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Big store Euro Coffee's on its way.

There probably will not be a party, but nevertheless, recent figures on in home consumption of roasted coffee indicate that the European Community is very close to passing the one-million-tons mark in volume. In fact, should projections come true in 1994, the EC will then see a more than one million ton market for in-home consumption of roasted coffee. There is some uncertainty about this because we do not have in hand the most recent in-home consumption figures for Greece, Portugal, Ireland, and Denmark. However, the projection is for a sum market in 1994 of more than 960,000 tons of roasted coffee credited to the in-home sector in the combined markets of Germany, Netherlands, Belgium, France, UK, Spain, and Italy - and it can be assumed that the consumption in the remaining countries will then take up the slack to the one-million mark. The coffee industry seems to be in need of a party spirit in these days of recessions and languishing international agreements, so perhaps this passage serves as well as any for celebration.

Despite the mighty weight in home consumption, it must be noted that in coffee, as in so much else, the ideal of the Maastricht Treaty has a tough way to go; the various national coffee markets within the EC perform in quite their own ways. Germany, France, and Italy - the three really big national markets, and which combined account for about 78% of the total EC in-home roasted coffee market - see continued, fairly stable market increases of about 1.5 to 2% per year. Denmark, Belgium, and the Netherlands are basically static markets, and can even show regressive tendencies.

The nations with more rapidly expanding in-home sectors are Spain, Portugal, and the U.K. These countries can expect annual growth of 3.5 to 4% in their in-home roasted coffee markets. If it were not for potential growth in eastern Germany, Greece, and Portugal, and for continuing expansion in Spain and the U.K., the EC would be a quite "matured" in-home coffee market. Certainly it can rarely boast of the kind of coffee boom one finds in Poland, for example, where the in-home market is viewed as progressing at more than 5% per year.

As for the nature of this vast, if somewhat sluggish, retail market for roasted coffee in the EC, we find that more than 78% of sales are by national brands, i.e. brands that can claim to be distributed throughout most of their homeland territories. This strong market share by nationally distributed products is born particularly well in Germany, France, Italy, and the Benelux nations. Across the EC, the standout companies in the home market for roasted coffee are Kraft General Foods (Jacobs), Douwe Egberts, Lavazza, Nestle, Tchibo, Eduscho, and Segafredo Zanetti

In 1991, individual national markets for in-home consumption of roasted coffee are quantified as follows: Germany, 412 thousand tons; France, 157.2 thousand tons; Italy, 155 thousand tons; Netherlands, 82.3 thousand tons; Spain, 52.1 thousand tons; Belgium, 40 thousand tons; U.K.,14.8 thousand tons.

According to the source of information we are using for this survey, and which is highly reputable - although no one is biblical when it comes to coffee statistics - about 14% of sum EC in-home roasted coffee consumption is now in store brands (private label). Store brands are of course a growth segment, but then so too are 100% Arabica blends, Italian-style espressos, and other genres - depending on the stage of development of the individual market. A note here, there is always some tension between the classic brand and the store brand concepts, and large companies like Philip Morris now seem ready to defend their trademarks against discounting by store brands. Whether what is true for Marlboro becomes true for Maxwell House - or if it is even to be extended to the European marketplace - remains to be seen, but it should also be mentioned that as one Euro marketer remarked to Tea & Coffee Trade Journal, "Don't forget, viva la difference! We need the bottom of the market to give meaning to the top end. Store brands help define the values of classic trademarks."

Apparent from the figures, regional coffee brands are no longer a significant feature in the overall EC roasted coffee retail market. Increasingly the companies producing such brands are concentrating on out of-home markets and in specialty coffee products. Many elements contribute to this, but the most salient surely is the very nature of the contemporary European distribution and retail system. With awesome rapidity, Europe has become a market of super and hypermarket food buying. This has impacted on coffee as much as any development, outside of the advent of ground and vacuum packed formats. The same is true of packaged tea as well.

To gauge the impact of the big store in euro coffee/tea retailing, consider these statistics concerning but one prominent chain - the GB Group - in their Belgium stores. In 1992, the Belgium retail market in coffee came to 39.9 million kilos, at a value of slightly more than 8 billion Belgium Francs. Of this, GB stores sold 17% from their own shelves. The GB coffee store brand rose to hold sales of 2,600 tons, or 6.5% of the total Belgium roasted coffee retail market. Most telling, perhaps, the store's own brand grew to represent 38.1% of its shelf sales in coffee.

Relative to classic teas, total retail sales in Belgium came to 5.7 million kilos in 1992, at a value of BF 388.6 million. GB store sales accounted for 22.2% of tea retail sales in the nation. Store brands in tea are not as important a factor in Belgium as elsewhere, total market share is negligible. GB's own tea brand holds no more than 0.3% share of the market, and 1.3% of its own in-store sales. In a separate sales segment, flavored teas achieved sales of 2.3 million kilos in 1992, at a value of BF 297 million. GB stores held a 20% market share of this.

As these figures indicate, the advent of the big foodstore group, and the action in the aisles of the super and hypermarkets, are today some of the most potent realities actually shaping the European coffee industry. Coffee is ever being nudged away from its commodity and factory mentality towards a new distribution and consumer consciousness. In the process of this change, the once all-powerful cultural and class distinctions in coffee consumption are weakened and slowly a more homogeneous European retail market for coffee will take shape in look-alike hypermarket aisles from Milan to Glasgow, from Lisbon to Berlin.
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Title Annotation:On the Continent with Jonathan Bell
Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Date:May 1, 1993
Previous Article:Coffee cupping: a subjective art.
Next Article:Smaller roasters share sophisticated services with UNITESA.

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