Commanding respect.

The coffee world respects Finland. Inhabitants of this country are the highest per capita coffee consumers the world, drinking only the highest quality coffee. There is no bad coffee here -- "never was, never will be," voices the industry, and coffee is consumed all hours of the day. Ironically, coffee in Finland was banned in the 17th and 18th century but was brought back to combat the country's high alcohol consumption rate. This started the coffee boom and the decline in alcohol consumption. Currently, there are laws against spirits drinking during work hours.

Coffee is the leading beverage (equal to milk) with 800 million liters consumed annually. Some 95% of fins drink coffee and over seven cups are consumed during a work day. Since World War II, coffee consumption steadily increased, hitting a record high in 1982 with a level of 10.8 kilos, but has dropped every year since, with consumption now resting at around 10 kilos. The industry averages consumption on a five year rolling average but for 1992, consumption registered at 10.5 kilos per capita. Many factors account for this recent increase, with the main factor being that more people are drinking coffee and soft drinks are losing market share. About 90% of the population average four cups a coffee per day, those at the workplace consume up to seven cups daily.

People start drinking coffee with milk and sugar quite young until their teenage years and then replace it with juices and colas. About 50% of teenagers consume coffee. When they enter the workforce, they revert back to coffee. Finns drink mostly high quality coffees, and a strong part of their culture is to serve coffee, buns, and colas to guests, not liquor.

High quality prevails, claims Finnish coffee manufacturers and they consistently look for ways to improve quality. When prices go up, the manufacturers claim they don't substitute. All coffee is made especially for the soft water that is predominant in Finland. Flavored coffee holds a very small market share and decaffeinated coffee is not a popular item in this country. The Finns don't care for the taste of decaffeinated coffee, though there is a 50/50 blend of regular caffeinated and decaffeinated coffee currently available on the market.

The total amount of coffee roasted for a five million population is 52 million kilos, which calculates to 10.4 kilos per capita. Four roasters prevail over Finland's coffee market -- Meira Oy, Paulig, Viking, and to a lesser extent, Tukospar. Paulig's share of the market in 1992 was estimated at 45%. Meira followed with 29%, Viking held 13% of the market and Tukospar has an 11% share of the market. All the Finnish roasters have good direct sources to origins, but if in need, they purchase from middle Europe. Finland is practically an all Arabica market, with Robustas from India and other origins used for espresso.

For Finland's blend preferences, the country is renown for their fine qualities. Origin countries include: Colombia, Brazil, Kenya, Costa Rica, and Guatemala. Colombia accounts for 36.4% of imports, Brazil, 24.8%, Kenya, 9%, Costa Rica, 8.5%, Guatemala, 8.6%, and others account for 5.4%. Robustas account for 0.1% for total imports.

Paulig's largest brand is "Juhla Mokka" (Jubilee Mocha). It went from a market share of 18 to 34/o in 13 years. Another Paulig brand, "Presidentti" has a share of 10%. Viking's largest brand, "Costarica," has 7% of the market and its starting to rise; it was formally the #1 brand. Tuko's "Kultamokka" is the #4 brand. Two brands from Meira are in the top 5 -- "Kulta Katrriina" is the #2 brand and is sold in SOK shops only, and "Saludo" is the #5 brand and holds a total 8% volume share. Price-wise, Paulig's "Presidentti" is always the most expensive brand and their "Juhla" is also priced higher than most.

Finland's close proximity to the former USSR makes it a likely supplier. In fact, roasters in Finland are already exporting to the former USSR, Poland, Lithuania, and Estonia. Tallinn, Estonia's capital, is just across the Gulf of Finland and one can see the city on a clear day. Both Meira and Paulig have established offices in Estonia, with Paulig also venturing into St. Petersburg, formerly known as Leningrad.

The retail shop structure in Finland is similar to the U.S. and Sweden with coffee a loss leader in supermarkets. The housewives purchase coffee on specials or as discounted prices. The roasters and wholesalers are making their margin, but it is the retailer that cuts price in order to bring in the customer. Branded coffee products predominate the market. In comparison, own label/private label have only 2-3% of the market.

Competition between retailers is getting fiercer and it isn't any easier with the current green coffee prices. Roasters and shops compete against each other with coffee prices. Coffee prices were the same for the past 11 years before the recent price escalation as of Summer 1994. In the out-of-home market, home coffee sales account for 2/3 vs 1/3 for out of home and these levels have remained stagnant for the last two years.

Tea in Finland

Finland is not a heavy tea consuming nations, remaining true to coffee. The Finnish tea market estimated at under 1,000 tons with no sight of increased market share. Tea is the #6 beverage with 56 liters. Teabags account for 73.3% of the total tea market, 21.4% is loose, and 4.9% is herbal tea. Lipton is the market leader with 36.6% and Paulig, which is really the only tea packer in Finland, holds 22.9%, Twinings holds 17.6%. Others account for 9.8%, Pirkko has 7.2% (Kesko private label), and Princess has 5.9% of the market. There's no duty in tea packing in Finland.

Meira Oy

Meira Oy, one of Finland's larger coffee manufacturers, was established six years ago, through a merger of two coffee roasters. The companies, formerly known as the EKA Group and S Group were two well-established, old roasters. Now, approximately 50 employees are involved with the coffee factory and an additional 22 comprise the sales and administrative staff. Meira Oy is one of the largest industrial companies because its 50/50 owned from a coop. Meira also processes spices. The company did pack some tea but stopped some time ago as the market was too small and the company didn't foresee any developments.

The company's product fine includes: Saludo, Kulta Karrina, and Cafe Arome. Cafe Nova is the company's 50% decaf product. They also offer some espresso products, with whole bean and roasted coffee only a small part of the market. Instant coffee is also a small segment of market, and at the time of my visit was priced at 24 Finnish marks per 500.

Meira's main countries of origin are: Colombia, 40-50%; Central America (Costa Rica, Guatemala), 25%; East Africa (Kenya, Malawi, Zimbabwe, Rwanda, and Burundi), 25%; and Brazil, 10%.

While Meira commanded a 29.8% market share in 1992, the company enjoyed a recent increase as the latest market figures in November registered 30.6%.

Plant Tour

Roastery manager, Timo Sairanen showed me around the plant building which was built in the 1930's. This roasting facility is truly unique as two separate roasting systems are responsible for all coffee manufacturing.

Meira has massive roasting potential. On the 6th floor in the plant building, the Probat roaster has the capacity to roast 4,000 kilos per hour and the Neuhaus/Neotec 150 RFB roasts about 1,000 kilos per hour(whole bean, espresso, and other products requiring special roasting times). When the two roasters merged, each roaster had a different system. The engineers that manned the Probat roaster were surprised and pleased with Neotec's system, and vice versa. Both Probat and Neuhaus Neotec are leaders in industrial coffee roasting processes, and while both competitive, their machines hum together under the Meira Oy roof.

On the fourth floor, the Probat roasting equipment produces 2,500 kilos per hour and the Neuhaus equipment roasts 3,500-4,000 kilos per hour. In an effort to degas the coffee, it sits for a half hour to two hours in a special degassing chamber, the time determined by the grind. All of Meira's brands are roasted and interchanged with any roasting equipment, and all blending is done before roasting and not after. The Probat generally roasts the largest brands, and the Neotec 150 FB roasts whole beans, espresso, and products that require shorter roast time.

One Bosch and two SIG vac pack machines pack the 500 gram packs and one SIG small machine packs 250 gram packs. Additionally, two Hesser bagging machines produce the catering pouches. The 500 kg pack is popular with the consumer. Hesser also does vac packs and shrink wraps on the pallet. Meira also acts as catering wholesaler to the hotel trade.

Consumption is not expected to increase, says Timo Sairanen, as he voices concern over what kind of consumer will the teenager be after drinking coke. Coffee accounts for 80% of the Meira Oy Coffee Division's turnover (20% comes from spices). They export to Estonia, Latvia, Lithuania, and Russia. In 1993, one percent of Meira's sales were in exports; and in 1994, it has already reached 6%.

Meira has established its own agent, Meira Ltd Estonia, in Estonia. According to Sairanen, the German roasters are strong in Poland, and he expects quality to increase in that region.

Paulig

Paulig is Finland's undisputed leading coffee manufacturer. This family-owned business was established in 18761 by Gustav Paulig, the great-grandfather of the present managing director, Bertel Paulig. The company also has production facilities in Estonia, and the U.K. Two years ago, Paulig set up a sales office in St. Petersburg, Russia. Contract packing is done in Paulig (Finland) and Paulig (UK). The company now has offices in all Baltic countries.

To enter Paulig's international headquarters, one passes the bays of the Gulf of Finland and countryside of Helsinki and enters the compound which houses several buildings. The company has been in this facility since 1968. Greeting guests in the massive lobby stands a map of the roasting facility. Paulig quietly roasts for Tukospar from Tukospar's green coffee.

Paulig produces 120,000 kilos of coffee daily, totalling 30,000 tons per year. Managing director of the coffee division is Pekka Pirinen. Their state-of-the-art facility enables the company to utilize both bulk and bagged coffee. Green coffee is stored in 40 silos for only one day before it's shipped out. Probat roasting equipment is prevalent throughout the facility. All green coffee serges into two silos for roasting. After roasting, the coffee is either ground or bagged and held between 2-6 hours for degassing. The amount of time depends in the grind. The Probat roaster produces 4,000 kilos/hour, averaging 30,000 tons per year in total roasting volume. In 1992, total coffee production at Paulig accounted for 30,000 tons..

Vacuum pack sizes range from 250 gm packs and 500 gm. Packs for whole beans range from 250 gm all the up to 10 kg. Whole bean can also be packed in 500 gm tins. In the catering segment, pack sizes range from 100-1,000 gm sachets. The company recently updates all packaging lines with Hesser equipment to produce single laminate vacuum packs for the retail market.

Two shifts keep Paulig able to keep up with Finland's lust for coffee. The eight hour shift work 7 am - 3 pm and 3 pm - 11 pm. A staff of 15 handles the purchasing and laboratory testing, three of these personnel solely purchase green coffee. The laboratory checks production for spoilage every four hours. The seams of each product is checked for leakage.

The U.S.-manufactured Jabez Burns sample roaster is utilized with propane rather than gas, though the department tells me; "gas is better because it's easier to adjust." Before packaging, quality control make their tests. They again take immediate samples after some packaging has been done to verify correct machinery performance.

Paulig's finest blend for the Gustav Paulig fine is a blend of Tarrazu and Antigua from Central America.

Coffee accounts for 70% of Paulig's net sales which accounts for 1,000 M Finn Marcs. Approximately 700 employees handle Paulig's tea, coffee, and spice empire with 36 employees situated in the Baltics. Contract packing factories in Sweden and Denmark are under the name INPAC.

The Paulig name is quite strong in Finland's catering market. A coffee institute that teaches chefs and waitresses to make good coffee is located at Paulig' headquarters. Paulig supplies coffee and paper filters through wholesalers but not the machines.

Paulig exports very little, a small amount to the U.S., Australia, and Canada. The export market mainly lies in the Baltics, Russia, Belarus, and the Ukraine. The company did try to reach the U.S. market and opened a facility in Minneapolis, but that really didn't take off. "The real volume is here in Finland," according to a company representative.

Paulig also does the majority of tea packing in Finland. Tea packing is done at Paulig Helsinki and at Inpac near Lund, Sweden, and together their volumes are by far the biggest locally produced in the whole Scandinavia. Paulig packs their own line and also private label. Paulig's flavored tea products include: Earl Grey, Raspberry, Apricot, Blackcurrant, and Lemon. Six Constanta machines package both loose and bagged tea. Teabags are 20, 25, 50, 100, and 200 to a box. Bosch is used for the 200 teabag count catering bags. Tea tins are available.

Paulig U.K.

While Paulig has had a manufacturing facility in England for some time, it was only this year that Paulig purchased from Lyons, the largest coffee brand in the British market from Lyons Tetley.

Paulig U.K. manufactures some foodstuff and personal items such as shampoo and tea. They distribute Melitta product, but not their coffee. Paulig had a 7% share of the U.K. R&G market in 1993 and didn't market any soluble products. Presently, Paulig, with the Lyons brand, accounts for 20% of the roast & ground market.

At the recent Vienna Show sponsored by the Tea & Coffee Trade Journal, Bertel Paulig participated in a panel discussion on how to get a coffee product in the supermarket. He jested that in order to be successful, one had to have an established company for 100 years to be successful in the Nordic countries. A member of the audience then asked him how his company could be successful in the U.K., "Easy, responded Paulig, just buy the largest brand!"

Viking

The smaller of the three larger roasters is Viking who has a 14% share of the market. Situated on the outskirts of Helsinki, Viking is unique in its setup and distribution. The company was founded on October 1, 1991, owned 50% by Kesko and 50% by a Swedish wholesaler ICA. An ICA production facility in Vasterros, Sweden was utilized for all roasting until the end of 1992. A division of Viking, Luxus was formed by a marketing group for Sweden and another division, Rich Coffee was formed by a marketing group for Finland.

Viking purchases and roasts coffee for the marketing department. Rich Coffee is distributed to Vanda, Finland, and Luxus Kaffee is sent to Sweden. The marketing companies take the sales orders and feed then to Viking. They also determine marketing schemes as to which coffee goes to ICA in Sweden or to retailers in Finland. The company has no sales force, ICA and Kesko do the marketing. The wholesalers sell the coffee to the retail shops.

Viking sells to Kesko which is a public company and the largest distributor in Finland. All the roasters compete in catering, either doing business direct or through wholesalers.

Viking purchases coffee through European importers and direct from origin countries.

Viking has a wide range of brands but do riot include an espresso product nor a decaffeinated product. Viking produce many products which are private label but since they're sold in certain outlets, they're sold as brands, and consumers perceive them as such. Not only does Viking produce private label, they also pack for Movenpick as Kesko made a license agreement with Movenpick. Viking imports Movenpick espresso in tin. Viking also packs instant coffee, freeze dried in 100 foil bags for a small consumer market.

For origin countries, Viking prefers Colombia, Costa Rica, Guatemala, Brazil, and Kenya. These countries account for 90% of Viking's needs, The company offers a pure Colombian product and everything else is a blend, said Ramio Ilveskero of Viking. "The year 1993 was the first year Viking roasted in the Vantaa facility and 150,000 tons was their target and their target was on line."

Plant Tour

At the time of my visit, the plant was closed due to vacation but Ilveskero gladly walked me through the pristine facility. Coffee consumption lags a bit during the summer and the production schedule reflects this. Viking has one shift during summer, and two shifts for all other times. The facility employs 40 people, who Ilveskero tells me have been with the company for 15-20 years.

Probat is the roasting machinery of choice here. Two continuous Probats roast 4,000 kilos/hour The three pouch packing machines include both Hesser and Bosch and a single tine can machine. Two Sigs and one Bosch are utilized for the 500 g pack and are able to package 100 packs/minute. Ilveskero is expecting a new SIG which will pack 130 packs per minute and be more silent. Gump grinders as well as Probat grinders are used, though each are used for different types of grind. Grind speeds ranges at 2.3-3 tons/ hour.

Eleven holding tanks, the latest ones being from Probat, contain the granulized coffee, Ilveskero said. "In 1986/87, they made decision to modernize, they wanted a complete turnkey facility, automated from receiving down to packing."

A Probat pilot lab roaster, which is a gold colored upright roaster, can roast larger amounts than a regular sample roaster, roasting 500 gms in 2.5 minutes. It almost looks like a gold rocket. The lab staff checks every container before unloading. The air which is generally 240[degrees] C is checked routinely. The lab is also able to control moisture of each sample and adjust the temperature accordingly. "With this machine, we can get the same result as one can obtain with a large industrial roaster, said Ilveskero.

For The Future ...

The environment is the next concern for the Finnish roasters. Not only are all manufacturers experimenting with regulating wastage but all eyes are aimed towards the Continent as additional regulation is proposed by the governments. It is the EU's objective to have only 10% of packaging waste in landfill, while the difference between recycling and disposal should be subject to recovery operations.

This is in line with the mM of the European Parliament that requires all environmental measures taken by the Community to oriented along the highest level of environmental protection the world.