Exporting Coffee to Canada: Innovations and Best Practices”

12 October 2017

• The Conference Board of Canada (CBoC) is Canada’s foremost independent, not-for-profit research organization.

• CBoC was awarded a CAD$12.05 million project in August 2014 to increase trade and investment between Canada and Indonesia, with emphasis on assistance to SMEs.

• The project will also identify and work to overcome barriers to trade and investment between Canada and Indonesia.

• The project has two years remaining, until August 2019.

What is TPSA? A Bilateral Trade and Investment

Project between Canada and Indonesia

Four Main Activity Streams

1. Improve Trade and Investment Information Flows

2. Enhance Private Sector Business Linkages

3. Strengthen Trade and Investment Analytical Skills

4. Improve Understanding of Regulatory Rules/Practices

•Said Fauzan Baabud, TPSA Coffee Sector Coordinator

• Iwannitosa Putra; Director of PT. Meukat KomuditiGayo, speaking on behalf of TPSA Coffee producers

Presenters:

Canada: Consumers & Market TrendsOverview

• Canada: where & what

6

The Canadian Population

Small, concentrated population:

• Total population: 35.7 million (October

2014 estimate)

• 10% size of U.S. population

• 62% of Canadians live in Ontario and

Quebec

• 80% of Canadians live within 160 km of

the U.S. border

• 81% of the population is urban

• 1 in 3 Canadians lives in one of

Canada’s three largest cities (Toronto,

Montreal, and Vancouver)

British

Columbi

aThe

PrairiesOntari

oQuébe

c

The North

Atlantic

Canada

Source: Statistics Canada, Population estimates and projections (2013)

7

Atlantic

Provinces:

Québec:

Ontario:

Prairie Provinces:

British Columbia:

The Territories:

Million

Million

Million

Million

Million

Million

2.3

8.1

13.5

5.3

4.5

0.1

Canada USA

Population 35.7 million 317 million

GDP $46,320 $50,140

Exports $14,680 $5,580

Imports $14,310 $8,290

Values in $CAD estimates (2014)

Source: Canadian & US Government Sources, ITC Trade Map

8

Market Comparison: Canada and USA per capita

Why Canada?Significant volume of imports

valued at $411 Billion (2014)

• Imports represent 31% of GDP

• 5% average yearly growth in

imports over the past 5 years

• 11th largest import market in the

world

Diversification of trade partners

• Canada is undertaking a major

effort to diversity trade

opportunities, including signing

new Free Trade Agreements

Excludes minerals (HS Codes 26-27 and 71-80)

Source: Industry Canada, Trade Data Online (2014)

$ 324 $ 347 $ 365 $ 380 $ 411

2010 2011 2012 2013 2014

Canadian Imports on the Rise…

Source: Industry Canada, Trade Data Online (2014)

Regional breakdown based on countries with imports valued over $500,000.

Excludes $3.2 billion in re-imports to Canada.

54%United States

23%Asia

13%Europe

8%Latin

America

Canadian Imports by Region United States

(54%)Asia (23%)

Europe (13%)

Latin America(8%)Middle East(0.5%)

Overview of trade from Indonesia to Canada

10

• Imports into Canada from Indonesia

totaled CA $1,392 M (excluding

minerals) in 2014 and are growing at

a rate of 5% CAGR over the past 5

years

• Indonesia’s exports to Canada are

primarily in 3 product categories:

➢ Rubber articles: $241 million or 23%

➢ Woven apparel: $164 million or 16%

➢ Knitted apparel: $ 151 million or 14%

Source: TFO Canada Trade Data Analysis Tool

$ 1,115

$ 1,356$ 1,242 $ 1,281

$ 1,392

2010 2011 2012 2013 2014

Canadian Imports from Indonesia

($CAD millions, excluding minerals)

5% growth over

the past 5 years

Canadian coffee market

11

• Tim Hortons Inc. is a Canadian multinational

fast food restaurant known for its coffee and

donuts. It is also Canada's largest quick

service restaurant chain; as of December 31,

2016, it had a total of 4,613 restaurants in nine

countries.

• The company is expanding its business

operation to Asia including Indonesia

Tim Hortons is looking for business partner in Indonesia, please come and talk to us for those who interest.

Canadian coffee market

Canadian coffee market

•2000-2010, Canadian market growth was much stronger (nearly averaging 7% annual growth). One of the strongest “traditional” importing market.

•A few reasons: •Population growth

•Sustained “good” quality market

• Increased availability - more points of distribution - strong foodservice sector

Canadian coffee market

Coffee and the Canadian Economy*:

•160,000+ jobs (in restaurants, manufacturing, franchising and support sectors)

•$6.2 Billion Total Sales

•$4.8 Billion Sales in Foodservice

•$1.4 Billion Sales in Grocery / Retail

•$325 Million Sales in the Office Coffee Sector

* Coffee Association of Canada

Canadian Coffee Imports from the World and Indonesia by Volume and Value (2010-14)

Canadian coffee market

• Indonesia is the 6th largest coffee exporter in the Canadian import market, BUT Indonesian coffee is one of the highest price.

• Indonesian coffee 37% higher priced compared to the average coffee import price

•Ranks: (in millions of CAD$ 2014) 1. Colombia: 210

2. Brazil: 160

3. Guatemala: 100

4. Peru: 40

5. Guatemala: 35

6. Indonesia 30

Indonesia : 6th largest source of green coffee

•Coffee imports into Canada are highly concentrated in terms of the number of importers.

•The top 12 major importers accounted for 79.02% of total imports in 2014.

•These are listed on the next slide

•Several importers are non-residents with addresses outside of Canada.

•The top 9 major importers accounted for 78.43% of total coffee imports from Indonesia in 2014.

The Importers

Some Importers

Major Canadian Importers in 2014

Company Name (alphabetical order) City Province / State

AMERICAN COFFEE CORPORATION Jersey City New Jersey

ATLANTIC COCOA CO. New York New York

COEX COFFEE INTERNATIONAL, INC Miami Florida

COFFEE AMERICA (USA) CORPORATION New York New York

ELAND INC. Mississauga Ontario

KEN GABBAY COFFEE LTD Montréal Quebec

N J DOUEK & FILS INC / N J DOUEK & SONS INC Montréal Quebec

OLAM AMERICAS, INC White Plains New York

RGC COFFEE INC. Westmount Quebec

SWISS WATER DECAFFEINATED COFFEE INC. Burnaby BC

VOLCAFE USA, L.L.C. Somerset New Jersey

WALKER COFFEE TRADING, LP Houston Texas

•Major market segments include :o grocery stores and supermarkets,

o mass merchandisers - club stores,

o drug stores and

o industry exports.

o cafes, restaurants

Major market segments

•Coffee consumption remains central among adult men and women in Canada as it is the most popular hot beverage in the country with 14 billion cups consumed every year

•51% of Canadians consume coffee at home, which is largely due to coffee being an important beverage during breakfast time

•Coffee shops and fast-food restaurants, is as important as supply into supermarkets or other forms of retail shops in Canada.

Canadian Consumer Behaviours

• Canadian Buyers Interviews

– Negative perceptions to overcome

o Price; Consistency; Reliability; Quality; Safety;

o Substitution potential (Sumatra vs. other sources).

What to sell: Indonesia has a reputation

• Canadian Buyers Interviews

• Main Positive outcomes:•Uniqueness, availability

•Different from Latin America mainstream beans

What to sell: Indonesia has a reputation

Coffee in Canada : rough guide 24

• Canadian buyers look for good value and competitive pricing, reliability of product quality, continuous supply and delivery times.

• There’s a niche for quality Indonesia coffee on the Canadian market

• Build good relationship and regular communication with the potential buyers, Follow-up service, website and social media like Facebook and Linkedin, responsive email,

• Recruit competent and experienced staff

• Innovative products that are not currently in the Canadian market and might respond to market niches

• Build your stories and share them

• Organic certification is no guarantee of success, but for niche markets, it’s a prerequisite

Key Notes

Meet Aman Al, a member

of the Permata Gayo coffee

cooperative in Indonesia.

Aman used to grow rice,

but growing Fair Trade

coffee has enabled him to

send his son to university.

Now, farmers come from all

over Indonesia to learn how

to farm coffee from him.

Stories: many ways to communicate your edge

Brief Update of TPSA Coffee

• Indonesia Coffee Associations visited Canada to meet with coffee business association in in Canada, September 2016

• Explored the potential coffee resources from Toraja dan Aceh Gayo Arabica coffee cluster in Indonesia

• On the coffee environmental sustainability; TPSA provided training for extension workers from Aceh Tengah, Bener Meriah, Gayo Lues and South Sulawesi

• Selected five coffee producers from Gayo, Aceh to participate in TPSA coffee trade project in 2017 and 2018.

• Conducted workshops on “ How to Export Coffee to Canada” in Makassar and Takengon, Aceh Tengah

• Participated in Specialty Coffee Association, Global Coffee Expo, Seattle 2017 to engage with potential buyer from Canada and Northern America

• Buyer mission to Gayo, Aceh in August and November 2017 and facilitated one potential buyer to Toraja, South Sulawesi

Manual and Presentation Available

Manual available on TPSA website

• A-Step-by-Step Guide for Indonesian Coffee SMEs to Export to Canada (April 2017)

Presentation available on TPSA website

•Coffee in Canada : A Rough Guide for Indonesian Coffee Exporters

Thank You!

For further information, please contact the Project Office in Jakarta, Indonesia:

Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)Canada Centre, World Trade Centre 5, 15th FloorJl. Jend. Sudirman Kav 29-31 Jakarta 12190, IndonesiaPhone +62 21 5296 0376, 5296 0389Fax +62 21 5296 0389

www.tpsaproject.comEmail: info@tpsaproject.com

Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)