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Modern Process Equipment

Industry Forecast
(continued)


WHAT TRENDS DO YOU SEE COMING IN THIS INDUSTRY?

“We see the specialty coffee movement gaining momentum in both Europe and Asia.” - Ted Lingle, SCAA Executive Director

“Laissez Faire is such a wonderful descriptive for the equilibrium of demand and supply at any given price, once the damage has been done. As farmers drop out of production and turn their attention to other crops, a price escalation will occur. Shortages of variety will ensue. Unless, farmers find markets outside of the current structure. These will deliver quality direct to market and protect their supply lines. The poor, uneducated, low yielding producer will not be able to compete here though. Again, the trend is education at all levels.” - George Sabados, president AustralAsian Specialty Coffee Association

“One would hope that product innovation would provide the needed positive trend, whatever this might be.” - Andy Holliday, A. Holliday & Co.

“The biggest trend has to do with 1-Cup or Single Cup, where the consumer can choose from a variety of coffee blends, roasts and flavors and then conveniently fresh brew one cup for immediate consumption. There are a number of ways to deliver one cup of freshly brewed coffee at a time. It will be the biggest thing that will happen in OCS and at home in the next couple of years, based on what is currently happening in Europe.” - Tom Martin, Pod Pack

“We do not see just one trend but rather several different ones. Depending on the country/region, it may very well be that new potential customers are entering the business. It is no secret that many countries of the former Eastern Bloc are investing as heavily as some players in Asia. But also in these two regions, companies are not evaluating just one type or size of equipment. It depends on where they are coming from business-wise: A small company may look for a shop roaster (between 1 and 25 kg per batch). Others may be interested in a one- or two-bag-roaster. Yet other companies are already involved e.g. in the mineral water branch. They do have the distribution channels and are jumping on the band-wagon for coffee. Requests for roasters with a nominal capacity of 1.5 to 4 tons of coffee an hour seems typical.

And even the existing national and international key accounts are thoroughly looking into investment of new equipment. I would like to summarize this under the aspect of “hard facts” and “soft facts”.

Hard facts: Yes, the overall consumption of coffee has not been growing tremendously on a worldwide scale in the younger past. And again, as an average it does not have the tendency to do so.

Soft facts: But looking at the more emotional side of the business, we all see the success of gourmet coffee and coffee-shops. Even though this is still a small percentage of the worldwide production, the coverage in many countries and almost in every local paper there is huge. Therefore, many roasters are asked or they question themselves, whether they are able to conquer the market with their existing product range. Some feel they should follow the existing trend and offer new products. Subsequently it seems that sometimes companies feel they are better off with new equipment. Consequently, plants that are 20 years and older are often replaced with new components - large and small. Very often increased production flexibility is the main focus.” - Stephan Lange, PROBAT


DO YOU SEE ANY CHANGES IN CONSUMER DEMOGRAPHICS?

“We see younger coffee drinkers becoming a larger percentage of the occasional coffee drinker segment as the category of cold coffee beverages continues to grow.” - Ted Lingle, SCAA executive director

“Consumer demographics show that people are living longer. Once we capture the young with above mentioned interesting blends, we will have them to be tea addicts for a life time. This is a positive factor for the sales of tea in general. The importance of retail coffee/tea bars is definitely increasing. Nowadays tea is not just an addition, but an important and essential section in this kind of outlets. Therefore we should find a way to offer specialty tea with more convenience, such as developing new and other brewing equipment and innovative single cup packaging.” - Marco Brinmuhl, Gebruder Wollenhaupt

“Sure, birth rates in the Western Countries are declining and people are living longer. The population bubble and consumer market is getting older.” - Andy Holliday, A. Holliday & Co.

“Hopefully, we will continue to see a shift towards younger drinkers, because of the coffee houses and quality coffee drinks that appeal to the younger tastes.” - Tom Martin, Pod Pack


WHERE DO YOU SEE THE RETAIL COFFEE/TEA BARS HEADED?

“We see continued sales growth as the owner-operators continue to improve their quality and refine their sales mix, while the broader foodservice industry remains clueless on how and why coffee quality can be a valuable tool in building customer counts.” - Ted Lingle, SCAA executive director

“One would think the pace of new coffee bars opening in North America is slowing. Of course tea has not enjoyed the same revitalization. Maybe tea is now destined to gain some of this spotlight.” - Andy Holliday, A. Holliday & Co.

“I think we will continue to see the coffee bars grow - half will probably be further penetration into existing markets and the other half will be moving into new geography. I don’t see much of a future for the tea bars, except in a few, well defined markets.” - Tom Martin, Pod Pack

“The most recent feature of the Brazil market has been the remarkable increase in espresso coffee with the number of coffee shops tripling the last five years. SINDICAFE has also founded Coffee Preparation Centers in the principal cities to train Baristas and Hotel and Restaurant personnel in preparation and maintenance procedures.” - Harry C. Jones, Cafes Fazenda da Sierra


WHAT DO YOU EXPECT THE RETAILER’S FUTURE TO HOLD?

“We believe retailers will become more involved in supply chain management issues as the current price squeeze makes high quality coffees more difficult to obtain on a continuing basis.” - Ted Lingle, SCAA executive director

“There are several factors to be considered. Some of these are:

The fact of food retailing has changed insignificantly in North America in recent years. The price clubs and mass marketers are now dominant, hence branded items are readily made available at very affordable prices. Food retail stores are now expected to provide every conceivable service from dry cleaning to personal banking.

The other type of food retailers emerging and in growing numbers are those who are catering to consumers who are willing to pay for quality products and the expected service which goes along with it, i.e. quality brands, healthy foods and organically produced items.” - Andy Holliday, A. Holliday & Co.

“The coffee bar retailer will need to continue to strive for the most efficient ways to deliver coffee drinks, taking into account labor and overhead issues. The grocery retailer will need to make shelf space available not only for more specialty varieties, but also for the new 1-Cup or Single Cup items.” - Tom Martin, Pod Pack


WHAT OBSTACLES SHOULD WE OVERCOME?

“We need to mitigate the coffee industry’s fear of a transparent market place, so consumers are not forced into “caveat emptor” choices by limited or misleading labels on coffee products and coffee farmers are not impoverished by the “laissez-faire” economic policies of consuming countries that preach free trade on the one hand but practice high levels of internal agricultural subsidies on the other.” - Ted Lingle, SCAA Executive Director

“Public perception that the coffees they buy actually help all growers. That the coffee industry is not sustainable when world prices are at their current levels - and the reasons why they are at those levels need to be made more public.” - George Sabados, President of AustralAsian Specialty Coffee Association

“The beverage tea whether it be consumed hot, cold or as RTD must constantly struggle for its share of the consumers’ mind and stomach. Beware of bottled water!” - Andy Holliday, Need Company

“The industry needs to continue to promote quality which has resulted in modest growth. An obstacle may occur when green coffee prices increase back to normal ranges and roasters are tempted to cut corners with lower grade (lower price) coffees. We need to remember what got us where we are.” - Tom Martin, Pod Pack



Tea & Coffee - December/January 2002
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