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Coffee and Tea Reports
from the Front Lines

Prices Down in Russia, For Now
Athens, Greece - Russian coffee prices are not expected to rise due to panic over cold weather in Brazil, according to the publication New Europe. International Coffee Organization (ICO) managing director Celsius Lodder says that export prices for coffee had gone down considerably over the last couple of years. Even if they do go up this year, they will not affect retail prices or demand for coffee very much, he added.

The situation in Russia depends not only on the large producers but also on the small firms, said Yury Gun, a representative of Golden Brazil (a division of M&M International Corp.). Companies like Nestle and Kraft Jacobs will keep their prices down for the time being because coffee does not usually sell very well in the summer months. Also, bringing prices up would curb competition among major producers. The smaller producers might panic and put their prices up, but if they do, coffee will not go up more than 5-6% in price, Gun said.

Russian coffee drinkers have nothing to worry about just yet, said Russian-U.S. Montana Coffee head Alexander Malchik. However, if world coffee prices continue to surge until the end of the year, coffee in Russia will become more expensive, he said.

According to the International Coffee Organization, Russia consumed 886,000 60-kg sacks of coffee in 1999, compared with 970,000 tons in 1998. This year, consumption is forecast to rise by 4-5%.

Colombia Forced to Import Coffee
London, United Kingdom - The Colombian coffee industry suffered such a slump this year that it must actually import coffee in order to meet its domestic demand, reports London’s The Financial Times. Natural disaster and financial crisis have compounded the plight of Colombia’s most vital industry.

The country is a leading producer, but production has dropped from about 13 million sacks in 1995-96 to an expected 9 mil. this year. Stocks are so low that Colombia must import one of its most famous exports, which in past years has accounted for 12-14% of total production. The news prompted a protest march in April in the main coffee-growing area and caps a tumultuous couple of years for Colombia’s coffee industry.

Last year Fedecafé, the national growers’ federation, lost control of Bancafé, its once powerful bank, during Colombia’s financial crisis. Bancafé, a source of financing for thousands of coffee growers, is now in state hands and set to be privatized, which some growers fear will cut their access to credit.

The misery was compounded by last year’s earthquake in the coffee-growing heartland. Although the crop was only slightly affected, infrastructure was badly damaged.

Continued low prices have also put Fedecafé’s coffee fund under increasing financial pressure-its net worth fell 36% in dollar terms in 1998-99-and it is seeking ways to cut its spending.

Fedecafé believes that production will bounce back to 12-13 bags annually. Weather patterns have only temporarily reduced the harvest. And one reason recent crops have been so small is because thousands of hectares are not in production because of a program currently implemented to renew ageing coffee plants. The plan should be completed in 2002.

Coffee is grown in more than half of Colombia’s towns, generates 30% of agricultural jobs, and provides a direct living for 570,000 families. Coffee districts have enjoyed some of the country’s best health and education indicators.

Banking with Starbucks
Don Mills, Ontario - Starbucks recently opened a retail outlet in the Toronto-Dominion Bank branch in the heart of Toronto’s financial district. This is the first time a major Canadian bank has brought a full-service retailer into one if its branches, reports The National Post.

The 56-square-meter Starbucks outlet carries a full range of regular and specialty coffees, as well as pastries and beans and ground coffee for home use. A limited number of gift items are also available for purchase. The outlet, which can be separated from the rest of the bank operates between 6am and 8pm-beyond the bank’s operating hours-during the week, and on a reduced basis on weekends.

"It’s all about customer convenience," said Andy Rattner, regional vice president of Starbucks Co. for Eastern Canada.

Rattner said that while there are "perhaps enormous opportunities" for expanding the concept of Starbucks in banks, that decision won’t be made for a while, until the results at the first location become clear.

From the bank’s point of view, said Marianne Taggio, vice president of in-store banking for Toronto-Dominion, Starbucks offers "the image of convenience, service, and a friendly, relaxed atmosphere.

"The idea is that people who had to go to the bank anyway can now pick up a coffee without too much trouble," she said.

Starbucks has long been associated with Chapters bookstores in Canada and has established outlets in most of the retailer’s superstores. And while it has tested the idea of coffee shops in banks in the U.S., most notably in Wells Fargo branches in San Francisco, it’s only now bringing the idea north of the border.



Tea & Coffee - October/November 2000
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