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Coffee and Tea Reports
from the Front Lines

No Place Like Home For Coffee
CHICAGO, ILLINOIS - According to Mintel’s consumer intelligence Coffee Report, young adults are less likely than older Americans to regularly drink coffee at home. Only 31% of people age 25 to 34 are regular at-home drinkers compared with 59% of people age 55 to 64. The market for coffee at home will continue to decline unless coffee companies can convince more young adults to trade their sodas and sports drinks for coffee.

In the past, most coffee advertising focused on brand building or touting line extensions rather than building a customer base. But as the proportion of Americans who drink coffee declines, coffee companies will have to direct some of their ad dollars to reaching new customers, especially younger customers.

Despite this, coffee consumption is expected to increase by 7% by 2005. This is due to the fact that the number of drinkers age 55-64 will grow the most, as the baby boom generation continues to move into that age group. The number of coffee drinkers age 25-44 will decline, as smaller Generation X occupies much of those groups.

Mintel’s consumer research shows that coffee drinking does increase with age, and that this is the case for both in home and out of home drinking. There is a sharp jump in the percent of regular coffee drinkers between the 18-24 age group and the 25-34 age group. This suggests that young adults’ drinking habits do change. After 35, however, the proportion of people who convert from non-coffee drinkers to regular coffee drinkers is considerably lower. For the coffee industry to address the decline in the share of Americans who drink coffee, it will have to capture more young people as they enter adulthood.

The results of Mintel’s research show that while most Americans drink coffee, the U.S. is not a nation of coffee fanatics. Only one out of five adults say they drink four or more cups of coffee a day during the week. Most commonly, coffee drinkers consume only one or two cups per day. Two fifths of adults drink no coffee at all during the week and nearly half avoid it on the weekend.

While one or two cups of coffee doesn’t seem like a lot, it is important to note that portion size has changed over the years. The traditional coffee cup has, for most people, given away to a larger mug. The average cup of coffee is now 9 ounces.

Guatemala’s “Cup of Excellence” Competition To Be Held
GUATEMALA CITY, GUATEMALA - Guatemala, already famous for high quality coffee, announced plans recently for its first annual Guatemalan “Cup of Excellence” competition and auction. The international competition to select its very finest specialty coffees for the year 2001 is scheduled to take place in Guatemala City over three days beginning April 30, 2001.

Guatemalan farmers are submitting samples that will be cupped blind and screened down to the top few by a Guatemalan cupping panel. The final winners will then be selected by a distinguished competition jury of green coffee experts from Europe, the U.S., Brazil, Guatemala and Japan. These winning coffees are to be honored with the prestigious “Cup of Excellence” award and will be sold to the highest bidders during a worldwide Internet auction scheduled for June 6, 2001. The “Cup of Excellence” logo used to identify the competition winners can be used to promote only these 2001 winning coffees. Anacafé (The Guatemalan National Coffee Association) is sponsoring the event.

“Given Guatemala’s proven ability to produce superb quality and its exciting array of flavor profiles from diverse microclimates specialty roasters in-the-know are looking forward to owning and selling these winning coffees,” explained George Howell, a well-known quality consultant who is managing the competition for Anacafé and who conceived the original concept. It is expected that these coffees will be in great demand resulting in tremendous competitive bidding during their auction.

The “Cup of Excellence” program, initially created by The Brazil Specialty Coffee Association, is a multi-faceted tool that helps the producers of great quality and the committed buyers of that quality find each other. It has the potential to change the specialty coffee landscape on an international scale. This potential has already been shown with the first two successful Brazil events conducted in 1999 and 2000 when the winning coffees were sold via the auction at record prices.

India Market Relying on Pakistan
CALCUTTA, INDIA - India, the world’s largest producer of tea, is hoping that Pakistan, which mainly buys tea from Kenya, will start importing more Indian tea, reports the Financial Times.

The Pakistan Tea Association is promising its Indian counterpart to lobby the trade to increase imports from India to between 7m kg to 10m kg in 2001.

Pakistan is the world’s third largest importer of tea after the Commonwealth of Independent States and the U.K.

The Financial Times reports that RS Jhawar, chairman of the Indian Tea Association, said, “The country’s official annual import of tea is around 110m kg, but high duties, including a 25% customs and a 15% sales tax, also lead to the smuggling of nearly 30m kg of tea of various origins into Pakistan.”

Kenya has more than 75% share of the Pakistani market. The other big exporters to Pakistan are Indonesia, Bangladesh, Rwanda and Sri Lanka.

India’s export success will depend on its ability to offer Pakistan the Kenyan kind of CTC (crush, tear & curl) teas.

“What Pakistan imports from Kenya in large volumes conforms to Indian pekoe fannings and pekoe dust,” said Gautam Bhalla, general manager of Warren Tea, a leading Indian tea producer. “These two varieties constitute over 30% of tea production of Assam and West Bengal and we are always in surplus of such teas.”

However, Pakistani importers are in no hurry to place orders for Indian tea as the sharp rise in Kenyan production since mid-December has caused price falls at Mombasa auction.

Coffee Shops in Tawian Slow to Grow
TAIPEI, TAIWAN - Taiwan’s major coffee shops are being hit with difficulties in finding suitable store locations and a changing economic environment, which has led to a decrease in expansion plan compared to the same time last year, reports the China Post.

The effects of market downsides, such as the announcement to halt construction on the fourth nuclear power plant, high unemployment, and the tumbling stock market damaged coffee shop business last November, which recorded a two to three percent drop in trade.

Although, since December, the business has gradually become stable, coffee shop companies are cautious about the unpredictable and rapidly changing market. Therefore, the expansion pace of the major coffee shops in the coming year is expected to slow down, compared to the flourishing growth of previous two years.

Tomson Coffee, a major coffee shop player in Taiwan, said their market strategy this year still focuses on cooperation with the department stores, shopping centers and super marts, without giving any consideration to setting up their own sales stores. Their developments in cooperating marts and centers are to be concentrated in Taichung and Taipei.

Another major player is IS Coffee, who hopes to add 20 stores this year to bring their total number of stores to 70. The priority location of the new stores will be at business areas in cities.

Owning over 50 affiliated stores in Taiwan, Starbucks Coffee said they would maintain the same expansion speed as last year when they opened 25 new stores.

Seattle Gourmet Coffee said they are scheduled to open eight new stores, among which five to six stores will belong to affiliated alliances, and another two to three will be run by them. The affiliated stores will open in the central or south of Taiwan, where the level of competition is lower.

Adding 10 new stores last year, Seattle Gourmet Coffee said they will have to move slowly on store expansion this year, and look towards expanding information technology and increasing baking factories, as well as development of retail and enterprise markets.

The major coffee shops have found that it is hard to estimate the number of new stores due to difficulties in finding appropriate locations. Although goals have been set for expansion this year, the results will depend on acquiring good business locations at affordable prices.

SCAA Sustainable Position Statement
LONG BEACH, CALIFORNIA - In 1997, the Sustainable Coffee Criteria Group created a position statement that was adopted by the Specialty Coffee Association of America (SCAA). Members of this group were: Lindsay Bolger, Batdorf & Bronson; Roberto Giesemann, Cafes de Alta Calidad de Mexico; David Griswold, Sustainable Harvest Coffee; Paul Katzeff, Thanksgiving Coffee Co.; Don Holly, Specialty Coffee Association of America (SCAA); Fred Houk, Counter Culture Coffee; Eduardo Kopper, ICAFE; Dave Olsen, Starbucks Coffee; Susan Woods, Coffee Kids and Marcelo Vieira, Specialty Coffee Association of Brazil. For a copy of this statement, contact the SCAA or David Griswold, chair, Environmental Committee.

After a conversation about this policy with SCAA executive director, Ted Lingle, he referenced an article from Iowa State University’s alumni publication titled “Sustainable Agriculture: A Journey.” The article defines sustainability as a three-legged stool. First, practices must be environmentally sound. Second, practices must be economically viable to sustain human life, and three, practices must be socially responsive. To be successful, practices must involve people at the community level; they must work within the structure of different, changing cultural customers and needs, the article states.

Another statement referenced by Lingle is the Environmental Management System (EMS) ISO 14001, which includes four main headings with criteria under each. The four major areas are: (1) Combat the consequences of soil erosion; (2) combat pollution; (3) recuperation of biodiversity; and (4) fair trade and human development.

Tea & Coffee - April/May 2001
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