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Austria - they're roasting up a storm.

Julius Meinl--A company which has gone through two world wars, its assets stolen, was still able to build itself back as a major roaster for Austria. Now e company is proudly prominent in the former Eastern Bloc countries where it originally had its roots. Mindful of the swell of coffee specialty shops in the U.S., I couldn't help but notice the myriad coffee shops throughout Western Europe as well as in the former iron curtain countries. It really did start all here with the company Julius Meinl as one of those shops whose beginnings started over 100 years ago. It is these European shops that were the forerunner of the specialty phenomenon in the U.S.

Established in 1862 in the Austrian/Hungarian empire (monarchy), Julius Meinl had shops throughout Romania and Western Europe, and was the first leading chain store in the world. Meinl's philosophy: Establish a shop wherever there's a railroad station.

Meinl was also the first company to introduce roasted coffee to consumers. Previously consumers purchased green coffee, roasting it at home.

In 1944, before the Russians occupied Hungary, Julius Meinl had already approximately 100 shops. After that, all Meinl shops were nationalized. After some time, Hungarians purchased shops and, in 1990, Meinl bought back the shops. Its factories were located in Salzburg and Wien (Vienna). When the Russians left Austria in 1955, the company decided to consolidate into one plant in Vienna.

Julius Meinl purchased an Italian roaster in 1862 and ran the firm as a private company. The family has run the firm through several generations. Julius Meinl III, who died in September 1991, had transformed the company into an incorporated enterprise some 20 years ago. Now Julius Meinl IV is president. Julins Meinl V is in his thirties and is a manager of Meinl bank. The family continues with Julius Meinl VI who is 5-6 years old.

Coffee used to be the company's main business but, as it increased the number of its shops, the firm introduced delis with salads, and a cafe corner in shops. About 280 Meinl shops are run for their Pam Pam Supermarkets (20 stores), which are owned by Meinl, and they sell competitors' products in their shops as well. A major modernization program took place in 1990. Several unprofitable stores were closed, with the remainder being refurbished. Coffee bars were installed in coffee sections of stores, wherever possible, to look even more inviting to enhance the customers' shopping experience.

Meinl packs its own tea in Vienna as well. Coffee and tea are purchased through German importers as well as at tea auctions in the countries of origin. Production capacity is 8-10 million kilos green coffee. The company had a large Yugoslavian business of 2M kilos, but there's nothing now clue to the current civil war. There is an Eastern business, but taxes and customs run up to 40% extra on consumer coffee and tea purchases. Consumers in those countries are turning more and more to the black market in order to get untaxed coffee. The company has hundreds of Turkish and Yugoslavian employees who take the coffee back to their homeland. All petrol stations sell coffee on the Austrian-Eastern bloc border.

All coffee imports are registered. Estimated per capita green coffee consumption is 10 kilos, but in reality, consumption is actually 7.5 kilos. The rest goes to the former Eastern bloc countries. Employees sell coffee to Russia, etc.

Meinl holds 10% of the household canned market. The company is the #1 institutional supplier with 60% of the market, servicing restaurants, coffeehouses, and hospitals. All together it has 18% of the total market. Meinl also introduced three new blends into the consumer market: Classic, Mild and Light. The market for mild blends is growing continuously and currently accounts for 15% of total coffee sales. Decaffeinated and espresso coffees are also important market segments which have been subdivided into more and more flavor subsegments in recent years.

About 70% of coffee sold in shops are R&G vacuumpacked; 90% of coffee in the institutional market is whole bean.

Coffee drinkers want fresh brewed coffee while, at home, the Austrians consume filter coffee.

The re-export market is quite large for the company as Meinl sells to consumers and export companies who then resell the coffee themselves.

Austria had a 5% customs duty but it was abolished. Tea and coffee have 10% taxes (VAT) as other foodstuffs. Tea consumption is estimated at 400 g per capita.

Meinl prefers Brazilian origins in coffee blends. Colombia, and gourmet coffees from Ethiopia, Costa Pica and Guatemala are also utilized. Almost 99% of Robusta imports are sold to guest laborers (migrant labor). Coffee is decaffeinated at facilities in Germany and Switzerland. The re-export trade is growing in Austria, and records aren't really kept as people take coffee out of the country in their car's boot (trunk). About 90% of coffee drunk in Austria is Arabica.

Meinl also sells some coffee to Poland. Unfortunately the cheapest Indonesian Robusta grades go there. A rather unique situation has arisen in the former Eastern bloc country. People who remembered Meinl coffee before the occupation were glad to see the shops back, but the quality is lower as the customers cannot afford better grades, "We are not happy about this situation," said Otto Karner, Meinl's coffee & tea director.

Meinl was eager to go back to the former Eastern Bloc countries. In Hungary, they have a joint venture. The company established shops in Yugoslavia some two years ago, but that has since collapsed with.the current civil war taking place.

Karner is in charge of buying and blending. Austrians are health-conscious. France got used to Robustas because of her colonies. Austria consumes/imports 9% of Robusta. Instant coffee holds 8-9% of the market. Meinl sells only freeze-dried coffee. The company compound also manufactures marmalade and liquor as well as operates a teaching school for coffee.

Meinl has 250 shops with a branch in Italy which has 25 shops. They have one retail firm and one institutional firm.

Plant Tour

Of the four Probat roasters at the factory, two are modern, with turning bowls where you can see green and roasted coffee come out. A temperature of 250[degrees]C is always maintained under the strictest surveillance. Ten bins hold some of the different varieties of coffee. Watercooled grinders adjust to the fine or coarse grind Meinl is manufacturing at the moment. On order are two more machines for more silos for holding coffee, and they're much larger, says Karner.

Seventy people work two shifts during the normal production schedules. Bosch 500-g or 1-kilo vacuum packaging machines for whole beans are utilized. Tins are a small share of the market. The 500-g packs account for over half of the total volume of the Austrian market. Hesser equipment for 500-g bean bags with nitrogen gasflushed packs with valve was a recent installation. There are also machines for 1/2 -kilo and 1-kilo nitrogen gasflushed bags. The 250-g packing machine is also a Hesser. Two Sortex electronic sorters of the 7000 series do the blending; they replaced 50 women who had hand-sorted the beans. Originally, the shops sold whole beans, but the mysticism, fantasy and image have made the packed coffee more attractive.

I felt I was walking through Austria's underground silent subways or in the persona of Harry Lyme in the movie,"The Third Man." when Karner led me underground, below the street in front of the compound. This was their green coffee distribution system. The rail pulls up alongside the warehouse which is across the street. The green coffee is unloaded and piped into the underground tubes where it is distributed/sent into the holding bins within the factory.

Meinl's brands include: Jubilee, President, Viennese, Decaf, Mild, Classic and Light.

Tea at Meinl

The tea market is not too large in Austria. Fruit teas are more popular than regular Black tea. Tekanne is the leader in Austria's consumer market, with Milford holding the #2 spot and Meinl with a smaller share. Of total consumption, 25% of tea is consumed loose, and 75% is teabags. Black tea consumption is estimated at 170 g per capita, with the herb and fruit tea market accounting for 200-g. The herb and fruit teas only entered the market three years ago.

In the market for tea in recent years, there has been a shift in relative market share between conventional and herbal teas. Because of consumer's increasing health consciousness, the market for herbal teas has grown considerably. Taking advantage of this development, the company was able to achieve impressive sales results with the new 200 g packs for their fruit tea line.

Meinl does a 50/50 production of loose versus teabags. The company packs approximately 100 tons loose tea per year of leaf and fannings. This is a high quality market for tea, says Harald Ryrek, similar to Germany and Switzerland. Meinl imports approximately 50% of all teas directly from India, 30% from Sri Lanka, 15% from Kenya and 5% from China. The Hamburg tea importers also deal with Meinl. The company has four dominant brands: Queens Blend (pure Darjeeling), India Special (pure Assam), Ceylon Special (100% high grown Pekoe), and Earl Grey.

Meinl packs 90M bags per year and expects consumption to Increase. Teabag growth is down, but loose tea is slightly up.

Both the herb and fruit mixtures have five blends within each category. The herb tea range includes: Rose Hip, Hibiscus, Peppermint, Chamomile and Fruit ( a mixture of orange, apple, citron). The fruit range includes: Wild Cherry, Black Currant, Maracuja Orange, Peach, Apricot and Framboise. Three of the fruit teas are available in teabags. Instant tea with lemon is the only company-offered soluble tea product, there's not a large market in instants.

The tea facility is about two blocks away from the main door of the company's compound. The tasting laboratory is situated in the coffee facility where both tea and coffee are scrutinized. Eight IMA teabag machines for black, fruit and herb teas are packing at a rate of 150 bags/minute. Fruit and herb teas account for 60% of tea consumed in Austria. Shifts begin at 7AM and end at 4PM, except for Friday, when the factory closes down at noon. (I wish my office would consider this) One machine packs in 100-g packets and tins, but says Harald Ryrek, the future is in packet packaging and not tins.
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Title Annotation:Julius Meinl AG
Author:McCabe, Jane
Publication:Tea & Coffee Trade Journal
Article Type:Company Profile
Date:Sep 1, 1992
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