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It's Exotic,
It's Exciting
and It's Hot...
Small Coffee Origins

By Maja Wallengren

Have you ever heard of royal coffee from a Himalayan kingdom? Or what about coffee from the Fiji islands of French Polynesia? It may just be worth only a couple of containers in exports as far as volume is concerned, but the demand for these truly exotic coffees lend natural interest to the growing demands of originality and pioneering new brands in the specialty industry. Maja Wallengren reports.

More than 80 countries across the globe are known to be producing coffee, but less than 20 countries in Asia, Africa and Latin America account for some 90% of the world's entire coffee output.

The balance is made up by countless numbers of tiny lots of beans from more than 60 small coffee producing origins across the world, many of them so small that no international coffee analysts ever include them in their crop forecasts or harvest updates, and few traders in the futures markets know of their existence.

In Asia, three countries are inside the group of big producers with India, Indonesia and the world's second largest producer Vietnam. But what is not commonly known is that at least 17 other countries and island nations in Asia produce coffee, with output ranging from Cambodia's total known production of about 1,700 bags to Thailand's crop of more than 1.2 million 60-kg bags.

"The small origins are pretty important because it's not just quality that drives the market, but variety, and if you produce a good product, even as a small origin, then you are naturally fit for the specialty market," said Ted Lingle, executive director of the Specialty Coffee Association of America (SCAA).

Although few statistics exist, industry officials say the trade of the Asian niche coffees in the U.S. specialty market has been growing steadily over the past few years in line with the general growth in consumer interest for trying something new and different.

One of the largely unknown small origins among Asia's coffee producers is the tiny little kingdom of Nepal. But after getting its hands on a couple of lots of coffee from Nepal, California-based Holland Coffee is now looking into buying more for the U.S. specialty market given the unique marketing potential.

"It's a very limited production and most of it goes to Japan, who likes it a lot because it's from the birth-country of Buddha. I have cupped it and it's surprisingly OK coffee, although it's nothing sensational," said Richard Allen, vice president of Holland Coffee.

"We have now done Nepal coffee for the Japanese market a couple of times and are thinking at bringing it into the U.S. market. There is always room for novelty coffee like this and if you are in the specialty market we feel you should be offering these different novelty coffees," said Allen.

Holland Coffee handles a variety of small origins from across the world, and two of the other Asian niche coffees which they offer to roasters in the U.S. include coffee from newly independent East Timor, and Luwak coffee from Indonesia.

Legend has it that the Luwak coffee are cherries which have been eaten by a native Indonesian Ozolot-like cat, in which process the beans are fermented, before being collected after digestion. Much debate remains in the industry about whether this coffee actually exists, but Allen has no doubts to the truth of the myth.

"Luwak coffee does exists, it's the most famous of all the niche coffees and it actually taste good with a rich fruity flavor. It comes in a nice little bag with a picture on the side of bag of the cat, which looks quite cheerful," said Allen.

Some of Asia's better known small origins which have gained recognition in the specialty market for their good quality include Papua New Guinea, which produces about 1.1 million bags of fine Arabica coffee. The Philippines, one of few Asian producing countries with a sizable home consumption, produces about 800,000 bags in an average harvest cycle.

Coffee from Thailand has long been known in the international market, and during the last decade it has added a good-quality Arabica crop to the country's larger Robusta harvest, most of which is used by Swiss food giant Nestle for its soluble industry in the domestic Thai market.

But other small coffee origins which have yet to be discovered include Sri Lanka with a total production of some 35,000 bags, as well as a handful of tiny islands including New Caledonia with a tiny production of just 5,000 bags, and Vanuatu which exports most of its 600-bag harvest, less than 3 containers.

China, which is watched as the major potential consumer of the future, actually produces about 200,000 bags of Arabica coffee in southern Guangdong province, southwestern Yunnan province and at the island of Hainan.

"I tried some Chinese Yunnan coffee some time back, and it was really very interesting, had I not known it was from China I would have thought it was an inferior Central American Arabica bean," said Sherri Johns, president of the WholeCup consultants company.

Fancy marketing potential aside, most people in the specialty industry agrees that the quality of the coffee from a small producing origin has to be in place for the roasters to spend time and extra money to market an exotic origin.

"Sometimes the little coffees are good for advertising but a lot of these coffees really are not that good in the cup, and the quality really has to be there," said Jason Long, of Cafe Imports, a small specialty importer in the U.S. Midwest (MN).

MALAYSIA -- Focus On Consumption Rather Than Production
Located in the heart of tropical South-East Asia, bordering Thailand to the north, Singapore to the south and Indonesia to the eastern part of the island of Borneo, coffee has been cultivated in Malaysia for some 200 years, since Arabica first was introduced to the former British colony in the late 18th century.

About 25,000 hectares of coffee are scattered out through Malaysia's northern frontier with Thailand, mainly in the Kedah, Kelantan, Selangore, Trengganu and Malacca provinces, as well as on the northernmost tip of the Borneo island in the Sabah area.

Although both Arabica and Robusta coffee is grown in small plots at both mainland Malaysia as well as at Borneo, it's the liberica coffee species which was introduced in 1875 which is dominating about 95% of the total local production, an interesting fact as liberica accounts for less than 2% of total world production.

But with production remaining stable for the past decade at about 160,000 bags - less than 10,000 tons - local government focus as well as international attention has been directed towards Malaysia's main commodities tea, palm oil and natural rubber, of which the country of some 22 million people is one of the world's leading exporters of rubber and palm oil.

"You have a very little local production which I have never seen mentioned in any export statistics, so the assumption is that it's all being consumed locally," said Sherri Johns, president of the WholeCup consultants company.

Johns said the focus of the Malaysian coffee market today is directed much more towards consumption, in line with Asia's other niche producers such as Thailand and the Philippines, where imports in some years have been required in order to meet local demand.

"The coffee shops in Malaysia existed long before the new specialty cafes in Kuala Lumpur because the Chinese have always used them for business meetings. But when the cafes were introduced about five years ago, they represented a new lifestyle for the younger people and they immediately became very popular," she said.

From 1995 when Johns first started traveling to Malaysia as a consultant for a local business group to help set up the first specialty coffee shop "Star Hill" in Kuala Lumpur in 1997, the number of coffee shops today has doubled five times.

Few official statistics exist on the actual number of coffee shops and even less data is available on the level of per capita consumption in Malaysia.

But Johns estimates that following the launch of the first "Star Hill" cafe in 1997 by the Kuala Lumpur-based San Francisco Coffee chain, today's number has grown to more than 60 shops across Malaysia, including 18 shops run alone by San Francisco Coffee, while the reminder is operated mostly by the Starbucks Coffee Company, Gloria Jean's, and the Coffee Bean & Tea Leaf.

"I think the market will grow even faster than what we have seen now, the potential is there for the current market to double within the next five years as more and more global players are entering the market," she said.

As no official emphasis have been put on improving the quality of the local production in Malaysia's coffee industry, few beans have reached the specialty coffee shops and traditional Chinese coffee houses in the urban areas yet.

"With palm oil, rubber, sugar, tea and tin all being much more important exports in Malaysia, well if you have rich land that's what it's used for, and coffee get the rest. I don't think they have the resources or knowledge to go into quality production," said Johns.

Well, at least not until now. But with specialty coffee booming in the local domestic market, especially in the bustling capital of Kuala Lumpur with a sizable well educated and economically well of middle class, industry analysts agree that the best potential for Malaysia's local coffee production is seen remaining in the local market.

With improvements in quality at the local farm and processing level and increased marketing efforts, many Malaysians as well as visiting tourists could develop a fancy for trying their own home-grown beans over the years to come, and this may in turn lead to some small lots of Malaysian beans one day reaching the specialty markets of the U.S., Europe and Japan.

Continued on next page...

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