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Tea & Coffee in Germany:

Old and New Cultures Thrive

BY MANFRED KORNER

Photos Courtesy of the German Tea Association

Not long ago According to 2001 sales figures, nearly 74 billion cups of either roasted or soluble coffee have been sipped in 2001 - a total of some 580 million more cups than the previous year. Sales of green coffee rose from 548,520 tons to 549,530 tons. The per-capita-consumption stabilized at 6.7 kg.

While still cautious about this encouraging development, the German Coffee Association (GCA) is highly satisfied that product innovations and an increasing number of coffee bars and coffee-to-go outlets seem to have made an impact, especially on young people’s drinking preferences. Says GCA president and member of the executive board of Nestlé, Hans-Dieter Bischof: "A new fascination around coffee drinking has emerged. We have been successful in lifting its image from a normal day-to-day habit to something fashionable and exciting."

Solubles Still Rising
2001 sales of roasted coffee stabilized at 430,000 tons, of which 47,000 tons represented the decaf segment. 56,000 tons went into the non-household sector, up some 1,000 tons from 2000. The mildly treated segment grew to an actual 19% of the market, whereas the percentage of decaf coffee fell to only 10%. The natural milds still represent some 20%.

Soluble coffee continued its growth by another 20% increase from 21,880 to 26,320 tons including the weighted volume of soluble coffee being added to other instant drinks. The Italian cappuccino has been strengthening its leading position among the soluble coffee drinks to account for an 84% share of the market, followed by Viennese melange and ice-coffee, both representing a market share of 6% each.

Low Prices Pose Problems
The turnover of the industry dropped from 3.94 bn in 2000 to 3.86 bn in 2001, which includes 0.588 million from sales of soluble coffees. Consumer prices continued its downward trend in 2001 reaching an all-time low in March 2002 with 3.15 per pack of 500 grams. The workload of an industrial worker has been one hour in 1985 to buy a 500 grams pack of coffee whereas today it is only a quarter of an hour.

There is a major imbalance between demand and supply due to stagnating consumption worldwide, global stockpiles of some 3 million tons of surplus beans and growing production from countries like Brazil and Vietnam. In Germany, for instance, Brazil has more than twice surpassed Columbia as Number One supplier compared to the situation 20 years ago. Vietnam which at that time had not at all been on the suppliers‘ list is now the second largest supplier, leaving the once leading Columbia only a third rank. Efforts of the producing countries to restrict output in order to stabilize prices has not worked. Asian coffee producers were particularly reluctant to stick to the agreed export quotas. As a consequence, world market prices fell by around 40%. In 1998 the prices for Arabica averaged $1.35/lb, today they are around 0.65 USD/lb.

But only at first glance do the international food companies and roasters profit off this development. The drastic decline of world market prices has created enormous economic and social problems for coffee growers. "Hundreds of thousands of jobs are in jeopardy especially in producing countries with high quality coffee," warns GCA’s Bischof. There are fears that overall coffee quality might suffer because of lack of labor-intensive quality control of coffee cultivation and bean harvest. However, Bischof is confident that in spite of fierce competition on the global markets the downward trend in both, world market and consumer prices, is set for a turnaround in the foreseeable future. There is already a shortage in the supply of high quality Arabica coffee, which is particularly popular in Germany. Accordingly green coffee prices went up 10 to 20% during March and April 2002 as compared to the months before.

To avoid widespread disaster the international coffee industry is keen on more close cooperation with the producing countries. It is involved already in numerous joint ventures aimed at helping the farmers overcome the crisis. "We want to improve the growers‘ performance and their international competitiveness so that they can earn an appropriate living from selling their products. In return we are looking to secure the consuming countries a long term steady supply of top quality coffee," says Bischof.

German Tea Market

Stabilization on high level
German consumers are not overzealous in spending money in these days of economic uncertainty . When it comes to tea, however, they stick with their favorite beverage, and sales have been remarkably stable. According to the German Tea Association, domestic consumption has been 19,370 tons in 2001 as compared to 19,760 tons the year before. Per capita consumption is around 250 grams. Imports have increased by more than 9,000 tons totaling 44,394 tons. Exports also increased by a third to account for 22,357 tons. If it comes to regional breakdowns of "hot tea spots," East Frisia continues to be the traditional "holy land" of tea drinkers with a per capita consumption of 2.6 kilograms awarding it the fourth rank among the world's most avid tea drinkers after the U.K., Ireland and Turkey.

Jochen Spethman, chairman of the Association, praises the distinctive taste of the German tea consumers and their preference for premium products. The German tea trade is well aware of their quality orientation and supplies the market with a wide selection of really fine quality tea. While the classical types of black tea have a market share of 82%, green tea mainly from China has become ever more popular and now accounts for 18% of the market. Only some five years ago, nobody would have bothered to talk about green tea in Germany. For the first time ever, figures are released about the sales of organic tea. They account for 525 tons, which represents a market share of roughly 2.7%.

Retail outlets are the most important sales channels for tea, with 58% of all sales stemming from their shelves. They are followed by specialty tea shops with 16.5% sales volume, mail order companies (4.6%) and caterers and bulk consumers (4.1%).

Germany's most important tea suppliers continue to be India with 17.0% (though down 3.6% as compared to 2000), followed by Sri Lanka with another 14.8%. Indonesia held its third rank (14.4%) followed by China (13.7%) which, after having gained 2nd place in 2000, lost nearly 6% of its volume and was only ranked 4th in the 2001 league of tea suppliers for Germany.


Tea & Coffee - November/December 2002
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