degree, it’s become like a wine… I think we’re going to see that in different markets the consumer will really start to appreciate their coffee and learn about the different origins, asking for them by name… People will start to drink different coffees depending on the occasion, maybe saving a really good coffee to appreciate in the evening.”

Lührs’ hypothesis is good news not only for consumers, but for producers as well. While many have debated whether current coffee prices are sustainable and awaiting a drop, Lührs interestingly says that he doesn’t think coffee prices are high enough. If tastes for coffee continue to mature towards the lines of a fine wine, then prices should only increase.

“There is so much work involved in coffee, from the farming to the production to the barista. From my point of view, coffee is too cheap,” he says. “If you do all that work, then surely the price of coffee will appreciate.” G C R

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TECHNOLOGY VST Inc.

A Q U A L IT Y

HYPOTHESIS AFTER REVOLUTIONISING THE WAY WE INTERACT WITH OUR COMPUTERS, VST INC. CEO VINCE FEDELE IS NOW LENDING HIS INVENTIVE SAVVY TO IMPROVING THE QUALITY OF COFFEE AND ESPRESSO BEVERAGES. Story by CHRISTINE GRIMARD

I

n January 1999, late Apple CEO Steve Jobs was set to present to an audience on the advent of FireWire. The device was one of the first high speed serial interfaces that would both power and connect an external hard drive to a computer and was hot-pluggable. A few minutes before the presentation, he turned to VST Inc. CEO Vince Fedele and asked him when the first set of VST pocket-sized drives he was about to demonstrate would be ready to ship.

Fedele had answered August, but when Jobs announced to the audience at large that it would be ready in June he glanced directly at Fedele, fully aware he had just moved up VST’s deadline by two months.

“That was how he challenged people,” recalls Fedele on the memorable moment which would see the company’s sales jump from US$20 million to over US$65 million a year. “Having Steve demonstrate a VST product was an extraordinary highlight in my technical career, and for everyone at VST who helped make that product a reality.” Always ready for a challenge, VST shipped the first portable FireWire drives in April, two months ahead of Job’s revised date, and a full 18 months before a single competitive product appeared.

VST, VST Power Systems and VST Technologies have a long list of contributions to the computer world. From the first Smart Battery Chargers, USB products for iMac, the notebook versions of the Zip drive and the some of the first multiple format flash memory readers integrated with USB, the list is an impressive contribution to the way we interact with our computers today.

After selling VST Technologies, Fedele moved on from Apple and lent his ingenuity to the FBI and state police crime lab, where he developed a high-resolution fingerprint imaging systems in 2003. These included 4000dpi FireWire imaging cameras and specialised machine vision software used to enroll and detect subsequent fingerprint images or partial images at very high speeds. The technology worked, and was intended by Fedele to mitigate the long security lines

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Americans have endured following the 9/11 attacks. It worked by providing an ultra-high reliability identification of an individual to their passport ID. Because passports are generated using secured credentials, the chance of a false ID using these combined technologies is nil to none. As a trusted traveler, security screening could be streamlined, greatly reducing the queues we still endure today.

“People could be identified as trusted travellers, virtually instantly,” Fedele says. In addition, for less than $1000, it could be used to authenticate a user to his/her government issues driver’s licence ID, virtually eliminating sales of alcohol to minors in bars, restaurants and retail sales.

It was a negative experience – in that the technology was too far ahead of the US federal agencies ability to adopt and deploy it – that led Fedele away from pursuing it further.

During an interview with a company who was working the secure ID issue with the US State Department and Passports, one of the

BREWING CONTROL CHART CIRCA 1969 REGION OF INTEREST SHOWS THE TARGETED AREAS OF EXTRACTION AND RANGE OF STRENGTH 5 15 25 35 10 20 30 40

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Extraction percent

1.90 1.80 1.70 1.60 1.50

Soluble solids - percent

“VST’S GOAL WAS TO DELIVER THE MOST TECHNOLOGICAL HELP POSSIBLE, WHILE MAKING IT EASY TO USE IN THE FIELD, WITHOUT HAVING TO RELY ON FORMAL LABS TO TELL US HOW WE DID, WITH INSTANT FEEDBACK AS TO THE RESULTS.”

NOTE THE SMALL TARGET AREA REQUIRES A SIGNIFICANT DEGREE OF PRECISION IN BREWING ACCURACY

1.40 1.30 1.20 1.10 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0

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Brew formula - gals. per pound SOURCE: CBC PUBLICATION NO. 27, 1969, P12

Vince Fedele,

VST Inc. CEO

interviewers mentioned to Fedele a rumour that George Howell, a pioneer in the American specialty coffee movement, was roasting coffee again. Fedele walked out of the interview, and away from a substantial compensation package, and drove to Howell’s roastery to confirm the news. With a long held passion for coffee, Fedele made an investment in, and started working with Howell, the dominant influence in Fedele’s perception of quality coffee. Fedele credits Howell with bringing strict quality control methods and processes to everything from cupping to processing, packaging and roasting. “Howell’s Coffee Connection cafés during the mid 1970s through the mid 1990s illuminated thousands to what coffee could be,” Fedele says. “His convictions to coffee quality and his passion for both learning and sharing what he has learned with the industry were leading motivations to help improve brewing quality and consistency.”

The main benefactor of Fedele’s shift into coffee is now the industry at large. In a tale of discovery, Fedele has spent the last few years of his career bringing together a scientific problem solving approach to achieving the ultimate extraction, improving how espresso and coffee are brewed and modernising tools so that the industry can learn, understand and practice better brewing technique.

“It takes a year for coffee to grow from blossom to cup. Farmers at origin cultivate their coffee crop. Processors wash, dry, mill, package and transport all while striving to maintain green coffee quality. Roasters put so much work into what they do, and we can blow it in just the last five minutes,” he says. “VST’s goal was to deliver the most technological help possible, while making it easy to use in the field, without having to rely on formal labs to tell us how we did, with instant feedback as to the results.”

The first of his steps towards this goal was the development of the coffee refractometer and the accompanying software. These products were followed with an espresso refractometer and a mobile

version of the software for the iPhone called MoJoToGo. VST’s products have won Best of Show awards at Special Coffee Association of America (SCAA) in 2009 and again in 2010.

The original brewing control chart was created under the direction of Ernest Lockhart at the Coffee Brewing Institute, around 1952. The chart was limited to coffee (not espresso) and a separate chart was needed for brewing in gallons, litres, cups, etc. Fedele corrected errors in the original charts, and expanded the concept by adding a universal aspect to the math behind the chart, allowing a single chart to be used not only for any form of measurement (i.e volume or weight, litres, gallons, grams, ounces, fluid-ounces) and batch size, but also to be used for espresso for the first time.

Last year, at the World Coffee Events held in Maastrich, the three different forms of VST’s technology were everywhere to be seen. The coffee refractometers were being used for both the World Brewer’s Cup and

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TECHNOLOGY VST Inc.

Cupping Championships. The espresso refractometers and VST’s [iPhone] software were being used to judge the World Coffee Events (WCE) equipment testing for the espresso machine World Barista Championship (WBC) sponsorship competition, and another of VST’s imaging technologies was used to evaluate espresso filter baskets as part of that evaluation. The Special Coffee Association of Europe (SCAE) was using the coffee refractometer and software for their research on preferred extraction yield taste surveys.

Indeed, VST’s products have been adopted as official measurement tools at the SCAE, SCAA, National Coffee Association (NCA) and European Coffee Brewing Centre (ECBC), and are used at many espresso and coffee brewing equipment manufacturers during the design of their equipment.

“I like to compare [the chart] to a map. When you go to a foreign place you’ve never visited before, you often use a GPS, right?” he says. “What’s the first thing you do? You press ‘here’. Why? So that you know where you are. Why? So that you can navigate to where you want to be. The universal brewing control chart works exactly the same way. The coffee refractometer and VST software allow you to do that, and they’re small enough to put in your pocket, bringing to the field what used to require an entire lab.”

The original chart from the 1950s shows a brew formula of gallons of water per pound of coffee on the horizontal axis, and extracted solids in percentages in the vertical axis.

Fedele points to the gallons per pound measurements as a sign of the times, when coffee was prepared in large urns. The chart shows how the various extraction yields play against the formulas, plotting the ideal combination for the best tasting coffee in a very small region on a very large chart. The chart emphasises just how much precision is required to brew coffee correctly, and repeat it brew after brew.

As the brewing control chart indicates, the key to a better tasting coffee is the extraction yield, which Fedele clarifies as different than the brew strength. Concentration (strength), he explains, is a personal preference. No one enjoys a sour or bitter coffee (i.e. under or over-extracted), but everyone loves a sweet extraction yield. People are less likely to dislike

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a coffee that is slightly stronger or weaker (i.e. more or less concentration) as long as the coffee was extracted near the centre (sweetest) part of the extraction yield range. The human palate is very sensitive to extraction yield and can detect a change of as little as +/- 1 or 2 per cent, so this is where brewing precision pays off most.

Extraction yield is the measure of coffee that is dissolved into a solution. If you were to take a spent puck out of the basket, dry it and weigh it, the difference from the original weight of the coffee compared to the original weight expressed as a percentage is the extraction percentage or yield. For espresso, Fedele says most people agree that most coffees taste best when extracted to about19 – 21 per cent to get the best balance of aroma, flavour, body, colour and clarity out of the coffee.

In expanding the application of the original chart, Fedele found a 4 per cent error due to the original formulae not taking into account the density of water as a function of temperature. At the time the charts were done, urns were used for most commercially prepared coffee, and were filled with tap temperature water, whereas today, brewers store water at 94 degrees Celsius. One litre of water at 94 degrees Celsius contains (i.e. weighs) about 4 per cent less than one litre at 15 degrees Celsius. Therefore, the amount of coffee used must be adjusted by 4 per cent, otherwise a different brew formula applies.

When brewing commercial batches, this error adds up. For a 6-litre batch, it accumulates to 217grams of water or 13 grams of coffee.

The updated chart, however, wouldn’t be of much use to the coffee industry without a simple and reliable way to physically measure the extraction yield, and use it in the field. Prior to Fedele’s development of the refractometer and software, the only way someone could accurately measure the yield was through highly advanced, and expensive, lab equipment. Borrowing from his experience in making information tools portable in the Apple realm, and his experience in optical imaging and refractive optics, Fedele took his first steps towards applying technology to his passion for coffee by developing the

THE BASKETS HAVE PROVEN A POPULAR UPTAKE WITH SPECIALTY COFFEE COMPANIES THE WORLD-OVER. MANY OF THE WORLD’S TOP BARISTAS AND SPECIALTY ROASTERS HAVE ADOPTED THEM FOR THEIR OWN CAFÉ OPERATIONS AND RESELL THEM TO THEIR COFFEE CLIENTS.

The espresso refractometers and VST’s [iPhone] software were being used to judge the WCE equipment testing for the espresso machine WBC sponsorship competition

refractometer and software for coffee beverages in 2008. The espresso refractometer followed in 2009. Both allow instant total dissolvable solids (TDS) measurements and extraction yield results with a simple, on the spot procedure. The coffee refractometer can be used with VST’s software to plot these readings on the universal brewing chart, and there is now even an iPhone app that calculates brew formula, proper water and coffee portions and computes extraction yield. Measurements can be saved and shared instantly anywhere in the world.

“What used to cost US$50,000 in equipment performed in a lab, can now be done in the field with nothing but this portable digital coffee refractometer and an iPhone,” he says.

As is often the case, new technology has the potential to reveal as many problems as it solves. While Fedele had created a measuring tool to find out where coffee was on the map, it didn’t fully solve how to get to where a barista wanted to go. Under carefully controlled conditions, Fedele attempted to repeat similar espresso extractions using different groups on the same machine, but found he was getting significantly different results.

The problem was first highlighted for him in his work with Howell. After installing a new account with a brand new LaMarzocco machine, Fedele recounts, the client called and complained about the coffee tasting sour. But the same coffee tasted fine at the shop. In troubleshooting they changed water filters, burrs, the grinder – they even tried using formulated bottled water – but nothing resolved the problem.

In reviewing all the variables, Fedele realised that he had never thought to check the filters.

As it turned out, they were using different filters than what was supplied with the machine.

Fedele borrowed the filter, and brought it to his lab at VST where he had a high resolution imaging system similar to the one he had developed for the FBI. The resulting images came as both a shock and a revelation. The preliminary software analysis showed that filters were anything but a clean pattern of uniform holes, but rather a minefield of various sized punches, blocked or partially blocked holes, ranging five to one in size. Fedele explains that extraction yield in espresso is controlled primarily by flow rate, which controls the effective time for extraction. Since most espresso machines have similar pressure, aperture restrictions and temperatures at the group, flow rate is controlled primarily by coffee grind particle size, coffee amount, and total open square area – that is, the cumulative total square area of the filter openings. Filters examined on the VST imaging system had total open area that varied by more than 3:1 in filters from the same manufacturer, with the same part number – in fact from the same lot. A filter with 27 square millimetres of total open area will flow much more slowly than the same filter with 97, all other variables being equal.

“When filters with a severe restriction find their way to a machine, a substantial reduction in-flow occurs,” he says. “The barista makes the only adjustment possible, not knowing or being able to see visibly that the filter is defective, they grind more coarse. This reduces

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TECHNOLOGY VST Inc.

TYPICAL FILTERS AVAILABLE TODAY

NEW VST PRECISION FILTER 350

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VST 18g Dble SOURCE: VST INC.

the available area of the ground bean from which to extract, and although the flow is returned to normal, the coffee tastes sour, and measures significantly under-extracted.”

All this was not necessarily news in the industry, Fedele says. There was a long-held belief that the quality of filter baskets had to be improved. The problem was that, without the imaging technology, and a way to measure how filters affected extraction yield, there was no way to measure the consistency of fabrication or how to tune the filter design to extract in the centre of the yield curve.

From here, Fedele adapted his imaging system to measure and grade dozens of aspects of hole sizes, shapes and fabrication quality that affected filter performance. VST then developed several new manufacturing processes that addressed precision and hole size distributions, and finally developed a method of tuning a filter for extraction yield performance.

The imaging system needed to be fast, with the ability to measure hundreds of filters a minute, so that all filters could routinely be measured to ensure specifications were being met and performance was identical on all filters of a given design. VST’s filter imagining system also grades the baskets to specific manufacturing and performance standards.

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CODEFACT Each basket is marked with a 2D data matrix code to track it through the manufacturing and testing process, and to ensure authenticity.

Each basket is marked with a 2D data matrix code to track it through the manufacturing and testing process, and to ensure authenticity. Factory measurements are stored, and reports generated for each filter, quality reports and image data are also captured and stored and are monitored during production to ensure tooling remains in specification, and serve as an indicator as to when to replace and refresh certain components of the tools.

The baskets have proven a popular uptake with specialty coffee companies the world-over. Many of the world’s top baristas and specialty roasters have adopted them for their own café operations and resell them to their coffee clients.

The list of users include WBC champions, as well as some of the most recognized quality cafes and roasters in the world.

La Marzocco of Florence was the first to engage VST to design their latest Strada filters and purchased the first VST Filter Imaging system, giving them direct control over the quality of their filters for the first time.

Most recently, the company entered into a collaboration with espresso machine manufacturers Nuova Simonelli, who last year renewed their position as official machine sponsor of the WBC. Nuova Simonelli announced at HOST Milan last October that VST will be manufacturing a custom 20-gram precision competition basket specifically commissioned by Nuova Simonelli for use in WBC events on their new Aurelia II T3 machines.

And so it would seem that after putting his technology in the hands of some of the world’s greatest computer icons, and now some of the world’s greatest coffee professionals, Fedele’s technology is once again set to take centre stage. GCR

PLANTATION Mechanical Harvesting

MECHANISATION m r a f e h at t

MECHANICAL HARVESTING HAS BEEN SEEN BY SOME AS A STEP AWAY FROM QUALITY SELECTION. EXPERTS IN NATIONS WHERE LABOUR COSTS ARE HIGH, HOWEVER, ARGUE THAT TECHNOLOGY IN PICKING IS INEVITABLE WHEN ECONOMIES OF SCALE TAKE HOLD. 46

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he 2005 award-winning documentary Our Daily Bread serves a wake-up call to the realities of modern food production.

Stark industrial shots of factory rows of vegetables, conveyor belt cultivation and mechanical tree shakers paint a portrait of the actualities of agriculture in modern-day developing countries. Where labour costs are high and land is scarce and costly, efficiency through technology has become a vital component of keeping food prices affordable. For most rich countries, gone are the days of the family farm. They have not been spared from economies of scale.

With most coffee production taking place in developing nations, however, coffee cultivation has largely been spared the advent of mechanisation.

Farm workers lugging baskets of cherries they hand-pick off trees is often the norm, where low costs of labour and limited access to technology make hand cultivation possible. Selective picking has become a popular term in the specialty coffee community, where this process of cultivation has become associated with quality coffee. It’s an association, however, that isn’t being universally welcomed.

Carlos Brando, of P&A International Marketing in Brazil, can’t help but express his exasperation of this “romantic” idea that coffee has to be hand-selected to be of any quality.

“There is this ridiculous idea that coffee has to be selectively picked, but there is no negative association between mechanical harvesting and quality,” Brando says. “There is this illusion that consumers care about how their coffee is picked. Do you think they care about how their sugar cane is picked? Or their oranges?”

In coffee-powerhouse Brazil, mechanical harvesting first entered the country in the 1960s, explains Brando. They were initially adapted from berry harvesters developed in the Northwestern United States. More recently, he says grape harvesters have become a popular adaptation. While initially these were limited to self-propelled vehicles, in the 1990s hand-held harvesters became increasingly popular. These are essentially gasoline-powered strokeengines, similar to lawn mowers or chainsaws.

The natural limitation to the machines is the slope of the hills. As most coffee is grown at 1000 metres or more above sea level, coffee trees lend themselves to hilly terrain. Not only does this make using the machines harder, but when the trees are shaken the cherries are difficult to collect as they roll downhill. Levelling devices have been developed to allow the machines to operate on more vertical terrain, but these still have their limitations. Handheld devices do help overcome these differences.

As Brando points out, these devices are in a “permanent” state of development, and every improvement in helping the harvesters select the ripest cherries and operate on more vertical terrain.

“Both types are increasing selectivity with the ability to change the speed and intensity of the vibration depending on the trees,” he says.

Brando points to the potential of genetic work that would see the stems of the cherries become even weaker as they ripens. This would facilitate the selection process, in that a weaker vibration could let loose only the ripest berries. Brando explains that the attachment force between the cherry and the branch is different between Arabica and Robusta varieties. Just as genetic work has helped fight rust disease and other plant developments,

PICKINGFACT Carlos Brando of P&A ­International Marketing says that hand held ­devices can harvest 20 times as much as a person can in selective ­picking, while self-propelled harvesters can collect a full 500 times what a person can.

similar genetic “borrowing” could help in this space.

The advantages to mechanical harvesting, Brando points out, are evident.

Hand held devices can harvest 20 times as much as a person can in selective picking, while self-propelled harvesters can collect a full 500 times what a person can.

“That is a substantial savings in terms of the labour it takes to harvest,” Brando says. With Brazil having one of the highest labour costs among coffee producing nations, mechanical harvesting is essential in large farms to ensure the owners can turn over a profit.

It’s this savings in labour that explains the two other countries where mechanical harvesting is most used – the United States (Hawaii) and Australia, two of the most

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PLANTATION Mechanical Harvesting

developed countries that grow coffee.

Australian coffee farmer John Zentveld says that he couldn’t possibly operate his farm profitably without mechanical harvesters.

“Our labour costs are too high, if we couldn’t do it with a mechanical harvester, we couldn’t do it at all,” he says. “To hand-pick our cherries it would cost us something like US$6 a kilogram, and that’s even if you can find people to do it. No one in Australia wants to pick cherries all day for seven days a week during harvesting time.”

Australia has a history of working with mechanical harvesters, when the Queensland-based company Austoft began developing and producing the machines.

With such a small coffee growing market in Australia, Zentveld explains, they have since sold off the production of the machines to Brazil.

On his farm, Zentveld has purchased coffee harvesters from leading American manufacturers Korvan. He’s also supplied three harvesters to coffee farms he helped set up in New Caledonia.

As Zentveld explains from this experience, implementing the use of mechanical harvesters isn’t as simple as just purchasing a machine. Especially with the self-propelled machines, farms need to be set up with wide lanes to ensure the machines can drive through. With the farms in New Caledonia, Zentveld was expecting from day one they would be using mechanical harvesters, and set-up the farms as such. Farms that are looking to make the technological step-up often have to do so at the cost of a row of trees.

Such a set-up, however, is now the norm among Australian coffee farmers.

Mark Bullivant of Byron Blue Coffee Estate agrees that hand-picking is simply out of the question – with minimum wage in Australia starting at over US$15 an hour.

Bullivant boasts that they hardly touch a single cherry in their harvesting season.

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

PEOPLE’S ASPIRATIONS ARE INCREASING, THEIR COSTS OF LIVING ARE INCREASING. HAS ANYONE THOUGHT THAT BY FORCING THEM TO PICK COFFEE, YOU’RE CONDEMNING THEM TO POVERTY? … COFFEE PRICES ARE GOING TO FALL OVER TIME. HOW WILL COFFEE PICKERS SURVIVE WITHOUT BETTER TECHNOLOGIES?

Carlos Brando

P&A International Marketing

Between two people, they were able to harvest 45,000 trees thanks to their set-up, which includes screening and colour matching technology that works to select the beans post-harvest.

In their set-up, they’ve ensured that their machines can be adjusted to harvest more or less cherries, depending on their ripeness.

The result is an impressive specialty product. Of around 500 kilograms of coffee, 470 kilograms are screened at 16 plus, resulting in just 30 kilograms of chips.

As yields continually improve, Bullivant says it won’t only be a matter of wages that will move farmers towards mechanical harvesting.

“Look at Brazil, it’s not just the labour costs that prevent them from hand-picking,” he says. “They have so much coffee that they pick, there is no where near enough people to do all that picking.”

Bullivant says that hand-picking cherries in developed countries is only possible where coffee is grown in small micro lots and collect a premium. He points to experience in Hawaii, where hand-picking does occasionally still occur.

“If you’re getting $45 a kilogram for your coffee then yes, you probably can afford to get the labour,” he says. “We just haven’t invested in that kind of marketing in Australia. As a result, even though we have a great product, we can’t get top dollar for our beans.”

John Ah San, of Ka-u Ocean Vista Coffee Estate in Hawaii, is one of the farmers in the Ka’u District who is benefitting from the strong Hawaiian coffee brand. Last year, they sold around 900 kilograms of green coffee to Starbucks, who on-sold 8-ounce packages for US$25 each. The coffee sold out in two days, and Starbucks has since revisited their farm to look at purchasing more coffee.

Ah San’s entry into the specialty market took place after a trip to a Brazilian trade show, where he was told that to stay competitive, they would have to sell their coffee in the gourmet, also known as specialty, market. Following the show, Ah San received a group of roasters who showed them how to select only the ripest cherries. Following these recent developments, they’ve paid special attention to market their beans in this space, and their reputation has helped them demand a high price for their beans. In the last five years, they’ve regularly placed in the top 10 at Specialty Coffee Association of America competitions.

“More farmers are realising that we have to up our quality if we want to stay in the gourmet market,” says Ah San. “The challenge is to get the pickers to only pick what’s ripe.”

Whereas pickers are paid based on the weight of what they collect, Ah San says many were afraid they wouldn’t make enough weight, so getting them to pass over accessible cherries was tough. What they found, however, was that the riper cherries were actually heavier, which meant that the pickers would receive more money for picking riper cherries.

“Not only were they getting paid more for their cherries, but they were also getting more work as we had to keep calling them back,” he says. “And so it was a win-win situation. They would get more work, and where our cupping quality would go up we would also get more money for our coffee.”

While Ah San does enjoy marketing his coffee as “hand-picked”, he says it isn’t necessarily the desire to stay in the gourmet market that’s keeping them away from mechanical harvesting. As one of the newer islands in the state, which is made of volcanoes emerging out of the Pacific, the “Big Island” of Hawaii is among the steepest islands at over 4000 square metres high. As such, mechanical harvesting is virtually impossible using current technology on this type of terrain, with no harvesters on the island.

“We have to hand-pick our coffee, it’s not a marketing tool. But since we have to, we can say, ‘we pick nothing but the ripe cherries,” Ah San says. “Whether hand-picking cherries is ‘romantic’ or not it doesn’t matter – you just can’t do it any other way here.” While they can increase their profitability by continually improving their cup quality and marketing their coffee in the specialty market, he says they’ll never have the capacity to increase their volume. When asked if he would consider mechanical harvesting if the technology were adaptable to his terrain, Ah San says he isn’t adverse to the possibility. “We’re certainly open to suggestions, we’re always willing to give something new a try.”

As for how the specialty market will accept mechanical harvesting, Stephen Hurst, Managing Director of Mercanta Specialty Coffee Merchants, says that from his view mechanical harvesting is perfectly acceptable:

SLOPEFACT Where technology stands today, mechanical harvesters can’t function on sloped terrain, as the machines need to be level. However, levelling devices are improving their ability to ­function on steeper fields, as are hand held harvesters.

“The setting of the tension of the arms of the harvesting machine can be very sensitive, only harvesting ripe cherries, or harvesting all colours – just as humans could be instructed (or rewarded) to pick well or badly,” Hurst says. “I know many fine farms using harvesters, many using hand picking. I know poor quality industrial low grade farms using harvesters and using hand picking.”

Hurst says that in his experience, harvesters do not put people out of works.

In the farms where he sees harvesters deployed, he’s seen that workers are deployed elsewhere within the structure or organisation.

Brazil’s Brando says that a country can only develop when workers become increasingly skilled and can demand higher wages. “How much coffee can a single person pick? If they pick X kilograms, that isn’t going to change overnight, not without technology,” he says.

“People’s aspirations are increasing, their costs of living are increasing. Has anyone thought that by forcing them to pick coffee, you’re condemning them to poverty? In the long run, coffee prices are going to fall over time. How will coffee pickers survive without better technologies?” GCR

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ORIGIN India

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INDIA’S ROBUST STEP TOWARDS

QUALITY COFFEE RECOGNISED SPECIALTY COFFEE GROWER NISHANT R GURJER, OF KAAPIROYALE & SETHURAMAN ESTATE, PROVIDES AN OVERVIEW OF HOW INDIA’S ROBUSTAS ARE SETTING NEW STANDARDS OF QUALITY.

T

he history of coffee’s place in India dates back to the 17th Century, when it’s believed that a Sufi Saint, best known at Baba Budan, introduced coffee to the country by bringing seven seeds over from Yemen.

It was in the mid-19th Century, however, when the British first colonised India, that coffee grew from being a scattered, small-holder grown product to a cash crop for export. In realising the potential of the plant, the British took existing farms under their care, and India turned into a relatively major coffee exporting country.

Up until the late 1980s, most coffee grown in India was shade-grown Arabica. However, in the last two and a half decades the crop has taken a major shift and is now mainly Robusta, albeit still shade grown. Of around 300,000 tonnes of coffee the country produces, nearly 200,000 tonnes are Robusta.

The shift initially came about from the need to diversify the crops to deal with pests that were destroying the plants. India had suffered from white stem borer, a native longhorn beetle that invades Arabica plants, as well as the illusive leaf rust disease.

Up until 1995, with government controls, the coffee was grown, traded, and treated as a commodity. Growers would sell their coffee to the Indian Coffee Board, who would then sell them on to auctions. When the government lifted their controls, growers started having more

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ORIGIN India

direct contact with their consumers, and were able to better discern what the market was looking for, and change their processing accordingly.

India has developed a reputation for a few brands of specialty coffee, with the best known ones Monsoon Malabar, Mysore Nuggets and their topend washed Robusta, called Robusta Kaapi Royale.

Catering for the specialty coffee industry was a calculated move for Indian coffee growers to find their niche. With relatively limited coffee production regions, India would struggle to be a major player in the market in terms of volume on the scale of Vietnam and Brazil. What Indian farmers did recognise is that in focusing on quality, they could command a higher price. While Indians are coffee drinkers, they consume only around a third of their own production, leaving plenty to be exported.

The move towards Robusta has helped not only increase India’s productivity, but also its reputation in the realm of quality coffee. Whereas Robustas elsewhere are largely produced for instant and lower quality coffee, India’s are becoming recognised as some of the best in the world. With quality Arabicas more widespread, India has found its niche in the diversity of the coffees it can offer. In addition to both major varietals, Indians can offer washed and

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THE FUTURE OF SPECIALTY ROBUSTAS IN INDIA IS NOW MAINLY IN THE HANDS OF SMALLHOLDER FARMS, WITH THE BRITISH HAVING LONG PULLED OUT OF INDIA AND RETURNED THE LAND TO COFFEE GROWERS.

unwashed coffee, and farmers are open to changing their processing methods to suit a buyer’s needs.

Among nations with strong reputations for their specialty coffee scene, including Japan, Australia and the United States, there is a growing acceptance that if treated correctly Robustas can score just as highly as their Arabica counterparts.

The future of specialty Robustas in India is now mainly in the hands of smallholder farms, with the British having long pulled out of India and returned the land to coffee growers.

While a few large scale farms remain, around 90 per cent of farmland is owned by small growers who mostly have less than 2 hectares.

The limited resources of these small landholders keep their production levels relatively low. Although larger farmers, including some corporates, may operate just 10 per cent of the land, they are responsible for 35 per cent of the coffee produced.

Production in these small farms continues to stagnate largely following the rippling effects of the coffee price crisis, when prices dropped to record lows around 2002. Faced with no prospect for profits, many of the farms were abandoned, or farmers found other work to sustain themselves, and weren’t able to fully invest into their coffee.

India’s continued economic success is interestingly having an inverse effect on the country’s coffee production. On most of these plantations, the work is entirely manual, from hand-picking to sun drying. As higher skilled jobs and the lure of the city draw more people to urban areas, Indian farmers are struggling to find the labour to keep up production.

Going forward, labour will likely be one of the biggest challenges Indian coffee farmers face. As the country’s economy continues to experience its impressive growth, fewer labourers will be willing to work on the farm.

Where India is highly advanced in its coffee production is in environmental consideration.

India’s primary coffee growing region is located in The Western Ghats, an ecological hot spot equivalent to the Sahara or the Amazon forest.

GROWFACT

Most coffee plantations sit in the hands of smallholders farms. Around 90 per cent of farmland is owned by small growers who mostly have less than 2 hectares.

While other coffee producing countries are just starting to move towards shade-grown trees, in India coffee has always been grown in conjunction with other vegetation and shade trees. Popular inter-crops include black pepper, which grows as creepers on the tress, cardamom, coconut and banana trees. If you were to look at an areal view of India’s coffee plantations, it would look more like a forest than an agricultural crop.

While Indian farmers may be doing their part to protect the environment, climate change has not escaped their reach. Just one generation ago, farmers could rely on steady weather patterns.

These days, a marginal shift in unexpected storms and rains is being noticed. Unsteady weather can affect production even in the best of times, but when farmers are still sun-drying their beans, climate has the potential to have highly damaging effects on production.

In the interim, coffee drinkers the world over will continue to enjoy the quality coffee Indian farmers are working hard to improve year on year. G C R Nishant Gurjer is Managing Partner of Kaapi Royale Coffee, located in the Chikmagalur district of Karnataka, India. Kaapi Royale Coffee exports fine Indian Arabica and Robusta coffees worldwide and is the exclusive representative of Sethuraman Estate coffees. Sethuraman Estate is the three-time winner of “Best Robusta” in the Coffee Board of India’s Flavour of India competition and received the highest-ever rating for a Robusta coffee of 94 points from coffee reviewer Ken Davids.

For more information, visit kaapiroyalecoffee.com.

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DIARY Dashboard COFFEE AROUND THE GLOBE

WORLD COFFEE EVENTS

 THE UK COFFEE LEADER SUMMIT  THE LONDON COFFEE FESTIVAL MILLBANK TOWER, LONDON

28 – 29 MARCH 2012 The UK Coffee Leader Summit is a high-profile gathering of top executives from across the branded coffee shop, food-to-go and food-for-now sectors. Now in its fourth year, this ground-breaking two-day event offers access to latest market insight, inspirational thinking, debate and unparalleled business development and networking opportunities. Combining the UK Coffee Leader Summit conference, a tailored Supply & Innovation Day and Study Tour of London’s most successful up-and-coming coffee and food concepts, participation is essential for leading industry stakeholders.

27 – 29 APRIL 2012 The London Coffee Festival, the flagship event of UK Coffee Week, is an inspiring and dynamic celebration of coffee and food culture.

Following its launch in April 2011, which saw 7500 coffee lovers, professional baristas, coffee shop owners and top industry decisionmakers come together over three action-packed days, The London Coffee Festival will be back at the iconic Old Truman Brewery on Brick Lane. Within the festival themed zones, visitors will be immersed in a world of discovery, tasting, demonstrations and entertainment. Festival features will include The Lab, The Growing Community, The Showroom, The Roastery, The Tea Garden, The Chocolate Factory and The Street Food & Artisan Markets. www.londoncoffeefestival.com

www.ukcoffeeleadersummit.com

 EXPO COFFEE & TEA 2012  MELBOURNE INTERNATIONAL SHANGHAI INTERNATIONAL EXHIBITION CENTRE

9 – 12 APRIL 2012 The coffee and tea section of Hotelex will have its own dedicated space next year as the Expo Coffee & Tea 2012. The event will take place over 11,000 square metres at Hall E5 of the new Shanghai International Exhibition Centre, with around 150 exhibitors. The event will also host the 10th China Barista Championship Final, to select a winner who will represent the country at the World Barista Championships. www.expocoffeetea.com

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COFFEE EXPO 2012 MELBOURNE SHOWGROUNDS

4 – 6 MAY 2012 The first international coffee expo to hit Australian soil will make its debut on 8000 square metres of space. From 4 – 5 May, the event will feature trade promotion, while 6 May will continue to attract trade activity while also welcoming the public to the finals of the AASCA Australian Barista Championships. www.internationalcoffeeexpo.com

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KEEP A LOOK-OUT

CAFFÈ CULTURE

Coffee Fest New York 9 – 11 March New York, Unites States www.coffeefest.com

16 – 17 MAY 2012 www.caffeculture.com

 TRIESTESPRESSO

EXPO

TRIESTE, ITALY

25 – 27 OCTOBER 2012

Food & Hotel Asia 2012 17 – 20 April 2012 Singapore Expo www.foodnhotelasia.com

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Taking place over two days at the London Olympia, Caffè Culture welcomes 5000 senior decision-makers to meet and do business with over 200 suppliers. The event offers the opportunity to source new products, network, and keep up-to-date with the latest in industry trends. The event is a highly targeted trade exhibition that exclusively caters for the UK’s café and coffee bar market. As an information-led show, Caffè Culture not only offers exhibitors a platform to network and generate new business, but to gain a valuable insight into a continually evolving market.

Hotelex Shanghai Expo Coffee & Tea, Hotelex Shanghai, China 9 – 12 April www.hotelex.cn

SCAA Expo 2012 19 – 22 April 2012 Oregon Convention Centre Portland, Oregon www.scaashow.org 3rd Moscow International Coffee Forum 17 September 2012 Swissôtel Krasnye Holmy, Moscow www.coffeetea.ru

TriestEspresso Expo will enter its sixth year, bringing together the world of coffee under one roof: importers, roasters, producers of espresso equipment, roasting and processing machines, packaging, coffee cups and accessories, connected services, merchandising and trade press.

This biennial edition will see some important changes, moving from Fiera Trieste to Aries, an ad-hoc agency of the Trieste Chamber of Commerce.

The successful approach adopted in previous years will be maintained, and special attention will be paid to international trade visitors who represented 39 per cent of the last edition attendees. A total of 230 exhibitors from 22 countries signed agreements in 2008 worth millions of euros, establishing new sales channels. www.triestespresso.it

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COFFEENOMICS PRODUCTS Marketplace Trade

ADONIS T3 Nuova Simonelli’s Adonis T3 stems from the company’s Victoria Arduino collection, offering the new T3 technology. The machine gives baristas the option to work with one or more blends of coffee , adjusting the machine according to the production, roasting, season and customers. Using Nuova Simonelli’s experience from the World Barista Championship, the company’s T3 technology allows baristas maximum flexibility and temperature distribution of each group, using three different parameters: water, group and steam. The electronics of the machine allow control of digital pressure sensors and temperature, sending information to the controller through three independent PID controllers, which manage each variable. The result is accuracy and precision, regardless of the page of work and environmental conditions. The display can control, in real time, the temperature of the water supply of each group.

For more information visit www.nuovasimonelli.it

MOKA CRYSTAL The Moka Crystal combines the traditional Italian method of preparing coffee at home with a stove-top. It’s a trendy and unique design of a professional coffee machine. The distinctive see-through glass and the resistant bright varnish make for a piece of equipment as aesthetically pleasing as it is practical. The Moka Crystal four cup is available in three colours: silver, white and red cherry. For more information visit www.bialetti.it

PHILIPS SAECO INTELIA CLASS The new Philips Saeco Intelia Class delivers a perfectly extracted espresso at the touch of a button. The device is the first fully automatic espresso machine for home use to be honoured with an in-cup quality label, certified by Centro Studi Assaggiatori Italian Tasters, an advanced Italian consultancy company in sensory analysis. The aspects of the Philips Saeco Intelia Class are user-friendly, thanks to the self-explanatory and colour-coded icons on its wide and bright display. Customising espresso is made simple, with the machine allowing users to adjust coffee strength, temperature and length. The patented Saeco Adapting System automatically detects the type of coffee beans and grinds the perfect amount of coffee, in order to provide the same release of aromas every time. The ceramic grinder offers low temperature grinding without the risk of overheating the beans, thus assuring consistency in the grinding process.

The Philips Saeco Intelia Class is equipped with an automatic and dishwasher-safe cappuccinatore for milk foam. Users simply add the desired strength of espresso for a cappuccino. For more information visit www.philips.com.au/saeco 56

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PROD DITTING GRINDER The ProD and ProD Espresso by Ditting are two new high-end coffee grinders for consumers and ‘semi-professionals’. The grinders are adapted to the special requirements for grinding espresso and filter coffee. The ProD is designed as an all-round grinder for filter and French press coffee in a special dosage container, as well as espresso in a port-a-filter holder. The ProD Espresso model is designed specifically for making espresso. This allows aroma-fresh grinding, with the coffee landing directly into the port-a-filter holder. The grinding time is entered via a touchpad on the front. Using the touchpad, users can program single-shot and double-shot portions independently of one another. The optimum setting of the fixture for all port-a-filter holder models enables hands-free operations.

For more information visit www.dittingswiss.ch

WMF 1800 S The WMF 1800 S User Guide was developed specially for the requirements of self-service operation. The keys are arranged in a line above the coffee spout to help the customer select the desired product, and a special cup stop in the design of the drip tray helps place the cup in position.

Attractive auxiliary units like milk coolers, cup racks, vending units and mobile coffee stations are available for use with the machines. For more information visit www.wmf.de

AZAHAR COFFEE The Azahar Coffee Company introduces a new brand of specialty Colombian coffee that is hand-selected, hulled, roasted and packaged in the heart of Colombia’s Coffee Axis, traceable to single lots from individual farms around the country. Over the last two years, the Azahar team, a unique Colombian-American collaboration, has established relationships with a growing network of over 30 remote farms that offer small amounts of what they’ve discovered to be some of the world’s most intriguing coffees. Each lot is exposed to a rigorous and comprehensive cupping analysis performed by dedicated coffee experts on the road and at Azahar’s cupping lab and roasting works. These evaluations guarantee that no bean goes into a bag of Azahar unless it passes a series of tests based on the internationally recognised Coffee Quality Institute’s “Q” Grading System, designed to rate coffees on their excellence in the cup, rather than on their physical appearance. Azahar’s team uses above standard benchmarks, which many of its coffees exceed, placing Azahar among the best coffees in the world. For more information visit www.azaharcoffee.com

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LASTWORD MacchiaValley

MECHANISING EXTRACTIONS WITH THE MAJORITY of espresso machine manufacturers located in Italy, Juerg Moser CEO of MacchiaValley Swiss, says he’s not surprised when he sees most innovations in his field follow similar technological trajectories.

From MacchiaValley’s headquarters in Germany – the land of fully and semi-automatic machines – Moser speaks excitingly of how his company’s latest traditional espresso machine sits apart from his Italian counterpart.

“In this industry, I find innovation can be really slow,” he says. “A lot of companies are focusing on temperature stability through the multi-boiler system, pre-infusion and so on, and I agree these are a must… They’ve also added a lot of electronics into their system, but in the end this can just increase the maintenance required. We’ve gone another direction.”

The direction MacchiaValley has taken is a relatively simple adjustment to their latest Reneka machine that is set to eliminate dosing and tampering as a variable in making good coffee. By introducing an expandable brew chamber with a spring-loaded ceiling, the machine can now automatically adjust for underfilled or overfilled baskets, as well as improper tampering – or no tampering at all.

The innovation, Moser recounts, came about accidentally by Christian Ruhl who had been playing around with a flexible brew chamber at his home.

“It was really lucky that he brought it into the office one day to show off at a meeting,” Moser says. “We picked it up, did a few tests, and had some pretty impressive results.”

The machine was a favourite at last year’s HOST exposition in Milan, where Moser says they invited users to try it out for themselves. Visitors would start out by making their coffee the usual way, dosing and tampering, and on the second try would simply fill the basket and not tamper at all. In both cases, the final result was the same – a quality extraction.

While having a highly skilled barista behind every coffee machine the world over is naturally the ideal situation, Moser points out that in practice this is rarely the case. It’s in the practicalities of the modern hospitality business where Moser says the machines will certainly come in handy, in producing a high quality product from a traditional espresso machine by any level of barista.

“Where you have a skilled barista who knows how to fill the basket, knows the right amount to make everything perfect, then extractions usually will work,” says Moser. “But in practice everything is different.”

Even between grinders, Moser says they’ve found some settings of dosing can produce a 15 per cent difference in volume, which can result in up to 2 millimetres difference in height.

At the expo, in addition to not tampering, they had visitors practice overfilling and underfilling the baskets. The results, Moser says, astounded the testers in that the chamber adjusted automatically to produce again an ideal shot of coffee.

“Usually there is such a big difference in the extraction. When you’re working with badly trained people, there is such a variation in quality,” he says. “Now everyone can get a good shot.”

Another advantage to the expandable chamber, Moser says, is a reduction in maintenance.

When a machine arrives cold, the ceiling is in a set position for the group handle to fit in.

However, as the machine operates over a number of days, the metal expands and the ceiling has to be adjusted by a technician. With the ceiling a part of the sieve system and not permanently fixed, a barista can simply adjust it by hand.

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In developing the system, MacchiaValley sent the machine out to both current and potential clients, who reported back that the reliability of the system was one of its biggest advantages.

Another point of difference the machine offers via the expandable chamber is the ability to use coffee capsules and pods. As part of the Aroma Perfect system, these various coffee mediums can be used by simply changing the filter in the group head. Moser boasts that they’ve been able to build a system that can extract from almost every type of capsule. Even where capsules have been designed to be pierced, MacchiaValley has built a pin in the top of the shower head to pierce the capsules.

“This is a huge advantage in being able to have a multi-function system,” says Moser. “Now the system can adapt to specialty, aromatic coffee, whatever a location holds. Especially with coffee like decaf, which only makes up from 2 to 5 per cent of what you sell, instead of having a separate grinder and you can simply change the seat holder and continue your work flow.”

The question arises as to how well baristas will accept that some of their skills have now been automated. While HOST proved a success, it’s now up to the market to decide. G C R