GCR Jun 2014 by Prime Creative Media

May/June 2014

COFFEE & CRIMEA

More reasons to worry

LOBBY FOR THE PEOPLE Hotels up the stakes

MIDDLE EAST SHIFT East meets West, Old meets New

SPENDING SAVVY A caring consumer

WINNING IN A CROWDED MARKET VITTORIA CEO LES SCHIRATO ON THE ADVANTAGES OF BEING THE BIG FISH IN AUSTRALIA’S POND OF SMALLER, BOUTIQUE COFFEE ROASTERS.

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CONTENTS May/June 2014

COVER STORY AT THE TOP

The head of Australia’s largest retail coffee roasting company discusses success in a crowded industry.

IN THIS ISSUE FEATURES

RESEARCH & TECHNOLOGY ORIGIN

12 FEAR OF A GIANT

36 MAN VERSUS WILD

Vittoria CEO Les Schirato on being the biggest fish in the pond.

16 A LOBBY FOR THE PEOPLE

Cenicafe’s efforts are helping the producing world mitigate against the risks of climate change.

Hotels are investing heavily to encourage guests to stick around.

CASE STUDY

21 MIDDLE EAST SHIFT

41 BRAMBATI TECHNOLOGY FOR ITALIAN AROMA

27 WHAT CRIMEA HAS TO DO WITH COFFEE

PROFILE

One of the world’s oldest coffee regions is experiencing a revival.

Unstable political relations with Russia could have repercussions for the coffee industry.

MARKETING 32 SPENDING WITH THEIR HEARTS

Rainforest Alliance President Tensie Whelan on a shift in consumer habits.

The Italian roasting plant manufacturer is teaming up with Lavazza.

45 SHIFTING THE AXIS

Fairtrade Africa’s new Executive Director is eyeing brand awareness among producing countries.

58 EASTERN PROMISE

A wrap-up of the latest insights from the GCR Coffee Leaders Symposium at Marina Bay Sands, Singapore.

“SMALLER ROASTERS LIKE TO SAY THAT SUPERMARKET COFFEE IS NO GOOD… I HAVE NEVER HAD THE SAME AMOUNT OF CONTROL OVER THE QUALITY OF COFFEE AS I DO NOW.” Les Schirato CEO, Vittoria Coffee

48 TRICKLING UP

Ecuador has ambitious plans to triple its production over the next decade.

INDUSTRY COMMENT 52 THE SPECIALTY CYCLE

Probat’s Jens Roelof on why high quality coffee is on the rise.

REGULARS

04 EDITOR’S NOTE 06 NEWS DRIP BY DRIP 55 DIARY DASHBOARD 56 MARKETPLACE 58 LAST WORD

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EDITOR’S NOTE Global Coffee Report

PUBLISHER John Murphy john.murphy@primecreative.com.au EDITOR Christine Grimard christine.grimard@primecreative.com.au



JOURNALIST Sarah Baker sarah.baker@primecreative.com.au

BUYING WITH THE BALANCE OF POWER IT’S NOT EASY being number one. In any competitive industry, companies at the top know all too well that they are the easiest targets to hit. Documentaries have done a great job at blaming societal woes on major corporations. McDonald’s was the cause of America’s obesity epidemic in the 2004 documentary Super Size Me, while Wal-Mart was killing small town American business in the 2005 film Wal-Mart: The High Cost of Low Price. In the coffee world, large companies are not being spared. Former World Barista Champion Tim Wendelboe condemned the quality of Nespresso coffee capsules on Norweigan television this past March. The segment made headlines when Nespresso fought back, listing off in a statement the quality control measures it takes in selecting and roasting its coffee. In our cover interview this edition, Les Schirato, the CEO of Australia’s largest retail coffee company Vittoria, echoes similar sentiments to Nespresso. Australia has a population of just over 22 million people, yet boasts more than 1000 coffee roasters, as possibly the most crowded coffee market on the planet. Although Schirato welcomes the work of all these coffee roasters to lift the bar of Australian coffee, he says it’s a mistake to think that larger companies are sacrificing on quality. If anything, he says his buying power has helped Vittoria maintain high standards (see page 12). In our interview with the President of Rainforest Alliance, Tensie Whelan outlines why mass consumer buying power is now a

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political movement. Customer research is showing that when price parity exists, people are making their choice in line with their values, meaning that sound corporate practices are more important today than ever (see page 32). Shifting the balance of buying power from the North to the South could be the key to illuminating poverty in many parts of Africa. The new Executive Director of Fairtrade Africa, Dr Nyagoy Nyong’o, tells GCR Magazine that growing awareness of Fairtrade among producers will be an important step in improving conditions at origin through the certification of coffee (see page 45). At a time when specialty coffee and smaller boutique roasters are making a significant mark on the industry, it’s a good reminder that great power exists in deeper pockets, and that power is being used for good.

ART DIRECTOR Michelle Weston DESIGN Blake Storey, Alice Ewen, Sarah Doyle BUSINESS DEVELOPMENT MANAGER Steve Roberts steve.roberts@primecreative.com.au GENERAL MANAGER COFFEE MEDIA & EVENTS Brad Buchanan brad.buchanan@primecreative.com.au PRODUCTION CO-ORDINATOR Michelle Weston michelle.weston@primecreative.com.au ADMINISTRATION MANAGER Chloe O’Brien chloe.obrien@primecreative.com.au PHOTOGRAPHY Carolyn Bates, Patrick Varney, Maja Wallengren CONTRIBUTORS Natalie Dunleavy, Eugene Gerden Maja Wallengren, Nick Sheridan HEAD OFFICE Prime Creative Pty Ltd 11-15 Buckhurst Street South Melbourne VIC 3205 Australia p: +61 3 9690 8766 f: +61 3 9682 0044 enquiries@primecreative.com.au www.gcrmag.com SUBSCRIPTIONS +61 3 9690 8766 subscriptions@primecreative.com.au

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

ARTICLES

Christine Grimard Editor

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

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

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NEWS In Brief

NEWS DRIPBYDRIP 

ASIA PACIFIC

Australia’s Vittoria coffee company was the first company to convince Al Pacino to take part in a marketing campaign. Vittoria CEO Les Schirato tells GCR Magazine that the coup came from convincing Pacino of their shared Italian heritage. Vittoria was the first company in Australia to get roasted espresso coffee onto grocery store shelves. The company currently enjoys a leading position in one of the world’s most competitive coffee markets for roasters. The nature of Australia’s abundance of independent coffee shops has led to a large number of coffee roasting companies. Some estimates say there are more than 1000 coffee roasting companies, in a country of just 22 million people. Nevertheless, only a select number of companies, including Vittoria, are able to produce the volumes needed to sell coffee on supermarket shelves. For more see story page 12. Vietnam’s largest coffee company Trung Nguyen is currently seeking franchise partners to bring its popular coffee shop chain to the international market. Trung Nguyen currently has 70 locations in Vietnam and Singapore, and is sold in more than 60 countries. In 2013, the company sold more than 13 billion cups of coffee, with 11 million households in Vietnam drinking Trung Nguyen. As one of the world’s most popular coffee brands from a producing country, the company is expecting quick international expansion of its

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Trung Nguyen is looking for international franchise partners.

luxurious coffee shops. Aimed at high-street locations, Trung Nguyen cafés are designed for a sophisticated clientele. The dominant colours of red and brown coordinate with dark wood and velvety sofas. The lighting is gentle, and complimented by pictures of celebrities who enjoy coffee. The cafés serve quality coffee products, including Trung Nguyen’s flagship Weasel and Legendee coffee. Trung Nguyen baristas are trained to serve high quality coffee, including L’amour and Mother’s Land coffee, which is coffee blended with ginger. Trung Nguyen cafés also offer Vietnamese signature dishes, including Gia Lai dried noodles, rice and bread. Trung Nguyen cafés are helping to spread authentic Vietnamese experiences around the globe. The company is currently seeking international franchise partners to help carry the brand internationally. For details email franchise@ trungnguyen.com.sg

Modern Process Equipment Corporation (MPE) of Chicago (United States) now offers on-site conveyor testing on the Chain-Vey at their new test facility in Indonesia. This facility is fully equipped to test products on the demonstration Chain‑Vey unit to determine the feasibility, and ideal configuration, for product conveying needs. MPE’s Chain-Vey tubular drag conveyor moves products gently, efficiently, horizontally and vertically in a dust-tight environment without product degradation or declassification, thereby making it an optimal solution for hundreds of products including coffee, food powders, material chips, activated carbon and more. MPE is a leading provider of coffee production equipment around the world. For further information, please visit MPE’s Chain-Vey website at www.chainvey.com or contact MPE at solution@mpechicago.com

THE CHAIN GAME

Trung Nguyen, Vietnam’s leading coffee company, is seeking international franchise partners oversees. It currently has 70 locations worldwide.

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NEWS In Brief



China and Taiwan have recently seen an increase in demand for in-shop roasting equipment, according to leading roasting machine manufacturers Probat. Jens Roelofs, Sales Manager for Probat Shop Roasters, says the company has seen a general increase in the demand for roasters under 60 kilograms, in both traditional markets, and emerging coffee markets. Roelofs says that there has been an increase in the number of cafés, coffee bars and coffee shops across the board, due to an increase in the demand for specialty coffee. Roelofs says an increase in education must accompany the sale of in-shop roasting equipment, and companies like Probat are starting to offer the training themselves. For more see page 52. Around 100 industry members from 10 countries gathered at the Marina Bay Sands Singapore on 5 March, to network with regional leaders and learn about the challenges and opportunities in the booming Asian market, at the GCR Coffee Leaders Symposium – Asia. Anthony Cottan, the Director

of PT Sari Coffee and the head of Starbucks’ Indonesia operations, was the keynote speaker, opening the day with an overview of the US coffee giant’s activities in Indonesia. The inaugural GCR Magazine Coffee Leaders Lifetime Achievement Award was presented to Eric Favre, the inventor of the Nespresso coffee capsule. For more see page 58.

AMERICAS

Hotels are revamping their lobbies, with quality coffee as a central offering, to add a source of income to their business. In the United States, hotels spent an estimated US$5.6 billion on capital improvements in 2013, which is more than double the $2.7 billion invested in 2010. A significant portion of that is being spent on injecting comfort, technology, and quality food and beverages in lobbies and public spaces to encourage guests to spend more time on site. Starwood Hotels & Resorts Worldwide, owner of the Sheraton brand, spent US$6 billion in 2009 to renovate 200 hotels internationally with the new Link@Sheraton experience. Marriott Hotels & Resorts first tested its “greatroom lobby” concept in 2007. After initial success, the lobby transformation should be complete in 80 per cent of its venues by the end of 2014. For more see page 16.

One of the oldest coffee consuming regions in the world, the Middle East, is experiencing a revival in its coffee industry. The recent GulFood trade show attracted more than 87,000 visitors and around 4300 exhibitors, including a strong representation from the coffee industry. In the past four years, Turkey has doubled green coffee imports to 500,000 bags in the 2013-14 crop cycle, according to the US Department of Agriculture. Total consumption for the core Middle East region of Iran, Jordan, Yemen and Turkey is around 1.315 million bags. The first Starbucks shop opened in the United Arab Emirates in 1999, and other local and foreign-owned coffee shop chains followed including Café Nero, Caribou, Costa Coffee and Australia’s Jones Coffee Bar. For more see page 21.

ON THE MOVE

Ecuador, one of Latin America’s smallest coffee producers, is hoping to triple its production to 2 million 60-kilogram bags in the next decade. See page 48. The Middle East is embracing a diverse coffee culture, while holding onto its traditions.

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ASIA PACIFIC

Ecuador, one of South America’s smallest coffee growers, is looking to triple its production in the next decade, with the help of ambitious government programs. Ecuador has produced a steady 600,000 – 650,000 60-kilogram bags of coffee over the past few years. The government would like that figure to hit 2 million within the next 10 years. The country benefits from growing conditions of between 1600 and 1800 metres altitude, and a strong knowledge of agriculture, which has already helped it achieve high yields in some areas. Around five years ago, an Ecuadorian coffee was graded as specialty receiving 92 points. For more see page 48.

The new dimension of espresso quality

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NEWS In Brief

The Rainforest Alliance is hoping to tap into a new wave of informed consumers who are spending in line with their values. Tensie Whelan, President of Rainforest Alliance, tells GCR Magazine that the organisation is working with roasters to help increase the share of consumers who are better informed of where their coffee comes from. Whelan is using research published by Young & Rubican. The marketing firm’s BrandAssset Valuator looks at what people prize in the material sense, and how that changes over time. For a business, the data produces valuable insights into what motivates consumer spending. The conclusions show how modern events have shifted consumer spending significantly in recent times. For more see page 32.

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The Russian government is considering a provocative law that would allow it to confiscate the property, assets and accounts of European and US companies operating in Russia. The law is Russia’s response to the second package of sanctions approved by the US Congress. Some analysts consider them the toughest sanctions imposed by the US on Russia since the Cold War era. The first repercussions on Russian coffee businesses started in March, with the closing of McDonald’s stores in Crimea. McDonald’s made the move, saying it was a business rather than a political decision. Some Russian officials, however, are arguing that the move was political, and that the company shut down its operations because it didn’t want to work with the Russian Crimea. Some officials are now arguing that the company should close its entire Russian business, including all of its McCafé locations, and leave the country. Soluble coffee manufacturers Nestlé and Mondelez International have both invested heavily in Russia in recent times, seeing ample opportunity in the world’s biggest consumer of instant coffee. For more see page 27. Italian roasting machine manufacturers The Brambati Group will supply a full turn-key plant operation for iconic Italian roasters Lavazza. The contract, which will be fully supplied by the end of 2014, will see Brambati construct a plant and facility for coffee processing. This will include all civil and engineering works necessary for the installation. This plant will include full automation and control from the receipt of raw (green) coffee right through to the feeding of the packaging machines. It will facilitate all areas of the production process including raw

Nestlé’s Russian operations could be at risk with increased political instability over Crimea.

coffee cleaning and storage, weighing, dosing, blending, storage, degassing and all modes of product transfer within the plant. For more see page 41.

AFRICA

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Tensie Whelan, President Rainforest Alliance.

EUROPE

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AMERICAS

Nyagoy Nyong’o was appointed Executive Director of Fairtrade Africa late last year. Nyong’o tells GCR Magazine that she would like to address the north‑south divide by making Fairtrade a better-known brand among African producers and consumers. Prior to joining Fairtrade Africa, Nyong’o worked for more than eight years as a Fairtrade auditor at Max Havelaar Switzerland and FLO-CERT GmbH of small farmers’ organisations and agricultural companies in Africa. Nyong’o has held senior management positions with several NGOs and has more than 15 years experience as a consultant and manager with civil society, private and public sectors. Today, Fairtrade Africa supports more than 700,000 farmers and workers through 410 producer organisations in 29 countries across the continent. For more see page 45.

DOLLAR POWER

Research is showing how consumers are increasingly spending in line with their values, and are better informed of where their coffee comes from. See page 32.

COVER STORY Vittoria Coffee

FEAR OF A

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THE MAN DUBBED AUSTRALIA’S COFFEE KING, VITTORIA FOOD & BEVERAGE CEO LES SCHIRATO, TALKS ABOUT WHY SMALLER ISN’T NECESSARILY BETTER IN THE WORLD OF COFFEE PRODUCTION.

hen it comes to establishing market dominance, getting in early can have its advantages. In Australia, the strategy seems to have worked for Vittoria coffee. As one of the first espresso-style, roasted coffees to hit Australian retail shelves in the 1980s, the company enjoys around a 40 per cent volume share of the retail roasted coffee market, if you include its sister brands Aurora and Delta, according to industry research firm Ibis. Not counting its exports, Vittoria sells around 5 million kilograms of coffee a year to Australia’s coffee loving public. It’s particularly impressive, considering that Australia is emerging as one of the most competitive markets in the world for coffee roasters. Some estimates say that over 1000 coffee roasters are fighting for a slice of the market. Leading the helm of Vittoria’s parent company Cantarella Brothers is its CEO Les Schirato, a man coined by local mainstream media as Australia’s Coffee King. Schirato has led the company since the early 1990s, when he bought out the original Cantarella brothers, one of whom, Ozario, is his father-in-law. He took over at a time that the company was reeling with debt, and today enjoys a turnover of $210 million a year, according to figures reported in 2014 by Business Spectator. Cantarella brothers currently trades as Vittoria Food & Beverage. Being at the top, in a market characterised by smaller roasting companies, makes Vittoria an easy target. Schirato says he is well aware of the criticism that larger roasters sacrifice on quality. He says that – if anything – Vittoria’s size is a major advantage in the upmarket coffee business. “I think getting in early has helped me identify how it works, and that it’s important not to turn your product into a commodity,” Schirato tells GCR Magazine. “Smaller roasters like to say that supermarket coffee is no good. I think it’s a big mistake. I have never had the same amount of control over the quality of coffee as I do now. Our standards for green coffee are

Vittoria Coffee uses state of the art Probat roasting equipment.

really high, we measure the moisture content on every shipment. Smaller roasters just don’t have the kind of buying power we do.” Schirato says that the proof of Vittoria’s quality is not just in its retail success, but with the more than 5000 cafés, restaurants and hotels that it services around Australia. Vittoria provides coffee for more award-winning restaurants than any other coffee company. “We wouldn’t be able to do that if we didn’t have the quality right,” says Schirato. “I meet boutique roasters who have been in the business for six or seven years and they think they know everything. I think it’s good that there are a lot of small roasters, I want to see more roasters in the coffee industry because it will move people over from drinking instant coffee. But I think smaller roasters do themselves a disservice [when they criticise larger companies]. It’s easy to say we’re big so we don’t do quality, but that’s where they make their biggest mistake. We take measures that they haven’t even heard of yet.” Where most smaller roasters, or even mid-size roasters, pale in comparison to Vittoria’s success is in the company’s dominance of supermarket shelves. Leading Australian business publication Business Insider called Schirato’s early work in the 1980s to bring espresso-style coffee onto retail shelves as a major “game-changer”. “Australia today has such a sophisticated coffee culture,” says Schirato. “When I first started selling espresso coffee, the market just wasn’t used to it.” When Australia’s supermarkets wouldn’t accept Italian espresso coffee on their tea and coffee shelves, Schirato had to resort to “tricks” to get his product into their shops. He convinced supermarkets to sell Vittoria coffee in 1-kilogram bags in the fruit and vegetable section, as an “ethnic” food. “It was only when our sales figures started to become high, that they started to take notice,” says Schirato. Vittoria’s dominance on supermarket shelves is the main factor that sets it apart from other familyowned coffee roasters that share a similar history with Vittoria. When a wave of Italian immigration hit Australia in the mid 20th Century, a handful of companies started locally roasting espresso style coffee, including the likes of Grinders Coffee, Genovese and Mocopan.

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COVER STORY Vittoria Coffee

Vittoria Coffee was the first product ever endorsed by Hollywood star Al Pacino (pictured on poster in backdrop) .

Brothers Orazio and Carmelo Cantarella founded their business in 1947, and started the Vittoria Coffee brand in 1958. Schirato started working for the company in his teens, and today clocks over four decades with Vittoria as he reaches his 60th birthday next year. Still a family business, Schirato and his wife Luisa own a 51 per cent controlling share, while Luisa’s sibling, Clelia Cantarella, owns 49 per cent. Schirato recalls that it was a big gamble buying into the company. In the 1980s, Cantarella Brothers had accrued massive debts, and were paying swelling interest rates that were hitting 22 per cent. Schirato had to borrow in this risky economic environment to buy out his in-laws. Schirato says he learned important financial lessons from this history. “It’s one of the reasons I have kept the company debt-free,” he says. “Controlled growth is really important.” The company’s family arrangements have caused some tensions over the years. Schirato and Clelia ended up in court in 2011 to resolve disputes over a $20 million subsidiary. The business will likely stay in the family, as Schirato grooms his son Rolando for leadership. While Schirato can take credit for Vittoria’s

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dominance in Australian supermarkets, he gives his son Rolando credit for putting Vittoria on the world coffee map. Rolando was the brains behind getting Hollywood legend Al Pacino to star in Vittoria’s print and television advertising campaign in 2010, as the first time Pacino has ever endorsed a product. “The Pacino ad really put us on the map,” says Schirato. “And what a great thing for Australia. I don’t think people really considered that Australia had a sophisticated coffee industry. Now, I think people understand.” Schirato explains that getting the Hollywood legend to do his first-ever advertising campaign wasn’t just a matter of putting forward the highest bid. Rather, Rolando spent months writing to Pacino’s agents, explaining the Vittoria story to appeal to the actor’s Italian heritage. The television ad was shot in New York City by Academy-Award winning Director Barry Levinson. “It was a great coup for us,” says Schirato. “[Pacino] could have just sold himself to the highest bidder. I asked him why he didn’t and he said at this point in his career, if he was going to advertise a product, it wasn’t just going to be for money. He wanted a product he could relate to.” Rolando landed a second celebrity coup when Vittoria’s sister brand Caffe Aurora contracted Rico Rodriguez, who plays Manny in the popular television series Modern Family, to star in another advertising campaign. With moves like this, Schirato is confident that his son Rolondo will be able to take over the family business. Schirato says that keeping the business in the family has many advantages. “Without a doubt, we take a long term view,” says Schirato. “It’s probably had more of an impact of what we say no to, than what we say yes to.” For instance, Schirato refers to Vittoria’s strategy of sticking to 100 per cent quality Arabica coffee. Although Robusta is an acceptable inclusion in Italian espresso, Schirato says maintaining a fully Arabica blend has ensured they put nothing but quality into their mix. “We don’t want to compromise on quality for short-term profit,” he says. While sticking to these founding principles, Schirato says Vittoria is now looking to the future of where the company will head. Coffee capsules have played heavily in this space. Euromonitor figures estimate that in 2013 single-serve systems accounted for around 18 per cent of the global coffee market share, an 84 per cent jump on the year prior. In this realm, Vittoria has teamed up with the inventor of the original Nespreso capsule Eric Favre of Mocoffee to introduce the Espressotoria system into the Australian market. Although mainly sold

“THE PACINO AD REALLY PUT US ON THE MAP…AND WHAT A GREAT THING FOR AUSTRALIA. I DON’T THINK PEOPLE REALLY CONSIDERED THAT AUSTRALIA HAD A SOPHISTICATED COFFEE INDUSTRY. NOW, I THINK PEOPLE UNDERSTAND.” Les Schirato

Vittoria Food & Beverage CEO

online and in boutique Italian shops, the capsules hit the shelves of major supermarket chain Coles this past April. The move might be another game changer for Vittoria soon in the single-serve space. Vittoria already operates one capsule manufacturing plant, and is preparing to open a second plant in the middle of this year. Once it’s operational, Schirato says it will be the largest coffee capsule packaging line in Australia. In addition to coffee capsules, Schirato also sees ample market potential outside of Australia’s borders. “We have a huge export market, and we’re expecting it to increase dramatically,” he says. The most obvious market is Asia, one that many Australian companies are targeting thanks to close geographic location, and ample opportunity for increased coffee consumption. Schirato confirms that Asia is probably its largest target market, with Cantarella Brothers operating an office in Hong Kong. A perhaps less obvious market for an Australian roaster to target is the United States. Schirato says that despite economic woes and ample local roasting companies, Vittoria is finding a strong consumer base in the US. “There is a groundswell of people here who are starting to become interested in up-market coffee,” he says. “We see a good opportunity to start at the top end.” Vittoria has already found a niche market among top end restaurants and hotels in the US, and it recently opened up an office in Los Angeles to facilitate oversees expansion. Schirato says he hopes Australians will take pride in a locally-owned coffee company making its mark overseas. In bringing the brand abroad, Schirato says that despite his four decades of experience, his time in the coffee industry is a constant learning experience. He says he hopes that as the Australian coffee industry grows, other roasters will take a similar approach in continually improving the industry. “What a great industry we have in Australia. However, we should not be so arrogant to think we know everything,” he says. “I’ve been in the industry for 40 years, and I’m still learning about coffee.” GCR

HORECA Hotel lobbies

AFORLOBBY THE PEOPLE Boutique-style hotels like The Ace Hotel chain (London location pictured) are helping to revive an industry focus on improving lobby spaces in terms of design, food and beverage offering.

HOTEL CHAINS ARE IMPROVING THEIR LOBBY AND COFFEE OFFERINGS TO ENTICE GUESTS TO STICK AROUND.

usiness travellers should have an easier time finding a decent cup of coffee and comfortable pubic work space, thanks to a resurging trend in the hotel industry. In fact, they may not even have to leave the hotel lobby. Several large players in the hotel industry are ditching stale coffee and developing their own cafés as part of an effort to make more profitable use of their lobby and common areas. In the United States, hotels spent an estimated US$5.6 billion on capital improvements in 2013, which is more than double the $2.7 billion invested in 2010. A significant portion of that is being spent on injecting comfort, technology, and quality food and beverages in lobbies and public spaces

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to encourage guests to spend more time on site. With room costs for corporate travellers expected to go up from between 5 and 6 per cent in 2014, attractive new work and social spaces may be a key factor for guests when deciding where travel dollars are spent. Starwood Hotels & Resorts Worldwide recognised the potential to increase profit in its Sheraton brand in 2009, with an initial US$6 billion investment to revitalise the brand. The investment saw the renovation of 200 hotels internationally with the new Link@Sheraton experience. The Link was designed as a social destination in the lobby area that allows guests to interact with each other and stay connected with complementary computers, high-speed internet access and docking stations. It can now be found in nearly 450 Sheraton locations in 70 countries. Hoyt Harper, Global Brand Leader, Sheraton Hotels & Resorts, tells GCR Magazine the lobby efforts have made a significant impact on the consumer experience. “Sheraton’s signature programming is resonating with guests, driving guest satisfaction scores and generating incremental revenues,” he says. Its success with the new lobby spaces prompted the company to take the experience to the next level. Sheraton is in the midst of aggressively deploying the Link Café in these areas, where guests can get freshly brewed Starbucks coffee and other snacks. Sheraton isn’t the only large hotel chain revamping its lobbies for a younger, more connected audience. Marriott Hotels & Resorts had similar goals when it tested its “greatroom lobby” concept

Sheraton spent US$6 billion to revitalise their hotel lobbies.

in 80 per cent of the 500-plus Marriott Hotels & Resorts properties worldwide by the end of 2014.

BLAST FROM THE PAST

“THE LOBBY HAS RETURNED TO BEING A PUBLIC SPACE WHERE PEOPLE WHO AREN’T GUESTS WILL COME AND SPEND TIME THERE.” Stephani Robson

Senior Lecturer, School of Hotel Administration, Cornell University

Stephani Robson.

in 2007. Geared towards a new generation of business travellers, the experience centres around greater access to food, beverage and technology in a modern setting where guests can work, hang out, and socialise. “Today’s generation of mobile travellers blends work and play, staying connected to family, friends and work nearly 24/7,” said Paul Cahill, Senior Vice President, Marriott Hotels & Resorts, in a statement. “By synthesising our customer research with the wealth of knowledge we have as hosts, we developed Marriott’s lobby experience. It represents a strategic and holistic approach to design, technology and service that is truly relevant to the new generation of travellers.” The lobby transformation is expected to be

While several chains have caught onto the benefits of turning lobbies into more profitable public spaces in the past few years, the concept isn’t new. Stephani Robson, a Senior Lecturer at the School of Hotel Administration at Cornell University, explains to GCR Magazine that hotel lobbies in the late 1800s and early 1900s were largely public spaces woven into a community’s social scene. The concept seems to have fallen away in the 20th century. “The lobby has returned to being a public space where people who aren’t guests will come and spend time there,” says Robson. Robson, who specialises in how the design of environments affects consumer intentions, satisfaction and behaviour, says hotels are stepping up their lobby experiences to meet expectations of a younger, more connected target audience. “A lot of hotels have been offering free coffee in their lobbies for decades,” she says. “What I think has made this more prevalent is the advent of [wireless internet] and mobile working. Hotels have responded to that by making a better offering in their lobbies.” According to Bjorn Hanson, Dean of New York University’s School of Hospitality, the trend has been gaining traction in the last decade. “It really started in 2003-04,” he tells GCR Magazine. “The industry was in a period of recovery and differentiating capital. One of the areas that was receiving extra focus was lobbies.” Hanson, an industry expert whose research focuses on statistical and econometric analysis, says that while part of the effort was to improve brand image, another goal was to retarget lobbies towards a new generation of travellers who enjoy congregating in lobbies to work and hang out. “All of a sudden the lobby took on even greater importance,” he says. “It has been accelerating since.” Hanson says the recession in 2010 prompted a renewed focus on the hotel lobby as part of the brand. Boutique hotels may have also helped pave the way for industry’s refocus on the lobby by bringing a cool factor to their public spaces. The Ace Hotel chain, for instance, is an edgy boutique-style brand known for being part of trendy social scenes with non-traditional lobby

M AY /J U N E 2 0 1 4 | GCR

HORECA Hotel Lobbies

spaces. With its first location opening in Seattle, Washington, in 1999, it can now be found in other cultural hotspots including New York, Los Angeles, London and Panama. Its London location opened in 2013 in the Shoreditch arts district, a historic neighbourhood and dynamic hub for leading galleries, theatres and fashion. Its lobby café, Bulldog Edition, is operated in partnership with Square Mile Coffee Roasters, a local company known for sourcing high quality coffee. The café helps generate traffic from both hotel guests and local patrons. But while boutique hotels may have been among the first to make lobbies cool again, both Robson and Hanson agree it’s not so much a trend as a new industry standard. “This is a permanent refocus and a new image for hotel lobbies,” says Hanson.

COST OF DOING BUSINESS

Bjorn Hanson, Dean of New York University’s School of Hospitality.

According to Robson, the renewed focus on the lobby as a public space is part of a strategy to get more out of their guests. “A lot of hotels realised there was an opportunity to keep people on their property so they didn’t go off and spend money at other businesses,” she says. “Part of that is to provide a pleasant lobby experience so people want to hang out.” Hanson believes the benefits of this strategy are two-fold. For the guest, it’s an added amenity, as having access to beverages in the lobby provides an alternative to room service and benefits those who spend more time working in the lobby. For the hotel, it’s an added revenue source. He explained some lobbies are leased spaces operated by the hotel. The strategy also includes attractive benefits for the guest, convenience being at the top of the list. “I think it makes things easy,” says Robson. “You feel like you’re in a controlled environment. It takes some of the guess work out.” She explains that this is part of why people gravitate towards chain brands in general. “When you’re in a strange environment, some things you like to explore and do differently. But to get a coffee, get some work done… and feel like you’re in a safe place, I think has a lot of power.”

Harper says Sheraton has already seen the return on investment and gotten positive feedback from its customers. “Since the initial investment, we have consistently seen guest satisfaction scores on the rise and a significant increase in lobby use, higher perception of value and increased likelihood to return,” he says. “Nearly half of our guests make use of the Link@Sheraton, more than the number of guests who use our fitness centres or order breakfast.” The formula for success, he says, is simple: “It has also become clear that as people spend more time in the lobby, they are more willing to purchase food and beverages. Our space planning concept now integrates the “Link experience” throughout the lobby with the Link Cafe, with carefully considered adjacencies that offer easy access to food and beverage options, creating new revenue streams.”

ABOUT THE BRAND Many traditional hotel brands are realising the potential of redesigning their lobbies to increase revenue. So why not just let a chain

coffee shop brand set up shop? While it may seem like an easy solution, Robson believes there is more to it. “If you put a Starbucks in your lobby it may dilute your brand identity,” she says. Robson explains that select service brands typically wouldn’t take this route, part of the reason being that the franchise wouldn’t be on board. “For Starbucks, they also have to maintain their (own) brand identity,” she explains. “They have to have significant traffic to justify it. Unless you are right downtown, you probably won’t have the volume to be attractive to Starbucks.” Robson says the key for these hotels is to create their own experience that is comparable. Hanson says the question is specific to the situation: “In some cases the hotel brand can be a feature offering. If a brand can be associated with good coffee [or] customer service, it can be good for the experience.” On the other hand, he says in some cases having Starbucks’ associated reputation can add to the brand experience.

LOBBY FOR A NEW GENERATION According to Hanson, the industry effort to bring lobbies into the 21st century is a direct target at millenials, the hyper-connected generation born after 1980. “This really is a service for millenials and does not respond to baby boomers,” he says. While it does not exclude the latter, Hanson says the baby boomer generation is much more likely to order food and beverage from the lobby and take it up to their room. Millenials, however, prefer the “see and be seen” aspect of being in a coffee shop, the one that more hotel spaces are trying to emulate. For Sheraton, the recent technology-focused lobby enhancements were definitely designed with this audience in mind. “Our internal research shows that our guests, whom we define as the ‘social traveler’, want to get out of their room and into a social setting,” says Harper. Hanson agrees: “Humans are herd animals… We don’t necessarily want to interact, but we want to work around other people.” G C R

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M AY /J U N E 2 0 1 4 | GCR

COFFEENOMICS Middle East

n the outskirts of Dubai, in the shade of a big tent stuffed with oriental rugs and traditional embroidered red pillows, an 80-year-old Bedouin, Ali Abdullah Alshikki, recalls a life filled with coffee traditions that date back more than 800 years. Slowly brewing a pot of coffee, Alshikki goes through each step with careful diligence. From cutting the wood, preparing the fire, filling the old pot with water and putting it to boil, only then, when the fire is right, does he starts to prepare the coffee itself. In an elaborate ceremony that takes the better part of an hour, he slowly grinds the coffee and mixes it with cardamom before finally putting the pot to boil. Taking in the late afternoon sun on a stretch of red desert sand along the coast of the Persian Gulf, coffee drinking doesn’t get more magical than this. The Bedouins, who are still found across most of the region, are the closest to what could be considered the world’s first generation of baristas. This is where and how coffee was consumed in the earliest beginnings of coffee trade and commercial cultivation. On these shores, the oldest of coffee traditions now seems to be taking a leap into the modern era of coffee drinking, driven by Western-style coffee chains serving up espresso-based drinks. “Coffee is such an important part of our culture here and it has such a deep-rooted history. For centuries it has been used as the way to welcome your guests, whether in your home or at formal meetings,” explains Khalid Al Mulla. Al Mulla is one of three partners in Easternmen & Co. Based in Dubai, the company is one of the biggest roasters in the Middle East. Around a decade ago, Easternmen & Co was one of the first regional companies to step away from tradition and embrace the modern coffee scene, by roasting single origin coffee and specialty beans. “Here in Dubai, it used to be that only the Syrian and Lebanese were involved in coffee roasting, but in a very traditional way,” Al Mulla tells GCR Magazine. “By 2000 it all started to change. Now coffee culture is growing everywhere and you see that people are becoming much more aware of the multiple types and different kinds of coffee you can get.” Since Easternmen & Co started introducing single origin beans into the local market, specialty

Khalid Al Mulla is a partner in Easternmen & Co, one of the largest coffee roasters in the Middle East.

G C R | M AY /J U N E 2 014

“THE MIDDLE EAST, AND DUBAI IN PARTICULAR, REALLY IS AN AMAZING MARKET AND A VERY COMPETITIVE MARKET. EVEN IF YOU STAY IN THE OFFICE WITHOUT DOING ANYTHING AT ALL, YOU’LL STILL HAVE AT LEAST 10 PER CENT GROWTH A YEAR.” Remi Rouchon

French roasters Malongo Café

Modern cafés are finding a welcome clientele in Middle Eastern markets.

coffee seems to be on the rise, with consumers appreciating a quality brew. At the recent GulFood trade fair – one of the largest food and hospitality shows in the world with around 4300 exhibitors – long queues formed whenever a stand put on a coffee brewing session. The crowd of Middle Eastern consumers that dominated the GulFood audience drew a record 87,000 visitors. “I really am impressed by the level of knowledge of coffee found in these countries. The Middle East, and Dubai in particular, really is an amazing market and a very competitive market. Even if you stay in the office without doing anything at all, you’ll still have at least 10 per cent growth a year,” says Remi Rouchon of French roasters Malongo Café. “If you do something and work on your business you should see growth rates of at least 30 per cent a year.” That growth is spread throughout the region. Thanks to Dubai, the UAE is rapidly becoming one of the top countries that imports green coffee and re-exports it roasted. “Dubai is the biggest hub for connecting the East and West. It has one of the best ports in the world and it’s the financial centre of the

Middle East,” says Al Mulla. Local industry figures put the UAE as the fifth biggest country for re-exporting coffee. Since the end of the Cold War, importing countries have earned a combined average of US$5.5 billion a year from re-exporting 24.2 million 60-kilogram bags of coffee, according to the International Coffee Organisation (ICO). This compares with an average of US$962 million from 1965 to 1989. The world’s largest re-exporter is Germany, followed by Belgium, the United States and Italy. In a 2013 report, the ICO said that both the value and volume of re-exports increased significantly during the free market period, and considerably over the last few years. For 2012, total value was estimated at around US$14.7 billion, compared to $2.4 billion in 2000. In general, the ICO said: “re-exporting activities in importing countries have shown consistent growth over the last 50 years.” The UAE, and most other countries in the Middle East region, are not included in ICO figures as non-member countries, making it challenging to source comparable data. Countries that are covered, however, leave little doubt that a coffee boom is widespread in the Middle East. “There are so many coffee shops and coffee chains in Turkey today, even Turkish coffee shop chains,” says Aysin Aydogdu, a coffee roaster based in Turkey. She got into coffee straight out of college, and today works with eight micro-roasteries to help them improve the quality of coffee, and introduce Western espresso-based coffee into the market. She says that while most Turks still drink Turkish coffee, the local market has been quick to embrace lattes and cappuccinos. “In the last three years we have seen a really big change in the local market. We have always been drinking coffee in Turkey, but for many years we forgot about our traditions, and it wasn’t until Starbucks came that people even knew about these different styles,” she says. The first Starbucks opened in the UAE in 1999, and both local and foreign-owned coffee shops have followed, including Café Nero, Caribou, Costa Coffee and Australia’s Jones The Grocer, among others. In the past four years, Turkey has doubled its green coffee imports to 500,000 bags in the 2013‑14 crop cycle, from just 275,000 bags in 2009-10, according to the US Department of Agriculture (USDA). The group pegs total consumption for the core Middle East region of Iran, Jordan, Yemen Bedouin, Ali Abdullah Alshikki performs a traditional coffee preparation.

M AY /J U N E 2 0 1 4 | GCR

COFFEENOMICS Middle East

and Turkey at 1.32 million bags. Comparative figures were not available. “At this point, most of the coffee we import is from neighbouring countries and it’s already roasted. But we have a lot of potential for industrial roasting, and we have a lot of interest from roasters to come and set up business,” says one coffee trader from Tehran, who distributes coffee and machinery to coffee shops across Iran and Iraq. Total consumption in Iran today is around 250,000 bags. No figures are available from Iraq. “Jordan is one of the biggest markets here. You see a lot of different styles in coffee shop set-ups, with some offering customers up to 16 different grinds to choose from. In Lebanon, you have coffee shops generally offering a standard 4 to 10 different grinds in the shops and that level of choice is what is driving volumes up,” says Felix Schmid of Swiss grinder manufacturer Ditting. Coffee markets are reportedly growing across the region, although it’s challenging to obtain figures to confirm this growth. The fact that the USDA has added figures from Jordan, Yemen, Morocco and Algeria is a good measure of the market potential. Smaller markets are Syria and Yemen, which consume each around 150,000 bags. Jordan consumes a healthy 450,000 bags. Key markets are Morocco at around 700,000 bags, and Algeria which, according to the ICO, has seen demand rise to almost 2.4 million bags from around 1.7 million less than a decade. “Algeria has a very large demand which mostly is being supplied through France, and new countries are starting to come along like Qatar and Bahrain,” says Schmid. “Now the market is starting to pick up in Bahrain, and it’s a market of quality here in the Gulf region, even if we are only a market of about 1 million people,” says Abdul Khaliq Milad, of Bahrain’s Tasneem Trading company, which primarily imports coffee and food products. Bahrain, he says, has “no good official statistics”, but local industry officials estimate the per capita consumption in 2010 was around 2 kilograms a year, compared to around 4.6 kilograms for Dubai. “We are planning to establish a coffee club where normal people and specialists alike can visit and

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Consumption is on the rise, with the USDA starting to keep track of figures in Jordan, Yemen, Morocco and Algeria.

get knowledge about coffee culture, training in preparing coffee and can enjoy an excellent final cup,” says Khaliq Milad. He is also looking to hold the first Barista Championships in Bahrain, another strong indication that specialty coffee culture is starting to take hold of this region showing ample potential. G C R

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FEATURE Crimea crisis

WHAT

CRIMEA HAS TO DO WITH COFFEE

AS THE WEST IMPOSES SANCTIONS FOLLOWING RUSSIAâ&#x20AC;&#x2122;S ANNEXATION OF CRIMEA, THE KREMLIN PREPARES TO RETALIATE, AND INTERNATIONAL COFFEE OPERATIONS COULD BE AT RISK.

M AY /J U N E 2 0 1 4 | GCR

FEATURE Crimea crisis

Nestlé’s soluble coffee factory in Timashevsk, Russia, is one of the company’s largest in Europe.

reak-ups can be hard at the best of times, and are often never completely resolved. Early this year, the world was reminded – once again – that the dissolution of the Soviet Union was anything but a clean break. Crimea, a peninsula that juts out into the Black Sea, started making headlines in February when Russian forces began taking control of the state it had gifted to the Ukraine in the 1950s. A referendum to join Russia reported that more than 95 per cent of Crimeans voted in favour, figures that most Western governments are not buying. In mid-March, Russia formally annexed Crimea, a move the United Nations has declared as illegal. For the business world, this level of political instability is never a good thing. As the world’s largest market for soluble coffee, and a target for growth among many coffee chains, coffee businesses will need to keep a close eye on these developments. As this magazine went to print, the Russian government was considering a provocative law that roughly translates to: “Confiscation of property, assets and accounts of European and US companies operating in Russia”. The law is Russia’s response to the second package of sanctions approved by the US Congress. Some analysts consider them the toughest sanctions imposed by the US on Russia since the Cold War era. According to an official statement, issued by the Russian Parliament, the new law would allow Russia’s President and his government to “protect the sovereignty of the country” by confiscating the property and assets of foreign countries operating in the Russian market. According to the Russian Council of Federation and the Russian

G C R | M AY /J U N E 2 014

ON THE TABLE

A new law is being considered by the Russian government that would allow it to confiscate the property and assets of foreign countries operating in the Russian market.

Parliament, this law could potentially be adopted by the end of May. Andrew Klishas, Head of the Committee on Constitutional Legislation of the Russian Council of Federation, tells GCR Magazine that the new law will fully comply with international legislation. It will be designed on the renowned Cyprian law, which provided the country’s government the right to seize the accounts of depositors and investors, including foreign, as part of measures aimed at avoiding a default of the country. While it’s difficult to say which foreign assets may be confiscated, theoretically the Russian government will have a right to seize all kinds of assets of foreign companies operating in Russia. The current tensions between Western governments and Russia could negatively affect US and EU businesses operating in Russia. Foreign coffee companies are currently well represented here, including Nestlé, Kraft Foods, McDonald’s, McCafé and more. The first repercussions on Russian coffee business have already started, with the closing of McDonald’s stores in Crimea. McDonald’s made the move, saying it was a business rather than a political decision. Some Russian officials, however, are arguing that the move was political, and that the company shut down its operations because it didn’t want to work with Russian

Vladimir Zhirinovsky, Head of the far-right Liberal Democratic Party of Russia, has criticised McDonald’s decision to shut down its Crimea locations.

Crimea. Officials are now arguing that the company should close its entire Russian business, including all of its McCafé locations, and leave the country. Official comments shared with GCR Magazine by Vladimir Zhirinovsky, Head of the Liberal Democratic Party of Russia, a far-right political party in Russia and one of the largest in the Russian Parliament, reflect this attitude. “McDonald’s closed its outlets in the Crimea. This is a wrong position and in such a situation the company should close its fast food restaurants and coffee chains throughout the whole country,” says

“MCDONALD’S CLOSED ITS OUTLETS IN THE CRIMEA. THIS IS A WRONG POSITION AND IN SUCH A SITUATION THE COMPANY SHOULD CLOSE ITS FAST FOOD RESTAURANTS AND COFFEE CHAINS THROUGHOUT THE WHOLE COUNTRY.” Vladimir Zhirinovsky

Head of the Liberal Democratic Party of Russia

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FEATURE Crimea crisis

Zhirinovsky. “We have already instructed members of our party to organise pickets near each outlet of the company, demanding [them] to leave Russia.” An official representative of McDonald’s Russia tells GCR Magazine that the current attacks on its Russian business are absolutely senseless, and have nothing to do with existing legislative norms. They say that the company is confident that its McCafé coffee chains and restaurants will not be closed, as there is a high demand by local residents. The spokesperson confirms that McDonald’s is aware of the initiative, but plans to continue with its expansion plans. Last year McDonald’s opened 10 new stores in Russia, increasing the total number of its Russian outlets to 60. Vera Ivanovskaya, a Senior Development Manager at McCafé Russia, says this year the figure should increase significantly. An official representative of Starbucks Russia tells GCR Magazine the company does not expect any serious problems in its Russian operations, however this will depend on further development of the political situation. The Russian opposition has already criticised the possible new law, saying it’s a senseless political initiative. The First Deputy Chairman of the Committee on Budget and Taxes, Oksana Dmitrieva, says the decision to confiscate may be only taken by the country’s President and in the presence of solid grounds. In addition to affecting coffee chains, the latest moves by Russian authorities could negatively affect the country’s leading soluble coffee manufacturers, including market leaders

Irene Rosenfeld, CEO Mondelez International, recently said that Russia is the second largest market for the company among BRIC nations.

G C R | M AY /J U N E 2 014

WARNING

While Russian authorities will probably not seize the assets of Western companies, they might create unfavourable conditions that could make it hard for them to work with their local partners.

Nestlé and Mondelez International. Both companies have recently invested heavily in Russia, seeing major market potential among the 143 million people living in Russia. Nestlé Russia’s Kuban factory is currently the company’s largest in Europe and one of the largest in the world. The factory is located in Timashevsk and specialises in the production of soluble, freeze-dried coffee under the Nescafé Gold brand. Nestlé recently spent almost a quarter of a billion dollars on the factory. Irene Rosenfeld, CEO Mondelez International, recently told the Russian press that the country is the second largest market for the company among BRIC nations after Brazil. Mondelez International’s annual revenue in Russia is estimated at around US$1 billion and continues to grow. A significant part of the company’s production at Russian plants is exported abroad. Both companies officially commented to GCR Magazine that while they are aware of the potential law, they are hoping their operations will go on unaffected. Only time will tell if they will be safe. Many Russian analysts are saying that the consequences from the imposition of sanctions could be more severe than what companies expect. Nikolai Nikitin, a Senior Analyst with the Russian Association of Coffee Producers, says that while Russian authorities will probably not seize the assets of Western companies, they might create unfavourable conditions that could make it hard for them to work with their local partners. The government could significantly increase imports duties on products, raw materials and equipment, making it harder for these coffee giants to make their mark in Russia. G C R

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MARKETING Rainforest Alliance

SPENDING WITH THEIR

HEARTS RAINFOREST ALLIANCE PRESIDENT TENSIE WHELAN TELLS GCR MAGAZINE ABOUT A MAJOR SHIFT IN CONSUMER HABITS THAT IS SET TO AFFECT EVERY COMPANY ON THE PLANET.

G C R | M AY /J U N E 2 014

he argument for a sustainable supply chain has taken different forms over the years. Initially, the need to protect natural resources fell in the corporate social responsibility (CSR) department. As climate change started to impact crop outputs, roasters became aware that ensuring sustainability wasn’t just about the “feel good” factor. Protecting the environment became an important part of securing their supplies of quality coffee. If these factors weren’t enough to shake companies into taking action, a new shift in consumer spending is about to be a major wake-up call. “We’re seeing an increase in groups wanting to spend in alignment with their values,” says Tensie Whelan, President of internationally-recognised sustainability organisation Rainforest Alliance. “These people don’t see themselves as environmentalists or social activists, but they care about the community and want to spend responsibly.” It turns out that showing customers a company cares about the environment might now be an essential marketing tool. Whelan says that although consumers won’t necessarily spend more on what they see as a product aligned with their values, when faced with the choice between two products at parity price, they will chose the latter. This trend was captured in the now much-cited book Spend Shift by John Gerzema and Michael D’Antonio. Published in 2011, the book draws upon 17 years of quarterly data gathered by international marketing and communications company Young & Rubican. The BrandAssset Valuator looks at what people prize in the material sense, and how that changes over time. For a business, the data produces valuable insights into what motivates consumer spending. The conclusions show how modern events have shifted consumer spending significantly in recent times. In the United States, the authors state how the “Great Recession”, that started in the US in 2007 following the sub-prime mortgage crisis, shone a spotlight onto the instability of a consumerist ideal of an ever-growing economy. “Americans generally resisted the urge to grab torches and pitchforks and go looking for the bad guys,” the authors wrote. “Perhaps this is because we were aware, on some level, of the way almost every one of us had played a role in the debacle and could accept a measure of responsibility.” The authors argue that the US population is now more aware of how their spending can influence corporations and the government. As a result, they have shifted their spending habits as a way to take action. “They realise that how they spend their money is a form of power, and they are using it to communicate their values and reward those companies that truly reflect them whether they are pro-environment, anti-bailout, or concerned about some other issue,” the authors write. The book says that in the US, around half of the population is spending in line with their values. Whelan says that this trend is not isolated to the US, but can be seen around the world. On average, she says, at least 10 per cent of global consumers are becoming more aware of the social issues around the products they purchase. In Europe, the trend in consumer spending is so strong that Rome’s La Sapienza University, with support from Nestlé Italia, put together the Food Reputation Map that enables food producers, growers, processors and marketeers to better understand how people feel about a particular product. The tool maps out consumer perceptions on the environmental and economic impact of food, or food products, and the process to create it. Three years in the making, the Food Reputation Map has collected and analysed the perceptions of almost 5000 Italian consumers. This trend towards more conscious spending has been good news for brands like Rainforest Alliance. The organisation has seen the amount of coffee sold with the Rainforest Alliance

Tensie Whelan, President of Rainforest Alliance.

“WE’RE SEEING AN INCREASE IN GROUPS WANTING TO SPEND IN ALIGNMENT WITH THEIR VALUES… THESE PEOPLE DON’T SEE THEMSELVES AS ENVIRONMENTALISTS OR SOCIAL ACTIVISTS, BUT THEY CARE ABOUT THE COMMUNITY AND WANT TO SPEND RESPONSIBLY.”

M AY /J U N E 2 0 1 4 | GCR

MARKETING Rainforest Alliance

The Food Reputation Map was developed by Rome’s La Sapienza University, with support from Nestlé Italia..

Certified seal jump 20 per cent in 2013, selling around 167,000 metric tonnes of green coffee equivalent. This was out of a total 450,000 metric tonnes of coffee produced under the scheme. Whelan explains the shortfall happens because a lot of Rainforest Alliance coffee is sold without the seal, by companies like Starbucks. Although the US coffee giant supports the sustainable production methods that Rainforest Alliance implements, the company prefers to label the coffee under its own certification scheme. Whelan says she’s not overly concerned, as long as major players like Starbucks continue to purchase Rainforest Alliance Certified coffee. “Although it’s nice to have the coffee sold under the Rainforest Alliance label, the most important thing is market access for our farmers,” she says. Customers who care about where their coffee comes from have found a good fit with the Rainforest Alliance brand. The simplified message of protecting rainforests is one consumers can easily grasp, however Whelan points out that Rainforest Alliance certification is much more. “Rainforest Alliance promotes a sustainable farm management program that helps farmers,” she says. “We help with financial, people and environmental management, while also helping to increase productivity and yields.” From the roaster’s perspective, she points out that the Rainforest Alliance seal is not just more marketable, but makes Rainforest Alliance farmers less risky as suppliers. With this increased consumer awareness of where their coffee comes from, Rainforest Alliance certification provides some protection against public relations disasters. “It’s about the avoidance of reputational risk. No company wants to find out that there is deforestation taking place in its supply chain,” she says. Whelan says that the values of the management team can have a major impact on a company’s practices. Although the early sparks of the conservation movement can be traced back to the

G C R | M AY /J U N E 2 014

19th Century, awareness of deforestation and links to climate change began to peak in 2006 with the release of Al Gore’s Academy Award winning documentary, An Inconvenient Truth. That generation, now hitting their mid-30s, grew up with concerns of climate change on the table, and are now coming into management positions. “People who are running these coffee companies are people who grew up with environmental protection in the conversation,” says Whelan. So it would seem that from management to consumption, the pressure to ensure a responsible supply chain is now coming from every end. With this, Whelan has high hopes for the future of Rainforest Alliance. Currently, around 5.2 per cent of the world’s coffee is certified Rainforest Alliance, compared to 10 per cent for cocoa and 12 per cent for tea. “We challenge the coffee industry to help us get to 10 per cent,” says Whelan. G C R

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GrindDefine™ High flexibility: The modular design allows for optimized operation in all coffee grinding applications – from coarse to very fine. The sophisticated mechanism used for the automatic roll gap setting assures consistent fineness. Energy-saving features: Direct drives and frequency converters assure the optimum operating point and save energy. Comfortable maintenance: Service downtimes are minimized due to excellent accessibility and rapid change of the rolls in less than one hour. Easy-to-use solution: User-friendly software and a 12" touch panel allow for comfortable operation.

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WILD 36

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SCIENTIFIC EFFORTS AT ONE OF THE WORLD’S LARGEST COFFEE RESEARCH STATIONS ARE PROVING THAT FARMERS MIGHT STAND A CHANCE AGAINST THE RISKS OF CLIMATE CHANGE.

hen it comes to headlines about climate change, the news isn’t getting any better. This past March, the UN Intergovernmental Panel on Climate Change released its fifth report, confirming that the world is doing a terrible job at cutting greenhouse gas emissions. Even if drastic measures are taken today, efforts will now be about limiting global warming rather than stopping it, with a gradual increase in the earth’s temperature an inevitable future. In the world of coffee production, the effects of global warming have started to hit home. The rust disease outbreak that is severely affecting production in Central America is the most recent example. The outbreak has been attributed to higher temperatures, which caused increased rainfall in affected areas. Colombian coffee farmers have largely been spared from this recent outbreak, with production exceeding 11.4 million 60-kilogram bags in the 12 months leading up to March 2014. This is a 40 per cent increase over the 8.1 million bags produced in the same period a year prior, a time that saw Central America’s production cut drastically. With the likelihood of a poor crop from Brazil as a result of erratic weather, Colombia is now positioned as one of the most important producers of high quality Arabica in Latin America. Colombia’s success story isn’t by chance. The tale is one of science winning against nature, proving that producing countries do have some power in protecting their crops from the risks of climate change. “Climate change is an ongoing process, we know that the whole planet is warming up. The scenario from the United Nations Intergovernmental Panel confirms that in 25 years, we’re going to be 2 degrees Celsius warmer,” says Fernando Gast, Director of Colombia’s Cenicafe, one of the world’s largest centres dedicated to coffee research, run by the Colombian Coffee Growers Federation (FNC). At the heart of Cenicafe’s work on

Fernando Gast, Director Cenicafe.

combatting coffee leaf rust has been the development of rust-resistant varieties. Today, around 2.8 billion coffee trees have been renovated and replanted with these varieties, efforts that have seen rust infestations drop from around 40 per cent in 2011, to less than 5 per cent today. This work has been no easy feat, and is the result of 25 years worth of efforts and foresight into protecting the livelihoods of the more than half a million Colombian coffee farmers. “Developing resistant varieties is a very long process,” explains Gast. The development work for the original rust resistant Colombian variety, which was released in the 1980s, began with 300 different coffee strains, as scientists filtered out the most resistant, productive, and highest quality. Working with strains of the Timor Hybrid, which is rust resistant, and the Caturra, which is of high taste quality, those 300 strains were filtered down to 100, then 50. It takes more than five generations of crossbreeding for scientists to be confident that the desired attributes are present in the new variety. In 2005, the second generation of the Colombian variety was released as Castillo, with different variations suited to the relevant weather conditions in different coffee growing regions. They are named after the different Cenicafe research stations. Because developing new varieties, and getting them out to farmers, is such a long process, Gast says Cenicafe has to have the foresight to look far into the future of agriculture, and see what conditions future strains will be facing. Working with different materials, researchers are currently working on strains of the future, testing new varietals in extreme geographical and weather conditions

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RESEARCH Cenicafo

Cenicafe conducts ongoing research to develop new coffee varietals.

Cenicafe’s efforts have led to a drastic reduction in coffee leaf rust in Colombia.

around the country. This work is helping the country determine whether climate change might affect its potential as a coffee grower. The first question, Gast says, about whether Colombia will be able to continue growing coffee, is about whether the country has enough geography to accommodate an increase in temperature. Fortunately, in this realm, he says the answer is yes. “Colombia’s mountains are high enough, we can have the optimum growing conditions to grow coffee,” he says. With the geography confirmed, Gast says Cenicafe’s main focus is to take a “worse case scenario” approach, in determining all the risk factors that could affect coffee growers in the future. In addition to the inevitability of climate change, climate variability is a constant threat to Colombia’s coffee production. While climate change refers to the long-term increase of temperature, climate variability is dependant upon the climate phenomena that can affect the cyclical changes of weather. The largest climate phenomenon that affects

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regional temperatures is the ENSO, a term that refers to the variations in the surface temperature of the Pacific Ocean. These flows are responsible for what is known as the La Nina and El Nino weather patterns. “We need to be aware of these phenomena, and aware of what effects they have in coffee growing areas,” says Gast. To record the temperature, solar radiation and precipitation variations in these areas, Cenicafe has established climatic stations in each distinct coffee growing region. These stations measure the parameters that are important to coffee growing. “We’ve developing a weather grid to understand the information, and have a stronger database analysis,” says Gast. “We can now issue early warnings to growers in different areas regarding possible conditions that they will face in the near future.” To make this information practical at the farmer level, Cenicafe has developed an app that will assist coffee growers in managing their farms according to these weather patterns. The app will be available to coffee growers via the Extension Service. The Extension Service is a team of more than 1500 workers who, under the FNC, work on the ground with farmers to distribute the resources made available from the FNC and Cenicafe. Some of the Extension Service workers are already armed with tablets to access the app, and are able to instantly download historical and daily weather data and outline the risk from the weather patterns. This will help farmers determine the ideal time to apply corrective measures to prevent pests or harvest crops and establish new plantations. The results should mean lower risks for coffee growers, as they will have a better understanding of how weather patterns affect crops. With recent events highlighting Colombia’s success in helping its farmers through scientific means, the country is well positioned to be hosting the International Conference on Coffee Science (ASIC 2014) from 8 – 13 September this year, see www.asic2014colombia.org. The event attracts more than 400 coffee industry leaders, scientists and speicalists from across the globe, with the goal of increasing worldwide awareness and knowledge of coffee. Gast says that hosting the event will be a good opportunity for the group to share their knowledge, while learning from other scientists around the world. “Climate change is a huge challenge,” he says. “I hope that we will have the answers for coffee growers in the future.” G C R

Leveraging knowledge for coffee sustainability Get ready for the XXV International Conference on Coffee and Science

DISCOVER HOW SCIENCE AND KNOWLEDGE CAN PAVE THE WAY FOR COFFEE SUSTAINABILITY

September 8 th - 13 th / 2014 Armenia - colombia

www.asic2014colombia.org

reasons why Colombia should be on your calendar this year!

Growers, industry and coffee lovers come together to discover the different coffees that the regions of Colombia have to offer.

October 2 nd - 5 th / 2014

MedellĂn - colombia expoespeciales.com

CASE STUDY Lavazza

BRAMBATI TECHNOLOGY FOR

ITALIAN AROMA LAVAZZA IS TEAMING UP WITH THE BRAMBATI GROUP TO PUT TOGETHER ONE OF THE MOST TECHNOLOGICALLY ADVANCED FACILITIES TO HIT ITALIAN SOIL.

hen Lavazza was looking for a roasting manufacturer to team up with for its latest plant, it looked no further than its

own home ground. In 2013, Lavazza signed a contract with The Brambati Group, based in Codevilla in Northern Italy, for a full turn-key plant operation. The contract, which will be fully supplied by the end of 2014, will see Brambati construct a plant and facility for coffee processing. This will include all civil and engineering works necessary for the installation. This plant will include full automation and control, from the receipt of raw (green) coffee, right through to the feeding of the packaging machines. It will facilitate all areas of the production process including raw coffee cleaning and storage, weighing, dosing, blending, storage, degassing and all modes of product transfer within the plant. Very important is that the plant will include the latest generation Brambati Roaster. “It’s another realisation of the success of the production philosophies that have characterised this Italian company over the last decade, constantly receiving acclaims in markets around the world,” says Brambati President Fabrizio Brambati.

With its long history of operations, The Brambati Group has developed top level expertise in delivering customised systems to its clients, even those with very specific requirements. One of the company’s strengths is its ability to customise its proposals based on the varying requirements and standards of its clientele. Teaming up with Lavazza was a very special project for Brambati. With more than a century of experience, Lavazza has become the symbol of Italian coffee throughout the world. Lavazza has achieved a reputation for consistent, quality coffee thanks to the use of high-quality raw materials and careful attention to its production processes. With this reputation comes the need to enhance and protect the most precious properties of its coffee. In working to some of the highest quality standards in the world, it was a natural fit for Lavazza to look for the most highly developed technologies. This will be achieved with the installation of highly automated systems, allowing for real-time control of all elements of the production process, as well as the storage of raw materials and the finished product. Brambati is careful to take into account the typical problems faced by its clients when it comes to compliance with rules and regulations relating to noise, environmental health and emissions into the atmosphere.

ONE OF THE COMPANY’S STRENGTHS IS ITS ABILITY TO CUSTOMISE ITS PROPOSALS BASED ON THE VARYING REQUIREMENTS AND STANDARDS OF ITS CLIENTELE.

The Brambati Group is based in Codevilla in Northern Italy.

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CASE STUDY Lavazza

In designing the plant, Brambati is working closely with Lavazza’s team. Lavazza places attention on every detail to maximise the sensory outcomes of the product. Brambati also understands the need to implement systems that pay particular attention to the preservation of the environment. Lavazza has a long history of looking out for its sustainable footprint. It strives to maintain principles of responsible production. Brambati has proven itself the ideal fit for a roaster who is looking for plants that minimise its environmental impact, considering that quality includes this important factor. The Brambati company, in fact, has collaborated with major Italian universities in this regard. This has led to the development of systems that provide significant energy savings and durable processes, combined with advanced systems for the reduction of emissions and optimisation of electricity and gas consumption. Brambati’s solutions allow the customer to limit emissions released into the atmosphere, without compromising the quality of the product. Chemical, physical and sensory characteristics of roasted beans can suffer if modifications to production processes are extreme. More and more, Brambati is constantly developing and improving its technologies by collaborating with important companies in the coffee industry. Brambati has always relied on the industry to share information to help improve its equipment. This includes requirements relating to product traceability and the precise management of these processes. This work will certainly come in handy in the new plant being developed for Lavazza. The systems will receive data (production orders, master data, etc.) and provide production reports in real time which are aimed at providing traceability using the ERP. The data expressed by this new level of plant automation, which until recently only had the functions of command and control, now allows the collection and integration of all data relating to the qualitative aspects of the

finished product, preventative maintenance, optimisation of production cycles and the reduction of energy consumption. These further developments in the field of automation have also allowed Brambati to increase their reliability, functionality and operational safety. The continuous research, and the possibilities offered by advanced information technology, in the use of electronic data, have brought about the accurate collection of all aspects of production data. Technology no longer has the sole function of offering system control. It now gathers the required information to allow the producer to give an identity card to their product, thereby offering maximum traceability. The development and use of new electronic sensors, product monitoring in Brambati systems can guarantee the proper monitoring of the coffee throughout the entire course of processing. This allows for a definitive perfect execution of every stage of the production process. G C R

March/April 2014

INTELLIGENT EXHAUST The information in off-gas

DEFICIT DEBATE

Production figures come up short

A BRIEF HISTORY OF ESPRESSO Advances that have shaped our drinks

COFFEE SOS Farming advice on the airwaves

INDONESIA’S GROWING MIDDLE CLASS THE HEAD OF STARBUCKS’ INDONESIAN OPERATIONS TALKS ABOUT SPREADING THE COFFEE GIANT’S WINGS IN ONE OF ASIA’S MOST PROMISING MARKETS

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PROFILE Fairtrade Africa

SHIFTING THE

AXI S

A NEW GENERATION OF LEADERS IN THE FAIRTRADE MOVEMENT WANT TO EMPOWER PRODUCER NATIONS BY TRANSFORMING THEM INTO CONSUMERS. FAIRTRADE AFRICA’S NEW EXECUTIVE DIRECTOR, NYAGOY NYONG’O, TELLS GCR MAGAZINE HOW IT’S GOING TO BE DONE.

ntil now, the Fairtrade model has primarily focused on addressing the north‑south imbalance in trade and consumption of certain agricultural commodities such as coffee. But in recent years, the focus of the organisation’s branches in those traditional producer markets has shifted towards south-to-south trade. Fairtrade Africa’s new Executive Director, Dr Nyagoy Nyong’o is one of the new generation of leaders in the 30-year-old movement who is trying to drive this change in the dynamics between producers and consumers around the world. Nyong’o, who took the helm of the African branch of the organisation in late 2013, says she is still struck by the lack of awareness about

the organisation in Africa as opposed to Europe. “I would like to increase our visibility and that of Fairtrade as a concept in Africa,” Nyong’o tells GCR Magazine. “In Switzerland, where I lived for four years, over 90 per cent of people I came across knew of, and had bought, products with the Fairtrade label. Here in Kenya, less than 10 per cent of the people I come across have heard of Fairtrade.” Nyong’o says she hopes to achieve more than just making African people aware of Fairtrade. She wants them to become Fairtrade consumers. “Africa has a growing middle class that needs to be tapped,” she says. But the former auditor for Fairtrade’s founding organisation, Max Havelaar, points to a range of other supply side issues that she also hopes to address in her new role. Climate change is having a direct impact on the lives and livelihoods of producers all around the world, many of whom lack the technical knowledge and resources to adapt to those changes adequately. This is a key challenge in Africa, and one that Nyong’o hopes her organisation can help producers to address. “Our members have various needs that include climate change and adaptation, capacity building in organisation and business development, better linkages with financial institutions, long-term financing and other partnerships, among others,” she says. While Fairtrade Africa itself has only a limited capacity to meet all of these challenges,

M AY /J U N E 2 0 1 4 | GCR

PROFILE Fairtrade Africa

Fairtrade Africa is looking to increase awareness of the brand among African producers and consumers.

IN SWITZERLAND, WHERE I LIVED FOR FOUR YEARS, OVER 90 PER CENT OF PEOPLE I CAME ACROSS KNEW OF AND HAD BOUGHT PRODUCTS WITH THE FAIRTRADE LABEL. HERE IN KENYA, LESS THAN 10 PER CENT OF THE PEOPLE I COME ACROSS HAVE HEARD OF FAIRTRADE.

Nyong’o says that the organisation does possess the connections and know-how to form strategic partnerships that will drive change in these areas. The new Executive Director also has lofty ambitions for increasing the profile of her organisation within the broader global Fairtrade movement. Working as an auditor with Max Havelaar in Switzerland for eight years, Nyong’o says it was seeing how the Fairtrade process empowered producers that stoked her passion for the movement. “From timid workers who could not previously contribute in meetings where their managers were present to those who, years Dr Nyagoy Nyong’o is the new Executive later, articulate their rights without fear; small Director of Fairtrade Africa. farmers having their voices heard in the running of their organisation, building schools, clinics and bridges – all made possible because of being Fairtrade certified,” she says. While south-to-south trade is a key focus for Nyong’o, she says that market diversification is also needed to drive the concept forward. “Last year Nespresso committed to sourcing a growing proportion of its coffee from Fairtradecertified cooperatives in Latin America, which is a partnership that will provide thousands of smallholder coffee farmers with income security,” she says. Another issue that is very close to Nyong’o’s heart is the role of women. She tells the story of Celestina, a smallholder coffee farmer in Tanzania who, like many women in her region, married a man much older than her who is now too old to work, leaving Celestina to balance the demands of the farm with raising her children. Since her community became involved with

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Dr Nyagoy Nyong’o

Fairtrade Africa’s new Executive Director

Fairtrade, they have directed the money raised through the Fairtrade premium – the extra money above the sale price of the coffee that is raised through being Fairtrade certified – to fund the Hekima Girls’ Secondary School. This school will give girls from Celestina’s community the opportunity to avoid the fate of Celestina’s generation, empowering them to take control of their lives and pursue a future that is not determined by their gender or who they marry. On a political level, Nyong’o says she is focused on achieving better outcomes for African producers by lobbying African governments to push for fair and ethical trade rules as a part of their post-2015 development framework. “I would like us to be innovative and strategic in our accountability to the membership, giving support that is holistic, relevant and meaningful,” she says. “It is only if we sustainably meet the needs of our members that their sense of ownership becomes a reality,” she says. G C R

CO FFEE . T E A . CO COA G LO BA L I N D UST RY E X P O

Sept 24–26 2014 H A M B U RG • G E R M A N Y

COTEC A - H A MBU RG.COM

Owned and organized by:

Supported by:

In par tnership with :

International media partners: part ners:

ORIGIN Ecuador

TRICKLING

The Ecuadorian government is investing heavily in its coffee industry, with ample potential to produce quality crops.

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COFFEE GROWERS IN ECUADOR ARE LOOKING TO TRIPLE THEIR PRODUCTION OVER THE NEXT DECADE THANKS TO AMBITIOUS GOVERNMENT PROGRAMS.

t’s been less than five years since the first micro lots from Ecuador’s new farms in Pichincha scored 92 points, and attracted the attention of specialty roasters. These roasters, however have had slim pickings from South America’s smallest coffee grower. Over the past few years, the country has clocked a steady 600,000 to 650,000 60-kilogram bags of production. A walk in a Pichincha coffee farm shows why. The coffee farms here are small, and many of the Arabica trees have not yet started to produce cherries. These young trees, however, are a good sign that roasters should soon have a better selection from Ecuador. The country’s government has been investing in expanding coffee cultivated land as part of a strategy to triple the country’s production to at least 2 million 60-kilogram bags in the next five to 10 years. “We planted the first hectare on the farm in 2008, and in 2010 we harvested 25 quintals [46-kilogram bags]. Now we have a total of 2 hectares, both with a density of 6000 trees

“WE PLANTED THE FIRST HECTARE ON THE FARM IN 2008 AND IN 2010 WE HARVESTED 25 QUINTALS [46-KILOGRAM BAGS]. NOW WE HAVE A TOTAL OF 2 HECTARES, BOTH WITH A DENSITY OF 6000 TREES EACH, AND NEXT YEAR [2014-15] WE SHOULD BE ABLE TO HARVEST BETWEEN 50 AND 60 QUINTALS.” Magda Zavala

Finca La Perla

each, and next [crop] year [2014-15] we should be able to harvest between 50 and 60 quintals,” Magda Zavala of Finca La Perla tells GCR Magazine. The first micro lot from La Perla scored 92 points on the 100-point scale developed by the Coffee Quality Institute. Zavala and her husband Olger Rogel are not new to coffee. The Zavala family has been growing coffee for three generations in Southern Ecuador’s Loja region. Rogel is an agronomist who has worked his whole life with coffee plants. Although coffee has been cultivated on a tiny scale for over 20 years in this region, most of the newcomers are coming in with an extensive background in coffee growing, and the technical knowledge to make the most of the land.

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ORIGIN Ecuador

Plants at Hacienda Victoria are in full bloom.

“This is great land for coffee. It has good soil, we have between 1600 and 1800 metres altitude on the farm and we’ve had almost 200 quintals in our best harvest, which was picked in 2010,” says Arnaud Causse, one of three partners in Las Tolas Estate. Las Tolas is spread over 73 hectares of land deep into the Ecuadorian Cloud Forest, in the northern most part of the Andes Mountains. Causse is an agronomist who has worked with tropical crops, including coffee across Africa and Latin America. He says he is aiming to see 30 hectares planted with coffee to “have the forest absorb the coffee”, and in the process improve yields and quality. From the Pichincha Volcano north of the capital Quito, to the south-central part of Ecuador near the commercial capital of Guayaquil, there seems to be a newfound sense of optimism about the future of coffee growing in Ecuador. “Because of the dry climate here we have no crop diseases, and when the plantation is in full production we expect an average of at least 60 quintals [46-kilogram bags] per hectare,” says Francisco Aray, one of the farm managers at Hacienda Victoria. The Victoria coffee and cocoa estate, located 20 kilometres west of Guayaquil, is a private investment which

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SOCIAL SPENDING

Coffee should help boost the country’s socio‑economic development. In 2013, Ecuador made the third highest gains among Latin American nations in the United Nations Human Development Index.

was launched less than four years ago. Nevertheless, it’s already starting to yield returns. “We have 200 hectares of Robusta coffee of which 150 are now entering in production for the first time in 2014. But the plans are to expand production to as much as 2000 hectares,” says Array, speaking to GCR Magazine during a visit organised by Ecuador’s tourist and trade board ProEcuador. At these yield levels, a 2000-hectare estate would produce a harvest of 92,000 60-kilogram bags. The results seen at farms such as Hacienda Victoria are exactly the type of development the government hopes to see more of in the next decade. Ecuador does seem to have all the characteristics needed to produce top quality coffees. The country benefits from multiple regions with their own micro-climates that

“THE SUBSTITUTION OF COFFEE IMPORTS IS A VERY IMPORTANT STRATEGY FOR THE GOVERNMENT BECAUSE ECUADOR HAS A DEFICIT OF 1.5 MILLION QUINTALS AND AT THE MOMENT WE ARE IMPORTING ALL THIS COFFEE.” Silvana Vallejo

Vice Minister for Agriculture

Ripe cherries are harvested at Finca Maputo.

Arnaud Causse is one of three partners in Las Tolas Estate.

support different kinds of coffee growing. This includes old varieties based on the original Ethiopian Arabica strains such as Typica and Bourbon. These varieties have been the main source of the Arabica industry and are recognised for their fine cup qualities. Most Arabica in Ecuador is grown at over 2000 metres above sea level, another essential factor for quality coffee. Silvana Vallejo, Vice Minister for Agriculture, says increasing coffee production can help boost the socio-economic development of the country’s 15 million inhabitants. However, she also sees an important secondary benefit. “The substitution of coffee imports is a very important strategy for the government because Ecuador has a deficit of 1.5 million quintals and at the moment we are importing all this coffee,” says Vallejo. In the past five years, Ecuador’s soluble

sector has seen impressive growth. Total exports of instant coffee products doubled to 1.68 million bags of green coffee equivalent in the 2012-13 crop cycle, according to the US Department of Agriculture (USDA). That compares to just 861,000 bags in the 2008-09 cycle. The soluble industry is accredited for increasing Ecuador’s coffee imports to 1.4 million bags in 2013-14, from just 389,000 bags five years ago. In 2012 the government launched the ‘Reactivation Project for Coffee And Cocoa’. The goal was to reactivate at least 80,000 hectares of land. The target is to plant Robusta in 30,000 hectares, according to Vallejo, in addition to renovating 50,000 to 70,000 hectares of Arabica plantations that currently have trees older than 30 years. Plans include using newer, more productive and disease-resistant varieties. “Ecuador is home to so many micro-climates, and we have so many unique characteristics in the coffee sector. From instant coffee to specialty, we want to make a product that is all fully ours,” says Manuel Echeverría, Director of ProEcuador. Although only the figures will tell of the government’s success, an abundance of new plants means Ecuador is one coffee producer to look out for. G C R

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////////////INDUSTRY COMMENT

THE SPECIALTY CYCLE JENS ROELOFS, SALES MANAGER PROBAT SHOP ROASTERS, DISCUSSES THE LATEST IN SHOP ROASTING TRENDS, AND WHY EDUCATION IS KEY.

t Probat, we’ve noticed a general increase in the demand for roasters under 60-kilograms worldwide. This has been in both traditional markets, as well as new ones, such as China and Taiwan. In these countries we have noticed a particularly high interest in shop roasting equipment. We think this is due to different trends in specialty coffee which intertwine, and are therefore mutually dependent, as one is the result of another. The growing number of cafés, coffee bars and coffee shops is due to a rising consumer demand in specialty coffee products that cannot be bought in ordinary cafés and supermarkets. People want to know more about origins, blends, roasting and the preparation of coffee. The higher the demand for specialty coffee, the more specialty coffee shops open, and the cycle continues as more and more people get interested in specialty coffee. This is supported by successfully giving

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the public access to coffee events, which – until a few years ago – were only open to a select number of coffee professionals. Nowadays, more and more coffee enthusiasts are drawn to these events to learn more about coffee. This, again, leads to a growth in the education of consumers, and here we come full circle. Of course, one cannot simply buy a roasting machine and start his or her own roasting business. This is where education comes in. High-quality coffee roasting equipment doesn’t enable you automatically to roast good coffee. Professional and comprehensive training is inevitable for coffee entrepreneurs. At Probat, we attach the highest importance to the education of new entrants to the market. It is the focal point of our Shop Roasting Segment Philosophy. For us, knowing how to handle a roasting machine is a crucial factor in achieving high quality and consistent roasting results. We pass on our knowledge to our customers through high-quality training courses. We hold intensive training programs for small groups of up to eight people.

Various roasters are permanent fixtures in our trainingÂ centres, which can be used depending on the training content. Probat trainers are SCAE-certified. We offer beginners complete packages to enter the world of coffee roasting through our basic roasting courses. More advanced customers who would like to delve deeper into the science of perfect coffee roasting can receive more in-depth training. This involves looking at the effects of temperature, roasting time and degree on the roasting results. We not only train on-site in our own training centre in Emmerich, but also offer training worldwide. Our agents in China and Australia, for example, provide their clients with coffee roasting training courses and workshops. Trends weâ&#x20AC;&#x2122;ve observed, in what customers are looking for in their roasting equipment, certainly includes energy efficiency. However, artisan roasters are also looking for technological developments in control and consistency. Most roasting machine suppliers are putting the majority of their efforts to meet these demands and requirements.

At Probat, we are able to provide roasters with a homogeneous roast of coffee beans thanks to the Probat-specific air-to-bean ratio and a special shovel mechanism. Our cuttingedge burner technology provides for reliable heating and higher energy savings. A better isolation of the roasting drums assures less thermal loss, and our infinitely adjustable gas regulation guarantees maximum flexibility and control. Our customers also ask us for reproducible results. We do this through our control software Pilot Roaster Shop. It enables roastmasters to record, edit, analyse and store roasting profiles, that can be called up at any time. This way, relevant parameters such as roasting time, product temperature, burner output or roasting profiles can be seen at a glance any time during the complete roasting process. This is getting more and more important, as roasters are showing a growing interest in the capability to understand every single aspect of the roasting process, how it is effected by the individual parameters, and how they influence each other mutually. G C R

PEOPLE WANT TO KNOW MORE ABOUT ORIGINS, BLENDS, ROASTING AND PREPARATION OF COFFEE. THE HIGHER THE DEMAND FOR SPECIALTY COFFEE, THE MORE SPECIALTY COFFEE SHOPS OPEN, AND THE CYCLE CONTINUES AS MORE AND MORE PEOPLE GET INTERESTED IN SPECIALTY COFFEE.

M AY /J U N E 2 0 1 4 | GCR

10/12 June 2014 Rimini Expo Centre Italy

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WORLD COFFEE EVENTS WORLD OF COFFEE & TEA

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INTERNATIONAL CONFERENCE ON

COFFEE SCIENCE RIMINI, ITALY 21 – 25 MAY 2014 ARMENIA, COLOMBIA BANGKOK, THAILAND World of Coffee & Tea, a professional coffee and tea trade fair, is poised to be Asia’s leading sourcing, trading and knowledge platform for the coffee and tea industry. The event will officially launch on 21 May and run until 25 May 2014. The action will take place at the IMPACT Exhibition and Convention Centre in Bangkok, Thailand, held in conjunction with the 10th anniversary of THAIFEX – World of Food Asia 2014. www.world-of-coffeeandtea.com

COTECA

HAMBURG, GERMANY

24 – 26 SEPTEMBER

KEEP A LOOK OUT

As the trade fair for coffee, tea and cocoa, the COTECA is the only business forum in Europe that unifies all three sectors. The prestigious two-day conference provides a comprehensive market overview of current topics and trends. The Hamburg location is a trade metropolis with the key European ports. www.coteca-hamburg.com

10 – 12 JUNE

World of Coffee is Europe’s leading speciality coffee event, organised by the Specialty Coffee Association of Europe in a different city each year. It’s an opportunity to meet up with top baristas, roasters and other movers and shakers in the coffee industry from around the world.  Catch up on the latest technologies, consumption formats and venue concepts. Follow the coffee bean’s journey from harvest through to cupping. www.worldofcoffee-rimini.com

WORLD COFFEE LEADERS FORUM

SEOUL, KOREA

19 – 22 NOVEMBER The World Coffee Leaders Forum brings together around 1200 delegates from 35 countries to examine and discuss the topics of the world and Asian coffee industry. Global coffee professionals from all over the world will gather to discuss the current problems and solutions to social, environmental, and economic aspects of the global coffee industry. www.wclforum.org

Café Show China 8 – 10 August Beijing, China www.chinaexhibition.com

Moscow Coffee and Tea Expo 23 – 26 September Moscow, Russia www.expocoffeetea.ru

The Coffee Experience 4 – 6 September Sydney, Australia www.thecoffeeexperience.com.au

Seoul Int’l Cafe Show 20 – 23 November Seoul, Korea www.cafeshow.com

8 – 13 SEPTEMBER The International Conference on Coffee Science will be organised this year by the Colombian Coffee Growers Federation, along with the Association for Science and Information on Coffee. The international event will focus on science, innovation and the impact of knowledge and sustainability on the industry as a whole. The event attracts more than 400 scientists and specialists from all over the world. www.asic2014colombia.org

BUON MA THUOT COFFEE FESTIVAL DAK LAK, VIETNAM

MARCH 2015 The Buon Ma Thuot Festival will take place in March 2015. Buon Ma Thuot is Vietnam’s coffee capital, with ideal growing conditions and advanced production methods. The festival is sponsored by Trung Nguyen Coffee, Vietnam’s top coffee company.

ExpoEspeciales 2014 2 – 5 October Medellin, Colombia Triestespresso Expo 23 – 25 October Trieste, Italy www.triestespresso.it

M AY /J U N E 2014 | GCR

PRODUCTS Marketplace

BODUM PEBO COFFEE VACUUM MAKER The Bodum Pebo Coffee Vacuum Maker is a modern take on the classic way to brew coffee. The vacuum, also known as siphon, brewing system extracts the flavourful oils and aromas from coffee without using paper filters. The device is made of borosilicate glass, so that users can view the theatrical brewing process from start to finish. Bodum is celebrating its 70th anniversary this year. Peter Bodum launched the company in 1944 in Copenhagen Denmark and it has since grown into a global housewares brand with distribution in over 55 countries. www.bodum.com

VACUUM RECEIVER WITH PNEUMATIC DUMP VALVE Flexicon has introduced a new Vacuum Receiver with a pneumatically-actuated dump valve for dilute phase pneumatic conveying systems. Constructed of stainless steel, the vacuum receiver features a rugged, clamp-together design that facilitates rapid, tool-free disassembly for filter cleaning and maintenance. The modular design permits the addition of cylinder segments for increased holding volume. The flap-type dump valve is actuated by a pneumatic cylinder via manual contact closure, or programmable controls based on weight gain, elapsed time or other user-defined parameters. Unlike conventional filter receivers that employ multiple small filter elements, this unit employs a single, large diameter filter cartridge facilitating rapid filter changes, and automatic reverse pulse jet cleaning of the filter element to maintain conveying efficiency during operation. Flexicon vacuum receivers separate solids from the air stream using filter media and gravity, and are generally specified when materials contain smaller particles that are prone to dusting and/or when dust containment is a primary requirement. According to the company, the new filter receiver handles a wide range of capacities but is particularly suited to high-volume applications above storage vessels or process equipment such as blenders and bulk bag fillers. For more information visit www.flexicon.com

DALLA CORTE MILK CONTROL SYSTEM Dalla Corte has introduced a new automatic milk emulsifying system. The new Milk Control System (MCS), produced by Dalla Corte, includes a system that automatically sets the steam pressure and the temperature. All a user has to do is dip the steam wand into the milk jug and start the steam production to let the system work quickly and autonomously while the user prepares the espresso. The system helps produce a dense and velvety milk, consistent in quality and not influenced by the userâ&#x20AC;&#x2122;s hand. The result is a remarkable advantage for cafĂŠs, bars and restaurants with a high staff turnover. The new wand does not use an air compressor, but only steam. Thanks to the particular position of the holes on the jet, steam triggers a series of turbulences and creates a centrifugal motion in the jug that is the same as the motion produced manually. A probe installed alongside the wand turns off the device when the right temperature is reached. See www.dallacorte.com

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THE MPE CHAIN-VEY TUBULAR DRAG CONVEYOR Modern Process Equipment Corporation features its Chain-Vey tubular drag conveyor. This chain and disc technology gently moves product, virtually eliminating degradation and particle size declassification, thereby making it an optimal solution for hundreds of products including ground coffee, dried foods, material chips, activated carbon and more. Aside from the intuitive benefits listed above, other Chain-Vey advantages include optional self-cleaning design that eliminates sanitisation between changeâ&#x20AC;&#x2018;over; enclosed, sealed tube protects product aroma and surrounding environment; less than 20 per cent of the energy usage of pneumatic conveying systems; conveying distances of up to 200 feet (60 meters), and Flexible designs with multiple inlets and discharge points possible. For more information, please visit www.chainvey.com or contact MPE directly at solution@mpechicago.com.

VICTORIA ARDUINO VA388 The Victoria Arduino VA388 Black Eagle features Nuova Simonelliâ&#x20AC;&#x2122;s T3 technology, that sets new standards in terms of extraction, flexibility, control and thermal stability. T3 stands for three temperature parametres that can be set by the barista: water infusion, steam and delivery group. On the Black Eagle VA388, this is combined for the first time with gravimetric technology. This technology was developed by Nuova Simonelli, as a precise electronic scale that weighs the volume of the liquid and displays it above the group head. The Black Eagle was designed with input from 2007 World Barista Champion James Hoffmann. For more information visit www.victoriaarduino.com

BUHLER ROASTMASTER 60 The RoastMaster 60 offers a maximum of process flexibility with a single batch capacity of 60 kilograms and an hourly throughput up to 240 kilograms per hour. It inspires product innovations with both traditional and sophisticated multi-step roasting profiles. With its multistep process, the RoastMaster 60 allows for optimised flavour creation for any coffee blend and varieties, and ensures excellent consistency. Thanks to the fully automated process control, the optimised degree of roast, the roasting time and the roasting profile can be precisely reproduced. For more information visit www.buhlergroup.com

M AY /J U N E 2014 | GCR

LAST WORD GCR Symposium

EASTERN

PROMISE AROUND 100 INDUSTRY MEMBERS from 10 countries gathered at the Marina Bay Sands Singapore on 5 March, to network with regional leaders and learn about the challenges and opportunities in the booming Asian market. Anthony Cottan, the Director of PT Sari Coffee and the head of Starbucks’ Indonesia operations, opened the day with an overview of the US coffee giant’s activities in Indonesia. “The potential here is huge,” Cottan told the crowd, pointing to limited tourism figures in Indonesia that are set to skyrocket. He said that after over a decade of terrorism attacks, tsunamis, volcanos and more, Indonesia’s economy is now growing strong, and the potential for increased out‑of‑home coffee consumption is growing along with it. “We’ve gotten over all those things and we look to the future. And the future is quite bright.” The first panel discussion was a timely one on coffee prices, as they continued to peak the week of the event. Volcafé’s Director of Sustainability and Business Development Mark Furniss started off the session with a history of coffee prices, showing that price spikes are nothing new. Based in Singapore, Furniss also explored the rise of the Asian coffee market, and what increased regional consumption could mean for coffee prices. “Asia is the real compelling growth story in the last few years,” Furniss told the audience, outlining the boom in regional demand. Following on from talk of volatile prices, Mark Brown from INTL Stone further expanded on why prices are so volatile, in the exposure to factors outside of market fundamentals. He went on to outline what roasters can do to mitigate their risk factors. Wahyu Wibowo, Indonesia Country Manager for the 4C Association, discussed what volatile prices mean for the livelihoods of producers, and how certification can help in this regard. Lance Brown, Australia’s National Account Manager for Commercial Coffee Lion, provided an overview of the booming Australian market, explaining how a supplier can help boost an industry as a whole – and profit as a result. “You can’t just put the product out there. You need to build relationships and keep customers in good stead,” he said. Anthony Ku, Director of Eco ConneX based in Singapore, picked up from Cottan’s presentation, outlining the degree to which the middle class in Asia will be a powerful economic

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From left Mocoffee’s Eric and wife Maria Favre, GCR Publisher John Murphy and Editor Christine Grimard.

A LIFETIME

Eric Favre, the Inventor of the Nespresso Coffee Capsule, was presented with the GCR Coffee Leaders Lifetime Achievement Award.

force in years to come. He noted that by 2020, there will be 1.7 billion people in Asia with significant disposable income. “Imagine having 1 billion new customers,” he said. The afternoon kicked off to a lively start, with a special presentation of the inaugural GCR Magazine Coffee Leaders Lifetime Achievement Award to Eric Favre, the inventor of the Nespresso coffee capsule. An exclusive video, produced by Nespresso but never publicly released, showed Favre’s determination in pushing the Nespresso product forward, despite Nestlé’s hesitation. The result was a new department with Favre as the first General Director of Nespresso. The day finished off with a strong presentation from Pascal Schlittler, the CEO and Co-Founder of Mocoffee, a company he started with Nespresso inventor Favre. Schlittler made the exciting announcement that Mocoffee would be the first capsule manufacturer to be producing capsules directly in a producing country, teaming up with a producer organisation in Brazil. G C R

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