Romancing the bean: as the coffee crisis persists, Mexico launches new quality and consumption plan. (Spotlight).

The bright pink, blue and yellow beans mixed in with colonial-style ceramics is a far cry from Juan Valdez and his mule, but Mexico's coffee industry is hoping its new logo will soon be just as recognized as its famous Colombian counterpart.

"The coffee bearing this seal is of a consistently good quality," said Roberto Giesemann, president of the Mexican Coffee Council.

Before taking the helm of the nation's top coffee board, Giesemann in the mid-1990s pioneered the effort to establish the Mexican Specialty Coffee Association, known as Calicafe. The organization is widely credited with re-establishing the quality and reputation of Mexican coffee.

But earning the respect of being a quality coffee producer is difficult, and only a few countries--among them Colombia--can claim the international recognition of quality as the logo of coffee farmer Juan Valdez.

In an interview with BUSINESS MEXICO, Giesemann said the main objective of the coffee council is to implement an official quality certification program, and although it has yet to be formally announced, the plan is advancing quickly.

"We have now started a very serious quality certification program and for its implementation, we have opened many, many cupping labs throughout Mexico and all the country's producing regions. The main one at the coffee council's headquarters in Mexico City has just been completed," Giesemann said.

TASTING THE DIFFERENCE

In cupping labs, professional tasters grade the green, unprocessed coffee prior to shipment based on flavor, aroma and quality. The process is similar to the one used by the wine industry and includes evaluations of coffee characteristics, such as body, acidity and aftertaste.

The quality certification program is also supported by a decree signed by President Vicente Fox in December 2001. The decree obliges coffee exporters to remove from their stockpiles the lowest quality 5% of all coffee beans, which are often broken and unripe. Producers believe about an average of 5% of all coffee beans harvested in Mexico are unfit for processing.

"We are changing our international image," said Giesemann, in reference to the certification program. He added the move coincides with an ambitious new campaign aimed at doubling domestic coffee consumption.

While Mexicans are the world's highest per-capita consumers of soft drinks, they have one of the lowest percapita coffee consumption rates, even though Mexico is the world's fifth-largest producer of the bean.

The new promotion campaign sets a target for per capita coffee consumption to average about 1.5 kilograms annually, which producers hope to hit in three to four years. Currently, Mexicans consume about half that amount.

"The potential for per-capita growth is enormous," Giesemann said earlier this year at the public presentation of TV ads and educational videos aimed at encouraging coffee drinking.

TARGETING THE LOCALS

In most coffee producing nations across Africa, Asia and Latin America, coffee cultivation was largely initiated by colonial powers so that foreign rulers could establish a solid source of revenue along with such other exports as cotton and sugar.

Only in Ethiopia, where coffee first was discovered growing in the wild in the 12th century, was it grown because the local population developed a liking for the hot, black beverage produced from the little, red, juicy coffee cherries.

As the world's coffee producers suffer their worst crisis ever due to historically low prices in international markets, producing countries like Mexico are redoubling their efforts to raise domestic consumption and ease pressures brought on by massive overproduction.

"We would like to have that trend completely reversed so that exports may reach only 20% of the total volume we produce and consist only of our top grades, and then keep the remaining 80% in the country for domestic consumption," said Giesemann.

He emphasized the most important part of the campaign will be to convince the 100-million-strong Mexican population that coffee is, in fact, healthier than soda.

The nation's 330,000 coffee producers, most of them indigenous farmers with less than two hectares of land, have been suffering in recent years from continued low prices in global markets. Many would prefer to sell to the higher-priced Mexican market, which besides offering better returns for their product, also offers more stability than volatile world markets.

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Maja Wallengren

Under the shadow of the Angel de la Independencia, Howard Schultz was all smiles when he cut the ribbon of the first Starbucks in Mexico City earlier this fall--the first step in an ambitious 10-year plan to revolutionize the Mexican coffee market. In an interview with BUSINESS MEXICO, the franchise's chairman and CEO characterized the country with the largest per capita consumption of soda as a market ripe with growth potential and said his company is ready to exploit it.

"You have a market of over 20 million prospective Starbucks customers. There is a strong buying power here from the Mexican people. I think one of the big surprises we found in the research we did was to see the high level of awareness that exists here around Starbucks. People have had Starbucks experiences in their travels, and I wouldn't underestimate the amount of people who have seen Starbucks in U.S. movies," Schultz said, during his visit to Mexico City to open the store on prime Paseo de la Refoma real estate.

According to company executives and local Starbucks partner, Mexican food franchiser Alsea SA, the target is to set up 15 to 20 Starbucks coffee shops within the next 18 to 24 months. Analysts see the long-term potential for opening at least 200 Starbucks around Mexico over the next 10 years.

Although Starbucks wouldn't confirm local business rumors of a total 10-year Mexican investment plan of US$200 million, Schultz said he was optimistic about the overall state of the economy.

"I've been in this business over 20 years and understand the way in which the coffee market has evolved, and I certainly understand the way in which different consumers respond. I look at the Mexican market perhaps in a different way than how it has been reported. I look at it not half-empty but definitively half-full," Schultz said.

"On a macro level, when I look at the future of the Mexican market and the future of the Mexican economy, I feel very strongly that we are coming here at the right time. We will parallel the growth and development of this market in a way that I think will be very compatible with growing our business. I suspect over time the number of stores and the reception we will have from the Mexican consumers will exceed our expectations," said the man who joined Starbucks in 1982, before the company went on to style the world's retail coffee market in its own image.

The Seattle, Wash.-based firm has transformed tea-drinking English and Japanese consumers into regular coffee drinkers, leading to a rise in both nations' per capita coffee consumption. Starbucks has also opened more than 100 shops alone in China over the past two years.

The move into Mexico marks not only the first Latin American destination for Starbucks, but also its first foray into a major coffee producing country. Industry hopes are high that Starbucks will honor promises in the long term to buy an increased share of Mexican coffee beans to be sold in its Mexican franchises, as long as the quality of the product remains unchanged.

Signs are already positive of that happening. Since opening its first store in Mexico City, the so-called "coffee of the day" has been a blend of beans from the southernmost state of Chiapas, and Schultz had no hesitations in applauding the quality of the nation's coffee.

"We have been a very proud supporter and promoter of Mexican coffee in our stores ever since we started 30 years ago and every single day, 20 million customers a week in 6,000 stores worldwide see the Mexican bag on the shelves. We promote that. We use Mexican coffee not only as a variety, but in many of our most popular blends, and we'll do everything we can to continue promoting Mexican coffee," he said.

Starbucks is offering Mexican consumers lower retail prices than in the United States due to economic advantages, such as lower real estate prices and minimum wages, factors which the company believes will favor strong growth in local consumption.

Maja Wallengren is a global coffee reporter and Mexico City-based freelance writer.