November/December 2012
POLAND HEATS UP
Eastern Europe’s coffee powerhouse?
VARIETAL SWITCH
Robusta sees new light
COFFEE & CURRENCY Why producers are losing out
A NEW BREEDING TOOL
Coffee leaves’ little secret
INTENSIFYING R&D
Probat ups the stakes
BEWLEY’S ON DIRECT BUSINESS MANAGING DIRECTOR JIM CORBETT SAYS WHY GOOD PRODUCER RELATIONS MAKE BUSINESS SENSE
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CONTENTS November/December 2012
COVER STORY TIME TO FACE UP
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Why Ireland’s leading coffee company prioritises producer relations and sustainability in its business plan.
“THE COFFEE SERVICE CONTINUES TO REINVENT ITSELF… COFFEE COMPANIES CAN NO LONGER HIDE BEHIND THE SUPPLY CHAIN.”
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Jim Corbett Managing Director, Bewley’s
IN THIS ISSUE FEATURES
RESEARCH & TECHNOLOGY ORIGIN
10 TRADING AT THE SOURCE
22 GLOBAL COOL DOWN
Bewley’s MD Jim Corbett discusses how good producer relationships make business sense.
17 P OLAND’S COFFEE MARKET HEATS UP
Coffee sales in this Eastern European powerhouse are on the rise.
27 R OBUSTA UPS THE STAKES The first certified Robusta program is helping this variety shake its stigma.
COFFEENOMICS 31 C OFFEE & CURRENCY
The drop of the US dollar is being felt around the coffee producing world, with some countries starting to take action.
The next climate change cycle could prove useful for the stability of coffee crops.
44 THE POWER OF THE LEAF
A new study reveals a genetic tool that could ensure the sustainability of coffee supplies.
INDUSTRY PROFILE
48 I NDONESIA’S QUALITY OUTLOOK
A look at qualitative steps forward in Arabica production.
52 S EVEN INITIATIVES FOR THE GLOBAL COFFEE INDUSTRY
Trung Nguyen Chairman outlines a vision for a more sustainable industry.
58 E SPRESSO INDUCTION
This portable domestic espresso device is making a splash Down Under.
36 R&D ON THE BIG SCALE
Probat opens the doors to a massive new facility that reflects a commitment to market leadership.
40 A MESSAGE TO CONVEY
How an animal feed conveyor came to be one of the most sought-after production tools on the coffee market.
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REGULARS 4 EDITOR’S NOTE 7
NEWS DRIP BY DRIP
52 GUEST COLUMNIST 54 DIARY DASHBOARD 56 MARKETPLACE 58 LAST WORD
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EDITOR’S NOTE Global Coffee Review
PUBLISHER John Murphy john.murphy@primecreative.com.au EDITOR Christine Grimard christine.grimard@primecreative.com.au
JOURNALIST Sarah Baker sarah.baker@primecreative.com.au
THE SWING OF THINGS
Some things just have a way of working themselves out. Market forces are like that. Just when something becomes too pricey, currencies collapse, or demand goes into overdrive, market forces (albeit with some regulatory help) come in and smooth things out. Last year’s record high Arabica prices evoked chaos among roasters, although was a welcome shift for growers who were used to being undercut. The result has been an increase in the use of Robusta, confirmed by the fact that for the first time since 2009 London Robusta stocks are lower than New York’s Arabica. Long considered the cheap filler, Robusta’s relatively lower prices are making it a more attractive offering. Coupled with a new program to certify Robusta (see page 27), the variety’s fresh outlook could bring welcome price increases. While supply and demand are better known for working themselves out, a positive forecast on the effects of climate change comes a bit more unexpected. Yet in this space, recent research is showing a cycle of cooling could have a way of evening out the annual production cycles (see page 22). Sometimes, however, things don’t work themselves out quite so smoothly. Just as Colombia is welcoming an influx of foreign investment, its currency – which has been largely left to the prey of market forces – has appreciated dramatically. The result is less real income for farmers (see page 31). It’s in instances like this, that the need for
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some government regulation comes into play. The Colombian Coffee Growers Federation should be applauded for their efforts in empowering farmers with a financial instrument they can apply to protect themselves (see page 33). The lesson here is that market forces are not enough. These topics fall well in line with our new regular guest columnist, Chairman of the Trung Nguyen Group, Đang Lê Nguyên Vu. This is the first of a series of columns Chairman Vu will be contributing to Global Coffee Review. Interestingly enough, in this first column he addresses the need to elevate Robusta, regulate the currency of coffee trading, and ensure sustainable production. These initiatives were drafted with no knowledge of what content was going into this edition. We could expect, then, that the Chairman is probably representing more than just his own views on issues that need to be resolved – whether by market forces, regulation, industry action, or maybe even mother nature.
ART DIRECTOR Joel Parke DESIGN Blake Storey, Alice Ewen, Karen Sloane, Michelle Weston, Sarah Doyle BUSINESS DEVELOPMENT MANAGER Steve Roberts steve.roberts@primecreative.com.au GROUP SALES MANAGER Brad Buchanan brad.buchanan@primecreative.com.au PUBLICATION CO-ORDINATOR Hayley Blain hayley.blain@primecreative.com.au PHOTOGRAPHY David Cantwell Brent Isenberger Pham Thi Diep Giang Andrew McRobb CONTRIBUTORS Maja Wallengren Jaroslaw Adamowski Leighton Cosseboom Dang Le Nguyen Vu HEAD OFFICE Prime Creative Pty Ltd 11-15 Buckhurst Street South Melbourne VIC 3205 Australia p: +61 3 9690 8766 f: +61 3 9682 0044 enquiries@primecreative.com.au www.globalcoffeereview.com SUBSCRIPTIONS +61 3 9690 8766 subscriptions@primecreative.com.au
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ARTICLES
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COPYRIGHT
Christine Grimard Editor
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NEWS In Brief
NEWS DRIPBYDRIP Poland’s coffee market was estimated to be worth US$950 million in 2011, with further data estimating that by 2015 it could be worth $1.64 billion. The Eastern European country is defying economic recession, with its gross domestic product expected to grow by around 2.6 per cent this year, and another 3.2 per cent in 2013, according to the International Monetary Fund. This positive economic data is transferring into the coffee industry, with one report saying that “coffee is among the biggest beneficiaries of the rising aspirations of consumers”. See page 17.
Probat opened its 15,300 square metre new research and development facility in mid-September at its headquarters in Emmerich, Germany. The world-leading roaster and grinder manufacturers celebrated the occasion by holding a World Coffee Meeting. From 17 – 19 September, Probat hosted more than 140 visitors from almost 30 different countries to the educational event, featuring speakers from eight different countries who discussed global trends in the coffee business.
In addition to taking part in the World Coffee Meeting, distinguished speakers and guests were the first to witness this latest technology first hand with a tour the new state-of-theart facility. See page 36. This year marks Ireland’s Bewley’s Coffee and Tea Company’s 10-year trading partnership with Henry Hueck and his Nicaraguan coffee farms. Bewley’s has maintained a focus on direct trade since 1835 when Samuel Bewley and son Charles imported chests of tea directly from East India, breaking the East India Trading Company’s monopoly. The business expanded into coffee importation, and today around one out of every two cups of fresh coffee drunk in Ireland in Bewley’s. The company largely sources directly from farmers, setting up long-term pricing contracts. Bewley’s made history as the first Irish company to go fully Carbon Neutral, and currently purchases carbon offsets from one of the farms that produces coffee it purchases. Bewley’s first bought a threecontainer shipment of beans from Hueck’s farm in Nicaragua in 2003 for US$0.97 per pound, and today purchases around 12 containers per year at an estimated $1.1 million. See page 10. The Tea, Coffee and Cocoa Global Industry Expo (COTECA), that took place in Hamburg, Germany from 20 – 22 September, saw around 3000 participants attend the trade fair. Event organisers reported a strong representation from the tea, coffee and cocoa industries. A high level of participation from international exhibitors and visitors were seen as positive factors.
Over 30 per cent of trade visitors came from abroad. Scandinavia, Eastern European countries and The Netherlands were especially well represented, with many professionals from outside Europe and the Arab world making the trip to COTECA. Exhibitors included numerous producers from origin countries who presented their raw materials at COTECA.
AMERICAS
EUROPE
With coffee priced in dollars, the fall of the United States dollar has led to the dropping income of coffee farmers all over the world. Colombian farmers have been potentially the most effected, with the income they see from coffee falling 30 per cent in the last year due to a combination of the falling dollar and coffee prices. As a result, the Colombian Coffee Growers Federation (FNC) has introduced a new Price Protection Contract, to help farmers insure their risk against currency and price fluctuations. The new financial instrument will allow farmers to purchase protection contracts setting a load price for the second, third and fourth month after the date they purchase the instrument. Farmers will be able to purchase up to 50 loads per month, with one load equal to 125 kilograms of coffee. The contracts can be purchased via mobile phone. See page 31. Recent data is showing that global climate is entering a period of cooling, according to Alvaro Jaramillo, a leading climate scientist
-30% Colombian coffee farmers have seen their income drop 30 per cent in the last year, due to the falling US dollar and drop in coffee prices.
See page 31.
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NEWS In Brief
AMERICAS cont.
wild coffee species in Madagascar contain levels of mangiferin and hydroxycinnamic acid esters accumulation in their leaves. The study is significant, as previously only one coffee species was found to have this phenolic competition. However, the new study finds these elements in seven other coffee species. These elements could have profound implications for the coffee industry, as they act as a natural protection against UV rays. As such, they offer a genetic tool to breed more resistant plant varieties. Furthermore, this leaf composition offers anti-oxidant qualities, thus opening up new possibilities of using coffee leaves in pharmaceuticals or natural medicines. See page 44.
ASIA The United States’ Cablevey conveyer systems have helped reduce bean breakage levels by up to 78 per cent, according to Karl Seidel, Cablevey’s Marketing Manager. The system was initially used to convey animal feed, until it was trialled by the Bong Brothers Coffee Company in the 1980s. The system proved a natural fit for roasted coffee, with the oils acting as a natural lubricant for the disc-pulled conveyer system. Today, Cablevey conveyors are used by major players the world over. See page 40.
AFRICA
A recent study published in the Annals of Botany has found certain
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Certified Robusta See page 27
as the first Robusta coffee certified under the systems. CQI’s Andrew Hetzel tells Global Coffee Review that Robusta’s poor reputation is likely due to the higher number of defaults allowable on London’s Robusta exchange versus New York’s Arabica exchange. He says the potential to increase the reputation, and value, of Robusta could have huge benefits in increasing farmers’ income. See page 27.
from Colombia’s National Coffee Research Centre (Cenicafé). While the negative impacts of global warming have continuously been cited, global cooling could have a stabilising effect on production, evening out into four annual output cycles. The new cycles could provide more opportunities to sell at the right time, and be of benefit to producers, roasters, and consumers alike. See page 22.
For the first nine months of the 201112 coffee year, Indonesia exported 6.7 million 60-kilogram bags of coffee, up an impressive 19 per cent from the year prior. While the country mainly exports Robusta coffee, some attention is being paid to the country’s production of quality Arabica. This focus is helping increase the value farmers receive. While Robusta brings in an average US$2300 to $2400 per tonne, Arabica from government-owned Perkebunan Nusantara XII plantation was priced at US$5275 per tonne. See page 48. The Coffee Quality Institute (CQI) announced earlier this year the launch of the Fine Robusta Initiative. The launch saw India’s Sethuraman Estates’ Kaapiroyale
6.7
million
For the first nine months of the 201112 coffee year, Indonesia exported 6.7 million bags of coffee.
See page 48.
The World Coffee Leaders Forum will take place from 22 – 23 November as a concurrent event during the Seoul Int’l Café Show 2012, Korea which runs until 25 November. The inaugural event will welcome world coffee leaders to discuss and share ideas on the issues shaping the industry. Topics will include a look at Asia’s position in the global market, the effects of climate change on coffee, and the relationship between producers and consumers in sustainability initiatives. The Seoul International Café Show will welcome over 70,000 visitors to one of Asia’s largest coffee events.
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COVER STORY Bewley’s
TRADING AT THE
SOURCE
FROM ITS QUAKER ORIGINS, IRELAND’S LEADING COFFEE COMPANY, BEWLEY’S, HAS MAINTAINED A FOCUS ON IMPROVING THE LIVES OF EVERYONE ALONG THE CHAIN, ALL THE WHILE ACHIEVING STRONG BUSINESS RESULTS.
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or all the modern talk of direct trade, one coffee company in Ireland has about 150 years on any roaster trying to claim originality. The company first broke the East India Trading Company’s tea monopoly in 1835, importing over 2000 chests of tea on a chartered ship. Since its pioneering foray into coffee, Bewley’s has continued a focus on direct trade. These days, the company enjoys a market share of around 4000 hotels, restaurants, and cafés all serving Bewley’s coffee, which translates into one in every two cups of fresh coffee served in Ireland. The company has mostly steered away from branded coffee shop operations for the last decade – other than its flagship Bewley’s Grafton Street café, which remains the country’s longest serving coffee house, serving 1 million customers annually. The company’s proliferation in Ireland is so strong that heritage building regulations are keeping Bewley’s branding on a Starbucks coffee shop. “It’s an Irish solution to an Irish problem,” laughs Jim Corbett, Bewley’s Managing Director. Corbett says Bewley’s has never looked back on its move away from directly managing branded coffee shops, in allowing the company to focus on its expertise in food servicing, and especially in their efforts to directly source their coffee. Bewley’s approach to its trade arrangements is perhaps best exemplified in a relationship with Nicaragua-based Ramacafe (see breakout story page 13). Corbett emphasises that the deal wasn’t just some feel-good, corporate social responsibility policy, but rather a solution to the company’s fundamental need for a stable supply of Arabica coffee. “We had a real concern at the turn of century, it came from what we saw in our travels,” he says.
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“Prices were so low, farmers were literally tearing down their trees and getting out of the coffee business. We were concerned that our supplies of quality coffee would disappear.” Today, Bewley’s continues to source its coffee via both direct trade agreements and larger coffee brokers. As a medium-sized player on the global scale – compared to giants Nestlé, Kraft and so on – Corbett says the company needs to be careful in what it commits to, as it can’t simply blend away poor quality coffee. In this sense, the key has been “a lot of homework” before they commit to a purchasing contract. Bewley’s works with on-the-ground nongovernment-organisations, including extensive work with the Fairtrade Labelling Organisation (FLO), to learn more about potential estates and co-operatives they can do business with. “We’re on the ground, visiting their coffee farms, getting to know who’s who in those areas,”
Jim Corbett, Managing Director Bewley’s
says Corbett. “We want to know if they have the ability to deliver quality coffee on a regular basis, to know who’s going to be there in the long term.” Once Bewley’s has identified a farmer or co-operative they want to do business with, they agree on a set buying price directly with the farmer, typically a price matching current market rates and the Fairtrade Premium. From there, they bring this price to a local broker or exporter to handle the logistics. Direct trade contracts, such as the ones Bewley’s engage in, can have their pitfalls when market prices jump higher than the ones set in the contract. When prices for Mild Arabicas etched close to US$3 a pound, the temptation existed for farmers to renege on contracts if they could get higher prices from the market. In this sense, Corbett says the quality of their relationships with farmers came through. Every direct supply deal Bewley’s was engaged with was
met, with no reneging of any contract. Corbett notes that naturally they increased their prices when the market shot up. This means that Bewley’s has benefitted little from recent price drops. “The market is at US$1.70, and we’re still roasting coffee at over $2 a pound,” he quips. “That’s trade, isn’t it?” In terms of their retail operations, Corbett calls the higher green prices a “mixed blessing”. With Ireland still in recession, they’ve increased their retail prices only slightly, and Bewley’s has mostly absorbed the hike in raw materials. Corbett says too high a market price will hurt the whole production chain in the long run. “I think those prices [last year] were too high, and this does effect the market,” he says. “We’ve been seeing a steady increase in consumption, but that increase will drop if prices are too high.” One area where Bewley’s has seen a rather unexpected savings has been in recent sustainability efforts. The company made headlines in February 2008 as the first Irish business to declare their intention to be fully ‘CarbonNeutral’, a certification trademarked by the privately-owned Londonand New York-based Carbon Neutral Company. The company helps businesses monitor their carbon footprint, and facilitates the purchasing of carbon offsets. The decision to go carbon neutral, Corbett explains, wasn’t taken overnight. Similar to the company’s workers experiences in seeing the devastation of low coffee prices at the turn of the century, in their coffee travels they’ve seen first hand the impact of climate change. “Anyone who is growing around the equator can see it,” he says. “In our time in the industry, we can see also a difference.”
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COVER STORY Bewley’s
“SO WE’RE MAILING THEM MONEY FOR THEIR OFFSETS, AND MAILING THEM MONEY FOR THEIR COFFEE. THE FARM HAS TWO INCOME STREAMS.” Jim Corbett
Bewley’s Managing Director
In 2006, Bewley’s Chairman told the management team they would need to start measuring their carbon footprint, as the first step to controlling their environmental impact. “It’s the old business mantra, ‘what gets measured, gets managed’,” says Corbett. Following from there, management set targets to reduce their carbon footprint. The first year, Bewley’s reduced it by 15 per cent, through energy saving measures managing their coffee roasting equipment. The following year, the company cut its footprint by another 20 per cent, in what Corbett says was “simple housekeeping”, through even better energy management and technology. This led up to the 2008 decision to make the big step forward. “We decided if we were really serious about this, than we needed to be fully neutral,” he says. The process involves measuring how much carbon the company is producing, and every year purchasing those offsets from a business or organisation that is deemed to be reducing overall carbon dioxide by a third party. Initially, Bewley’s purchased their carbon offsets from a Spruce Plantation in Scandinavia, but later decided to go a different route. “We felt like we were writing checks to [a part of the world] that probably didn’t need our money,” he says. “It made more sense to use our money to help our supply chain.” Bewley’s shifted its focus instead to coffee producing countries, at first investing in a wind farm in Central American. In working with FLO,
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BEANCHECK Every year, Bewley’s serves more than 600 million cups of tea and coffee worldwide. Around one in every two fresh cups of coffee served in Ireland is Bewley’s.
they were able to identify coffee growers selling carbon offsets. They sourced a cooperative in Peru, Cepicafe, who were planting trees around their coffee farms. “The beautiful thing about all this is that now we’re buying their coffee,” says Corbett. “So we’re mailing them money for their offsets, and mailing them money for their coffee. The farm has two income streams. It’s a very repeatable model that we’re fully engaged with.” In looking back on this move, Corbett says there are two important lessons that the company has taken from the experience. The first, is that it was the right thing to do. As a company founded by a Quaker family, Corbett says that the need for profit has always been strongly accompanied by the drive to do the right thing. The second point that Corbett stresses is that the company has increased in profitability as a result. “As a company, there is no doubt that we’ve saved money,” he says. “Even though we’re writing checks every year, we’ve actually experienced a net gain. That’s quite a statement to make, and it’s an important one.” As for the future of the coffee industry, Corbett says the company is “very optimistic”. At home, Bewley’s is hoping to gain market share by converting instant coffee drinkers – who still account for around 75 per cent of the retail business – to fresh coffee. Abroad, the company has invested in coffee distribution companies Darlington’s Coffee in London and Java City in the United States. “We’re really upbeat about the future of the coffee industry,” he says. “The coffee service continues to reinvent itself. Direct trade is going to have a big role to play in that. Coffee companies can no longer hide behind the supply chain and from what’s going on at origin. The coffee trade needs to make a point of improving the lot of everyone in the supply chain.” G C R
BEWLEY’S&RAMACAFE DIRECT TRADE AT ITS BEST
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ewley’s Coffee Buying Director Paul O’Toole likens the company’s 10-year partnership with Nicaraguan coffee producer Henry Hueck to that of a long distance friendship, “at times challenging” but “very rewarding”. After 22 years working at Bewley’s, O’Toole more than most has seen the development of the coffee business in the largely tea-drinking nation. “Thirty years ago in Ireland, coffee came out of a jar,” says O’Toole. “Back then Bewley’s was principally just a bunch of cafés in town. Patrick Bewley (current CEO) was roasting the coffee on the neighbour’s floorboards. We may be a tea-drinking nation, but coffee consumption has undoubtedly grown here at astronomical rates over the last 30 years.” At the height of the coffee price crisis in 2002, O’Toole travelled to Nicaragua as a Cup of Excellence judge. It was here he first met Ramacafe’s Hueck, and was impressed by his passion for the trade. “I have always shared the view that happy people make better coffee. I could see what Hueck was trying to do with his workforce and I believed in it. Most impressively, Hueck had a 10-year plan for his business, infrastructure and social enterprise, not just a plan for the next coffee season,” O’Toole says. A year later, O’Toole travelled with Irish Aid to Honduras and Nicaragua where he was told: “What the people need are customers so they can produce coffee and continue to make a livelihood,” O’Toole recalls. “So that’s what [Bewley’s] did.” In 2003 O’Toole initiated trading with Hueck and his two farms in Northern Nicaragua to not only help establish a quality life for his
coffee workers but to developed a program that would see quality coffee transported to Ireland in a “win-win” situation for both parties. “We agreed on a sustainable price rather than the market price at the time,” says O’Toole. “We agreed to purchase three containers from Hueck for three years. That was at a time when the market was paying about US$0.65 per pound. But we agreed on $0.97 a pound. Our purchase represented about one third of Henry’s production at the time.” For Hueck, the support from Bewley’s during the height of the coffee crisis was a sign that he was dealing with a company that valued its relationships. “In the tough times, Bewley’s stuck by me and helped secure my business and build my company’s corporate social responsibility,” says Hueck. “When coffee prices were low, Paul said to me, ‘Quality will always be the price of entry’. They understood my position when the price of coffee was lower than that of production. They knew quality would succeed in the end and we worked together on a business model that would reflect that.” Since 2003, when Bewley’s bought their first shipment from Hueck’s farms, O’Toole says they have continued to develop their relationship by meeting every three years to renew the contract and discuss the challenges and prospects for the years ahead. O’Toole says it’s no secret the market’s fluctuating prices have caused anxiety over the years, but an open platform of communication have allowed both businesses to look for ways to maintain security. “Even though the world is scheduled to produce 148 million bags (of coffee) this year, the prices are volatile and are subject to supply and demand,” says O’Toole. “Because of this, one of the things I identified with Hueck six years ago was that eventually there will be a shortage of really good high grown quality Arabica coffee. The world won’t be growing enough to meet demand. For this reason, we’ve encouraged Hueck to reinvest and look for ways to expand his business potential.” The development of Hueck’s successful annual Ramacafe conference, and the introduction of home stays on Hueck’s farms, are just some of these business developments. When O’Toole first came into coffee trade, he recalls the entire coffee world hiding behind New York coffee prices. “[Coffee] became so commoditised. I think the crisis caught out a lot of buyers because it was coming to a stage where coffee was becoming unsustainable for producers,” O’Toole says. “Thankfully for a lot of good companies, I think the buyers got off their backsides and accepted the price challenges they were going to face. The producers have now turned a corner in my view, particularly in the last three years.” Over the years, O’Toole says the partnership developed from two companies separated by distance, to two companies bound by passion and loyalty. “When we started doing business, we began sharing information and growing our partnership. We shared cupping information, product evaluations – everything, even photographs of coffee imagery,” says O’Toole. “We believed in the partnership so much that we started sending board members, Irish ministers and staff there each year to do external examinations, for baristas to practice their skills and to understand where the coffee process begins.” O’Toole points to the assistance of technology and its place in modern day business communication. “If you look at the whole transparency of information in this modern era, the baristas and trainers can
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COVER STORY Bewley’s
get in contact with Henry at any time to answer any questions they might have – via the internet, phone, Facebook or Skype,” says O’Toole. “It’s definitely a benefit of the relationship and a fantastic marketing tool as a company.” O’Toole says understanding the role of the producer and roaster has been vital to the longevity of the 10-year partnership with Hueck. “We wanted our staff to understand that it all starts with the producer and we wanted [Hueck] to understand that it ends with the customer,” O’Toole says. “If we receive quality coffee, you’re probably about 20 per cent of the way. But then we have to roast it perfectly and produce a good cup of coffee on either side of the counter – there’s many challenges and demands involved in that.” Hueck has travelled to Ireland four times, and O’Toole and other Bewley’s members to Nicaragua eight times, to understand each other’s position and participate in the Ramacafe conference. “The world is changing and the specialty coffee market is growing rapidly,” says Hueck. “It’s so important that suppliers work directly with their roasters and understand each other’s role in the process. It’s a lesson I’ve learnt and should be a lesson for others.” For Hueck, the fact that Bewley’s is a familyowned and operated business has been a strong driving force in their partnership. “Bewley’s are true to what they do. We share the same love and passion for the industry and a strong passion for corporate social responsibility in our lives,” he says. “It’s not always about money, but about what you can achieve together.” Hueck’s coffee farming operations support 100 families directly, 46 of which live on the farm. As part of its commitment to corporate social responsibility, Hueck provides school and medical services to the families. Back in Ireland, Bewley’s raised over US$2.2 million in 2009 for the Irish Hospice Foundation and is committed to Bewley’s Access Scholarship Program to provide talented students with the opportunity of tertiary education. Social commitments aside, to survive
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“THANKFULLY FOR A LOT OF GOOD COMPANIES, I THINK THE BUYERS GOT OFF THEIR BACKSIDES AND ACCEPTED THE PRICE CHALLENGES THEY WERE GOING TO FACE. THE PRODUCERS HAVE NOW TURNED A CORNER IN MY VIEW, PARTICULARLY IN THE LAST THREE YEARS.” Paul O’Toole
Bewley’s Coffee Buying Director
Bewley’s Paul O’toole, Ramacafe Vice President Gabriela Hueck, Ramacafe President Henry Hueck, Jonathan Harris
another 10 years in a volatile market, the next step for Hueck will be to follow in Bewley’s footsteps towards being carbon neutral. “We want to be the first carbon neutral farm in Nicaragua,” says Hueck. “I’ve learned many lessons from [O’Toole] and Bewley’s, but particularly about their mission to reduce the carbon footprint in the world, and we want to take an active role in this also.” A far cry from the three-container shipment from Nicaragua to Dublin back in 2003, today Bewley’s orders 12 containers from Hueck at an estimated US$1.1 million. “We are very proud of our growth and we’re very proud of our relationship with Henry. Many companies in Ireland have faced a tough recession over the last three years, but the businesses who have remained consistent with their coffee products, are those who have managed to survive,” O’Toole says. “As long as everyone evolves, from the producer to the roaster, the barista to the machine technician, then to the consumer, we’ll continue a healthy business model and long lasting partnerships.” G C R
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22 November 2012 - The Passenger Terminal Amsterdam To benefit from latest market insight and unparalleled networking opportunities secure your place today. Please contact: Ludovic Rossignol Tel: +44 (0) 207 691 8836 Email: lrossignol@allegra-events.com www.europeancoffeesymposium.com
‘Today’s Action For Tomorrow’s Success!’ CONFERENCE PROGRAMME
SESSION 1: CUSTOMER Engagement 09:00 ALLEGRA STRATEGIES Jeffrey Young Managing Director ‘Current & Future Marketplace: Latest Insights from Allegra’s Project Café12 Europe’ 09:35 LA MARZOCCO Guido Bernardinelli Managing Director ‘Cultivating Brand Loyalty’ 09:55 COFFEE FELLOWS Stefan Tewes CEO ‘The German Coffee Shop Market: Challenges and Opportunities’ 10:15 EXKI Nicolas Steisel Co-Founder ‘Building Brand Equity’ 10:35 COFFEE BREAK
SESSION 2: CONCEPT Innovation 11:15 STARBUCKS Liz Muller Director of Global Concept Design ‘Engaging Audiences Across the Globe: Using the Power of the Brand to Create Environments That Inspire’ 11:35 LA PLACE Paul Bringmann CEO ‘Radical Freshness…’ 11:55 KESSELSKRAMER Matthijs de Jongh Head of Strategy & Partner ‘How to Wake Your Customer up, Without Coffee.’ 12:15 PANEL DISCUSSION: ‘Are Chains Still Relevant?’ 13:00 LUNCH
Celebrating people, planet and pure tea
SESSION 3: COFFEE Excellence 14:15 DA MATTEO Matts Johansson CEO ‘Pull Sale Not Push Sale: Fresh Strategies for Artisinal Growth’ 14:35 COUTUME CAFÉ Tom Clark Co-Owner ‘Redefining French Roast’ 14:55 COFFEE COMPANY Jasper Uhlenbusch Head of Brand Development ‘For the Love of Coffee’ 15:15 PANEL DISCUSSION: ‘How Sustainable is Our Industry?’ 16:00 CLOSE
FEATURE Poland
POLAND’S COFFEE MARKET
HEATS UP COFFEE SALES IN THIS EASTERN EUROPEAN POWERHOUSE ARE ON THE RISE, AS THE COUNTRY’S ECONOMY IS BOOMING. HOWEVER, A PLANNED TAX HIKE ON WARM BEVERAGES SOLD IN CAFÉS COULD PUT THE CURRENT EXPANSION OF COFFEE SALES IN JEOPARDY. BY JAROSLAW ADAMOWSKI, WARSAW
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ecently published data suggests that coffee is increasingly gaining ground in the local Polish market. In 2011, the coffee market was estimated to be worth about US$950 million. From October 2011 to March 2012, the country imported some 105,900 tonnes of coffee, an increase of 3.6 per cent over 102,200 tonnes in the same period a year earlier, according to the International Coffee Organisation (ICO). The average Pole consumes about 107 litres of coffee per year, which gives the country the 12th position in Europe, according to a report by Euromonitor International. By 2015, the report puts Poland’s coffee market at as much as US$1.64 billion. Recent economic data confirms these positive forecasts. Unlike in many neighbouring countries, the Polish economy has managed to steer relatively clear of the ongoing Eurozone crisis. The International Monetary Fund (IMF) expects that Poland’s gross domestic product (GDP) will grow by about 2.6 per cent this year, and by a further 3.2 per cent in 2013. Meanwhile, the vast majority of European countries are projecting much lower growth rates in upcoming years. In the second quarter of 2012, the European Union’s combined GDP was down by 0.2 per cent over the same period a year earlier, according to Eurostat, the EU’s statistics office.
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FEATURE Poland
CHANGING LIFESTYLES Poland’s remarkable economic performance is impacting its inhabitants’ aspirations and lifestyle. As Poles have become wealthier since their country joined the 27-member state EU back in 2004, cafés are gaining an increasing market share. Polish annual coffee shop sales are estimated to be worth about US$568 million, according to data from local market research company PMR. “Coffee is among the biggest beneficiaries of the rising aspirations of consumers. With the domestic economy offering resistance to the financial crisis, consumers continue to seek out coffee and aspirational products in general,” Euromonitor International said in its report on the Polish coffee market. In 2011, Kraft Foods, operating under the Jacobs brand, was the Polish coffee market’s leader, with a 26 per cent share of the retail market, followed by Tchibo and Nestlé, which sell their products under the brands of Tchibo and Gala, and Nescafé, respectively. “Kraft Foods and Tchibo offer fresh and instant coffee products within various price segments. This allows them to reach wider customer groups,” the report said. “However, Nescafé is the leading coffee brand in off-trade value terms, and benefits from the range of coffees at various price points.” Meanwhile, coffee sales in Poland continue to point towards greater sophistication and diversification, the report said. This, in turn, has allowed brands like Lavazza to increase its Polish sales by 23 per cent in 2011. While Poles still drink coffee mostly at home, coffee shops are consequently gaining popularity, a recent public opinion poll suggests. From 2009 to 2012, the number of respondents declaring to have visited a coffee house over the past month increased from some 46 to 53 per cent, according to local polling company ARC Market and Opinion. According to another opinion poll commissioned by retail chain Makro Cash and Carry, over 70 per cent of Poles admit to visiting cafés, and the average Pole goes out for coffee 11 times per year. With Italian-style coffee dominating the local coffee shop landscape, the three most popular coffee-based beverages are latte, espresso and cappuccino, ARC Market and Opinion said. And while the market is still far from saturated, mounting competition is forcing coffee shop chains to look for new ways of attracting customers. In the past, Polish cafés lured a large part of their consumers with free wireless Internet, but this factor has become less of a factor, local observers say. “Consumers’ expectations are changing along with the evolution of the coffee shop market,” says Marzena Bialasek, an analyst from ARC Market and Opinion. “With the increasing availability and affordability of wireless Internet, local consumers are less interested in using wifi than they used to be.” Meanwhile, the number of coffee shop customers interested in watching television over coffee increased from 15 per cent in 2011 to some 24 per cent this year, according to the Polish polling company.
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In supermarket sales, Kraft Foods is currently the market leader in Poland, with a 26 per cent market share of its Jacobs brand.
CAFE CHAINS EXPAND For some local coffee shop chains, teaming up with foreign brands has helped reinforce their presence in the Polish market. In June 2012, Poland’s Green Coffee formed a joint venture with the UK’s Caffè Nero under the merged Green Caffè Nero brand. Under the scheme, the two companies aim to open around 10 new stores a year, in addition to the 11 stores operated by the Polish chain in the country’s capital city of Warsaw. For Green Coffee, the partnership is an opportunity to bolster its brand and expand to other Polish cities. In 2010, the Polish coffee shop chain reported a revenue of around US$2.6 million. “Both brands have an exceptional reputation for coffee excellence, personal service and good quality food. By working together, we hope to create a coffee house offering that brings the best of both brands into one setting,” Gerry Ford, Founder and Chief Executive of Caffè Nero, said in a statement. “We want to create a new style of coffee house in Poland, and this partnership is a step towards achieving that,” Ford said. Set up in 2003, Green Coffee is owned by founders Adam Ringer and Kinga Łozinska, two Polish businesspeople who previously owned several companies in Sweden. Starbucks was introduced to the local market in 2009 by Polish-American AmRest Coffee, a joint venture between Poland-based AmRest and US
“WE SEE GREAT POTENTIAL FOR FURTHER GROWTH, AND WE PLAN TO LAUNCH NEW CAFÉS IN VARIOUS LOCALISATIONS. WE WILL DEFINITELY CONTINUE TO STRENGTHEN OUR POSITION IN BIG CITIES, ESPECIALLY IN THOSE WHERE OUR BRAND IS ALREADY PRESENT.” Michael Hudspeth
Starbucks Brand President for Central and Eastern Europe
Michael Hudspeth, Starbucks Brand President for Central and Eastern Europe
Starbucks Coffee International. Starbucks currently has 29 stores in eight Polish cities. “After three and a half years of our presence in Poland, we have become an important player in this market,” says Michael Hudspeth, Starbucks Brand President for Central and Eastern Europe. “The situation in the Polish café market is very dynamic.” Reflecting the growing importance of the local market, in June 2012, the chain’s third Starbucks Reserve concept café in Europe was opened in the Polish city of Wroclaw, with the first two stores launched in Amsterdam and Moscow. “We see great potential for further growth, and we plan to launch new cafés in various localisations,” Hudspeth says. “We will definitely continue to strengthen our position in big cities, especially in those where our brand is already present.” In addition to the Polish market, AmRest Coffee operates a further 14 Starbucks coffee shops in the Czech Republic and seven stores in Hungary. In the next years, the franchiser plans to focus on developing its chain of coffee shops in these three markets, according to the company’s semi-annual report for the first half of 2012. AmRest also operates KFC, Burger King, Applebee’s and Pizza Hut outlets in nine European countries. It would seem that business is going well. In the first six months of 2012, the company posted revenues of some US$350 million, an increase of 141 per cent
over US$248 million in the same period a year earlier. AmRest also posted an EBITDA of about US$44.4 million, up a robust 150 per cent from some US$29.5 million in the first half of 2011, according to its mid-year report. The Polish café market is not necessarily dominated by foreign brands. Coffeeheaven, the largest café chain in Poland, is present in 18 cities and operates a total of 95 stores. Of these, some 41 outlets are located in Warsaw, where the prices of coffee are also the highest in the country. Following its rapid expansion in Poland, Coffeeheaven has begun to establish itself in neighbouring markets. Currently, the chain operates outlets in Hungary, Bulgaria, Slovakia, and Latvia, where it purchased local café chain Coffee Nation. The Coffeeheaven chain was established in 1999 by local company CHI Polska, which was acquired in early 2010 by the UK’s Costa Coffee. Costa Coffee currently operates an additional seven Polish coffee shops under its own brand. By mid-2013, the British chain aims to launch a further 20 Costa Coffee outlets in Poland, company representatives say. In 2011, CHI Polska posted revenues of around US$47.3 million. Next year, Coffeeheaven also plans to develop its vending machine concept, Coffeeheaven Express, which will be established in partnership with Shell petrol stations. Empik Café is Poland’s second-largest coffee shop chain, with some 70 outlets operating under several brands, including Empik Café, Voyage Cafe, Business Shark, Bread and Butter, and Flying Bistro. In 2012, the chain was acquired
DRINK UP In 2011, the Polish coffee market was estimated to be worth about US$950 million. By 2015, one report puts the country’s coffee market at as much as $1.64 billion
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FEATURE Poland
Coffeeheaven was acquired in early 2010 by the UK’s Costa Coffee.
TAX HIKE The Polish government recently announced plans to increase the value added tax (VAT) on all hot beverages from the current eight to some 23 per cent. The tax hike is scheduled to take effect on 1 January 2013.
from Poland’s Empik Media and Fashion Group by France’s Lagardère Group for an undisclosed sum. By the end of next year, the new owner plans to launch a further 20 cafés. Other brands currently developing their coffee shop chains in Poland include Israel’s Aroma Espresso Bar, which operates two stores in Warsaw and aims to open another 23 cafés in the next five years, and Italian Segafredo Zanetti Espresso, which opened its first store in Gdansk, in the country’s north. Moreover, Local franchiser AD Trading plans to develop its new Coffee Factory chain, intended as a rebrand of the company’s coffee shops previously operated under the Swedish brand Wayne’s Coffee. Certain Polish café chains are concentrating on building their brands only in selected regions of the country. Set up in 1999, Columbus Coffee operates nine outlets in four cities located in the country’s northwest. The chain plans to open new cafés, some of them as a new drive-up concept, a novelty in Poland’s coffee market. In total, local market analysts estimate that Poland-based café chains operate more than 700 outlets. Of these, as much as 100 were opened in 2011. If this dynamic development continues, this year, the number of new coffee shops opened in Poland could exceed last year’s figure.
PLANNED TAX HIKE The growing popularity of drinking coffee out of home could be undermined by the Polish government’s recently announced
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“UNDER THE MOST LIKELY SCENARIO, POLISH COFFEE SHOP CHAINS WILL NOT LOWER THEIR PRICES, AND THE INCREASED TAX WILL BE COVERED BY THEIR CUSTOMERS CONSUMERS… WE WANT TO BE WELL PREPARED FOR THE UPCOMING TAX INCREASE.” Dorota Szczerbicka
Marketing director at CHI Polska, operator of Coffeeheaven and Costa Coffee outlets
plans to increase the value added tax (VAT) on all hot beverages from the current eight to some 23 per cent. The tax hike is scheduled to take effect on 1 January 2013. Under the most likely scenario, Polish coffee shop chains will not lower their prices, and the increased tax will be covered by their customers, according to Dorota Szczerbicka, marketing director at CHI Polska, operator of Coffeeheaven and Costa Coffee outlets. “We want to be well prepared for the upcoming tax increase. This is why we have commissioned an opinion poll to assess the price flexibility of Polish consumers,” Szczerbicka says. Local observers seem to agree that the planned move by the government could seriously harm the growth of the café market in Poland. One in five Poles believes that beverages sold in coffee shops are already too expensive, as shown by data from ARC Market and Opinion. G C R
FEATURE Climate Change
GLOBAL
COOL DOWN AND THE COFFEE CYCLE
WHILE GLOBAL WARMING HAS EMERGED AS A FAVOURITE CATCHPHRASE IN RECENT TIME, EVIDENCE POINTS TO A CYCLE OF COOLING FOR THE NEXT 20 YEARS. THE EFFECTS COULD HAVE A PROFOUND IMPACT ON PRODUCTION, WITH THE POTENTIAL TO REVOLUTIONIZE THE CURRENT GLOBAL CROP CYCLE.
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hen anti-globalisation activists in 1999 ravaged Starbucks coffee shops in what became known as ‘The Battle of Seattle’, a lot of the talk centered on the effects of global warming. Former Vice President Al Gore would go on to win an Oscar for his documentary on climate change, as scientific and political debates have continued to focus on global warming. But some scientists are now pointing out that since 2007, the world has gradually moved into a phase of global cooling. After around 30 years of warmer weather, the world is most likely set to see the effects of La Niña, a period of cooling, for the next 20 to 25 years that will replace the highly talked-about El Niño. “The climate on Earth has constantly been changing for over 4.6 billion years and the formation of mountains and volcanic activity continues to create new weather cycles,” says Alvaro Jaramillo, a leading scientist who has spent his career studying the effects of climate on coffee at The National Coffee Research Centre (Cenicafé). “We have to try to start improving our understanding of how El Niño and La Niña actually work, and how this is affecting the global climate at large,” Jaramillo recently told a packed audience at the annual coffee congress in Guatemala.
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For over 100 years, scientists and climatologists have observed that global weather patterns shift from warmer to cooler cycles every 25 to 30 years, based on ocean currents in the Pacific Decadal Oscillation and other weather patterns. Jaramillo argued that the direct link between greenhouse emissions and global warming has not been well represented in the public debate, with the interaction of natural warmer and cooler cycles largely ignored. While Jaramillo says that greenhouse gasses likely boosted warming effects, he argues that the warmer weather was from 1977 until 2006 partially the result of natural weather cycles. This change followed a prolonged period from 1947 to 1976 when
the earth saw cooler weather. “Since 2007, what we have seen is that the world is actually entering a new era of global cooling in which we, for the next 20 to 25 years, will see weather patterns dominated by La Niña rather than El Niño,” he tells Global Coffee Review. The result of this latest change in global weather helps explains why Colombian coffee producers have suffered four consecutive crop failures since 2008. With La Niña producing significantly cooler weather, higher rainfall and a “dramatic reduction” in sun exposure to coffee farms, the weather has by far been the main culprit behind Colombia’s harvest troubles, says Jaramillo. “In Colombia we have seen six years with relentless rains and very little sun exposure, which in the specific case of coffee has resulted in a massive drop in productivity. In order to have a good flowering develop into a good crop, coffee trees need an average of 4.8 hours of sun exposure every day. But in this period we have seen the average sun exposure reduced by over 30 per cent to between 3 and 3.5 hours a day. With the reduction in sun exposure it’s impossible to produce the same yields as seen before 2007,” says Jaramillo. Like it or not, this new weather trend is expected to dominate the global coffee climate for the next 20 years at least, he says, something producers will need to take into account when planning ahead. Farmers will need to start selecting varieties more resistant to these weather effects in their renovation and replanting efforts. “There is no doubt that climate change is having a dramatic effect on coffee and we will still see a lot more of that coming in the next few years, even if nobody really knows for sure what will happen and why,” says Jack Scoville, Vice President at The Price Futures Group in Chicago. While the cause of climate change continues to be a point of contention within both the scientific and political worlds, its existence is being less contested. Coffee producers have seen plenty of first hand evidence of La Niña making its mark in the coffee lands. Producers from East Africa to
“THE CLIMATE ON EARTH HAS CONSTANTLY BEEN CHANGING FOR OVER 4.6 BILLION YEARS AND THE FORMATION OF MOUNTAINS AND VOLCANIC ACTIVITY CONTINUES TO CREATE NEW WEATHER CYCLES… SINCE 2007, WHAT WE HAVE SEEN IS THAT THE WORLD IS ACTUALLY ENTERING A NEW ERA OF GLOBAL COOLING IN WHICH WE, FOR THE NEXT 20 TO 25 YEARS, WILL SEE WEATHER PATTERNS DOMINATED BY LA NIÑA RATHER THAN EL NIÑO.” Alvaro Jaramillo Cenicafé
South-East Asia have good reasons to continue to be concerned. For the last five years, the coffee world has witnessed an onslaught of weather-induced problems affecting crops. Four years of crop failure in Colombia; unseasonal drought followed by
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FEATURE Climate Change
excessive rains in Brazil; five tropical storms including two hurricanes in Mexico and Central America in October 2011; drought in East Africa; and erratic monsoons in South-East Asia. Unpredictable weather not only affects flowering, but increases the spread of plant diseases. “Now we are hearing talk about an outbreak of rust disease in Nueva Segovia [Nicaragua]. Global warming and climate change has been prompting this fungus in places where it was not a problem before. Many people are worried because these are producers who were not used to doing any preventive work to stop this fungus,” says Henry Hueck, President of the Ramacafe estate group in Nicaragua. Pedro Echavarria, an independent Colombian analyst and a producer, tells Global Coffee Review that it’s just a matter of time before Brazil, the world’s largest coffee producer, will be more severely affected. “Every year we are seeing a more extreme impact of weather on coffee producing countries,” says Echavarria. “The kind of rains and drought we have seen in Brazil in the last year is a phenomenon which we have not seen to this extreme degree for 18 years. And with La Niña taking hold we are going to be much more attentive to the possibilities of drought in Brazil in the coming years.” When a coffee harvest is hit by drought in the last phase of the bean formation, the excess dryness makes beans smaller, black or hollow, or a combination of all the above. Excess rains during the final phase of maturation or early harvesting period, on the other hand, often results in cherries swelling up and falling to the ground. Cherries can also go black and start rotting on the tree. When rust disease strikes, the fungus attacks the leaves that will die and fall to the ground. Once stripped of foliage, that part of the tree is weakened and unable to sustain a flowering, and even less a crop, and affected trees normally take at least two harvest seasons to recover. Producers in places as geographically diverse as Tanzania, India and Mexico complained of constant semi-drought conditions, due to a combination of reduced rainfall and higher levels of direct sunexposure, during the 1980s and 1990s. This was due to the dominance of El Niño during these years. “It’s a legitimate question to ask how the market is going to deal with this. The weather uncertainty is happening and the market will deal with the supply and demand according to what’s going to be out there. But when you don’t know how to forecast how much will be available in the next crop, that uncertainty will
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be very hard to create the conditions to send the prices sharply down,” says Scoville. “It will increase the need for more risk management, from producers to roasters.” Jaramillo explains that adding to the complications of crop forecasting will be the years in between the regular weather cycle where an opposite pattern occurs. Even if La Niña predominantly influences the next 25-year climate cycle, every four to five years a smaller opposite cycle can hit. December 2012 and January 2013 can expect a small El Niño possibly hitting the coffee belt from Southern Colombia to Mexico, with warmer weather and less rain. For Central America, this won’t be too detrimental as the region will be in the middle of harvesting. For Colombia’s southern region, however, this could result in another disappointing crop.
“ROASTERS WOULD REALLY BENEFIT BY GETTING A MORE CONSISTENT SUPPLY CALENDAR WITH MORE COFFEE COMING IN WHEN THEY NEED IT, WHICH IN TURN WOULD HELP THEM SWITCH MORE EASILY IF THERE WAS A WEATHER PROBLEM.” Christian Wolthers
Wolthers America Inc
“With the climate turning drier in Latin America, we are also going to see more frequent infections such as the current wave of rust disease, which has struck severely in Peru, Colombia and across Central America,” says Echavarria. Central America supplies around half of top-quality Arabica beans produced in Latin America, which is home to around 75 per cent of the world’s mild washed Arabica coffee exports. Most of the top-quality Arabica balance is made up by coffee from East Africa. Climate change, however, may have a way of working itself out in the coffee growing world. Jaramillo says that the result of the current cooling cycle might actually help stabilise world production into four annual output cycles. While the main Colombian crop could drop, he explains that the spring mid-harvest, also known as the mitaca, could gradually become the bigger of the two crops. The result would be Central America having less competition for their harvest during the key United States and European fall-winter roasting season. This harvest would be followed by the new harvest from Peru and the larger mitaca crop from Colombia harvested from the end of March through June. The Brazil crop would follow from late June to mid-August and the East African harvest from late August to mid-October. For producers, if such a new cycle develops, this could improve their opportunities to sell at the right time, while roasters could benefit from more stable flows of fresh supply. With four regular and relatively equal production volumes smoothened out during the 12 months of the year, it would also provide a bit more of a buffer for all involved in case of unforeseen weather problems like the occasional hurricane in
RAIN, RAIN GO AWAY Excess rains during the final phase of maturation or early harvesting period, can result in cherries swelling up and falling to the ground.
Central America, untimely monsoons in Vietnam or frost in Brazil. “If this happens, I see it as very beneficial to Colombia as it will help them become better placed in the market again,” says Brazilian coffee trader Christian Wolthers of the Miami-based Arabica importers and brokers Wolthers America Inc. “Roasters would really benefit by getting a more consistent supply calendar with more coffee coming in when they need it, which in turn would help them switch more easily if there was a weather problem somewhere else.” Not all industry players are overly concerned about recent weather changes, with market forces having a way of working themselves out. “I continue not to be particularly alarmed about any of these natural possibilities. We know, by studying our past, that since man appeared on this earth he has been dealing with an ever evolving environment, and even so, man has been able to grow in numbers and prosper,” says Carl Leonard, Vice President for Green Coffee of Louisiana-based roasters Community Coffee. “It’s my belief that resourceful producers of coffee will make wise decisions as the evolution of the world’s climate continues. They will figure out the ways and means to continue to supply the world with their morning cup.” G C R
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FEATURE Robusta
Robusta Plantation, Kaapi Royale & Sethuraman Estate, India
MAKING THE SWITCH A NEW CERTIFICATION PROGRAM FOR ROBUSTA PRESENTS AN OPPORTUNITY TO LIFT THE STIGMA OF WHAT, SOME SAY, HAS WRONGFULLY BEEN CONSIDERED A SECOND RATE COFFEE.
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hen Mild Arabica prices crept to almost US$3 a pound last year, roasters scrambled to find more affordable alternatives. For many, the solution came in the form of cheaper Robusta. The result has been an increase in Robusta exports by 13.1 per cent in the 12 months leading up to August, while Arabica exports have dropped by 3 per cent. The shift falls well in line with the Coffee Quality Institute’s announcement last March of the first Robusta certification program. The program saw Sutheraman Estate’s Kaapi Royale as the world’s first R Certified
coffee. The CQI has worked on the Robusta program dating back to 2002. Andrew Hetzel, from CafeMakers, an advocate for quality Robusta, got involved as a consultant early this year. He says the rise of demand for Robusta might be just what the industry needs to help this variety shake off its negative stigma, and find a new place in the market. “Robusta has been largely ignored by the specialty coffee industry,” says Hetzel. “It’s a bad situation for Robusta coffee growers as they have no incentive to improve their quality.” Hetzel partially blames Robusta’s bad reputation on the London Financial Futures Exchange (LIFFE) that allows ten times the number of defects in Robusta than in commercial Arabica. He says LIFFE will allow 450 defects per 500-gram sample, while in commercial Arabica only 30-40 defects are allowed per 350-gram sample. “So when people are drinking Robusta, they’re essentially drinking defective coffee,” he says. “If you were to add the same level of defects to Arabica, it would taste just as bad.” The result of these defects has led the specialty coffee industry equating ‘100 per
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FEATURE Robusta
cent Arabica’ to quality coffee. While this simplified marketing message has served its role in educating customers on the availability of better coffee, Hetzel says Robusta has lost out on the long run. The new R Certification program is set to work against this trend in giving producers an incentive to improve their quality, similar to when the CQI first introduced the Q Grading system for Arabica. “The whole idea was to formalise a way to identify quality coffee,” says Hetzel. “The idea worked great and now we’re looking to do the same thing with Robusta. It’s coffee too, and can taste just as great, I think a lot of people forget that.” Sethuraman Estate’s Nishant Gurjer says Robusta’s poor reputation was exactly why he decided to focus his producing efforts on this varietal. As a sixth generation coffee grower in India, Gurjer did his research before entering the family business, and saw the high amount of quality Arabica available on the market. With his land better suited to Robusta, he saw more opportunity in this less-reputable varietal.
TRADEFACT The London Financial Futures Exchange (LIFFE) may be partially to blame for Robusta’s poor reputation in allowing ten times the number of defects in Robusta than in commercial Arabica.
Nishant Gurjer, Kaapi Royale & Sethuraman Estate
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“It’s always nicer to be number one in a field, and I just didn’t see that happening with Arabica,” he says. “In working with Robusta I really had an opportunity to produce the best quality available, the kind that could compete with the best Arabica.” With Robusta a “bad word” in the specialty coffee industry, Gurjer says it took a bit of convincing to get roasters to try his coffee. He says inviting roasters to his farm has been quite helpful, in allowing them to see how he grows his coffee. He says the new certification program is another powerful tool in helping win over roasters. “It’s a big challenge to get people into a different mind-set,” he says. “To be able to say it’s the only R Certified coffee is a big help.” In terms of pricing, Gurjer refuses to discount his coffee simply because it’s Robusta. “That would be lowering the perspective of Robusta, which is exactly the opposite of what I’m trying to do,” he says. Gurjer has invested heavily into his farm, including the recent installation of a specialised drip irrigation system that helps cater the amount of water needed to each plant, as well as water-saving coffee processing equipment from Pinhalense. Hetzel and Gurjer have worked together over a number of years to help the specialty coffee industry understand that investments and efforts like this can produce fine quality Robusta. Hetzel remembers that they struggled to get anyone to attend their first cupping sessions at the annual Specialty Coffee Association of America exposition a few years ago, with most specialty roasters turning their noses up to Robusta. At this year’s event in Portland, however, he says they filled the cupping room to maximum capacity. “People are realising the potential of Robusta coffee. Without question, there is a place in the market for this,” says Hetzel. He is hopeful the recent increase in Arabica prices will help their case. With more roasters increasing their share of Robusta, he says this is a great first step to roasters becoming more comfortable with the varietal, and hopefully understanding the quality available. “We don’t want people to think of Robusta anymore as some cheap alternative,” he says. Just as the specialty industry benefitted from programs to help farmers increase the quality of their Arabica, Hetzel says the commercial opportunities to increase the value of Robusta are enormous. For countries like Vietnam, the world’s largest Robusta producer, to be able to sell their coffee at higher than market value could lead to significant humanitarian benefits by increasing their incomes. As for the future of CQI’s R Certification program, Kaapi Royale is still the only certified Robusta commercially available. However, Hetzel says they’re receiving increasing interest and sample submissions, and he hopes to soon add other certified
PEOPLE ARE REALISING THE POTENTIAL OF ROBUSTA COFFEE. WITHOUT QUESTION, THERE IS A PLACE IN THE MARKET FOR THIS Andrew Hetzel
Consultant, Coffee Quality Institute
Robustas to the list, which should benefit the industry as a whole. “Specialty coffee is really only focused on 1 to 2 per cent of the industry. It’s unfortunate, but it’s really only an elite group. Having only Arabica coffee in that group makes it even more exclusive,” he says. “Over the next few years, I’d like to see this program grow, so that we can create some opportunities for the other 98 per cent. I’d rather take a large quantity of coffee like Robusta and try to improve the quality, than continue to work on that 1 to 2 per cent. In the long run, I think more farmers will benefit and a lot more good will come from that.” G C R
GALILEO Have your own Italian Espresso Affair
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COFFEENOMICS Currency & Coffee
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Coffee Currency THE DROP OF THE US DOLLAR IS BEING FELT AROUND THE COFFEE PRODUCING WORLD, AS THE WAVERING OF THIS BENCHMARK CURRENCY IS LEAVING FARMERS WITH LESS AND LESS INCOME.
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n the lead up to the November United States Presidential election, global headlines were regularly dominated by any news that would hint as to who would emerge to lead the American economy. With the US dollar staggering at record low levels, the election seemed especially important. As The Economist noted: “Every election tends to get billed as the most important for decades: but this one really is.” With the international price of coffee set in
US dollars, a steady US economy and currency is important for producers the world over. In the last year, many coffee farmers have seen their income steadily decline along with the American economy. Where currencies in many producing countries have appreciated, the effect has been magnified. The problem of currency evaluation is most exemplified in Colombia, explains Luis Fernando Samper, Chief Communications and Marketing Officer for the Colombian Coffee Growers Federation (FNC). Colombia
currently has one of South America’s most appreciated currencies, with the government only recently (July) taking action to increase interest rates to address the problem. Since the beginning of 2012, to when Samper spoke to Global Coffee Review this past October, the Colombian peso was revalued by 7 – 8 per cent against the US dollar. Couple this with a 23 per cent drop in coffee prices, and the average Colombian grower has seen the price they receive for their coffee drop by almost a third. It’s a sad twist of fate, that Colombia’s
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COFFEENOMICS Currency & Coffee
LONG TERM CURRENCY VARIATIONS IN PRODUCING COUNTRIES Currency valuation (+) or devaluation (-) against US dollar
Source: P&A Marketing
success in boosting its economy has resulted in this unfortunate drawback for coffee farmers. “Colombia has changed a lot in the last 10 to 15 years, for the better of course,” says Samper. “We’ve seen increased security, which has created opportunities for people to invest, which has generated an influx in foreign investment. As the demand for the Colombian peso has increased, so has its value.” From a macro perspective, the fact that currencies like the Colombian peso can buy US dollars for cheaper should lead to higher prices, explains Avtar Sandu of Phillip Futures in Singapore. Other market forces aside, he says a falling dollar is generally considered bullish for commodities. “In a market where there are no fundamentals driving the market, or are not considered a factor, a strong movement strengthening the dollar would be considered bearish for coffee,” says Sandu. While he notes it’s not a strong correlation, when the opposite happens and the dollar drops – as it is now – and it takes more dollars to buy coffee, then the price should rise. Prices in general are showing no sign of climbing any time soon. As of September 2012, the International Coffee Organisation composite price sat at 17.4 per cent lower than a year prior. This was on the back of tighter fundamentals, with production remaining roughly the same as the last coffee year, and consumption on the rise. Carlos Brando, from coffee marketing firm P&A Marketing in Brazil, says one factor that may have helped keep coffee prices down has been Brazil’s recent moves to devalue its currency. Robustas have remained steady since last year, with Arabicas mostly to blame for dragging down the composite price. As Brazil is the world’s largest Arabica producer, devaluing the Brazilian Real against the US dollar should have helped keep prices down. “That may help explain why prices are not higher than they are now,” he says. Indeed, Arabicas have dropped the most significantly since last year, when they peaked
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at over US$2.60 per pound. Brando says that currencies may have been partially responsible for last year’s record high prices, with 70 per cent of Arabica production taking place in countries with stronger currencies. As it took more US dollars to buy coffee in these countries, Brando says this may have contributed to the unprecedented price hike. Conversely, he points out that Robusta production is split roughly evenly between four countries: Vietnam and Uganda with depreciated currencies on one side, and Indonesia and Brazil with appreciated currencies on the other. As such, the currency effects on Robusta prices were more weighted-out, widening the price difference between Arabicas and Robustas that led to increased demand for Robusta, and decreased demand for Arabica. With less demand and lower prices, the compound effect is certainly being felt at the production level, Brando notes.
The US dollar has steadily declined against the Colombian peso. $2.700
$2.500
Pesos per dollar
$2.300
$2.100
$1.900
$1.700
AUG 12
APR 12
JAN 12
OCT 11
JUL 11
APR 11
JAN 11
OCT 10
JUL 10
APR 10
JAN 10
OCT 09
JUL 09
APR 09
JAN 09
OCT 08
JUL 08
APR 08
JAN 08
OCT 07
JUL 07
APR 07
JAN 07
$1.500
Timeline
Source: Colombian Coffee Growers Federation
“Coffee farmers are definitely less comfortable now than they were before,” he says. With prices and currency out of farmers’ hands, Brando says that farmers must look to increase their yields to increase their incomes.
LESSONS FROM COLOMBIA Over in Colombia, leaf rust fungus and poor weather make increasing yields easier said than done. For its part, the FNC has invested in renovation programs that saw 74,000 hectares renovated already this year, having planted 2.1 billion trees since 2008 that has cost them close to US$1.4 billion. “Of course, we’re looking to adjust our productivity, it’s what we have been doing, but with this elevated currency our farmers continue to be pressed,” says the FNC’s Samper. With the FNC’s 540 purchase points, Samper says Colombian farmers are fortunate to receive around 95 per cent of the international coffee price, far above what most coffee producers receive. When that price drops, however, along with the US dollar, even at 95 per cent of market value, farmers are
nevertheless prey to market forces. To help producers, the FNC has recently introduced a hedging instrument that will allow farmers to use those market forces to their advantage, or at least protect themselves against volatility. On 8 October, it announced a new Price Protection Contract (CPP) to help farmers insure their risk against currency and price fluctuations. The tool is quite innovative, as never before have small rural coffee growers had this kind of access to hedging and financial intruments. The new financial instrument will allow the country’s coffee growers to buy contracts to set a load price for the second, third and fourth month after the date they purchase the instrument. One load equals 125 kilograms of parchment coffee, and farmers will be able to purchase up to 50 loads per month to protect their income when they decide to sell their harvest. “This way, we hope producers can not only optimise their productivity and costs through ongoing and successful plantation renovation programs, but take advantage of volatility and favourable price situations,” says Luis G. Muñoz,
DOLLAR GAME Colombian pesos have been revaluated by up to 8 per cent against the US dollar, meaning the country’s coffee farmers get less money for their crop. A new mechanism will allow them to insure against currency and price fluctuations.
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COFFEENOMICS Currency & Coffee
In a market where fundamentals aren’t a factor, commodities and the US dollar have a reverse correlation.
260
High: 84.145
High: 250.80
84.000
240 82.000
220 1.91%
200
79.925 78.000
180 170.20
Low: 75.011
2011
-27.11%
Last Price ICE/NYBOT Arabica futures 170.20 ICE/NYBOT US dollar index 79.925
160 DEC
MAR
76.000
Low: 149.20
2012
JUN
SEP
Source: Phillip Futures
CEO of the FNC. “[This] can guarantee them a minimum income to be chosen individually by every coffee grower.” The new tool will set a minimum income according to the market price of the day the farmer buys the contract, or to prices 10 per cent lower or higher. The cost of options will be published on a daily basis. Producers will be able to purchase the contracts from their farms, via their mobile phones, and deduct costs from their intelligent Coffee Grower ID Card. As the CPP is designed to support the FNC’s goal in guaranteeing a minimum price, if the domestic price rises at the moment the producer sells the harvest, then the ‘put’ option is not exercised. When the domestic price falls, the producer will have the guaranteed minimum price as purchased. “The best scenario for a producer is that prices climb and he [or she] can sell [for example] in January better than in November,” says Julian Medina, the FNC’s Chief Financial
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Officer. “It is worth a reminder that, as with every protection instrument, the ideal would be not to have to exercise it. But we buy it to have a guarantee and avoid the risks. With current volatility of markets, the risk of having unfavourable price situations at the moment of selling the harvest is not minor.” Samper tells Global Coffee Review that the financial risk of the new instrument will be unloaded on market players, such as private finance companies and exchange operators. “The philosophy behind this is that we’re focusing on a new factor in helping farmers,” says Samper. “The first variable is farm productivity, taking care of young coffee trees and so on. The second factor is to help them improve their coffee, so they can sell at higher prices, as specialty coffee through programs like Cup of Excellence. This third factor is now something new. We have to take a new angle and help farmers deal with the factors behind market volatility.”
With the European Union joining the US in shaky economic times, Samper says this market volatility is likely to only increase. Investment companies the world over have proven their ability to take advantage of price volatility to their advantage, and Samper says this FNC program does the same for farmers in reducing their risk – to a certain extent. While the CPP may help buffer price changes, Samper points out that as long as coffee is priced as a commodity, farmers will continue to be prey to market forces. “I think the industry needs to get a grip on certain new things that the coffee producing world is facing,” he says. “Coffee continues to be a US dollar dominated product, and the dollar is not as strong as it used to be. Currencies in producing countries are rising, inflation and input costs are rising, and over time, these costs will transpire into prices… We have to convey the value of producing high quality coffee to consumers. It’s a costly activity, whether you value it in pesos, dong, or dollars.” G C R
PROFILE Probat
RESEARCH & DEVELOPMENT ON THE
BIG SCALE THE MASSIVE NEW FACILITY SITTING NEXT TO PROBAT’S HEADQUARTERS REFLECTS THE COMPANY’S COMMITMENT TO LEADING THE PACK, AS THE LARGEST ROASTING MACHINE MANUFACTURERS IN THE WORLD.
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A
t 15,300 square metres, Probat’s new research and development facility is a sight to behold. With a glass façade of 350 square metres, and ceilings reaching up over eight metres high, the stateof-the art building could be displaying luxury cars instead of the world’s leading roasting and grinding equipment. Interestingly, Probat’s Director of Sales Rainer van der Beek says the car sales model isn’t far off what Probat are looking to achieve. More than a showroom, the new R&D centre holds Probat’s entire equipment range. It’s been developed to allow clients to bring in their beans, and see and test the results before making a commitment. “No one just buys a new car without trying it out. With this new centre, it’s like you can take it home and test it for a weekend,” says van der Beek. “We’re providing a physical guarantee on what the equipment can do.” The new centre was officially opened in mid-September. It came about when a space became available next to Probat’s current headquarters in Emmerich, Germany. Van der Beek says that while their old facility housed the latest equipment, the building itself was getting “old fashioned”. “This new centre is a nice marketing investment for two reasons,” he says. “We wanted to build and show the most modern research and development centre in the industry. And from a sales perspective, we wanted to allow customers to use the equipment before they purchased it.” Giving customers this trial run is about more than just demonstrating the functionality of the equipment. As global coffee tastes are becoming increasingly discerning, concerns over taste profiles are paramount. An efficient factory doesn’t necessarily translate into great tasting coffee. Thomas Koziorowski is Probat’s Director of Product Technology and R&D, and works extensively in this area, collaborating with clients on coffee taste profiles. Koziorowski says the days of guessing which equipment might be best for a client’s beans are long gone. Today, Probat works with customers on the product development side, bringing their beans into the R&D centre and
“OUR MESSAGE WITH THIS BUILDING IS THAT YOU CAN BUILD TO THE HIGHEST INDUSTRY STANDARDS AND STILL BE RESPONSIBLE FOR MOTHER EARTH.” Rainer van der Beek
Probat’s Director of Sales
working with them on the best production methods. “Having a roaster delivered to you on site and working out how to roast it during the production process, with no way to try it out, doesn’t work,” says Koziorowski. With the new R&D centre, Probat is now the only company in the world to have all three roasting technologies – drum, centrifugal and tangential – available for trial, so clients can test and compare the results of each method. Probat’s research labs support the process by analysing the chemical and aroma make-up of the different results. The labs feature state-of-the-art equipment, for instance an electron microscope, colour and particle size measuring instruments, and a HPLC system (High Performance Liquid Chromatography) for advanced analysis of the final product. This product development side has now seen Probat take on the task of training. Especially – but not exclusively – in former tea drinking nations, including many countries in Asia, Koziorowski notes that roasting knowledge can be improved. These companies turn to Probat not only for their equipment, but also to inform themselves more in detail about the industrial knowledge available. “In these cases, we’re really using the centre as a training facility,” says Koziorowski. “We’re able to provide them with the basics of blending, of Arabica and Robusta use, and of course much more sophisticated information if needed. What may be obvious in Europe is not obvious everywhere.” Even for companies who do know the standards, van der Beek says that having an advanced training facility helps improve company efficiency. Operating staff – including everyone from workers in large factories to boutique roasters – can receive their training in Probat’s facility, so
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PROFILE Probat
“WE WANTED TO BUILD AND SHOW THE MOST MODERN RESEARCH AND DEVELOPMENT CENTRE IN THE INDUSTRY. AND FROM THE SALES PERSPECTIVE, WE WANTED TO ALLOW CUSTOMERS TO USE THE EQUIPMENT BEFORE THEY PURCHASED IT.” Rainer van der Beek
Probat’s Director of Sales
they’re trained and ready to work as soon as the equipment hits the ground. For companies replacing old equipment, off-site training allows for limited interruptions in the production process. Another major advantage that the new R&D centre holds is the ability to show off the impressive flexibility of Probat equipment in handling different products. Koziorowski says that flexibility in production is key in today’s industrial environment, with companies producing everything from whole beans to ground coffee to single-serve capsules – all out of the one plant. “Companies used to have two or three brands, but now we’re seeing some with 20 brands,” he says. “As our customers are spreading their portfolio, we need to show our flexibility in the production line.” Adding to the complexity of juggling different coffee products, are requirements in the traceability of modern coffee supply chains. From farm to cup, van der Beek says roasters need to be able to trace the origin of every bag, so that defects can be easily managed. Probat’s technology uses bar code scanning so that bags of roasted coffee can be traced to the green bag received, even with high demand production systems. Probat’s leading position is not just embodied in the services and technology available in the new centre, but also in the engineering and architecture of the building itself. The building’s façade is made of heat-absorbing glass to reduce heating costs in Germany’s cold winters, while the air-conditioning is set up through an innovative ventilation concept to keep power use down during summer. The LED lighting technology is supported with flexible daylight support, with hall ceiling lights using a maximum of 60 watts. The building features state-of-the-art control systems that can be extended to fulfil challenging control tasks, meeting the KNX Standard for Operator Systems Interconnections for intelligent buildings. “Our message with this building is that you can build to the highest industry standards and still be responsible for mother earth,” says van der Beek. “Why would you use 1000 watts to light a room, when you can use 60 [watts]?”
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Van der Beek says that the industry has been heavily focused on carbon emissions, following government activity and steps towards carbon taxes and trading schemes. However, he says there are huge opportunities for energy efficiency that should not be missed, and their new centre demonstrates the possibilities. To accompany Probat’s sustainable design is their latest in equipment advances, including a green coffee heater system to reduce energy usage during the roasting process. “We wanted to show what was possible in promoting sustainability in design,” says Koziorowski. “We want to make the link with customers to show what can be done to reduce carbon footprints.” These technological and service moves forward are something van der Beek says were not necessarily a request by customers, but rather the direction that Probat wanted to take in leading the industry. He notes that around 70 per cent of the world’s coffee supply is roasted on Probat equipment, and the company is prepared to maintain this position by staying one step ahead in supporting their clients. “We see ourselves as leading the industry. It’s not a trend we’re following, we didn’t see ourselves as forced into to this, but we wanted to maintain a certain direction.” G C R
PROFILE Cablevey Conveyors
convey A message to
WHILE CABLEVEY MAY HAVE STRAYED FAR FROM ITS ROOTS, THE INCIDENTAL COFFEE CONVEYING EQUIPMENT IS NOW SAVING DELICATE BEANS FROM BREAKAGE, INCREASING PROFIT MARGINS THE WORLD OVER.
L
egend has it that some of the best inventions were discovered by accident. The microwave oven was supposed to be a vacuum tube. Fireworks were a cook’s recipe gone wrong. Coca-cola was at first a medicine for headaches. It’s no legend, however, that the Cablevey system – now one of the most popularly used tubular conveyor systems in the coffee industry – didn’t see a coffee bean for its first few decades of use. The company Intraco was founded in December 1971 as an import/export company for agricultural equipment. In 1974, the company decided to manufacture and market its own line of feed conveying equipment, under the trade name Cablevey. As Cablevey’s Marketing Manager Karl Seidel describes, as a feed conveyor, the system was designed to carefully transport prepared animal food. Because the feed was mixed to deliver the right balance of minerals and vitamins, it had to be carefully transported not to disturb the distribution.
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“Many of these farmers would have used an auger system to transport the feed. But what happens with an auger? The heavier minerals tend to fall back,” Seidel explains. “It compromised the blend. With the Cablevey system, you have an unclosed tube that you’re moving, so you get the same product and consistency from Point A to Point B.” And so it was that Cablevey’s early years, under the leadership of Ben Hall, thrived with a strong consumer base of small farmers. The company hit a crisis point, however, in the 1980s with its fate so closely tied to
these small American farmers. The United States underwent a policy change under the Presidency of Richard Nixon, with the appointment of Earl Butz as Secretary of Agriculture. With a greater focus on farming efficiency, Butz famously told farmers to plant corn “from fencerow to fencerow”. Those policies coincided with the rise of major agribusiness in the United States, and the sad decline of the small family farm. “Things changed,” says Seidel. “We know now how that story went. Small farmers were thrown out of the business. We [at Cablevey] had based ourselves on these small equipment sales to individuals farmers. So Cablevey lost out as well.” The company struggled into the 1990s, when Hall’s sons Phil and Gary took over the business. The original founders had died, and the next generation had to find a way to keep the business moving forward. “They couldn’t keep pounding on farmers doors,” says Seidel. “They had to figure out what to do next. As it turns out, we just had the wrong market.” Looking back, Seidel says it was a “stroke of fate” that a customer came up with the idea to try and move coffee. The Bong Brothers Coffee Company out of Hawaii, who worked with both green and roasted Kona coffee, were one of the first coffee roasters to experiment with the Cablevey system. The results were successful beyond anyone’s imagination. The natural oils that build up in coffee acted as a natural lubrication for the discs. Most importantly, the system that had been designed to carefully not over-mix the livestock feed, handled the coffee so gently that it resulted in virtually no breakage, something unheard of at the time in the industry. From that lucky initial trial, the business has grown exponentially. To be able to eliminate breakage in the roasting and packaging process, Seidel points out, translates directly into less wastage and more profits. “We know from our experience now in working with roasters, and having been adopted by some of the biggest players, when
you’re roasting on that level, to even have 1 to 2 per cent breakage is a big deal,” he says. In addition to reducing breakage, Cablevey’s closed system offers remarkable advantages in moving both whole and ground coffee. With many roasting companies offering Organic Certified, Fairtrade Certified, and decaffeinated coffee under different labels – produced all on the same line – limiting cross contamination has proven key in ensuring traceability. The enclosed system offers protection from any foreign materials entering the system. These advantages have translated into this American-made conveyor system gaining an increasing market share, with major coffee players the world over taking up the Cablevey system. “Then around 2000 to 2001, people started to ask, ‘If you can move coffee with that, what else can you move?’” recounts Seidel. “Then they started using Cablevey with breakfast cereal, peanuts, cashews, and so on. We’re looking at really fragile products here. Because of the high
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PROFILE Cablevey Conveyors
From left, Gary and Phil Hall run the company today.
“WHEN YOU’RE ROASTING ON THAT LEVEL, TO EVEN HAVE 1 TO 2 PER CENT BREAKAGE IS A BIG DEAL.” Karl Seidel
Marketing Manager, Cablevey
value of these commodities, any breakage translates directly into a loss of income.” With so many new potential customers, Seidel says he’s seen their business increase by at least 400 per cent in the last six years alone. “It’s not by chance that we’ve quadrupled the business,” he says. Seidel can’t help but hide his shock when discussing the auger systems they still come across, and are constantly replacing. Those systems – that weren’t good enough to transport livestock feed – are being used still by many coffee companies to transport their delicate roasted beans. “If you think about an auger, by definition it’s a screw. You’re circulating your product with a screw, you’re going to get breakage. You just can’t get away from that,” he says. “These systems are not designed to move fragile objects.” Seidel says he’s seen breakage rates drop by as much as 78 per cent with the Cablevey system. Naturally, with such a successful system, some competition has crept up attempting to duplicate their technology. Seidel says their tradition of continual change and timely improvement by listening to their customers needs, as well as their background in person-to-person sales, has helped them
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maintain market dominance. “You’re talking to guys who live and breathe this,” he says. “Time and again, we’ve had people come to us after making a bad decision. Because, what happens when something goes wrong? When you’re operating 24-hour facilities? We’ve got guys here who are dedicated to figure it out.” And so it is that while Cablevey may have strayed away from its mid-west farmer consumer base, Seidel says the staff have remained true to the traditions that were the foundation for their success. And the United States can add one more incidental invention to its list. G C R
THE UK’S LARGEST COFFEE AND ARTISAN FOOD EVENT Now two days dedicated to the industry! Register for free using the industry registration code 1NDLCF when booking online for Thursday 25th or Friday 26th April 10am-5pm sessions.
www.londoncoffeefestival.com
RESEARCH Coffee Leaves
Photo: Andrew McRobb, RBG Kew
The 44
POWER G C R | N OVE M B E R/D EC E M B E R 2012
A NEW STUDY HAS REVEALED THE CHEMICAL PROPERTIES OF COFFEE LEAVES THAT COULD UNLOCK THE POTENTIAL FOR BREEDING AND AS A VALUABLE BEVERAGE.
D
r. Claudine Campa, from the Institut de Recherche pour le Développement in France, has a bit of a leaf obsession. Campa specialises in looking at the phenolic composition of leaves – the natural compounds that build up in plants to help protect the plant from natural elements. Fortunately for the coffee industry, Campa recently turned her near obsession to this caffeinated plant. “Much of the focus of studies on coffee has been directed on its uses as a beverage. The research often starts with the cup in mind: the seeds, that is the coffee beans. Few people have thought about the leaves,” says Campa. “But when you think about it, everything is linked to the nutrition of a plant. From the roots, to the photosynthesis carried out by the leaves, it all comes together to define the health of the fruit and the beans inside.” The results of Campa’s coffee-leaf focus have resulted in a scientific paper she first-authors “A survey of mangiferin and hydroxycinnamic acid ester accumulation in coffee (Coffea) leaves: biological implications and uses” published in the Annals of Botany in April this year. The results could have profound implications for the coffee industry, offering new possibilities for breeding more resistant coffee varieties. Additionally, the potential health benefits discovered in the study open up new possibilities for using coffee leaves in pharmaceuticals and natural medicines. As well as the commercial coffee species, Coffea arabica (Arabica) and C. canephora (Robusta), Campa opted to look at less studied wild species in Africa and Madagascar. This follows on from the work of one her co-authors Dr. Aaron Davis. Davis, of the Royal Botanic Gardens, Kew (United Kingdom) has focused much of his recent work on discovering and studying wild coffee species, which includes estimating the medium- to long-term potential for coffee production. While several biochemical studies have focused on wild species, Campa says these have generally focused on green (unroasted) and roasted beans, with little attention paid to the leaves. Other than Arabica and Robusta, only one wild species has been studied for its leaf phenolic content. Furthermore, Campa says that chemical analysis of wild species from Madagascar
has been limited. The last published study was by Jean Jacques Rakotomalala in 1992. Rakotomalala continues to work in Madagascar, at the coffee research station in Kianjavato, where they hold a large living collection of wild coffee plants. “But most coffee research has been focused on the seeds,” says Campa. “But if you think about it, the leaves are also of critical importance. With climate change, for example, it makes sense to start paying attention to other parts of the coffee plant, including the leaves.” In the study, led by Campa, the team looked at 23 coffee species, observing – as the title of her study suggests – the levels of accumulation of hydroxycinnamic acid esters (HCEs) as well as mangiferin. Mangiferin was first isolated from mangos, and provides
Dr. Claudine Campa, Institut de Recherche pour le Développement (IRD)
of the Leaf N OVE M B E R/D EC E M B E R 2012 | GCR
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RESEARCH Coffee Leaves
Photo: Institut de Recherche pour le Dévoloppement (IRD)
“WHEN YOU THINK ABOUT IT, EVERYTHING IS LINKED TO THE NUTRITION OF A PLANT. FROM THE ROOTS, TO THE PHOTOSYNTHESIS CARRIED OUT BY THE LEAVES, IT ALL COMES TOGETHER TO DEFINE THE HEALTH OF THE FRUIT AND THE BEANS INSIDE.” Claudine Campa
Institut de Recherche pour le Dévoloppement
COFFEE LEAVES AS TEA?
Wild coffee species Coffea pseudozanguebariae
plants with antioxidants, antimicrobial protection, and also helps shield against the sun’s UV rays. Study of these phenolic compounds helps scientists understand how plants evolve and adapt to environmental change. Prior to this study, mangiferin had only been detected in Coffea pseudozanguebariae. A key result was the discovery that seven of the species studied, including the cultivated species Arabica (but not Robusta), stored mangiferin in their leaves, and also in the outer layer of their fruit. Campa says this could be one of the ways coffee species have evolved mechanisms to combat the damaging influence of harsh UV rays in environments (for instance at high altitude). “It’s really interesting to look at the composition of these wild species, especially from a commercial perspective,” she says. “Crossing these plants with cultivated species provide a way to help protect those species from climate change while not affecting the quality of coffee.” Campa points out that focusing on protecting agents in coffee leaves provides a way to improve the quality altogether, because better healthier plants will be tasted in the cup.
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This renewed focus on coffee leaves opens up new possibilities for the potential future usage of the plant beyond the cherry. To this end, Davis says there are varied interests in coffee leaves as a beverage and a health remedy. “Chlorogenic acids are powerful antioxidants. In the green beans of Robusta their content is very high typically 6 to 7 per cent and a bit less in Arabica.” he says. “Coffee-leaf tea might be another way to consume high levels of antioxidants via a beverage that’s not coffee.” Chlorogenic acids, derived from green coffee beans, have received recent publicity as a means of reducing body fat, leading to weight loss. Davis says, however, that further study would be needed to confirm coffee-leaf tea as a metabolism-boosting agent, or indeed for consumption in general. Shortly after the 2012 study was released, Davis travelled to South Sudan with World Coffee Research’s Executive Director Tim Schilling and visited a small village on the Boma Plateau. They met a woman who had been gathering wild Arabica in the forests for years. “It was clear she wasn’t interested in coffee beans but only the leaves,” Davis recalls. “This woman would trek into the forest on a weekly basis to collect coffee leaves to make tea. She used it as a beverage and as a very concentrated tea-like infusion as a purgative when she was ill.” Coffee-leaf teas and other drinks made from the outer part of the coffee cherry are also widely used in Ethiopia, and other parts of Africa. There is also a long history of coffee-leaf tea drinking. Davis has found numerous records of its use, dating back to the 1800s, in countries including Jamaica, India, Java and Sumatra. In the Economic Botany collection in Kew, there are numerous examples of coffee-leaf tea, processed either like green tea or a fragmented black tea (see photo on page 44). Dr Gardner of Ceylon took out a patent for preparing coffee-leaf tea in the 1850s. The infusion of the coffee-leaf had long been an article of universal consumption among the natives of parts of Sumatra, according to P.L Simmonds in The Commercial Products of the Vegetable Kingdom. Wherever coffee was grown,
Photo: IRD
Photo: Andrew McRobb, RBG Kew
Wild coffee species Coffea stenophylla
good for growing coffee leaf tea?” he asks. Davis is not the first to have this thought. On 14 April 1977 The Brisbane Courier reported that coffee-leaf tea had the same potential to advance at the rate of Chinese tea. “If found superior it would lead to a change in the cultivation of the coffee tree in plantations abroad,” the article stated. “It would be more profitable to cultivate the coffee tree for its leaf than its berry or it might enable the plantar to secure first the berry, and hence a crop of leaves with greater yield would enable him to sell both as cheap as the crop of berry alone.” Davis points out that production is one thing, but taste and quality are another. In 1876 The British Medical Journal stated that various travellers, both in the West and in the East of the Eastern Archipelago spoke very favourably of the flavour. “The taste of coffee-leaf tea was considered ‘fresh’ and ‘most delicious’… So it might just have value as a niche beverage and perhaps be popular once again,” Davis says.
Dr. Aaron Davis Royal Botanic Gardens Kew, United Kingdom
the leaf had become one of the “necessaries of life”, which the natives regarded as “indispensable”. Looking back on its fascinating history, Davis says it’s fair to say the first consumers of coffee-leaf would have had a degree of knowledge about its health benefits, based on personal experience. “At one stage it was considered more popular than drinking water,” he says. For Davis, who was involved in Campa’s study as the expert on wild coffee species, some of the most compelling questions are the origins and history of coffee leaf usage. “Why was it once so popular in certain parts of the world, particularly Asia and Africa, and is no longer?” he asks. “It may be that the market was just saturated with normal tea and there was no interest in it. Maybe there wasn’t enough for production, we just don’t know.” Arabica was widely grown in South East Asia up until the end of the 18th Century, until it started to attract diseases. Robusta was then taken from West and Central Africa to South East Asia in the 1900s and Davis wonders whether this switch prevented the practice of coffee-leaf drinking to carry on through the 19th and 20th centuries in parts of Asia. “There is no concrete evidence to confirm this idea, but there does seem to be some historical correspondence,” he says. So far it appears that only Arabica leaves are used to make tea, but this also requires confirmation. With a possible regeneration in interest in coffee-leaf tea, Davis says there might be potential for growing a crop of coffee leaves in areas that are not suitable for coffee production. “I wonder if there is the potential for using defunct coffee plantations that may not be good for growing beans, but are
SAVE THE LEAF, SAVE THE TREE
SUNBLOCK The relationship between the levels of mangiferin found in coffee leaves and UV levels might indicate that higher altitude plants are better adapted to increased light levels.
Campa is hoping that her study will help demonstrate some of the many qualities of plants, and as such the dangers of cutting them down. She notes that deforestation, in Madagascar in particular, has been devastating. Other than protected areas (such as national parks), she says the country’s forests are being destroyed at an alarming rate. “Perhaps if they know more about the amazing attributes these plants hold, they’ll be more careful,” she says. “These plants hold some amazing qualities, many of which we’re only just beginning to discover.” G C R
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ORIGIN Indonesia
INDONESIA’S QUALITY OUTLOOK
WHILE THESE PACIFIC ISLANDS MAY BE BETTER KNOWN FOR THEIR VOLUMES OF ROBUSTA EXPORTS GLOBAL COFFEE REVIEW TAKES A QUALITATIVE LOOK AT INDONESIAN ARABICA, WHICH IS BRINGING WELCOMED HIGHER PRICES TO GROWERS. BY LEIGHTON COSSEBOOM, SURABAYA
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t this year’s Trieste Espresso Expo exhibition in Italy, roughly 20 Indonesian Arabica representatives wandered to halls, promoting their quality coffee. Just six years ago, however, Alun Evans, founder of Merdeka Coffee, the parent company of Antipodean Coffee in Kuala Lumpur, was the only representative for any Indonesian Arabica. Traditionally known for its Robusta production, which represents around 95 per cent of Indonesia’s export figures, the fact that many traders have followed in Evans footsteps tells the tale of why it’s worth taking a look at the country’s production of quality Arabica. “The growth in popularity is because Indonesia has so many unique growing origins… producing so many interesting coffees,” explains Evans. “Aceh is spicy and bold, Java is soft and bitter chocolate, Papua… honey suckle and stone fruit, they all share a low acidity. Quality had, in the past, been one issue preventing Indo Arabica from ascending towards the top. However 10 years of focus by the Department of Agriculture on the sector has solved many of those issues.” Situated on the Ijen Plateau of East Java, just a stone’s throw away from the world’s largest acid crater lake, is Indonesia’s famed Blawan Plantation. A relic from the late 19th Century, Blawan was absorbed by the Indonesian government after the Dutch occupation of Java, and the abolition of the ‘Cultivation System’, an act instilled by the colonial government allowing Holland to profit from Indonesian exports. The act was originally designed for the purpose of refilling the Dutch treasury after heavy economic losses in the Netherlands. Today, Blawan is one of four plantations within close proximity to one another, all of which operate under the umbrella of the government-owned company Perkebunan Nusantara XII (PTPNXII), a name which literally translates to the Archipelago Plantation 12. The other plantations on the estate are named Kalisat Jampit, Pancur and Kayumas, but Blawan is the
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only one that dedicates its 500 hectares strictly to cultivating Arabica. “[A full] 90 per cent of our production is exported, and our main clients are America, Europe, and Japan, and this year we’ve begun selling to China,” says Arief Wicaksono, Blawan Manager. While he was unable to comment on Blawan’s official international price per pound, PT Coffeeindo, an export and trading company based out of Medan in North Sumatra, priced single origin Arabica from Java at about US$2.39 per pound, whereas most of Indonesian Robusta consistently hovers around US$1.04 to US$1.09 per pound. “Last year we produced 600 tonnes of Arabica,” he explains.“ But so far, we’ve produced 1300 tonnes already this year.” In a typical year, Blawan can yield approximately 21,667 to 25,000 60-kilogram bags of coffee, but similar to other countries such as Colombia, the 2011 crop on Java was severely hampered by heavy rains. PTPNXII Director of Production, Pak Soewarno, says that a long dry season this year has helped improve production.
PTPNXII workers sort through last year’s harvest.
The six different variants of Arabica currently growing commercially in Indonesia are Typica, Hibrido de Timor, Linie S, Ethiopian, Caturra cultivars and Catimor, according to the Specialty Coffee Association of Indonesia (SCAI). Typica is courtesy of the Dutch colonization in the 1880s, while Hibrido de Timor is a splice between Arabica and Robusta. Linie S comes from India’s Bourbon cultivar, while Caturra is a mutation of Brazilian Bourbon. Soewarno and Wicaksono both concede that their position in the international coffee community is thanks to the unique characteristics of Blawan’s particular Arabica clone. “The name is Blawan Pasuma, and it’s unlike any other coffee,” says Wicaksono. “It yields a very nutty and sometimes flowery taste.” The flavours are indeed sought-after in the global coffee market, particularly in Europe and Asia. As Wicaksono prepares a blind taste test in his quality control room, he describes Blawan’s signature strain as a distinct one, with production staff aiming to strike a balance between body and acidity.
SHIP IT In the 2011-12 coffee year, Indonesia has exported approximately 6.7 million total bags of coffee, including Robusta and Arabica, up an impressive 19 per cent from last year.
The purity of the clone is maintained by using special rods to graft the roots of each year’s Arabica sprouts to a single unadulterated root, resulting in a consistent bean quality each harvest year. Wicaksono explains that this process, along with the sprouting stage, takes place in Blawan’s closely monitored greenhouses. All the coffee on the farms belonging to PTPNXII is hand-picked. “It’s important to us that we create jobs for the people in our community,” says Soewarno. The company usually employs 3600 to 4000 people during each annual harvest. Plantations like PTPNXII with their 1800 hectares of land are not the norm, however, in Indonesia. A full 90 per cent of the country’s exports come from private producers with only one hectare or less of land. The United States Agency for International Development says there are currently more than 1.3 million hectares of coffee cultivation spread out across the world’s largest archipelago. In general, Indonesian Arabica coffee exhibits a high body with relatively low acidity levels. Sumatran specialty coffees tend to feature cocoa and earthy notes, while coffees with Balinese origins generally exhibit nutty and citric tastes. Connoisseurs of Sulawesi coffee are typically drawn to Tana Toraja and Kalosi, as they are
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ORIGIN Indonesia
“LAST YEAR WE PRODUCED 600 TONNES OF ARABICA. BUT SO FAR, WE’VE PRODUCED 1300 TONNES ALREADY THIS YEAR.” Arief Wicaksono
Blawan Manager
said to feature the most balance along with flavours of ripe fruit and dark chocolate. Tana Toraja is the back bone of Sulawesi’s coffee proliferation. Because the island is formerly known as “Celebes,” a name from the Dutch colonisation, coffee from Sulawesi is often referred to simply as such. Producing a mere 70,000 bags per year, Sualwesi distinguishes itself by largely employing the dry process method as opposed to other regions that more often use the wet process. Currently, one of the most talked-about places in the Indonesian coffee industry is Gayo highlands in North Sumatra’s Aceh region. With altitudes narrowly ranging from 1110 to 1300 meters, Gayo sits around Lake Laut Tawar and has been primed for Arabica growth for the past 30 years. The Jakarta Post credits Gayo’s Arabica as possessing a quality and flavour that is superior to that of Jamaica Blue Mountain. A bold statement, especially when considering the vast international revenues generated by said competitor in the United States, the United Kingdom, China, Korea and most noticeably Japan. The Gayo Organic Coffee Farmer’s Association (PPKGO) is a cooperative project of several local organic farms. It includes a team of organic agriculture field specialists and a community-centered coffee processing company. The area was chosen because of its inclusion in the buffer zone of Gunung Leuser National Park, which protects it from
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Blawan Manager Arief Wicaksono, Production Manager Soewarno and Kalisat Jampit Manager Ardi Iriantono
PTPNXII workers sort through last year’s harvest.
potential third party development. Currently, the organisation is rehabilitating old farms while building new ones. It has also purchased several new wet mill machines along with 25 transport vehicles to gather crops from five different communities in the area. As the PPKGO pre-finances the entirety of its project a couple months prior to shipment, it also takes on a large part of the financial risk as liquidity is subject to fluctuate. The organisation now sells their product straight to a current member, a fellow farmer who
also exports the product directly on behalf of the association. Before this arrangement, there were several intermediaries between the annual harvest in Gayo and exportation. Gayo’s rich soils and efficient farming methods help to make it the largest Arabica producer in South-East Asia. The local traditional farmers practice a multifaceted coffee cultivation system that includes the use of leguminous shade trees, fruit trees and horticultural crops. “I’ve noticed that Gayo demand has become very popular in recent years, and I’ve decided
A plantation worker at Blawan
to partner with a local producer to sell the product under my label,” explains Bambang Soetanto. “We’ve almost got the final product ready,” he says regarding Gayo. “It’s very delicious and we look forward to diversifying along with the region.” It would seem that Japan has taken the largest affection to Indonesian coffee. With Japan’s interest in coffee stemming from the later 20th Century, coffee has become a causal agent of socialisation among professionals. As cafés and corner coffee shops become even more ubiquitous in Tokyo, so do Japan’s inquiries for new foreign flavours. According to the Association of Indonesian
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Coffee Exporters, Japan has already spent over US$22 million this year on all types of coffee imported from the island of Java alone. Europe’s demand for all types of Javanese coffee comes in second, just nipping at Japan’s heels, as Italy and Germany collectively spent just over US$20 million this year. Italy’s enthusiastic caffeine culture comes as no surprise of course, but entrepreneurs might find it interesting that the fruity and piquant flavours of Indonesian origins have begun to creep into Italian stores among the more popular rich and bold flavours. With an evident demand base out there, experts seem to agree that Indonesia’s efforts on quality Arabica production may just be the push the country needs to increase their export values. “There is a chance that in the near future our country will produce more because of high demand for Indonesian origins and from the growing number of private producers,” says Soewarno. “The Indonesian government also pays close attention to coffee production, so it really has the potential to become a much bigger producer on the globe.” G C R
/////////// GUEST COLUMNIST
Photo: Pham Thi Diep Giang
SEVEN INITIATIVES FOR THE GLOBAL COFFEE INDUSTRY Đặng Lê Nguyên Vũ
Chairman of Trung Nguyen Group
MANKIND is facing a globally integrated crisis. This crisis is getting more and more uncontrollable and unpredictable. The globalised world needs to “re-think, re-shape, and re-operate” under the guiding principle of sustainable development, centred on a Green Economy and a Knowledge Economy. This is an irreversible trend. The latest global economic forum has once again reinforced this trend. The coffee industry can play a big role in this transformation. The coffee trade is global in nature, worth billions of dollars with 2.5 billion consumers worldwide. In it’s own way, the coffee industry relates to all aspects of human life. We cannot run away from the responsibility of re-thinking, re-shaping, and re-operating the nature of the global coffee industry. Re-thinking, re-engineering (re-designing), and re-operating the coffee industry, in a fundamental and universal manner, needs to be based on our heritage and existing conditions. It needs to be done on the global stage to bring two strategic benefits. Firstly, the industry needs to resolve the root cause of its main challenges: unfair trading, speculationopportunism, environmental decline and depression. Secondly, the global coffee industry needs to grasp unprecedented opportunities that are being presented to those who work in the coffee industry. Looking at the development of the coffee industry helps in this regard. As does looking at current conditions to forecast future trends and strategic opportunities. We, at Trung Nguyen Group, propose the following seven initiatives as joint steps for our entire global coffee industry: INITIATIVE 1: Rethinking the concept of coffee. Innovation and transformation must come from ideas and reasoning. We need to rethink and break traditional concepts of coffee. We need to start thinking not only of coffee as one of the most popular drinks in the world after water, but as the heritage and legacy of mankind which has the potential to affect every aspect of our lives. It can fuel a new type of creativity – responsible creativity – and if we are creative and innovative enough, we
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will be able to overcome the challenges of every individual, organisation, and country. This new perspective can shape the coffee industry as a pioneering model of sustainable development. INITIATIVE 2: The vision of a global coffee community. The new concept of coffee mentioned above can serve as the basis for us to gather, connect and develop a global coffee community. This can be a community where political ideology, religion, nationality, race, gender, and language are irrelevant. It can be a community of more than 2.5 billion people. This can be a community of growers, traders, roasters and consumers, who look at coffee as the source of responsible creativity. These can be people who think about where their coffee comes from to ensure the sustainable development of the industry, and the prosperity of everyone along the chain. This community can unite to ensure the proper redistribution of wealth. This can be a strong community that will make unprecedented progress in human history. INITIATIVE 3: Diversifying the styles, habits, standards, and cultures of enjoying coffee. Preserving and developing a diverse range of ways to enjoy coffee is key to ensuring sustainable aggregate demand. This can limit speculation activities and work against any moves to define coffee to a single culture. Preserving and developing cultural diversity in coffee also means preserving the biological diversity of the planet. Arabica cannot be viewed as the single aspirational coffee, but Robusta must be elevated as well. There must be more than just American and Italian styles of coffee, but the traditions of Vietnam, Turkey, Ethiopia, Japan, and other coffee cultures must be celebrated. Roasted coffee brands from Europe and America cannot be the only ones to dominate the market, but brands from coffee-growing countries must be encouraged. Only when the distribution of brands is diversified across the globe can we ensure a truly global coffee culture. Coffee cannot be viewed as merely a drink, but also a food, cosmetic ingredient, pharmaceutical, therapeutic, and above all, an experience.
THESE SEVEN INITIATIVES WE’VE PROPOSED ARE ABOUT CREATING SYNERGY AND HEALTHY COMPETITION IN THE GLOBAL COFFEE ECONOMIC ARENA. THEY ARE ALSO ABOUT BRINGING THE WORLD FORWARD INTO A NEW ERA – AN ERA OF RESPONSIBLE CREATIVITY, AND SUSTAINABLE DEVELOPMENT.
INITIATIVE 4: A comprehensive approach towards an integrated coffee production chain. An enclosed coffee production chain, organised in a circle, must work without generating harmful waste that can damage the environment. Production must be optimised to make the best use of resources at every stage. Research and development can help us make the most of this amazing plant, to commercialise products made from coffee through scientific advances: high-end cosmetics, bio-energy, fertiliser, and materials for construction and household use. INITIATIVE 5: Fairness in the value exchange and distribution of the coffee industry. This initiative consists of two core tasks: Firstly, to link nations, associations and non-governmental organisations (NGOs) together with farmers in coffee growing countries. We need to push forward fair trade programs in a quick, sustainable, and efficient way. Secondly, we need to take the next step to create public financial institutions that allow farmers to gain a legitimate voice within the industry. INITIATIVE 6: Proactively forming agriculture-based standards in the global monetary system. This is indeed a very bold initiative, but not unrealistic. Most importantly, it’s absolutely necessary to bring real stability to the industry. Coffee is a vital global commodity, the secondmost exchanged value in the world just after crude oil, with over 100 million families around the world depending on it for a living. Coffee requires a new global currency and standard which is more sustainable, to help contribute to economic and financial security, food security and the global environment. Coffee should be linked with other goods to create a global coffee standard currency system based on essential
commodities from newly emerging economies (mainly agricultural products, and the products of biotechnology), minimising the risk of abuse of financial derivatives to the farmers detriment, as we have sadly seen in recent history. INITIATIVE 7: Building a flagship model geographically for the coffee industry. These six global initiatives have the power to create a great impact on the global coffee industry. They can help promote the process of transition to a sustainable development model. To begin the change, it’s necessary to have a pioneer and flagship model that can represent how these initiatives will unfold. We call it the coffee sanctuaries, or coffee paradises, where we can fully and profoundly integrate the application of the above initiatives. Trung Nguyen, as the leading coffee company in Vietnam – one of the world’s largest coffee producers – will take those first steps by proactively applying this flagship model. These seven initiatives we’ve proposed are about creating synergy and healthy competition in the global coffee economic arena. They are also about bringing the world forward into a new era – an era of responsible creativity and sustainable development. Our vision is for an era where coffee fuels these changes needed, where coffee can act as a model for sustainable development. Let’s call it the coffee era. Let’s see all those who work in coffee stepping forward to create a model for sustainable development, in both an economic and environmental sense. Now, more than ever, we desperately need a form of interdependent solidarity, common beliefs, communal thinking and mutual action. Together, nothing is impossible. G C R
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DIARY Dashboard COFFEE AROUND THE GLOBE
WORLD COFFEE EVENTS SEOUL INTERNATIONAL CAFÉ SHOW
EUROPEAN COFFEE SYMPOSIUM
THE PASSENGER TERMINAL
AMSTERDAM, THE NETHERLANDS
20 – 22 NOVEMBER The European Coffee Symposium is a flagship event for executives from across the branded coffee shop and food-to-go sector. The event provides a platform to develop knowledge, build relationships and drive business performance. Fuelled by the expertise of leading-edge market analysts and the contribution of industry thought leaders, the event provides decision makers with ready-to-implement market insight, innovative ideas and networking opportunities.
COEX SEOUL, KOREA
22 – 25 NOVEMBER The Seoul International Café Show welcomes over 70,000 visitors to one of Asia’s largest coffee events. Seoul Int’l Cafe Show was established in 2002, and today is the representative café exhibition in Korea. With the region seeing a growing demand for coffee and tea, the event offers participants the opportunity to meet core buyers and valuable business partners in the market. In 2011, the event welcomed almost 70,000 people and 280 exhibitors from 18 countries. The 2012 Seoul International Café Show will host the 10th Korea Barista Champions, as well as the I Love Coffee competition. www.cafeshow.co.kr
www.europeancoffeesymposium.com
18TH ASIA INTERNATIONAL COFFEE CONFERENCE
WORLD COFFEE LEADERS FORUM
PARK HYATT SAIGON
22 – 23 NOVEMBER
5 – 7 DECEMBER
COEX, SEOUL , KOREA
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HO CHI MINH CITY, VIETNAM
The World Coffee Leaders Forum will take place as a concurrent event during the Seoul Int’l Café Show 2012. The inaugural event will welcome world coffee leaders to discuss and share ideas on issues shaping the industry. Topics will include a look at Asia’s position in the global market, the effects of climate change on coffee, and the relationship between producers and consumers in sustainability initiatives.
A prominent gathering in Asia’s coffee hub, with topics covering Vietnam’s developing coffee sector, as well as global trends, changing market structures, quality challenges and trade risk. Key speakers include Jinlong Wang, President Starbucks Asia Pacific, Đang Lê Nguyên Vu Chairman CEO Trung Nguyen Coffee Group, Neil Lacroix Director of Sustainable Supply Chains for Kraft Foods Europe and more.
www.cafeshow.co.kr
www.asiainternationalcoffee.com
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10TH AFRICA FINE COFFEE CONFERENCE & EXHIBITION
MUNYONYO COMMONWEALTH RESORT
KAMPALA, UGANDA 14 – 16 FEBRUARY 2013
The 10th African Fine Coffee Conference & Exhibition will employ the theme ‘Uganda: Discover a Diversity of Coffees, from the Pearl of Africa.’ The event will host over 1500 delegates, an interactive conference program, large exhibition areas, engaging social events as well as exciting afternoon activities. www.eafca.org
KEEP A LOOK-OUT Tea & Coffee World Cup 28 February – 2 March 2013 Singapore www.tcworldcup.com/singapore International Coffee & Tea Industry Expo Café Asia 14 – 16 March 2013 Singapore www.intlcoffeeteaexpo.com The SCAA Symposium 10 – 11 April 2013 Boston, United States www.scaasymposium.org The SCAA Event 11 – 14 April 2013 Boston, United States www.scaaevent.org
GLOBAL COFFEE REVIEW
LEADERS SYMPOSIUM
ZINC FEDERATION SQUARE
MELBOURNE, AUSTRALIA
22 MAY 2013 The GCR Leaders Symposium will welcome the industry’s influential voices to discuss pressing issues, with vivid presentations and panel discussions aimed to help grow and inform the coffee industry. The event will be launched in Melbourne, Australia, in conjunction with the Melbourne International Coffee Expo and the World Barista Championships 2013. With its strategic geographical location, Melbourne serves as the ideal venue for an event catering to the needs of the blossoming Asia Pacific coffee industry. The GCR Leaders Symposium will be held at Zinc, Federation Square. www.globalcoffeereview.com/gcr-leaders-symposium
Food&Hotel Vietnam 24 – 26 April 2013 Ho Chi Minh City, Vietnam www.foodnhotelvietnam.com The London Coffee Festival 25 – 28 April 2013 London, United Kingdom www.londoncoffeefestival.com Melbourne International Coffee Expo 23 – 26 May 2013 Melbourne, Australia www.internationalcoffeeexpo.com
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PRODUCTS Marketplace
CERVINO AUTOMATIC COFFEE MACHINE Macchiavalley’s Cervino is made of durable and robust quality components. The actively heated brew unit has teflon-coated elements. This long-life brew unit does not need to be checked until after serving over 60,000 cups of coffee. The boiler in the new Cervino can be opened and closed again, to replace the heating elements, and is energy-efficient thanks to the heat exchanger. The new Cervino model is designed for high performance and simple operation, and requires a 400 volt/4600 watt connection. It manages to make specialty coffees from up to 3.6 kilograms of coffee beans per hour, as the patented boiler with heat exchanger guarantees no waiting time between shots. Whether during a break at a function, at peak times at service stations or lunchtime in the café: cappuccino, espresso, filter coffee, take-away coffee and hot chocolate can be prepared in a matter of seconds. Each cup is prepared with fresh faucet water, and milk drinks can be prepared with 100 per cent fresh milk. The 7-inch i-Touch screen display leads one intuitively through the menus. The touch-and-scroll function and simple zooming of the controls ensures ease of use. The spout height of the Cervino can be quickly adjusted for cups, mugs or glasses via an elegantly designed slide bar. For more information visit www.macchiavalley.de
NEUHAUS NEOTEC SHOPROASTER The glazed floor-mounted Neuhaus Neotec shop roaster is designed as an attractive centrepiece for a café. The roaster is characterised by its high flexibility and simple operation, which can be easily learned. The complete roasting process can be observed – from filling-in of the beans, to roasting and cooling. During roasting, the chaff is separated by the cyclone and collected in a bin. As up to 100 different recipes can be stored and called in, depending on the blend and the requested colour/roasting temperature, optimum reproducibility is ensured. As soon as the coffee has reached the desired roasting temperature, automatic discharge will start the cooling process. The coffee is cooled down with fresh air in a very short time so that the volatile aromas remain in the coffee. Whether single origin or a blend – the result is perfectly roasted coffee which can develop its full flavour due to the gentle and carefully controlled roasting process. For more information visit www.neuhaus-neotec.de
BFC GALILEO The latest line from BFC follows modern trends, while staying true to the stylish design tailored to the barista. The Galileo is made entirely of stainless steel, with a new moulding technology that allows for a flexible design. The Galileo is available in two-groups with a 14-litre boiler, three-groups with a 21-litre boiler or four groups with a 27-litre boiler. It is available either as a semi-automatic machine, electronic or as a lever machine. This latest design presents two different units: the Galileo and Galileo’s Dialogue. The latter allows communication with all parts of the machine, detecting failures or malfunctions in real time, and simplifying its operation. The newest version is also available in TCI (temperature independent groups) with an electronic device already used in other previous models via a separate multi-boiler circuit. The Galileo comes equipped with several new accessories such as the lighting system, which can be applied under the groups to illuminate the dispensing area and on the lateral sides for aesthetic appeal. For more information visit: www.galileo11.it
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DALLA CORTE DC PRO & DC ONE ON-DEMAND GRINDER The dc pro espresso machine is based on the original multi-boiler technology first released by Dalla Corte in 2002, where espresso brewing groups are independent of the steam boiler. This ensures a constant temperature with a precision of one tenth of a degree, essential to obtaining excellent espressos. The parameters of each brewing group can be calibrated separately and work independently of one another: this allows users who extract several blends or single origins to set the right temperature for each type of coffee and obtain the best results. This dc pro works in dialogue with the new Dalla Corte dc one on-demand grinder, designed by Thomas Liebe. Once the right coffee extraction parameters have been set, the devices keep up-to-date with one another and automatically adjust grind and dose as necessary. Each group of the three-group dc pro can be connected to a different dc one grinder. This way, if different coffee blends and single origins are used, each will be maximised by setting their right temperatures and grind parameters separately. For more information visit www.dallacorte.com
LA SPAZIALE S5 EK La Spaziale S5 EK has been on the market since 2005, having emerged as one of the most popular La Spaziale models among its customers. The machine offers electronic temperature control, through an LED panel which allows the barista to easily read the operating temperature and better control it as needed. The electronic temperature control is essential for the highly sensitive adjustment of the operating temperature of the machine, according to the coffee blend used. The S5 EK model three-group T.A. (Take Away), offers raised groups (16 centimetres distance between spouts and drip tray) and removable supporting grids for espresso cups. This allows the barista to deliver espresso and cappuccino drinks both in traditional cups and in take-away tall paper cups. All S5 machines are equipped with a manual lever, instead of a knob, for steam delivery. This feature is generally appreciated by baristas who can better control the steam dose necessary to correctly foam milk for cappuccinos. As all other La Spaziale espresso coffee machines, the S5 is built with the special heat exchange system between the boiler and delivery group with steam circulation instead of water. For more information visit www.laspaziale.com
CABLEVEY CONVEYORS Cablevey Conveyors is a manufacturing company that develops and builds state-ofthe-art systems used to convey specialty materials. Based on patented, gentle, cable and disc technology, Cablevey conveyors gently move products such as roasted and ground coffee through an enclosed tube without the use of air. This virtually eliminates the product separation and degradation that occurs with traditional conveying systems. Cablevey Conveyors’ cable and disc technology gently moves products through an enclosed tube without the use of air. Systems can convey up to 1240 cubic feet (35 cubic metres) per hour. Numerous and flexible layouts are customised using multiple inlets and discharge points to customer specifications. Product separation and degradation are practically eliminated. All systems utilise cable and disc technology and operate at convey speeds which average 100 feet (30.48 metres) per minute. For more information visit www.cablevey.com
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LASTWORD Induction Top
THE OTTO INDUCTION TOP:
A COMPACT & TECHNOLOGICALLY
ADVANCED POWER BOX IT TOOK CRAIG HIRON only a matter of hours to come up with the design for the Otto Induction Top. Like many creative thinkers who do their best work surrounded by silence and wide-open spaces, Hiron’s concept for the design came to fruition while travelling, by corresponding with designers via email and phone calls. Coming off the back of the Otto espresso machine, a stove-top machine modelled on the 1950s Atomic Coffee Maker, Australian creator Hiron says he saw a need in the market for a heat source that was calibrated for the Otto, and stainless steel kettles for other brewing methods. Giving careful consideration for an optimum heat source, Hiron chose the induction method for its accuracy and efficiency. From the outset, Hiron says the biggest consideration was whether to put an element inside the Otto machine or to create something independent. Preserving the Otto espresso machine’s reliability and longevity was of paramount importance and so the separate induction unit was the best solution. The challenge then was to produce an induction hot plate that would work with Otto’s solid stainless steel boiler. Stainless steel’s low ferromagnetic content (its magnetic attraction) is not ideal for induction circuitry. Stainless steel is a challenging material to work with given that the energy transfer from the coil to the vessel requires a magnetic reaction. “There is already a stack of portable induction hot plates on the market,” Hiron says. “The technological challenge was in creating an induction coil that would work reliably with stainless steel. Creating products with a point of difference is the basis of our business.” Otto’s Manufacturing Agent and Electrical Engineer, Doug Marshall, undertook two years of background work. Marshall worked tirelessly with carefully chosen suppliers to make the Otto The power cycle of the Otto induction top a reality. “The challenge had to be tuned specifically was in getting the coil, the firmware and for the stove top machine, a sensor to all work together and read the and is a separate circuit stainless steel material,” Marshall says. to five cooking and kettle The key was finding firmware (software settings. for the controller chip) that allowed a sensor to read and engage with the stainless steel boiler.
HEATFACT
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Engineers then refined the power cycle into the coil, so that enough energy was produced to heat without overloading the circuit. Marshall says the power cycle had to be tuned specifically for the Otto, and is a separate circuit to the five cooking and kettle settings. “Once Doug had the finer points of the electronics sorted we knew we had the components for a great product,” Hiron says. The next stage was getting the electronics into a box-like housing. “We needed it to look the part on it’s own and to be aesthetically supportive of Otto,” Hiron says. “Through a series of phone calls back and forth with Otto’s industrial designers we collaborated to design a box that fits the coil and switch sensors with a specified clearance for airflow underneath.” The final design element was finishing the box in a brushed stainless steel to ensure it ties in with other kitchen appliances, also fitting well with the polished glass top. “Originally, we didn’t intend to make something for use beyond the Otto, however it made sense to add a few settings. Now we’ve got roasters and café owners using the induction top with stainless kettles like the Hario Buono,” Hiron says. In terms of application, the product is designed for Otto users, however, it also opens opportunities for brewing coffee and tea in offices or anywhere enthusiasts require fast, controlled hot water. Weighing in at 1.5 kilograms, and with a surface area smaller than an A4 page, the compact build of the Induction Top makes it easy to take anywhere. The removable power cable fits beneath, and as for maintenance, it couldn’t be simpler – one quick wipe and it’s clean. Using the specific Otto setting, the Induction Top has an eight-minute alert system to notify the user of the extraction and will automatically switch off at the end of the process, should the user forget. In addition, the device features five independent heat settings to use for kettles and cooking. Hiron notes the Induction Top has commercial certification, which is important for cafés and espresso bars using it commercially. “It’s really exciting having this now, it makes Otto a complete package, and opens us into the broader specialty coffee market,” Hiron says. G C R
LEADERS SYMPOSIUM 22 MAY 2013
OFFIC IAL EVENT
THE GLOBAL COFFEE REVIEW LEADERS SYMPOSIUM WILL WELCOME THE INDUSTRY’S MOST INFLUENTIAL VOICES TO DISCUSS PRESSING ISSUES AFFECTING THE COFFEE INDUSTRY. Sessions to cover: * Doing business in Asia The coffee deficit Coffee price overview
Research and Development at origin Single-serve surge Certification *subject to change
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