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Theta Ridge Coffee

The
Rocketing Rise
Of Elite Romania

By Reg Butler

Trying to capture a major market share in any country is a formidable task. The Elite International Group entered the Romanian market in 1995. From that time, they have been able to take 48% of the roast & ground market and 35% of the instant market.

Elite Romania SRL is a part of the Strauss-Elite Group, which is among the largest food companies in Israel. Created in 1997 by merging Strauss and Elite, both leaders in their fields, the group handles a variety of categories like yogurt, ice-cream, dairy products, coffee, chocolate, baked goods, sugar confectionery and salty snacks. Yearly turnover is $1 billion. In Israel, the group has three joint ventures with world leading companies: Unilever, Danone and Frito-Lay. In Israel, most of these products dominate the specific market areas. In the group’s home base, Elite leads the coffee market in each and every category: R&G, instant coffee and cappuccino.

The international activities of the group are made through Elite International B.V. and comprise business units in Poland, Romania, Belgium, Bulgaria, Croatia, Turkey, Ukraine, Russia, France and recently in Brazil. These international activities focus mainly on coffee - roast & ground and instant - in the branded products arena. In Belgium and France, the main activity is in the private label sector.

The former Soviet-bloc Balkan country of Romania has a population of 22 million and an obsolete industrial base. It’s a coffee-drinking country with an average annual consumption of 1.3 kg per capita, while only around 6% of the population drink tea.

Elite Romania SRL started its activity in 1995, when the R&G factory was built. First, the shell of the building was rented. Then, the company installed the infrastructure and production equipment.

Commercial activity started in the second half of 1995, with the launch of three products: Pedro’s, Sahara and Elita. The coffee was adjusted to local taste and presented in a new packaging material, Three Layer Foil. The Sahara launching was followed by marketing support, including a television campaign which, at that time, was regarded as an outstanding, high quality production.

The years 1995 and 1996 were difficult for the company mainly because of the harsh economic environment and often unfriendly changes in legislation. By the end of 1996, Elite Romania SRL had built a 5% market share but the financial situation was shaky.

In 1997, Eliezer Schneider took over as general manager. He had been working in the group since 1969. During that career, he had gained diverse experience in sales, marketing and operational management. For more than 20 years he has been responsible for all the coffee activities of the group in Israel.

The year 1997 marked a turning point for Elite Romania. Major changes were introduced in all fields of equipment, sales and distribution. The most significant change was in the marketing arena, using the Elite brand as an umbrella and changing the product portfolio, using Elita as a sub-brand. The marketing operation was backed by novel promotions, some of which had never been seen before in the Romanian coffee market. The year 1998 saw the introduction of innovative, sometimes aggressive marketing activities, based mainly on strengthening a local brand. The company ended 1998 with a 19% market share.

These marketing strategies continued in 1999, during which Elite Romania became the largest advertiser in the local coffee industry. By the end of that year, the company had extended its market share to 37%. In 2000, the market share of Elite Romania soared again, reaching 45% - it was now the number one coffee company in Romania. The basic brand sub-divides into Elita, Elita Selected, Elita Espresso and Elita Decaffeinated. The products are marketed in pillow, vacuum and stabilo packs.

Last year, Elite International decided to unify the product design across all its countries of activity. Elite Romania successfully implemented this change in April 2000, backed by a major launch campaign.

Examples of the successful implementation of Elite Romania’s marketing strategy - acting as a local company with local brands - include one interesting purchase. That is, recently KJS bought the number two coffee company in Romania, Nova Brazilia.

Naturally, the local press covered the deal, also mentioning all the international or foreign coffee companies active in Romania. Not mentioned among them was Elite. Several managers in the company were disappointed - as the number one company, why was Elite’s name omitted from the press coverage? But Elite-Strauss group c.e.o., Erez Vigodman, was very pleased. He saw it as proof that Elite had succeeded in its policy of promoting itself as a local company.

Riding on Elite’s success in the R&G sector, entry into the soluble arena commenced in 1998, based on instant coffee produced in Israel and partly packed in Romania. Within two years, Elite Romania became the market leader in this sector as well, with a 35% market share. Elite’s total coffee sales in Romania for the year 2000 totaled over US$51 million.

The company’s blends for the Romanian market comprise Robustas from Africa and the Far East; and Arabicas from Central America and Africa. Coffee buying is handled through the group buying office - Elite Commodities, in Zug, Switzerland - in charge of Paul Borgers. Obviously, the latest in roasting technology has given Elite a decisive edge on the Romanian market. One of the main objectives in the company’s local development strategy has been to install the latest generation of specialized equipment with the aim of increasing capacity and improving the product quality.

Hence, the decision was made to invest in a Neuhaus Neotec RFB 300 batch roaster with step roasting capability. This new equipment came on stream last September with a capacity of up to 3,500 kg/h for high quality production with roasting times from 2 to 8 minutes.

Elite International already had experience with this roaster, as the group’s factory in Belgium - Koffiebranderij Fort N.V. - was already using an RFB 250 batch roaster with capacity of 3,000 kg/h, with roasting times from 90 seconds up to 8 minutes and state-of-the-art control system.

As Schneider explained to the Romanian media at the launch press conference: “The roasting time can be changed, depending on the type of coffee. The setting of the roasting time being flexible, each type of coffee can be roasted in the most appropriate way.”

Yearly capacity at the plant is 15,000 tons, with 150 production employees working in two shifts. The factory is equipped with Buhler and Probat grinders, Bosch and Rowena packaging machines, and standard laboratory equipment for quality control - moisture analyzer, gas analyzer and color meters. Neuhaus also supplied an RFB 10 batch roaster for laboratory purposes, and a chaff collecting and pelletizing system. Coffee handling, cleaning, storage and blending are all fully automated.



Continued on next page...

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