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ASIC 2014

Industry Forecast

As we say goodbye to 2002, our eyes look forward to exciting new prospects in 2003. Tea & Coffee Trade Journal asked some of the tea and coffee industries’ leaders their thoughts on what this new year will hold for all of us.


WHERE DO YOU THINK YOUR RESPECTIVE INDUSTRY IS HEADED?

“As an ever growing number of consumers, worldwide, develop an awareness and appreciation for quality differences in coffee, specialty coffees will achieve an even greater market share of total sales.” - Ted Lingle, SCAA executive director, USA

“Now this is a broad question. In respect to green bean production, I can only foresee misery and heartache for those growers producing Robusta, and for those producing Arabica for the multinationals. I would like more scope to explain - I tend to agree with Oxfam’s argument, but not their solution to the problem.” - George Sabados, president Austral Asian Specialty Coffee Association, Australia

“We see the industry going through difficult times, but there is good hope to overcome this period by being creative and developing new tea blends and finished products with added value. In tea business the economic slowdown is the bigger problem than the pressure on the cost prices for tea. Once the economy picks up again in Europe and the U.S., we expect sales to increase again. We see that there will be more sophisticated blends on the green tea and white tea side as well as some kind of functional teas which include single herbs that are said to have a certain health benefit. The big winner will be once again Rooibush tea which will also be developed into more blends with other flavors and into green Rooibush as well. “ - Marco Brinmuhl, Gebruder Wollenhaupt, Germany

“Pretty much the status quo will prevail unless the consumers’ perception of the beverage tea can be positively influenced. Certainly steps have been taken in this direction with the awareness of the Tea and Health and the Specialty Tea programs.” - Andy Holliday, A. Holliday & Co., Canada

“I think total consumption will remain steady for the next few years, but the trend towards convenience and variety will continue to grow.” - Tom Martin, Pod Pack, USA

“Our customers do not seem to be influenced very much by the green coffee price crisis. Of course this differs. In some coffee-growing countries the influence may be larger with respect to the mood for investment. But in the vast majority of the consuming countries, the amount of quotations and orders remains very high. This may have several reasons. The most important one is that the decision-making process for an investment takes several months or even longer, especially for the larger projects. Therefore, and as many customers take the medium- and long-term approach to their business, we are still very satisfied with the amount and size of the business outlook for 2003 and the following years.” - Stephan Lange, PROBAT, Germany

“Over the past 10 years, the largest coffee manufacturing facilities in the U.S. and Canada have consolidated, closed down or merged with other facilities to achieve economies of scales achievable with “mega factories. While we expect this trend to continue, we also anticipate the continued growth of the small to medium sized roaster who services the growing premium, personalized and service orientated markets, those sectors being better served by smaller manufacturers. This scenario creates opportunities for equipment companies to supply the more sophisticated, high capacity production designs on the one hand and the traditional, flexible production equipment designs, for the small and medium sized roaster, on the other hand. Notwithstanding the plight of the farmer, current profit margins of coffee roasters should provide sufficient capital to fund both sides of this growth pattern.” - Daniel Ephraim, Modern Process Equipment, USA

“Our opinion of the roasting industry and coffee consumption in Brazil is very positive at the moment. In spite of economic and political uncertainties, large and well financed promotions have been launched by State Agriculture authorities and the São Paulo Coffee Industry Union (SINDICAFE), to increase local consumption especially for higher quality coffees.

The campaign’s widely publicized objective is to educate consumers to quality differences by classifying coffees on the grocers shelves into three categories: Traditional and with Superior and Gourmet qualities identified by a “Seal of Quality” stamp.” - Harry C. Jones, Cafes Fazenda da Sierra, Brazil


CAN WE OVERCOME OUR PRICE CRISIS SOON?

“As long as the industry lacks the political will to take decisive steps, there will not be an end to the price crisis in the near future. Even the most economically promising step of redirecting triage coffees into alternative uses has not received broad industry support.” - Ted Lingle, SCAA executive director

“Education is the key. History shows us that we have been able to rid countries of many diseases through education and demonstrating proper practices. Coffee is not different. Programs such as the Cup of Excellence is my case in point. An active task force funded by a combined SCAA, SCAE, AASCA, and any other organization wishing to join should look at: attacking the price crisis at the grass roots through better work practices and processing, lobbying governments to sponsor an auction system which circumvents multinationals, and educating the public to the human cost of supporting particular coffee products. There is much that can be added here at all levels, but I am limiting my words. I do feel that we, as Associations, are also not working closely enough, on a united front to resolve the price crisis.” - George Sabados, president, AustralAsian Specialty Coffee Association

“Unfortunately tea is an agricultural commodity and governed by the dictates of the supply/demand equation. The annual world production of tea has been out-stripping demand (absorption) for too many years. This will not change unless some curbing influence suppresses the availability of supply.” - Andy Holliday, A. Holliday & Co.

“Leave it in the hands of simple supply and demand - this will be the best way to fix it in the long run.” - Tom Martin, Pod Pack

“With respect to price crisis, it is generally believed by the Brazil trade that with an expected much lower crop next year and with the government finally fixing a minimum support price, the market bottom has been reached and prices, local and abroad, should improve during 2003.” - Harry C. Jones,Cafes Fazenda da Sierra



Continued on next page...

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