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When Coffee Speaks
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Triestespresso

2007 Tea & Coffee
Industry Forecast

As 2006 ends, nearly as quickly as it arose, Tea & Coffee Trade Journal asked several key players of the industry for their thoughts on what the new year will hold for business.


1. Within the past year, what are the most important changes that you have witnessed in your segment of the industry (and the industry as a whole)?

Biggest change in our sector has been the decline of raw tea prices over the year, after the strong start of 2006.

Philip Miles - Van Rees Global Accounts, UK


In the past year, the most important change witnessed in the Darjeeling tea industry has been the effect of the trade-related Intellectual Property Rights. Further, there has been a consolidation within the industry with change of ownerships.

India has made considerable progress in promoting organic products in the international market. After having achieved recognition by the United States Department of Agriculture (USDA), we have also been able to achieve equivalence with the EU. An interim letter from Switzerland, agreeing to equivalence, has also been received and a notification is pending. This would mean that the certification bodies accredited by India will be able to issue the scope and transaction certificates to enable India’s organic products to enter the respective markets. This will bring down the certification cost for all our exporters, and lend visibility to the “India Organic” logo through the documents and products. This will facilitate the growth in the export of organic tea from India.

Darjeeling tea has been registered under the Geographical Indications of Goods (Registration & Protection) Act 1999, and now enjoys protection as a member of the World Trade Organizations (WTO).

Geography indicates which goods, such as agricultural, natural or manufactured goods originate, or are manufactured in the territory of a country, region or locality where a given quality, reputation or other characteristic is essential and attributable to its geographical origin.

Also, the effects of global warming have been felt, and unusual weather threw the normal pattern of harvesting into jeopardy.

Sanjay Bansal - Chariman - Darjeeling Tea Association, Ambootia - Tea Group Exports, India


Farmers are now able to sell their coffee directly to buyers overseas, as opposed to being forced by regulation to send their coffee for sale at the weekly central auction. For the last few years there have only been three interim marketing agents acting as sales agents for the farmers, but now - more or less - anyone who applies and can fulfill the application criteria is eligible to be licensed for this function. This will undoubtedly change the coffee industry in Kenya significantly, as middlemen and exporters are now able to go directly to the farmer to source clean coffee. There will be winners and losers, and we predict a fair amount of chaos, before a new status quo is reached. Many farmers, mistakenly, believe that they will achieve far higher prices if they make direct sales with overseas buyers. Others are not really aware of how the changes in the system might affect them, and what they can and can’t do when going forward. There is a great need for capacity building, and education at the farmer’s level, so that they are aware of industry changes and are able to make informed business choices.

Jeremy Block - C. Dorman, Kenya


The demand for ethically and sustainably sourced coffee is increasing at a faster pace than ever. There are many different ways a company can source ethically, such as “outside the box,” which is being taken up by a number within the trade. This is occurring in addition to the increase of fair trade, rainforest alliance and other certified coffees. D.R.Wakefield, as a pioneer in the ethical and sustainable sector, are well placed to source these coffees for the industry because we already have in place the direct sourcing channel -- to the farmer -- for many of our coffees.

Simon Wakefield - D.R. Wakefield, UK


A change that has already been underway, picking up speed, and will be with us for the next years as the ‘single portion revolution’ in the in-home market expands. This applies to instant coffee, as well as filter and espresso. In the instant market we see an increasing variety of single-portion instant coffee sachets, including recipes like Viennese coffee, Cappuccino and Latte Macchiato. With the filter market, we see the coffee pads for machines like the Senseo and others really taking off, especially in Northwest Europe. In the espresso market, a variety of capsules and pads are available. What they have in common is convenience of preparation, consistency of quality, and easy and mess-free disposal of spent coffee grounds (filter and espresso pads). What they also achieve is to increase the number of drinking moments that would otherwise be lost. For example, an individual consumer at home may not want to brew an entire pot of filter coffee, but now they can enjoy a cup of coffee whenever he or she feels like it. The single portion packaging keeps coffee fresh and allows the consumer to have more taste varieties at home to choose from, or to offer friends.

Roel Vaesssen - European Coffee Federation, Netherlands


What stands out to me is the groundbreaking work of the International Coffee Organization (ICO). Two historic developments are the active U.S. membership and renegotiation of the expiring International Coffee Agreement, which dovetailed as a rare opportunity to recreate the organization. It opened the door to breaking with the past and crafting a modern, more efficient ICO -- a new organization that effectively and efficiently serves its stakeholders with unsurpassed value. It is a chance to empower the ICO and promote a free market environment, support sustained expansion of markets, and leverage private/public sector cooperation for the betterment of the entire supply chain

Robert F. Nelson - National Coffee Association of U.S.A, New York


The coffee industry has increased the demand in training and R&D services. Our training facility and R&D are fully booked far into next year. Coffee roasters contract us to train their staff about green coffee, roast coffee and coffee preparation. On the R&D side, the coffee industry orders investigations on chemical and physical characteristics of green, R&G coffee or coffee processing which we carry out in our pilot plant. Due to the rising energy costs, potential savings in energy consumption are an important matter. The trade asks for technical solutions to reduce the required amount of energy for roasting and emission treeatment. Suitable solutions are recirculation of exhaust gases, green coffee preheating and PROFORTE (flameless, regenerative, thermal) exhaust combustion

Robert Dous - Probat-Werke, Germany


2. What recent trends have had an effect on your industry, and what trends do you see developing? How will your company meet these demands?

The EGCG (epigallocatechin-3-gallate [epi-gallo-cat-ekin-3-gal-ate]) is going to become BIG NEWS, and we are going to see mass publicity about its benefits. We intend on meeting the demand by providing EGCG-laden products.

Barry Cooper - Cooper Tea Co., Colorado


Specialty coffee becomes more and more of interest for the mainstream coffee producers. Roasting equipment needs to be highly flexible to meet the wide range of requirement in terms of taste and frequencies of blend changes. therefore we developed a revised version of our THERMA TWO roaster, which combines the roasterg systems of three different roaster types.

Lot tracking is a focal point. The coffee packaging units need to traceable backwards up to the green coffee lot. In Europe, this has already become standard.

Robert Dous- Probat-Werke, Germany


The trends of health, well being and a more conscious intake of food and beverages, have also been prevalent this year. The consumer can choose from an ever-increasing number of products and varieties targeted at different situations or consumer demands. Data suggests that the consumer continues to make choices in order to achieve a healthier lifestyle and chooses products dependent on time and place.

The tea industry is uniquely positioned to offer many varieties, and play an active role in a healthy and good tasting diet. Plantextrakt is uniquely positioned to develop concepts and products for the industry, which meet these trends. The company, which is aware of the current trends, sources globally and has a strong R&D department to meet the demands of the industry for today and tomorrow.

Oliver Hehn - Plantextrakt, Germany


The growth of the green tea/specialty sector, and despite talk about quality, most packers remain very price sensitive.

Philip Miles - Van Rees Global Accounts, UK


Trend, away from the mainstream coffee to specialty coffee, means biggest variety of coffee services (pods, pads, whole bean, etc.) and overall service. The effect on our industry was that we had to adapt to smaller production capacity, which means smaller badge sizes bit with sophisticated demands regarding quality.

Gustav Luehrs - Neuhaus-Neotec, Germany


3. Have you witnessed changes in the consumer’s tastes? Do you see any new ones developing?

We are going to see a lot of functional RTD appearing in the market. They will contain EGCG and other functional ingredients.

Barry Cooper - Cooper Tea Co., Colorado


The American consumer’s love affair with tea is in a constant state of flux, moving from black, green, white, Oolong, Pu-erh, RTD, Bubble, flavored and then back again. Fickleness aside, a constant thread running throughout the search for the “perfect” tea is the demand for a more natural, healthier, great tasting beverage to replace whatever they are currently consuming. On the flavor front, there is a never-ending array of new options coming into the market; areas that only a few years ago no one would have ever guessed there was any kind of compatibility.

Joe Simrany - Tea Association of the USA, New York


I’d say consumer tastes have not merely changed, but have expanded and diversified. Consumers are reacting vigorously to the growing menu of coffee options on store shelves and in coffee shops. The more varieties there are, the more they seem to want.

The NCA’s market research shows an intriguing pattern of consumers that are now looking into different coffees to fill different roles at different times of the day. Coffee has become many things to many people -- a morning staple, an afternoon treat, a focus for social interaction and more. These same consumers are choosing many of the different options. In fact, they’ve become so accustomed to gourmet varieties that they appear to regard them as “traditional coffee,” when asked to describe their consumption and purchase habits. This trend is evident in the NCA’s National Coffee Drinking Trends study -- virtually all of the growth in daily coffee consumption in 2005 and 2006 has been in what survey respondents describe as “traditional” coffee.

Robert F. Nelson - National Coffee Association of U.S.A., New York


We see an increasing interest in drip coffee. Despite the continuing trend to espresso-based coffee beverages, consumers have rediscovered the classic drip filter coffee. Since there is this huge hype around espresso, some consumers start t odesire a regular cup of cofee.

Parallel to that, coffee drinkers demand a higher quality level for coffee consumed at home or in the office. They are used to quality espresso drinks and want to keep that level. This is a growing market for specialty coffee. Standards and rules for drip coffee preparation such as the “Golden Cup” have to be communicated to the end consumer to spark interest for appropriate drip filter preparation.

Robert Dous - Probat-Werke, Germany


4. How does the exploding interest in Fair Trade and sustainability affect your industry?

Don’t exaggerate the ‘exploding interest’ in Fair Trade/Sustainable coffee. There is an undeniable and positive increasing interests,. However, Fair Trade-labeled coffee still only represents 1.2% of the West European market (I don’t have market shares for other initiatives like Rainforest Alliance and Utz Kapeh readily available, but these as well as company-individual initiatives should be added to arrive at an estimate of total sustainable coffee market volumes). Having said that, the consumer does want to feel generally comfortable with all products he or she consumes, be it sporting goods, textiles or coffee. This provides the ‘raison d’être’ for a base-line standard like 4C, which will become operational in the beginning of 2007. Its development and the benefits it provides to the growers, in terms of market adaptation and resilience to changing market conditions, will be one of the most exciting trends to watch in the coming years.

Roel Vaessen - European Coffee Federation, Netherlands


The most striking thing that has happened in the past year is the increasing public demand for Fair Trade and organic coffees. In fact, people seem to be saying “What the heck, if I’m going for Fair Trade, I may as well go organic too.” So we see this trend of consumers combining the two concepts in the same purchase.

Stuart Daw - Nationwide Gourmets, Florida, U.S.


Positively -- and to a large extent. The standards implemented try to improve the best practices at the farm or smallholder level, whether economic, social or environmental. However, they do raise the expectations of the farmers and create a certain amount of confusion. The farmers are overwhelmed with the number of different possibilities, and within the smallholder sector there is a great need for capacity building to help them overcome the challenges of implementing a certification program. The farmer is also disillusioned when, having gone the extra mile, his coffee is not bought and he does not receive the promised premium.

Jeremy Block - C. Dorman, Kenya


Although the benefits that Fair Trade programs can bring to the environment and the employees, through social programs, and the best management practices are unquestionable, with some exceptions, they don’t address two crucial points:
  • The necessary long-term contract guaranteeing a premium over the market price for the farmers involved, due to the investments that comes with the Fair Trade principles.

  • Lack of better information towards the consumer, to motivate them to pay a better price for Fair Trade products.
Joaquim Leite - Coop Guaxupe, Brazil
5. Do you think companies/organizations are succeeding in educating the consumer about the different origins and blends?

I believe the entire tea industry is doing an excellent job in educating consumers about the nuances of ‘specialty tea.’ That said, there is much more that needs to be done before American consumers will develop a deep appreciation for the variety and complexity of the types of tea available from around the globe. The Specialty Tea Institute is also doing its part by expanding its Certification Program to include an appreciation for single origins, regionals, seasonals, and Estate teas.

Joe Simrany - Tea Association of the USA, New York


Definitely! When talking about education on coffee, different origins and blends, it would be unfair not to mention Starbucks, as nowadays an increased number of people look for specialty coffees and are trying to learn more about it.

As producers, we perceive the evolution when we have specialty requests from buyers, such as larger screens and cup profile. Four years ago, for example, Daterra developed a “Green Coffee Menu,” where the client would choose their coffee among 18 blends that were all not only produced at Daterra, but were of single origin and under a brand. At the beginning, the client would give the specifications and we would fit it in to the menu, now 100% of Daterra’s clients already asks for one of the brands.

Educating consumers not only about quality, but also about sustainability, has been paying off. There are some countries that simply don’t buy coffee without a certification. Quality and sustainability are becoming a premise, not a differential.

Isabela Paschoal - Daterra, Brazil


6. What developments/changes do you feel need to be made in your segment? How will this affect/improve the industry as whole?

We need to continue to strive for quality, and never rest on last year’s products. Innovate, develop and prepare amazing beverages in new ways with new flavors and recipes. We continue to look at the developments in the restaurant trade (from QSR and casual dining to fine dining) to evaluate the trends and implications of specialty coffee beverages.

Spencer Turer - Kerry Food & Beverage


7. In what direction do you see the role of ‘the barista’ going?

The Barista is the face, personality and sole representative of the specialty coffee supply chain to the consumer. They not only can make drink suggestions or recommendations, but their skill can be the difference between an everyday latte or an amazing specialty coffee experience. The passion, skill and commitment of great baristas must be recognized and rewarded. Today, with resources and contests, such as the Barista Guild of America and the United States Barista Championship, there are opportunities for a barista to learn and grow professionally.

Spencer Turer - Kerry Food & Beverage


Tea & Coffee - December, 2006
Coffee & Tea Fest

Tea Fair - China


Tea & Coffee Trade Journal is published monthly by Lockwood Publications, Inc., 3743 Crescent St., 2nd Floor, Long Island City, NY 11101 U.S.A., Tel: (212) 391-2060. Fax: (1)(212) 827-0945. HTML production and Copyright © 2000 - 2013 by Keys Technologies and Tea & Coffee Trade Journal.

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