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Sweden's coffee's roast style has darkened through the decade.

It has often been said that the Swedes produce the best coffee, and then some claim the Finns roast up the most royal brew.

The green coffee sources are basically the same for all the Nordic countries with the only major difference being the roasting of the green coffee. A short characterization is that Swedish coffee has a darker roast and more body and is less acidic than Finnish blends. In fact the roast now desired by the Swedes has been getting darker over the last 10 years due to increased travel by the inhabitants to the south of Europe where they are becoming more acquainted with the espressos in Italy and Spain. The now desired body comes from using a greater percentage of green from Brazil, Guatemala, and Kenya, as compared to the other Scandinavian countries' tastes.

The main producers desired for the Swedish roaster are: Brazil, Colombia, Costa Rica, Guatemala, and Kenya. In addition, coffee is sourced in about 20 other countries. Consumption of roast ground coffee is basically stable with only a small decline of 0.2 - 0.5% per annum. Freeze dried has enjoyed a phenomenal growth rate of 2% per annum for the last six years and now represents between 6-7% of total consumption. In total, the market remains constant when all types of coffee are taken into consideration.

The usual alternative of soft drinks and the not-so-usual one of beer have slightly eroded the consumption of roast ground coffee. However, the roasters are making effective counter measures by maintaining the qualities of the raw materials utilized, advertising to youth groups to encourage year round consumption instead of viewing coffee as primarily a cold weather beverage. Two trends are assisting in making this advertising campaign successful: a lower starting age for coffee consumers and a tendency of older people to respond to the "glamour" of young people in advertising copy.

Compared to other countries purchasing the most expensive green coffee, Sweden has an unusual retail market. Coffee is used as a loss leader along with about five other commonly purchased items but the quality remains high even in all three price categories of coffee. There are premium, middle, and severely discounted brands. In fact, 90% of brands are discounted but the range of the discount varies, so a difference can be perceived by the consumer. Premium brands sell at 18-20 SEK (Swedish kroner) for 500 grams, middle brands retail for 12-14 SEK, and the lowest discount is at 10 SEK. Due to some current economic uncertainty, the severely discounted brands are gaining market share, a trend which has not yet shown up in the above chart.

Sweden is a difficult market to enter. The average per capita consumption is 10 kilos per annum with a population of 8.3 million. In order to enter the market, a firm must buy into it if any large market share is to be gained immediately. Such was the case with Nestle which initially purchased the company, KaffeBonas, in 1984 during a general expansion into the roast and ground business from a strictly soluble manufacturer. The Bonas firm was formerly 100% family owned and had a national brand in the catering field -"Guld Mocca." In 1986, Nestle also purchased the remaining shares from the last of the family members of the Zoegas roastery in Helsingborg which basically controlled the south of Sweden. The production of the two firms was concentrated in Helsingborg in 1990 to utilize the advantages of scale of one large factory and also to concentrate planned capital expenditure in one facility.

One effect was to have the Kaffe Bonas factory unutilized. The son of the former owner was offered the opportunity to purchase it along with some of the retail brands but not "Guld Mocca" and the offer was taken. In a saturated market Kaffe Bonas has been able to go from 0% to nearly 1% market share in the period from July 1, 1990 until the present. The point is that there is room at the bottom of the market for roasters supplying a restricted geographic area or niche catering/institutional markets or private label which KaffeBonas has made a good business.

The major multinational marketing firms control this market along with the remaining privately held firms and the Coop Cirkel which are too strong to be knocked out by large advertising expenditures. The charts indicate that Kraft General Foods, Zoegas (Nestle), Lofbergs, Cirkel dominate the market place. This is basically true but Sweden is not homogeneous in its taste preferences nor in traditional preference for one coffee over another.

Regionally, Zoegas dominates in the bottom 300 kilometers of the country and is introducing roasts which are more suitable to the tastes farther north of the traditional selling area of south of the belt of forest about 100 kilometers south of Stockholm. Maxwell House from Kraft General Foods is considered a premium brand just about everywhere in the country but the brand is really predominant in the Stockholm and North areas. This brand is a 100% Arabica blend and is probably unique in the KGF marketing of the Maxwell House mark in this regard. Also with the Gevalia trademark, KGF has a marketing success in the U.S. with direct mail service which enjoys about 300,000 MT exports per annum and continues to grow. Also, Gevalia is the largest brand on the national scale.

Arvid Nordquist, a brand of Cirkel, is beginning to export to the U.S. and are up to about 3,000 tons. The coffee is imported through Scandic Foods, an importer based in Arlington Heights, Illinois.

The Swedish consumer is perhaps a dreamer in that the highest quality coffee is expected at the lowest price. The severe discounting at the retail level is a fact of life but so is the determination of all the roasters to maintain market share in this extremely competitive market. For the foreseeable future, Swedish coffee roasters assured us that their coffee will be among the best anywhere in the world.
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:shift in consumer's tastes
Publication:Tea & Coffee Trade Journal
Date:Nov 1, 1992
Previous Article:Value added gets serious: coffee producer takes message on the road.
Next Article:Finland: coffee fights for its market share.

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