Coffee_Tea_International_1-2013_EN_FREE

ARABICA VS ROBUSTA: WHICHCLASS IS WHICH?

HOT DRINKS IN UKRAINE

GLOBAL COFFEE TRENDS

MAX QUIRIN: "COFFEE QUALITYIS THE FUTURE!"

# 1 (102) 201312–14 SEPTEMBER 2013 — MOSCOW

www.unitedcoffeetea.ru

https://apps.facebook.com/ahmadteastore/

1

contents

3 days at the Nordic Barista Cup Moscow coffee shop market Brazil. Another storm over the coffee ocean…

2 EDITORIAL

5 CALENDAR OF EVENTS

6 PRESSING ISSUEArabica vs Robusta: which class is

which?

8 NEWS

REVIEW&STATISTICS32 Hot drinks. Future Global Coffee

Trends

33 The volume of hot drinks retail

market, 2009-2011 (Russia)

34 Three leaders of the Moscow cof-

fee shop market are far ahead of

the competition

38 Hot drinks In Ukraine. The

Ukrainian tea market keeps on

growing

INTERVIEW

40 Max Quirin: "Coffee quality is the

future!"

ECONOMICS

44 Brazil. Another storm over the

coffee ocean…

48 ADVERTISER INDEX

№ 1’2013

9

24 34 50

10 22Jasmine-scented reflections…Champions are made, not born Tasty notes from MICF 3

Lately, people have been asking me how we can

combine a tea magazine and a coffee maga-

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

ical point of view, tea and coffee are two separate

plants, and the beverages made from them have

historically been competing with each other!

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

the surface: it is obvious that these two traditional

beverages, equally stimulating but also equally nat-

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

many companies today work with both products

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

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

fighting for their share of consumers’ daily fluid intake.

But there is a deeper reason: in order to understand the usefulness of a publica-

tion such as ours, we need to realize that both industries can profit from studying

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

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

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

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

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

Tata Tea a while back acquired the American coffee brand Eight

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

into the market.

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

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

union of opposites.

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

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

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

directory of tea and coffee companies.

In addition, we have come up with the idea of the United Coffee & Tea

Industry Show, the largest industry event in the CIS (Commonwealth

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

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

gible proof of the benefits of inter-industry dialogue.

We always strive to publish a broad variety of materials, so whether you

are a professional involved in both tea and coffee spheres or just start-

ing out in one, you can be sure to find something of interest on the pages

of our magazine.

Ramaz ChanturiyaEditor-in-Chief

ED

ITO

RIA

LEDITORIAL

EstablisherZAO INTERNATIONAL TEA HOUSE

Distributed worldwide among coffee and tea pro-ducers, wholesale companies, shops, and restau-rants. Printed in Russia. According to the registrationcertificate of mass media П И №77�7213 from 30thJanuary, 2001. Reprinting of materials is allowed onlyby permission of the magazine. The reference to themagazine «Coffee and tea in Russia» is obligatory.The editors don't bear any responsibility for reliabili-ty of data placed in advertising blocks or announce-ments. The editor's point of view may not coincidewith the author's point of view. All provided materi-als will not be returned or reviewed.

Coffee&Tea International magazine has been includedin the VINITI (All�Russian Institute of Scientific andTechnical Information of the Academy of Sciences �Vserossiisky Institut Nauchnoi i TekhnicheskoiInformatsii (VINITI)) list of synopsis journals and theinstitute's data base.Information about the magazine will be annually published in the «Ulrich's Periodicals Directory»,international handbook of periodic magazines andongoing publications.Coffee&Tea International is an appendix to theCoffee&Tea in Russia magazine.

№ 1‘2013

Editorial Address:

Russia, 123060, Moscow,Berzarina str., 36, building 2, of. 214

tel./fax: +7 495 935-87-07E�mail: [email protected],

www.coffeetea.ru

Printed in

Tipografia Mospoligraf LLC, Moscow

PublisherZAO INTERNATIONAL TEA HOUSE

Chief EditorRAMAZ CHANTURIYA

Deputy Chief EditorSVETLANA BELIKOVA

Computer�aided makeupVALENTINA GUSKOVA

Advertising DirectorJULIA CHANTURIYA

Advertising ManagerANNA ANTONOVA

Special Projects ManagerELENA TREGUB

Promotion Manager OLGA DOLGACHEVA

THE EDITORIAL BOARD

Chairman of the Editorial Board

R.O. CHANTURIYA,general director of Rusteacoffee Association

Members of the Editorial Board

S.G. BELIKOVA,deputy editor�in�chief of Coffee&Tea in Russia magazine,

PhD of Philology, Editorial Board Secretary

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

I.V. LISINENKO,general director of May Company

A. MALCHIC,chief executive of Montana kofe company

R.D. PANZHAVA,Georgian Tea Producers Association

M. PEYRIS,International Tea Committee

V.A. TUTELIAN,Head of the Institute of Nutrition of Russian Academy

of Medical Sciences, Member of the Academy

G.V. SMIRNOV,general director of SDC FOODS company

A.V. ELSON,general director of KLD Coffee Importers

Photo on a cover:

Coffee and oranges. Maxim Zhuchkin

COFFEE&TEA INTERNATIONAL # 1/20132

A – advertising materials

www.unitedcoffeetea.ru


NEWS

4

THE PROGRAM FOR THE WHOLE PRO-DUCTION CHAIN: FROM BEAN ANDLEAF TO A CUP

Business program of September 12 will bedevoted to coffee, with conduction of MoscowInternational Coffee Forum and specializedseminars. September 13 - is a “tea day”. Themain event of this day will be MoscowInternational Tea Symposium. For 5 years MICFand MITS have established a reputation of theevents where the most actual and demandingissues of the coffee and tea markets are beingdiscussed, forecasts are made and fresh ideasare suggested. MICF and MITS favors thedevelopment and promotion of coffee & teaindustries in Russia and other CIS countries.Recognized international experts are invited totake part in the business program which coversa wide range of topics and is conducted in theformat of presentations, panel discussions,round tables and seminars.

Free educational seminars and workshops in the exhibition areamay interest a wider audience in the various industry segments —manufacturers, distributors, specialized trade, retail and HoReCa.Seminars will be accompanied by tea & coffee tastings and competi-tions.

For the first time everyone will have a unique opportunity to tryoneself as a coffee roaster on the Roasting Factory. Roasting facto-ry is an area where everyone can see the roasting machines in action,roast coffee on the spot at desired profile and comprehend the basisof the green coffee quality roasting under the strict guidance ofexperts.

For the moment a desire to support the event as a general spon-sor has already expressed Martin Bauer Group, and an official part-

ner of Russian United Coffee & Tea Industry Show has become KLD Coffee Importers.

A rich program of conferences and exhibitions will be crownedwith a black & white reception — Moscow Coffee and Tea Dinner tobe held in one of the most historically significant places of Moscow,namely at the Metropol hotel.

The event is organized by business industry magazines Coffee &Tea in Russia and Coffee & Tea International and a non profit orga-nization the Russian Association of Tea and Coffee Producers(Association Rusteacoffee).

More detailed information on participation in Russian UnitedCoffee & Tea Industry Show exhibition and conference is available atwww.unitedcoffeetea.ru

Russian United Coffee & Tea Industry Show is an international combined coffee and teaconference and industrial exhibition. Its three-day work includes already traditionalMoscow International Coffee Forum (MICF) and Moscow International Tea Symposium(MITS). As the major exhibitors taking part in the Show there will be coffee and tea rawmaterials suppliers, coffee and tea producers, exporters, importers, distributers, manu-facturers of all types of equipment, packaging, various ingredients, and accessories forindustries. Organizing Committee of Russian United Coffee & Tea Industry Showexpects the arrival of more than 2,500 visitors — representatives of all segments of cof-fee and tea markets in Russia and other CIS countries.

The key industry event inRussia and other CIS countrieswill take place in Moscowon September 12–14, 2013

5

CALENDAR OF EVENTSJanuary–October 2013

All materials are provided by support ofWWW.COFFEETEA.RU

25–28 April 2013

Country: UKCity: LondonCompany Page: www.londoncoffeefestival.com

THE LONDONCOFFEE FESTIVAL

23–26 May 2013

14–16 March 2013

Country: SingaporeCity: SingaporeCompany Page: www.cafeasia.com.sg

www.intlcoffeeteaexpo.com

Country: AustraliaCity: MelbourneCompany Page: internationalcoffeeexpo.com

CAFE ASIA andINTERNATIONALCOFFEE & TEAINDUSTRY EXPO(ICT)

20–22 March 2013

Country: RussiaCity: MoscowCompany Page: www.vendingexpo.ru

VEND EXPO

19–20 April 2013

Country: SerbiaCity: BelgradeCompany Page: www.coffeefest.rs

COFFEE FEST

18–20 March 2013

Country: RussiaCity: MoscowCompany Page: www.fastfoodexpo.ru

INTERNATIONALFAST FOOD FAIR(IFFF)

12–14 April 2013

Country: USACity: BostonCompany Page: www.scaaevent.org

SPECIALTY COFFEEEVENT OF THEYEAR

23–25 April 2013

Country: RussiaCity: MoscowCompany Page: www.sirha-moscow.com

SIRHA MOSCOW

MELBOURNEINTERNATIONALCOFFEE EXPO

26–28 June 2013

Country: FranceCity: NiceCompany Page: www.scae.com

SCAE WORLD OF COFFEE

19–21 September 2013

Country: GermanyCity: KoelnCompany Page: www.euvend-coffeena.com

EU’VEND & COFFEENA

18–22 October 2013

Country: ItalyCity: MilanCompany Page: www.host.fieramilano.it

HOST


Country: RussiaCity: MoscowCompany Page: www.world-food.ru

WORLD FOODMOSCOW

29 January – 1 February2013

Country: RussiaCity: MoscowCompany Page: www.upakowka.ru

UPAKOVKA/UPAK ITALY

11–15 February 2013

Country: RussiaCity: MoscowCompany Page: www.prod-expo.ru

PRODEXPO


Country: UgandaCity: KampalaCompany Page: www.eafca.org

10th AFRICAN FINECOFFEE CONFERENCE& EXHIBITION


Country: IndiaCity: MumbaiCompany Page: worldteacoffeeexpo.com

WORLDTEA&COFFEE EXPO

28 February – 2 March 2013

Country: SingaporeCity: SingaporeCompany Page: www.tcworldcup.com

TEA & COFFEEWORLD CUPSINGAPORE

1–3 March 2013

Country: RussiaCity: Saint PetersburgCompany Page: www.farexpo.ru

EXPOHORECA

8–10 March 2013

Country: USACity: New York Company Page: www.coffeefest.com

COFFEE FEST


Country: RussiaCity: MoscowCompany Page:www.unitedcoffeetea.ru

http://coffeetea.ru/en/calendar-of-events/


NEWS

6

QUIRIN MAX,a president of SCAA:

— Frankly speaking the costs for pro-ducing Washed Arabica Coffeeshave always been higher thanRobusta Coffees and to my mind willalways be higher due to some rea-sons. Firstly mainly due to the farm-ing practices that are required by anArabica coffee plantation. If wecompare these two types of trees,Arabica trees are more delicate andsensitive to sunlight exposure, soilnutrition, fungus diseases andnematodes than Robusta ones, so itis clear that the labor and differentchemicals inputs need to be moreintensive for an Arabica plantation.Secondly, the processing cost is alsomore expensive for a washed coffeethan a natural coffee, this is anotherreason for the cost difference.Speaking about price difference yes,it is now less than a year ago,because Arabica prices had increasedsignificantly and there has been nowalso a significant reduction for theArabica prices. This does not meanthat Robusta prices have increasedsignificantly or dramatically. Theprice difference is now still higherthan some years ago when therewere lower prices for Arabica cof-fees. If we consider the average ofthis price difference for the last tenyears compared to the current mar-ket prices, there is no reductionbetween the Arabica and Robustaprices.We all know that it is important toimprove quality for all coffees, andin the recent years the quality forsome Robusta coffees has improved,and these better quality Robusta cof-fees can be named fine Robusta orspecialty Robusta. But is very impor-tant to point out that the cup attrib-utes and taste profiles in Robustacoffees are different from theArabica coffees. It would be a mis-take to try to compare Robusta and

Arabica coffees. The taste expectations inspecialty Arabica coffee are quite differentfrom the expectations in a good qualityRobusta coffee. So I would like to concludewith saying that the coffees are not thesame and the markets are not the same.

VINCENZO SANDALJ, president of Sandalj TradingCompany spa:

— In Italy, in one of the traditional espressodrinking markets, we have always givengood quality Robusta a high status becauseof its use in the espresso blends. It dependsfrom region to region but a Robusta compo-nent in the blends provides for the necessarybody in the mouthfeel and will also increasethe thickness of the crema, both considereda must in a traditional Italian espresso cup.This preference evolved notwithstanding theprice factor in Arabica and Robusta coffees. If we look in the past we can see that espe-cially the washed Robusta from India andIndonesia have been considered for a longtime really specialty coffees and have com-manded a premium on the market oftenhigher than some Arabica!I believe that to be considered a gourmetcoffee the Robusta must have a completelyclean and neutral taste, without any woodi-ness or earthiness, and such coffees are notproduced in big quantities. And this coffeehas nothing to share with the bulk of thenatural Robusta that is used by the main-stream industry.As far as I know recently the surge in Arabicaprices have prompted an increased demandfor Robusta coffees worldwide, so the issueof specialty Robusta has become more pop-ular also in markets that ignored this qualityup till now. I think that, with the spread ofespresso consumption, the integralistic viewthat only Arabica is to be considered a supe-rior quality will partially be offset by differ-ent approaches, as happened years ago withNatural Arabica compared with WashedArabica. It is also a fact that processing aproperly washed Robusta is more difficultthan processing a washed Arabica, so this

ARABICA VS ROBUSTA: which class is which?

Pressing issue:

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

Aliona Velichko

NEWS

7

consideration will continue to playan important role in future.The discovery of washed Robusta bynew markets and consumers is hereto stay, so other producers will betempted to increase the supply ofthese coffees to the market andbring with it pleasant surprises toconnoisseurs worldwide.

PHAM THANH THUY,Chief Representative of Neumann Gruppe in Vietnam:

— I can say that the quality of theRobusta has been improved a lotsince the last five years. The proces-

JOSEPH RIVERA, a coffee scientist:

— I strongly disagree with the move-ment of substituting Robusta forArabica although there has been agradual shift over the years in thisdirection. Yes, on the surface thereare similarities between bothspecies, but Robusta has a signifi-cantly different chemical composi-tion profile than that of Arabica.Compounds such as sugars, caf-feine, trigonelline, organic acids,lipids and chlorogenic acids vary sig-nificantly in Robusta to produce abeverage that is inferior in quality.These chemical differences are notonly quantitative, but qualitative aswell and ultimately play a role in thedevelopment of important flavorcompounds during roasting. How can we expect to produceArabica — like flavor attributes usingRobusta with compounds that arenot present — or worse, compoundsthat severely taint the overall tasteexperience?

WOLFGANG HEINRICY, Global Head of Marketing& Supply ChainManagementCoffee Division of LouisDreyfus CommoditiesSuisse SA:

— Let us think about the fact thatRobusta serves as a economical opti-misation blend ingredient in themature and highly competitive mar-kets gaining market share in globaland regional blends. At the sametime robusta coffee is supporting thegeneric growth of global consumtionby their production increase, particu-larly in the emerging market. Increasing product differentiationwithin Robusta — less and less roast-ers are willing to accept bulk / faqRobusta. The resulting increasedsupply in black and brokens is easilyabsorbed by the soluble industry inproducing countries increasing pro-duction of high grown washedRobusta, eg in Mexico andGuatemala.Interesting to see that differentialvolatility seen in India Robusta (cher-ry and parchment) illustrate harddemand and 'gourmet' character inthe case of Parchment. IndiaParchment traded at premium toColombia Arabica at one stage in2012 which demonstrates the pointwidespread use of wet polishingincreasing supply of 'clean' Robusta.Nespresso and Illy among the buyersof Indian Robusta illustrating its useamong the highest quality espressobrands.

sors/ exporters have been investing modern facilities fortheir factories. Until now they could process almost all kindof Robusta coffees, which could satisfy the buyer'sdemands.We consider that Arabica price became very expensive two-three years ago because many Arabica countries in theCentral America got big losses in their productions. Theindustries had to find replacements in order to reduce theirinput costs. They could reduce the share of Arabica coffeein their blend and that part has been replaced by some goodRobusta like Washed, Wet Polished or Clean and ColorSorted...Beside the traditional markets like Europe and America wecould see a big growth in the new coffee consuming coun-tries and in the producing countries: China, Indonesia,Thailand, Philippine. And what is the main product there?Yes, Robusta coffee. All these factors can help us understand the change in thedifference in price between Arabica and Robusta.


NEWS FROM RUSSIA

8

coffeetea.ru

Consultative Board Begins Work

The Consultative Board on the developmentof specialty coffee market (CB), founded

by the Rusteacoffee Association on July 17,2012, began its work.The first meeting of the Board took place inMoscow in September, attended by represen-tatives of CB member companies. The partici-pants discussed the framework and generalprinciples of the CB’s activity, as well as possi-ble areas of focus. Another item on the agen-da was the election of the CB Chairperson; thevote was won by Andrei Elson, General

Director of KLD Coffee Importers.During their discussions, the participantsreached consensus on the high-level goals andmethods of the Board. The main focus of theCB is the development of a robust market forspecialty coffee. The two primary challengesare educating the general public and the busi-ness community about specialty coffee andinvolving as many specialty coffee marketparticipants as possible in the work of the CB.Meeting these challenges will likely lead togrowth in sales of high-quality coffee.

During a regular session of theInternational Coffee Organization (ICO),the Rusteacoffee Association, whichrepresents the Russian Federation,became a full member of the PrivateSector Consultative Board (PSCB), anadvisory body of the ICO. Among othermembers of this Board are such well-respected national coffee industry orga-nizations as Anacafe, AFCA, AJCA, FNC,NCA, SCAA, SCAE and others.

coffeetea.ru • ico.org

The Rusteacof-fee Associationstrengthens ties with ICO

Several new products under Jardin brand have just been introduced to

the market. Specialty coffee line is extended with limited volume of

the new product called Jardin Ethiopian Treasure – arabica from Gedeo

region in Ethiopia. This coffee has original flavour profile with berry,

flower and syrup notes that are unique only for coffee from this region.

As a whole in Gedeo the coffee is grown in limited volume and this makes

Jardin Ethiopian Treasure even more valuable.

Second Jardin novelty is the collection of ground coffee with natural

flavourings. The product line also comes in limited volumes and includes

three splendid blends of excellent arabicas: Jardin Vanilla, Jardin Caramel

and Jardin Cinnamon. Absolutely all flavourings are natural what makes

this collection a truly special offering.

orimitrade.ru

New Jardin Coffees

www.elisental.de

NEWS FROM RUSSIA

9

When a baristabecomes a

world champion inpreparing coffee withalcohol, no one willthink that this wasdue to sheer luck.Behind each such winthere is always exten-sive experience andlove of one’s trade. Itis this love that allowsone to rise to the top,says Philip Leytes, aRussian barista whowas named 2011Person-of-the-Yearby the Industry Boardof the “Coffee andTea in Russia” maga-zine for his contribu-tions to the develop-ment of the coffeeindustry. Philip has atough road behindhim… and ahead ofhim – many opportu-nities inspired by hisbright ideas aboutcoffee.Here’s what Philip says about coffee: “When you work with coffee everyday, you find yourself break away from certain preconceptions; yourexperience shows that things are at the same time simpler and more com-plicated than you have thought. When I was starting out, I was told thatto prepare an espresso you need to run water through 8 grams of groundcoffee to get 60 ml of the drink. But after a while, I realized: coffee is aliving product, constantly changing. It has no rigid rules and comes outdifferently depending on who prepares it. And this is wonderful!

Aliona Velichko

Champions are made, not born

Victorious Victoria

Victoria Kashirtzeva, Russia, was the winner of the Latte Artworld championship, held November 1—4 in Seoul, South

Korea. Her first international competition — and she win! Buthow could it have been otherwise if even her name speaks ofvictory! Victoria gave an interview for our readers.

— Did you enjoythe competition?— During mywhole stay inSouth Korea I feltat home. I wasamong friends! Ispoke Russianwith a Spaniardand we under-stood each other!So many familiarfaces… it really liftsyour spirits!

— When you areat work in yourcoffee shop, doyou enjoy watch-ing people drinkcoffee with yourdesign on top?— Yes, I love thesemoments! We used

to have a regular customerwho always took pictures ofmy designs on his coffee andthen came up to the bar andtell me about it. I was verypleased! Sometimes I drawsomething pretty and thenwatch as the waiter deliversthe drink to the customer andhow the customer reacts. It isimportant to me that peoplesee not just white foam ontop of their drink but some-thing beautiful, like a lovelybutterfly.

— What was the mostmemorable moment foryou?— They misspelled my name!They wrote “Victori”, which,although incorrect, soundsjust like the English word “vic-tory”! So there was no doubtthat I was destined to win. Atfirst, I wanted to change myname tag, but then I thought,“Why?”.

Evgenija Efimova

www.zwirnerei-wutach.com

http://www.zwirnerei-wutach.com/


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


Watching the participants arrive at the Forum early in the morning, one couldn’t help but ask:what makes this event stand out? Why do people choose MICF when they have so many other

exhibitions and events to meet friends and colleagues?One answer to this question comes from Andrey Elson, Director, KLD Coffee Imports, Ltd.: “First of

all, the MICF is the main coffee event in Russia, and it is very important for my Russian colleagues, whouse this platform to discuss future directions and current world trends. For the foreign colleagues, thisis a great opportunity to learn about our domestic coffee market and to figure out how to find thebest models of cooperation. I have always supported such events and will continue to do so in thefuture.”

The taste of meeting friends

What is the taste of quality coffee?

TASTY NOTES FROMTHE MOSCOW INTERNATIONAL

COFFEE FORUM (MICF) Aliona Velichko

http://coffeetea.ru/en/coffee-forum-news/

11



The number of applications for participation in the Forum exceeded the expected 500 and reached the total of 579. There are good reasonsfor this: the growth of the market, the rich and unique experience of the organizers of this B2B event for the coffee industry, held in Russiafor the third time, and, of course, the packed schedule of the Forum, featuring many events that would take place in Russia for the first time.The choice of September as the Forum month was not an accident: during this time, the business world is hard at work putting new ideasand plans into practice. The mission of the Forum was to set the tone for the coming year, to coordinate industry efforts, to evaluate cur-rent trends on the Russian and international markets. The Forum offered many interesting events that were happening in parallel in threelocations. The guests had to decide where to go and which coffee to taste, but they also had to face larger questions. What is the future ofcoffee markets in Russia and in the world? The Forum did not provide straightforward answers, but participants raised questions, helddiscussions, learned new facts – and each tried to come up with his own answers.

The fact that the MICF attracts all types of market participantsbecame clear as the venue was filling up with coffee industry pro-fessionals from different corners of the world. Andrey Savinov, SFTTrading Ltd., who was awaiting the opening ceremony standing byhis company’s exhibit shared his thoughts with us: “It is with the helpof such events that the industry can come together and make itsknowledge and expertise available to the consumers, who need itvery much right now.” Lively discussions started as participants weresipping their morning Black Carte, the official coffee of the Forum.

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

Lectures and seminars were wonderful complements to the aroma of coffee. Imagine that yourday begins with a survey of the Russian and European coffee markets by well-known world-

class specialists. You ponder over the numbers, trends and arguments. But the toughest question isleft for last: shall the Russian market be driven by price or by quality? How often do you ask yourself:how long can my business depend on the exchange price of green coffee going up? How can I breakout of this cycle? Ramaz Chanturiya shared his views on this issue and argued that the price markethas no future and that those who want stability are better off following the path of increasing qual-ity and chasing a more sophisticated consumer. David Veal outlined one possible future for theRussian coffee market – if it chooses to follow the path of quality, as Europe did 10—15 years ago.

The taste of reflection

The taste of different countriesDuring the discussion of the state of coffee industry in coffee-producing countries and the impact

of these industries on the world coffee market, guests could chat with Max Quirin, President ofthe Specialty Coffee Association of America (SCAA), Abdulla Bagersh, Chairman of the EthiopianChapter of the African Fine Coffees Association (AFCA), Vincenzo Sandalj, Chairman of InternationalRelations Committee of SCAE. Discussions continued even during breaks… All participants noted the highpotential of the Russian market, shared their knowledge of the markets in their own countries andreflected on how all these factors can be used to foster cooperation.

Coffee breaks were an integral part of the Forum, as discussions and questions for the speakers didn’t stopeven then. There was only one door during the Forum that for the most part remained closed – and when itopened, it was only to let someone out, not in. Behind this door another interesting – and tasty – event was held,



As the Latte Art competition started, a large crowd gathered around latte cups, watch-ing the competitors work their wonders on the surface of the coffee. Nearby, a group

of activists was promoting alternative methods of coffee brewing. Under the direction ofTatiana Elizarova, an independent expert on tea and coffee, and her colleague, TatianaGuliaeva, a SCAE-sertified barista, visitors studied how different ways of brewing high qual-ity coffee can help bring out all its exquisite characteristics. The large number of seminarsconnected in one way or another with coffee quality leaves no doubt: the taste of coffee isbecoming more and more important, not just at the Forum, but outside its walls as well. Andthis is a real cause for joy.

The taste of brewing coffee

one that, by its very nature, could not be open to the general public: the sem-inar on evaluating the quality of green coffee, organized by KLD CoffeeImporters Ltd. Needless to say, participants signed up for this even monthsin advance, as the number of seats was limited, because judging coffeequality requires concentration, attention and a focus on the presenter.

What were the reasons behind the success of this seminar? The topic, ofcourse –but also Rob Steven, a unique specialist, certified Q-grading instruc-tor. He turned out to be a lively, open and tremendously interesting person,ready to talk at great lengths about coffee quality. After several hours ofpresenting a system of grading green coffee, he let the participants try it for

themselves. “Always sigh your cupper’s protocols,” Rob urged them, “Thereis no such thing as an anonymous cupper. If something isn’t going well,other people will look at your protocol and know who needs help. And ifeverything goes perfectly, people will know whom to ask for help. Andremember, when you enter this room to do cupping, you must leave youregos at the door.”

Another engaging speaker – Joseph A. Rivera, an independent expert onthe chemical properties of coffee – helped us understand the taste of cof-fee (and America) molecule by molecule. Together with other participants,Joseph experimented with various coffee tastes and factors that affect it.



De gustibus non disputandum est, as they say – but there is no disputing the importance of dis-cussion. “Calm, civilized, open exchange of opinions is extremely important: you can see the

other person, instead of reading anonymous posts on the internet”, said Anton Eine (Strauss CIS).Together with Alexander Borisov, the founder of the famous “Grand” brand and General Director ofthe Kruger-Grand company, they defended the view that the Home Consumption market is moreimportant for the development of the coffee market in general and for shaping consumer tastes. Onthe other side of the isle, Ilya Savinov (SFT Trading) and Enver Chariyev (training center “Lavazza”)were convinced that the Out-of-Home market is the key. The consensus was that the arguments forthe Out-of-Home market were stronger. Still, during a short interview after the discussion, Anton Eineremarked that although competition is tough, the relations between the retail market (which driveshome consumption) and the HoReCa industry, the basis for the Out-of-Home segment, are more

The taste of discussions

As the Forum drew to a close, guests were getting ready for the gala-dinner, exchanging theirimpressions after a full day. Someone was delighted by the seminar given by Constanza MejRa de

los RRos, who talked about Columbian coffee and the factors that contribute to its price formation; oth-ers discussed the advantages and disadvantages of coffee capsules and pods after a lecture by RobertoFrancia of IMA Industries; still others simply relaxed, trying to sort out wonderful memories and bits ofuseful information. One of the young roasters remarked that roasting seminars were very important forhim and that the Forum made him feel that he was among friends. There were proposals concerning top-ics for future Forums – special challenges for coffee producers in the HoReCa and retail segments (ViktorPortnov, Blues Coffee) or new technologies for producing instant coffee (Philip Blaber, Instant ProductsInternational).

The gala-dinner gave Forum participants an extra bit of informal and tasty time to continue their dis-cussions and the exchange of opinions. From time to time, the organizers announced tasty intermissions,

The taste of cake



complementary than competitive, as each of these two segmentshelps the development of the other.

During the discussion of whether retail coffee outlets should investin barista training or automated coffee equipment, proponents ofboth views agreed that both are necessary, and that each establish-ment should answer this question based on its own unique circum-stances. Nonetheless, those who, during the second half of the day,managed to observe the skills of the competitors in the Latte Art com-petition, organized by the Barista Team and supported byRosTeaCoffee, probably felt inclined to place their bets on the barista.The winners of the competition were Margarita Dadayan (1st place,

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

one of which was the presentation of a big and beautiful cake shapedlike a coffee bean. One of the traditions at the Forum is the presenta-tion of the Person-of-the-Year award by the Coffee and TeaInternational trade magazine. For 2011, the award went to Philip Leytes,(Coffee Workshop Ltd. and cafe “Bulka”), the winner of the “Coffeeand Alcohol 2011” world competition, for his contributions to the devel-opment of the coffee industry. A touching moment came when mem-bers of the organizing committee presented a musical number – a jazz-quartet-style performance of the popular tune “Java Jive (I love coffee,I love tea)”, which has already become another Forum tradition. Onecould easily have thought that they were professional musicians! Itbecame clear that the feeling of unity and the desire to achieve the

highest level of cooperation – indispensable for this kind of perfor-mance – came naturally to members of the quartet. And this means thatno task is too difficult for them and no challenge is insurmountable!

At last, after the many tastes of the Forum, came the aftertaste ofreflection, cherishing of new friends and making plans for the future.The next chance to check how these plans are coming along will be onSeptember 12-14, 2013 – the dates of the United Coffee & Tea IndustryShow, a B2B event that brings together the Coffee Forum and the TeaSymposium. The idea of this show is to offer its participants several daysof events to cover both market segments. Opportunities for comfort-able interaction, a large number of participants, new and unexpectedevent formats – all this is already fast approaching!


• Gold Sponsors: BuencafJ – Colombian Coffee Growers Federation(FNC), KLD Coffee Importers Ltd. , SFT Trading Ltd.

• The Official Coffee of the Forum: Chernaya Karta, a Russian sub-sidiary of the Strauss Group

• Silver Sponsors: Buhler, Givaudan, Probat• Bronze Sponsors: IMA Industries, Orimi Trade• Technical Sponsor: GOURMET STYLE• With support from: Coffee-Service LLC., ALMAFOOD

The MICF organizers wish to express their gratitude to all who supported this event:

“Coffee and Tea in Russia”, a sister publication of “Coffee and Tea International” and theonly Russian language magazine about coffee and tea, celebrated its 15th birthday. A

decade and a half in publication and 99 issues of the magazine are behind us… Multiple inter-views with interesting people, from industry professionals to those who simply love coffee and

tea; stories about people who laid the foundations of the industry and continue to push it forward; authors who have beenloyal contributors to the magazine; speakers who comment on many industry-relevant issues; advertisers who took therisk of supporting a trade publication about coffee and tea during its early stages and all those who joined them later on…Of course, our people are the main asset of this publication! And so, this date is significant for all who have contributed toour magazine during all these years. This editorial collage pictures some of the past and current contributors.

RUSSIAN TEA AND COFFEE

Adolf Kler

Hatim AkbarallyUpali KahandawaAlexander Malchik

Alexander Borisov Rudolph and Vera Meyer Radhakrishnan Baskaran

Trigve KlingenbergAndrey Savinov

Michael Bunston

Michael Neumann

Andrey Dozhdikov

MAGAZINE CELEBRATES 15th BIRTHDAY

Karen Cebreros Sergey Kasyanenko Premala Srikanta Joseph Simrany

Vincenzo Sandalj Tone Liavaag

Nestor Osorio

William Gorman

Astrid Nehlig

Michael Opitz

Luise Roberge

Francesco Corsetti Susie Spindler Manuja Peiris

Andrey Elson

Otari Chanturiya

Hasita De Alvis

Peter Pasket Wolfgang Heinricy


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Starbucks pours less coffee in Japan

Nespresso to face competition on machines from ethical coffee

Ethical Coffee Co., a Swiss coffee compa-ny, plans to introduce its first coffee

machine as Chief Executive Officer Jean-Paul Gaillard steps up competition againstNestle, his former employer.The machine will work with any single-servecapsules that fit into Nestle’s Nespresso sys-tem and will go on sale in France in February,Gaillard said in a phone interview. EthicalCoffee expects to ship between 150,000and 250,000 units next year, he said.

“It’s an open system”, Gaillard said, addingit will work with capsules from EthicalCoffee or any other Nespresso-compatiblecoffee. Ethical Coffee will sell the machineunder license with retailers, and theresponse has been “extremely positive”,Gaillard said.Gaillard ran Nespresso between 1988 and1997. Nespresso, which generated 3.5 bil-lion Swiss francs ($3.8 billion) in revenue in2011, or about 4 percent of Nestle’s sales,

has been one of the company’s fastest-growing major brands over the pastdecade.Ethical Coffee has fought a legal battle withNestle since it began selling Nespresso-compatible capsules in 2010. Retailers suchas Casino Guichard-Perrachon SA (CO) sellthe coffee under their own brands.The Ethical Coffee machine will be capableof making both espresso and milk-basedcoffee drinks, Gaillard said.

Indian coffee exporters are staring at a bleak year as global coffeeprices tumble with Brazil and Vietnam, the two largest coffee pro-

ducers, harvesting a bumper crop.Almost 70% of the Indian coffee production of over 320 thousandtons is exported. This year, economic woes in Europe, the main buyerof Indian coffee, have led to a drop in purchases. Coffee shipmentsfrom the country have declined by close to 10% by the first week ofDecember in 2012.Brazil's coffee output for 2013 was a record 55 million bags (1 bag =60 kg). Predictably, the prices of Arabica beans, which account forthe bulk of production, are expected to slump by over 10%-12% in thecoming months.Vietnam, the biggest producer of the Robusta variety, also had agreat crop year with the output expected to reach 25 million bags.Rising demand for the variety due to a switch-over by roasters fromArabica when its prices zoomed last year had kept the prices more orless steady around $2,000 per ton. But Robusta prices, too, havestarted declining.

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

economictimes.indiatimes.com

Indian coffee exporters worried as global prices tumble

news.com.au

Starbucks Coffee Japan Ltd. said it

reduced the amount of drip coffee it

pours into each cup by 9 millimeters (0.35

inch), reflecting customers’ requests to

avoid spilling drinks and add room for milk.

The move risks angering consumers in a

country where a small cup of drip coffee

costs 300 yen ($3.60), more than double

the $1.70 after tax in Seattle.

Spilled Drinks

A short drip coffee purchased at a

Starbucks store in Tokyo’s Marunouchi

Building on Dec. 18 was filled 20 millimeters

from the top, lower than the new guideline

of 15 millimeters. Previously, staff were told

to pour 6 millimeters from the rim.

“Customers complained that they spilled cof-

fee and got burned because cups were filled

too high”, Norio Adachi, a Tokyo-based

spokesman, said by phone. The move wasn’t

prompted by cost cutting, he said.

“I have been feeling uneasy with the very full

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

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

on the first sip.”

Some customers questioned the move to

serve less coffee at Starbucks’ current prices.

“The company should have informed cus-

tomers about the guideline changes”, said

Yumiko Sakaue, 36. “They should go back to

the previous amount unless they lower the

price.”

bloomberg.com

www.glatfelter.com


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COTECA (Coffee, Tea and Cocoa Global Industry Expo) is aEuropean exhibition of coffee, tea and cocoa that covers

the complete process chain from raw commodities to finishedproduct. This year, the exhibition was held concurrently with a con-ference devoted to the future of tea, coffee and cocoa markets(September 20—22). COTECA has the support of the German TeaAssociation, the German Coffee Association and the GermanCocoa Trade Association.

Coffee, tea and cocoa industry representatives who took part inthe three-day exhibition noted its superb level of organization.Everyone was especially impressed by the high percentage of inter-national participants and guests and the overall high professionallevel of attendees. The total number of visitors was around 3000.

"We are really pleased at how COTECA has developed since itslaunch in 2010", said Bernd Aufderheide, President and CEO ofHamburg Messe und Congress GmbH. "The 125 exhibitors we wel-comed here in 2012 mean an increase of 20% – instead of 20 coun-tries, 30 were represented among the exhibitors at this secondCOTECA, which makes us very positive about the future. There was

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also a striking number of international visitors at the trade fair".About 30% of exhibition guests arrived from foreign countries suchas Eastern European states, the Netherlands and Arab countries.

Compared to 2010, the portion of the exhibition devoted to teawas much more comprehensive. In addition, COTECA has managedto cover the whole production spectrum from raw materials to thefinished product: for example, presentations on coffee productioninvolved coffee growers, green coffee producers and suppliers,roasters, processing industry specialists, etc.

Guests of the exhibition enjoyed programme with tastings,workshops and roasting seminars. According to Holger Rehorik,General Secretary of the Deutsche Rostergilde e.V. (GermanRoasters Association), "The coffee campus at COTECA was very wellreceived. The interactivity and being able to work on the machinesthemselves were the crucial factor for visitors. It gave them a placefor learning and interacting. We are really very satisfied." "Our con-cept for COTECA worked out well," said Bernd Aufderheide at theend of the trade fair. "The feedback and encouragement we'vereceived this year is an incentive for us for COTECA 2014."

Great stimulus for future work Anna Antonova

We made our regular October visit to China in order toattend the International Jasmine Tea Conference that

was held, quite naturally, in the birthplace of jasmine tea –Fuzhou, Fujian province. The Tea Authority of the ChinaChamber of Commerce for Import & Export of Foodstuffs,Native Produce and Animal by-products (CFNA) has spared noexpense organizing this event, and the Conference attracted

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

Jasmine-scented

Every visit to China is an occasion for reflection about thefuture – and not only the future of tea and coffee. This time, Imust say that nothing new has been added to the general pic-ture of the world. We are still seeing a rapid growth of coffeeculture in China, an inconceivable presence of luxury shops inthe most humble provincial centers, mind-blowing develop-ments in infrastructure… It is evident that China will continue to

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

reflections…Ramaz Chanturiya

When you arrive at the Nordic Barista Cup (NBC) 1, you realize that the other famous competition, the World BaristaChampionship, is not the only way a competition among coffee preparation professionals can be organized. You are immedi-ately overcome by the unique spirit of this event, by the way the participants love their trade, showing their emotions, skillsand fascination with coffee, preparation of which, for many people, is just an insignificant part of their morning routine…It is safe to say that all who gather here spend a very happy time together. This is more than a competition: this is life itself,life with the aroma of coffee… and not just ordinary coffee!

Every year, the focus of the NBC is a particular coffee-producing country. This time, the Nordicbaristas set their sights on Kenya, last year it was Indonesia, and before that – El Salvador, Costa

Rica, Columbia. By the way, next year will be Brazil’s turn; that country certainly has some surprises instore for all of us.

The guests were introduced to Kenya via their taste experiences: if words like karagoto, muchoki,kieni, mugaga, kapsokisio didn’t ring a bell for you before coming to the NBC, afterwards they will beassociated with very particular tastes that are not easy to forget.

One thing that sets this event apart is the fact that it is not, strictly speaking, a competition. You mayeven think that the organizers did not know anything about other barista competition formats, butdecided to start from scratch and do what they thought was right… And right it was… Very well organizedand very professional. I think that this demonstrates a uniquely Scandinavian approach: do everythingyour own way, paying attention to every detail. Each of the five participating countries – Finland,Sweden, Denmark, Norway and Iceland – gets its own tent, and any guest can stop by and taste the cof-fee. In addition to the competitors, the event usually attracts about 200 guests. Entry is by ticket only;you have to buy your tickets in advance, each costs an impressive 600 euro and they are usually sold outabout 2 months before the event. This ensures that only those who are truly interested will come here,and everyone is maximally motivated to take part in as many events as possible.

Every guest has special cards they can use to rate the coffees tasted. Each score can be from 1 to 10,and all individual scores get added up in the end to arrive at the final score.

Every team has to have a member from the country that is featured during the competition. Everyteam prepares four drinks: espresso, cappuccino, a signature drink and a drink that uses an alternativebrewing method (Chemex, dripper, AeroPress). In my opinion, the best tasting drinks were made by theteams from Finland and Sweden; but, honestly, it was really hard to give anything but high marks to anyteam. All competitors were so charming and so engrossed in the coffee-making process that ratingthem seemed irrelevant…

In the end, the Finnish team got a deserved first prize, Sweden was in the second place and Icelandwas the third.

Another part of this event, besides the competition among Scandinavian barista teams, was theNordic Roaster Cup, which focused on roasting coffee for espresso and filter coffee. The guests who

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3 DAYS AT THE NORDIC BARISTA CUPLiudmila Ivanova

rated the baristas also rated the roasters. For this event, the competitors presented coffee that hadalready been roasted for espresso and filter; the competition itself involved a series of cupping events,first for espresso and then for filter coffee. The guests did not need to rate every individual drink, but sim-ply had to select the best-tasting one. They could also note the flavor characteristics they enjoyed themost. The winner of this competition was the Norwegian company Solberg & Hansen.

An important part of the NBC is its lecture program; looking at the list of presenters, you simply can-not wait for the lectures to start. The following three presentations are, in my opinion, the three mostmemorable lectures at this event:

• A lecture by David Walsh (R&D, Marko) on coffee extraction;• A lecture by Tim Wendelboe, a well-known barista from Norway, who addressed a very interesting

topic of experimental methods of coffee bean processing and their impact on the taste of prepared cof-fee. This topic is fascinating, in part, because the opinions and recommendations of the barista – peoplewho know all there is to know about the taste of prepared coffee – can really help coffee growersimprove their harvesting and processing technologies. This opens up an array of possibilities for the pro-ducers as well as for the barista, who can apply their knowledge in an interesting and important way.

• And, finally a lecture by Vince Fedele (VCT), who spoke about new developments in reflectometersand software that helps baristas prepare coffee.

The superb organization of the Cup and attention to every guest were the glue that held the wholeevent together. The three days at the NBC gave us enough memories, knowledge and interaction to lasta whole year. And we are already looking forward to the next meeting, in October of 2013. It will takeplace in Stockholm, where a most extraordinary company of the most extraordinary coffee fans will con-vene in a most extraordinary house on a most extraordinary street… and, quite possibly, a short, plump,overconfident man with a propeller on his back will appear on the roof of this house and, after meetingeverybody, will say, “Please remain calm!” and start his little steam engine.

1 Nordic Barista Cup is a barista competition that first took place in 2003. Its participants are baristas from the five Scandinavian countries: Finland, Sweden, Denmark, Norway and Iceland. This event

has been so successful, that two years ago another team competition was started in Europe: European Barista Championship. This latter event, however, still lags the NBC in popularity. The NBC slo-gan – “Be together, Act together, Learn together” – sums up the main idea and purpose of the event: a place where people can meet, interact and exchange information about all things coffee.

Nordic Roaster Cup 2012

#1 Kaffitar 36 27,69#2 Social Coffee 32 24,61#3 Tim Wendelboe 30 23,07#4 Fika Fika 19 14,61#5 Solberg&Hansen 13 10,00

PLACE ROASTER VOTES %

Espresso Competition – Finals

#1 Solberg&Hansen 39 9#2 Social Coffee 38 3#3 Tim Wendelboe 20 10#4 Fika Fika 17 8#5 KAFFA 12 4#6 Coffee Libre 10 6#7 Johan&Nystrom 8 5#8 Kaffitar 5 7#9 ST. ALi 5 2#10 Kontra Coffee 3 1

PLACE ROASTER VOTES CUP #

Filter Competition

#1 Solberg&Hansen 39 38 77#2 Social Coffee Co. 38 36 74#3 Tim Wendelboe 20 37 57#4 Fika Fika 17 38 55#5 Kaffa 12 30 42#6 Kaffitar 5 36 41#7 Coffee Libre 10 22 32#8 Johan&Nystrom 8 17 25#9 ST. ALi 5 20 25#10 Kontra 3 7 10

PLACE ROASTER FILTER ESPRESSO TOTAL

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NEWS

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Tea-plucking machines threaten indian workers

Greek-Turkish Coffee Wars Ensnare UNESCO

The age-old dispute over whether thethick coffee enjoyed by Greeks and

Turks is Greek or Turkish has reached theUnited Nations Educational, Scientific andCultural Organization (UNESCO).The earliest evidence of coffee drinkingcomes from 15th-Century Yemen and thepractice soon spread to Cairo and Mecca.In the 1640 s, the Ottoman chronicler brahim PeHevi reported the opening ofthe first coffee house in Constantinople.

In the Arab world, “Turkish” coffee is themost common kind of coffee and issometimes called Arabic coffee. Someargue that what is known as Turkish cof-fee is actually very close to coffee that hasbeen made for ages in Yemen, parts ofOman and South Western Saudi Arabia. Inany case, there is a very distinguishedArabic coffee that is very common inSaudi Arabia and it is very different fromwhat is known as Turkish coffee in terms

of taste, smell and color. Ankara, apartfrom coffee, wants the folk remedy“mesir” to be also included in the List ofImmaterial Cultural Heritage. Mesir pastetradition is a very old tradition in the his-tory of Manisa, an Anatolian city in theAegean region, dating back almost 500years. Mesir paste was started as a medi-cine invention during the Ottoman periodbut later on it became an important partof local festivity in this city.

Climate change has already been blamed for major storms andmelting arctic ice, but now it may be coming after your morning

cup of joe.Researchers have found that climate change will reduce the numberof suitable growing locations for the Arabica coffee plant, which pro-vides about 70 percent of the world’s coffee supply, according to anew study in the journal PLOS ONE.Using computer modeling, researchers at the Royal Botanic Gardens,Kew, in London predicted that the number of suitable growing locationsfor the coffee plant will drop from 65 percent to 99 percent by 2080.In South Sudan, for example, “the modeling predicted that Arabicacould be extinct by the year 2020 due to climate change.”In Ethiopia, another prime Arabica growing area, “optimum cultiva-tion conditions are likely to become increasingly difficult to achieve inmany pre-existing coffee growing areas, leading to a reduction inproductivity.” The researchers also partly blamed climate change forrising coffee prices, which have reached 30-year highs: “It is per-

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

washingtonpost.com

Climate change is making your coffee more expensive

greece.greekreporter.com

The north-eastern Indian state of Assam is renowned for its tea -the backbone of its economy. The traditions of the old estates,

including hand-picking, make the tea expensive. But any drop in

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

bbc.co.uk

http://www.haelssen-lyon.de/


Surrounded by mountains and bathed by the Adriatic Sea, the port ofTrieste is the entry point of a lion’s share of all the coffee importedinto Italy. Coffee is an integral part of the history, economy, servicesector and traditions of Trieste. The city has even its own signaturecoffee drink: ”cappuccino in bicchieri” or ”capinbi”, espresso – sizedcappuccino, served in a glass, rather than in a cup. All this historyand culture made Trieste an ideal venue for the TriestEspresso Expo2012, which took place here on October 25–27, 2012.

TRIESTEretains the title of thecoffee capital of Italy

Anna Antonova and Olga Dolgacheva

NEWS

Representatives of Italian coffee business and guests from all over the worldgathered here in one place. More than 200 exhibitors from different countries

represented various segments of the coffee industry that are integral parts of the con-temporary world of coffee. Compared to 2010, the number of guests increased by10%: around 10,000 people from 85 countries visited the expo during its three-dayrun. Vanusia Nogueira, General Director of the Brazilian Specialty Coffee Association(BSCA) gave the event the highest marks. According to Benjamin Monge, GeneralDirector of the Salvadoran Coffee Council (Consejo Salvadoreno del Cafe), theTriestEspresso Expo was a great opportunity for all participating coffee-producingcountries. The guests enjoyed and greatly benefited from a full schedule of presenta-tions, barista competitions and many other special events. Of special note was theMumac coffee maker exhibition, presented by Gruppo Cimbali S.p.a. on the occasionof the company’s 100th anniversary.

The guests also enjoyed various coffeeware collections – it was hard to miss thevariety of designs and colors on coffee cups of all shapes and sizes. The most endear-ing exhibit was the collection of coffee cups by ANCAP S.p.A., featuring drawings bychildren (Insieme Together).

At the colorful stand by Sandalj Trading Company S.p.a., coffee specialists had anoccasion to taste Arabica Typica (also known as criollo), a Cuban coffee variety thathad recently reappeared on the market. Visitors were also introduced to the new bookby Fulvio Eccardi titled “Caffe, Meraviglia del Chiapas, Messico” (“Coffee, the Wonderof Chiapas, Mexico”). Also the presentation of “Cappuccino Italiano”, the latest bookby the brothers Bazzara aroused interest of the audience.

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A popular spot at the exhibition was the Coffee Bar Tasting &Testing area, where guests were invited to taste and rate espresso madefrom 23 coffee varieties sold by different suppliers.

TriestEspresso Expo has become a widely recognized Europeanvenue for the espresso culture promotion. Barista competitions andeducational seminars are part of this mission. The semi-finals of theItalian Barista Championship have become another important contribu-tion to promote quality coffee culture in general and espresso culture inparticular. Another event at the expo was the 2nd Barista Open compe-tition – Mittel European Barista Cup – that attracted national baristateams from Italy, the Czech Republic and Slovakia.

The “Coffee & Tea International” and “Coffee and Tea in Russia”trade magazines stand attracted a lot of interest from both theexhibitors and guests: we have met old friends and partners as well asthose who had no idea that a coffee and tea industry magazine hasbeen published in Russia already for the last 15 years.

Even the heavy rain that pounded Trieste during this time could notdampen the spirit of the Expo and interfere with its events: water pour-ing from the sky could not compete with the pouring of Italian wines,the serving of delicious tortellini, spaghetti, pizza, lasagna, seafood andtons and tons of exquisite coffee, all to the delight of the thousands ofguests at the TriestEspresso Expo 2012!

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Distribution. Historic. Retail. Volume, %

CATEGORIES '2009 '2010 '2011

Market Sizes. Historic. Retail. Volume, tonnes

GEOGRAPHIES CATEGORIES '2009 '2010 '2011

Source: Euromonitor International

Market Sizes. Historic. Retail Value RSP, RUB mn. Constant 2011 Prices

GEOGRAPHIES CATEGORIES '2009 '2010 '2011


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


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34

Based on the analysis of survey

results, RBC.research* gained in-

sight into the structure of the

retail coffee market (by value). The

research shows that Moscow and the

Greater Moscow Region account for

35.1% of all retail coffee market (with

Moscow accounting for 27%), while

Saint-Petersburg accounts for 7.8%.

Coffee shops have become popular desti-

nations for many Russians: according to a

country-wide survey by RBC.research,

slightly more than 60% of respondents

visit coffee shops regularly.

The highest percentage of population

visiting coffee and coffee/pastry shops is

in Novosibirsk: there almost 3 out of 4

respondents have visited a coffee retail

outlet in the last 6 months. Coffee shops

are also popular with the residents of

Omsk, Saint-Petersburg, Kazan,

Ekaterinburg, Rostov-on-Don, Chelyabinsk

and Moscow. In these cities the frequency

of retail coffee shop visits exceeds the

national average.

On the other hand, the residents of

Nizhni Novgorod and the Moscow Region

are the least likely to visit coffee shops:

only about 50% of Nizhni Novgorod res-

idents and 52.8% of the Moscow Region

residents have visited a coffee shop in the

6 months from November 2011 through

April 2012. Although Saint-Petersburg has

Three leadersof the Moscow coffee shop marketare far ahead of the competition…

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

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

in the following geographical zones

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

Sergey Khitrov, Senior Analyst of RBC.research, RBC Consulting Department

Source: RBC.research

Moscow Moscowregion

St.Petersburg

November 2011 - April 2012

Other citiesmillionaires

Cities with a pop-ulation from 500 000 to

1 000 000 people

Cities with apopulation from

100 000 to 500 000 people


35

a small lead in the percentage

of residents visiting retail

coffee establishments, the

most developed geographi-

cal segment of the retail

food market in general, and

retail coffee market in partic-

ular, is the Moscow Region.

The three market leaders in

the retail coffee segment are

Shocoladnitsa, Coffee House

and Starbucks. The first two

chains are far ahead of

Starbucks, but the latter is

growing rapidly and has a

good chance of catching up

to the two leaders.

The research shows that Shocoladnitsa, Coffee House and

Starbucks were visited by 77.7%, 66.9% and 34.2% respectively of

those who visited a retail coffee outlet in the last 6 months. The three

chains are also ahead when it comes to the number of loyal cus-

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

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

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

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

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

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

population surveyed.

These findings show that the “second-tier” chains have their work

cut out for them when it comes to catching up to the market leaders.

According to RBC.research, in the next 2 to 3 years no significant

changes at the top are likely to take place.

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

in each of the geographic areas

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


Combined rating of the largest network coffeeshops and pastry-shop in terms of their fame andpopularity,% of respondents in Moscow and the

Moscow region, visiting coffee houses and pastry-shops



Kazan

Ekaterinburg

Rostov-on-Don

ChelyabinskMoscow

Samara

Moscow region

Nizhny Novgorod

Shokoladnitsa

Coffee House

Starbucks

Costa Coffee

McCafe

Dunkin Donuts

Koffein

Coffee Bean

Pyshka

Cinnabon

Moscow

Moscow region

St. Petersburg

Other cities millionaires

Cities with a population from500 000 to 1 000 000 people

Cities with a population from100 000 to 500 000 people

Coffeemania

Paul Bakery

Hleb&So

CoffeeShop Company

Sladkoezhka

Bushe

Zolotoj kolos

Le Pain Quotidien

Chajnikoff

Baltic Bread

Vermishel'

Traveler’s coffee

Percentage of people, visited public catering places at least once for the last half a year

Stolle

Ideal Cup

Coffee Expert

Novosibirsk

Omsk

St. Petersburg

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

Cities with a population from 100 000 to500 000 people

Ufa

In the Ukraine, tea is a traditionally popu-lar and a relatively inexpensive beverage, soeven under the conditions of somewhatrestrained consumer spending this marketsegment continues to compare favorably toother categories of non-alcoholic beverages.In addition, tea is a healthy, natural productfree of toxins, dyes and other harmful ingre-dients. In the last few years these factorshave become important for the Ukrainianconsumer. Besides, today supermarketshelves stock teas of all imaginable colorsand flavors, and this is an additional incen-tive for the consumer to buy tea instead ofsome other hot beverage.

Within the segment the picture is as fol-lows. Volume-wise, at the end of 2011 blacktea continues to dominate, comprising about70% of all retail sales. In this category, bulktea has a higher rate of growth as consumersperceive it as being healthier (you can visual-ly determine that it contains only tea leavesand you can gauge its quality) as well asmore affordable. The second place goes togreen tea (around 20%). The share of fruitteas is about 9%, and powder tea and othersfinish up with 1% of the market. The slowestgrowth occurs in the weight-loss tea catego-ry: it is too niche and requires additionalefforts on behalf of the producers to drivegrowth (e.g. advertising, educating the con-sumer, working with the pharmaceuticalindustry, etc.). It needs to be noted that in2011 the highest rate of growth was exhibit-ed by fruit and herbal teas: around 9%. Theconsumers were interested in new andunusual flavors and also in additional healingproperties of fruits and herbs. It is expectedthat in 2012 this category will continue tolead in terms of volume growth. It will be fol-lowed by bulk flavored black and green teas,also due to their relative novelty.

PRICESCompared to 2010, the retail price of tea

has changed only slightly. In the tea categoryoverall, the price growth was less than 2%,and in some subcategories we saw retailprices go down. Among the reasons for thisare the stabilization of high wholesale prices

In 2011 the Ukrainian tea mar-ket passed the 24.9 thousandtons mark and showed thesame growth rate as in the pre-vious year (2010): just under4%. In terms of value, the growthfor 2011 was only 14%, com-pared to 17% in 2009/2010.

HO

TD

RIN

KS

TH

E U

KR

AIN

IAN

TE

A M

AR

KE

T K

EE

PS

ON

GR

OW

ING



NEWS

39

for black tea in 2010-2011 and the flockingof consumers to the mid-range and econo-my segments.

It is expected that in 2012 the retail priceof tea will grow on average by 6%. Theslowest growth will be seen in the powdertea subcategory, as such teas are not verypopular with consumers. Producers of suchteas, in their attempt to hold on to their

existing customers, will continue to holdback prices as they did in 2011. The oppo-site is true for the popular green tea sub-category, which is expected to exhibit thehighest price growth in 2012. Among con-tributing factors are the growing populari-ty of green tea in the country and the con-sequent increase in demand. Also relevantare the trends on the global tea market: thedrop in production volume in Kenya cou-pled with the growth of world-widedemand for tea.

COMPANIES AND PRODUCTS

The Ukrainian tea market is dominatedby companies whose market share exceeds1%. There are slightly more than 10 suchcompanies. The five leaders are UnileverGroup, Ahmad Tea Ltd., Stoic Group, TheMay Company and Exim Trade (a subsidiaryof Orimi Trade in the Ukraine). These com-panies became leaders due to the highbrand recognition of their tea brands, theirwide distribution networks and their longhistory on the Ukrainian market. In terms ofbrands, the most popular ones are Lipton,Ahmad Tea Ltd., Greenfield, May,Conversation, Batik and Askold. Amongleaders in market share growth are privatelabel brands, whose products represent dif-ferent price segments. For example, one ofthe more interesting novelties on the teamarket in 2011 was Fozzy Group’s privatelabel “Premium Diamond Collection”. This isa series of premium black and green teabags

with different flavors and unusual innova-tive packaging. This product is also interest-ing because its packaging is comparable tothe premium segment packaging, but

because this is a private label, its position inthe mid-price segment makes it affordablefor large numbers of consumers. To someextent, the growth of private labels is due tothe fact that they are relative newcomers tothe Ukrainian tea market and their marketshare in 2012 is still relatively small.

The majority of novelty items on theUkrainian tea market in 2011-2012 appearedin the fruit and herbal tea category, whichsecured heightened consumer interest inthese categories. In spite of the fact thatthere were no major innovations in terms ofpackaging, producers tried to attract con-sumer attention by varying packagingthemes. Thus, for example, in 2012 the

Ahmad Tea brand came out with a line ofteas dedicated to the Olympic Games inLondon (Sport Collection) and also with aspecial Christmas collection of teas pack-aged in tins shaped like music boxes (MerryChristmas Collection).

OUTLOOKIn spite of the general economic slow-

down, 2012 promises to be a successful yearfor retail tea sales in the Ukraine. Accordingto estimates, retail volume growth will bearound 3%. The weighted average sales vol-ume growth will reach just above 2% by2017. This figure is lower than the one forthe previous 5-year period. However, giventhe fact that this category is traditional andrelatively saturated, the next 5 years lookpromising for the market participants. Thetrend among Ukrainian consumers toward ahealthier lifestyle and further increases inthe variety of tea flavors will contribute tothe positive dynamics of the tea market nextyear, as well as over a longer period.

It is also expected that during the fore-cast period, due to the increased competi-tion within the sector, companies will moreactively promote novelty items, and retailprices, in constant terms (without account-ing for inflation), will drop (assuming nor-mal tea harvests and stable world-widewholesale prices). Currently Ukraine holdsthe third place in the Eastern Europe, afterRussia and Poland, in terms of per capita teaconsumption. But even those latter coun-tries lag far behind Turkey, which remainsthe undisputed world leader, with per capitaannual consumption of about three kilos. Itis expected that Ukraine will retain its posi-tion in this line-up through the end of thenext 5-year period.

In Ukraine

Sales of different types of tea in Ukraine

Sourse: Euromonitor International

Dynamics of the tea market of Ukraine

Sourse: Euromonitor International

Black tea Fruit/Herbal tea Green Tea Instant tea Other tea

Mil

lion

hry

vn

ias


INTERVIEW

40

For Max Quirin, President of the Specialty Coffee Association of America(SCAA) and the head of a family coffee farm with a century of tradition inCoban, Guatemala, this visit to Moscow to take part in the work of the MoscowInternational Coffee Forum 2012 was his first. Mr. Quirin noted the saturatedschedule of the Forum, the highly relevant discussion topics and a friendly,almost family-like atmosphere of the whole event; he also agreed to answersome questions from C&TI about the state of the specialty coffee market inAmerica and a few other things.

— Mr. Quirin, what does the term"specialty coffee" mean to you?

— To be brief, specialty coffee for meis a source of great pleasure, the pleasurethat stems from its unique origin and aspecial taste in the cup. But the truedelight comes when you know how thisparticular coffee variety is grown and areable to discern the most exquisite andminute details of its taste and aroma!

It is interesting to note that in the spe-cialty coffee segment no individual playeris more important than the others. Everylink in the chain is crucial, from the farmerto the barista. Because if one link fails, thewhole chain will be broken.

— What is your judgment about thecurrent state and the outlook for thespecialty coffee market in Russia?

— 6 years ago 85% of all coffee con-sumer in Russia was instant coffee, whichis similar to the situation in Japan andGreat Britain in the 1970s. It took thesecountries several decades to become con-sumers of high quality coffee. It looks likeRussia is following the same path, onlymuch more rapidly. The evidence is thegrowth of high quality green coffeeimports into Russia during the last 5 yearsand also the fact that roasted whole-beancoffee makes up 35% of the market. I amalso impressed by the increase in thenumber of coffee shops. This is why Ithink that Russia is well positioned tobecome a significant high quality coffeemarket.

I am certain that ensuring the highquality is the right path to follow. Byoffering the consumers what they reallyneed, i.e. good-tasting coffee, we opennew horizons for the coffee market. Thecoffee connoisseur, who keeps discover-ing new product characteristics and whois able to truly appreciate them, is readyand able to pay a premium. We see theway forward through putting emphasison improving coffee quality. For if youaim to lower prices by offering coffee ofinferior quality, you will have a drop indemand and bring the market to a halt: itis obvious that people will not drink some-thing they do not like, even if you try tolure them with low prices.

— What are some of the problemsand challenges on the road to improv-ing coffee quality?

— In order to offer the consumer a goodproduct, you need to educate him aboutmany things, such as different methods ofroasting and preparing coffee. Thisprocess takes time: first people need tolearn how to choose the product, then theywill need to learn how to properly prepareit. This is what happened in America, and ittook a concerted effort of many profes-sionals to bring about real change.

The role of our Association is preciselyto educate coffee professionals fromother countries in order to speed up thisprocess. We offer training programs bythe best people in the industry. I think thatit is wonderful when those who alreadyhave experience share it with people whoare just starting out.

We are also currently working withcoffee farmers, because when theybecome interested in growing higherquality coffee, they also need to be edu-cated about such aspects of coffee busi-ness as roasting, sales, etc.

— Besides education, what are theobjectives of the Specialty CoffeeAssociation of America?

— Our task is to promote productionand consumption of specialty coffee. Westrive to achieve this goal by following thepath of sustainable development, takinginto account all relevant economic, socialand environmental factors. There exists aseries of agreements that we signed withcoffee associations of many countries,according to which we promise to run var-ious programs to share our expertise andprovide help with education. One exam-ple is the new “Coffee and Health” pro-gram that we have developed on the basisof the latest scientific findings; we areplanning to launch it in America within afew months, and later in other countries.

— What is the state of the specialtycoffee market in America? What arethe challenges?

— It is hard to give exact numbers,because the “specialty coffee” concept isnot so well defined. I would say that spe-

cialty coffee makes up about 20% of themarket today. Of all the cuppers that wetrained last year, only 30% specialized inthe gourmet coffee category, and this yearthis number has gone up to 52%. We arealso seeing the trend of increasing con-sumption of high quality coffee by youngpeople, and this is a very good sign. To behonest, dealing with young people is one ofour greatest challenges. And we have onlyone way to get access to them: through theretail outlets where young people congre-gate to drink coffee. Even though membersof the younger generation consume mostlymilk-based coffee products, by doing sothey still develop their taste, and coffeeshops are indispensable for that. It is veryimportant to us to nurture and developyoung people’s interest in quality coffee.

It is almost impossible to reach thespecialty coffee consumer by way of thesupermarket. Still, if people go to thesupermarket after leaving a coffee shop,they are more likely to seek out a betterquality coffee. Another challenge we arecurrently facing is how to make coffeequality information accessible to the con-sumer. As coffee industry professionals,you and I understand each other immedi-ately; but conveying the same informa-tion to the general consumer in an acces-sible format is another matter entirely.

— How does SCAA work with SCAE(Specialty Coffee Association of Europe)?

— We have an established practice ofworking together. We jointly organize abig annual event called “The World ofCoffee” that includes many events andbarista competitions. In my opinion, whenevery coffee industry professional under-stands the importance of workingtogether, great things are possible.

— How do you see the future of thespecialty coffee market?

— I think that both the American andthe Russian markets will continue togrow. But in Western Europe we are see-ing a bit of a slowdown; however, there isa strong segment of coffee shops that iscontinuing to grow, and I think that thiswill push the whole European market inthe positive direction.

MAX QUIRIN: "Coffee quality is the future!"

Aliona Velichko

NEWS

41

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

BRAZIL.

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

Andrei Savinov1

ECONOMICS

ECONOMICS

STAYING IN THE LEADToday coffee accounts for only 2% of

Brazil’s foreign trade volume. But this is duenot to the reduced production and export ofcoffee but to the increase in production ofother goods.

In spite of all the changes, Brazil remainsthe leader of the world coffee industry.

Any drastic changes in the coffee pro-duction volume in Brazil may have seriousconsequences for the world coffee marketfor the current year, up until the next coffeeharvest.

According to estimates, world productionof coffee in 2011/2012 was 135 mln sacs (1sac=60 kilos), out of which 49.2 mln (36%)was produced in Brazil. When it comes toArabica production, Brazil’s share was evenhigher: 43% (34.7 mln sacs out of the totalworld production of 80.6 mln). Brazil’s share inthe world export of coffee was 32% – 34 mlnsacs out of 106 mln (including the export ofgreen, roasted, ground and instant coffee).

CONTRADICTIONS OF GROWTHAn important question that is on the

minds of all players in the world coffee mar-ket is: what can we expect from Brazil in the

coming years? Will it remain a stable sourceof relatively cheap green coffee that is usedall over the world in the production of manycoffee blends? The answer to this question,in my opinion, is not so obvious.

The development of coffee productionin Brazil in the last few years has beenplagued with internal contradictions. Therehas been a sharp rise in wages and socialguarantees for the low-wage part of thepopulation. During peak harvesting periodsthere is a lack of workers; it is not easy tobring cheaper labor from remote parts ofthe country, and importing labor fromabroad is out of the question.

The cost of credit is relatively high, thereis an increase in fuel and fertilizer prices, aswell as a rise in transportation costs. Otheragricultural products are competing withcoffee: soy, sugar cane, maize, cotton, cit-rus fruits, eucalyptus, animal products.Many of these industries are more prof-itable than coffee while also being lesslabor-intensive. Coffee plantations todayaccount for only 2% of all agricultural land,compared to 20% in 1980s.

As the standard of living rises, so doesthe internal consumption of coffee, which isalready approaching 20 mln sacs annually.

As a result, Brazil is now not only the world’slargest producer of coffee, but also the 2ndlargest consumer, almost catching up to theUSA. The quality of internally consumedcoffee is also rising, albeit very slowly.

VOLUNTARY CERTIFICATION – A NEW LEVEL OF MARKETDEVELOPMENT

The voluntary roasted and ground coffeecertification initiative, undertaken by theAssociation of Brazilian Coffee Roasters(ABIC), deserves special attention.Beginning in 2004, 3 levels of quality havebeen established, with each one indicatedby a special mark on the package (QualitySeal sample):• Traditional (100% coffee – Arabica/

Robusta/blend);• Superior (100% Arabica good to fine

cup);• Gourmet (100% specialty Arabica).

Naturally, the bulk of coffee productionfalls into the first category, because of itsactual characteristics as well as due to lowcertification costs (only the final productneeds to be certified). For the other two cat-egories, the production process needs to be

Another storm over the coffeeocean…

certified as well. So far, not many producersvolunteer to undergo certification, but thereare some, and coffee products labeled“Superior” and “Gourmet” do appear on themarket, although the volume of such prod-ucts is still very limited.

GROWTH RESERVESSo – what is going to happen to Brazilian

coffee exports? Are there reserves that willallow the country to retain its leadershipposition on the world coffee market, in spiteof rapidly rising internal consumption?

First of all, there is the increase in coffeeyields. During the last 10 years the averageyield has risen from 14 to 23 sacs perhectare. For the Conillion Robusta the yieldsurpassed 40 sacs per hectare, which hasbrought Robusta’s total share of Braziliancoffee production to 1/3.

Several main factors contribute toincreased yields.

— Mechanization. Combines and man-ual harvesters are increasingly being used,which makes manual harvesting easier. As arule, large companies have their own com-bine fleet, while smaller ones either leasethem or buy one machine for several com-panies. Currently combines are used only inthe Arabica production, but it is possiblethat in the future we will see machinesdesigned for the production of Robusta.

— The use of new high-yield coffeevarieties. These varieties have greater resis-tance to weather and disease. Brazil is theworld leader when it comes to investmentsin agricultural research.

— Irrigation. While in 1970-80 frost wasthe main threat to coffee plants, today it isdrought. Today only 10% of coffee-grow-ing lands have access to irrigation, but thatnumber is constantly growing. At the sametime, we need to remember that installationof irrigation equipment is usually done whennew coffee bushes are planted, so thisprocess is relatively slow.

— The use of modern agriculturaltechnology. This impacts the selection ofcoffee varieties most suitable for a givenarea, the care of coffee plants and theapplication of fertilizers. On some moreadvanced farms, the latest technologies arebeing used, including the use of satellites.

BARRIERS THAT ARE GETTINGHARDER TO OVERCOME

Everything said above doesn’t imply thatopportunities for growth of Brazil’s coffeeproduction are unlimited. As noted, the returnon investment in coffee production is relative-ly low: when it comes to new “industrial” cof-fee plantations, it takes 10 years to recoup theinitial investment and turn to profitability (andthis doesn’t include the cost of the land).Therefore, we cannot expect a significantincrease in coffee-growing land. Anotherdampening factor is the instability of the priceof coffee on world exchanges, which negati-vely affects the long-term planning ability. Fi-nally, there are natural limits to yield increases.

The rise of production costs, including, firstof all, the cost of labor, is pushing Brazilianproducers towards varieties that requiregreater processing (washed and semi-washedcoffee). Today such varieties already accountfor 10% of all Brazilian Arabica exports. Ofcourse, 3-4 mln sacs is a small number forBrazil, but we need to remember that thisnumber is comparable to the total annual pro-duction of countries such as Guatemala,Honduras, Mexico and is twice as high as theproduction in Nicaragua, let alone Costa Rica.

Given the recent overall drop in Arabicaproduction in Columbia and some CentralAmerican countries, some large transna-tional roasted and ground coffee producersare revising their view of Brazil as a sourceof mostly cheap, low-quality Arabica andare beginning to expand their purchases ofhigher quality coffee. One example isNespresso, one of the world market leaders.

It is certain that in the next few years thecoffee world will continue counting on

Brazil as the largest and the most stablesource of Arabica. Brazil itself will continuetaking steps towards preserving its positionon the world coffee markets. But prospec-tive buyers can expect the rise in prices ofBrazilian coffee as well as limited supply ofsome varieties from time to time.

ADDENDUMI wrote these notes in the beginning of

June while visiting Brazil. Heavy rains startedjust at the peak of the harvest season. Thework stopped. While the big farms man-aged to move coffee berries to storagefacilities, others had to leave them on patioscovered by plastic, letting them slowly fer-ment. The wild weather so characteristic ofthe recent past started to have an impactagain. According to a preliminary estimatethat came out in July, about 15% of ripe cof-fee berries fell to the ground because of therains. Many people were concerned aboutthe quality of the coming crop. This concernturned out to be justified.

According to final estimates done at theend of 2012, about 9 mln bags (roughly25% of all Arabica production) turned outto be of “Rio” quality suitable for local con-sumption only. Since normal local demandfor this kind of coffee is 3 mln bags, we maysay that Brazil “lost” 6 mln bags of good andfine quality coffee from the current crop –the quantity comparable to the annual pro-duction of such country as Honduras. Thus,there will continue to be downward pressureon the quantities of Brazilian coffee avail-able for export, and the problem of qualitywill remain.

However there is good news as well asfar as 2013/14 crop is concerned. While itshould be treated as an off-cycle year, pre-liminary estimates give production figuresthat are very close to those achieved in thecurrent crop year.

What will the weather be like over thecoffee ocean? The answer continues todepend on Brazil…


ECONOMICS

46

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ADVERTISER INDEX

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