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Colombia: Federation's promotion campaign successfully reaches Japan.

Colombia: Federation's promotion campaign successfully reaches Japan

Colombia's coffee shipments to Japan have more than doubled in the last eight years due to a successful export-promotion campaign.

Only eight years ago, Colombia exported barely 500,000 bags of coffee annually to Japan. Subsequently sales to the Japanese grew steadily and, by 1989, annual exports had topped the 800,000-bag level. Then, in 1990, Japan-bound shipments soared to the record figure of 1,060,000 bags--in no small measure as a result of the collapse of the International Coffee Agreement (ICA).

Because of the price slump triggered by the demise of the quota system, the Colombians were forced to augment the volume of their Milds consignments generally to compensate, at least in part, for depressed prices--and Japan was an obvious target for exporters.

For years, the Japanese market had been dominated by the Indonesians and Brazilians and, under the former quota system, there was little Colombia could do about this.

The statistics are revealing. In January-November, 1989, the Indonesians and Brazilians exported some 988,000 and 991,000 bags respectively to Japan, while the Colombians dispatched only 585,000. But last year, in January-November, Colombia's share of the Japanese market soared to nearly 20%, with exports of some 907,000 bags compared to 1,078,000 of Indonesia and 923,000 of Brazil.

So the Indonesians not only retained but slightly improved their market participation. But the Brazilians all but lost out to the Colombians who are now challenging them for second ranking in the Japanese market.

Long-term, it remains to be seen whether this pattern will be sustained. Possibly Brazil's poor showing last year may have been primarily traceable to transient factors. But many Colombians doubt it. They point out that only a decade ago their coffee exports to Japan amounted to no more than 5% of the market there.

Colombia's success in the Far East stems from long years of accurately targeted market research. De. Eduardo Libreros, chief of the Commercial Information Division of the Growers' Federation, explains that quality is the key to market penetration in Japan. "The best coffees are in ever-greater demand there."

He cites the case of Jamaica's Blue Mountain coffee which finds ready acceptance in Japan, despite its high price there (in 1989, more than three times more expensive than some Colombian Milds purchased by the Japanese). Hence price is not necessarily a marketing barrier in affluent Japan--indifferent quality, though, can be.

Vigorous export promotion campaigns have been launched by the Growers' Federation, while the Japanese themselves have gone out of their way to increase imports from Colombia. In part, this can be explained on political grounds. The Japanese have long had a sizeable surplus in their trade with the Colombians, who courteously but firmly have pressured Tokyo to remedy the situation. The Japanese have responded by increasing their purchases of Andean Milds and other products.

Geography also explains why Colombian coffee shiments to Japan are rising. Compared to the Brazilians, for example, the Colombians enjoy the advantage of shorter shipping routes to the Far East, via their Pacific port of Buenaventura.

Japan's expanding commercial presence in Colombia is yet another factor that has facilitated the growth of coffee exports. Major Japanese trading corporations and a Colombo-Japanese Chamber of Commerce now operate actively in Colombia and consequently, with improved commercial links, it is increasingly easy to export to the Far East.

The Colombians, in any event, are hardly new to the export world. In recent years, they have built up from scratch multi-million dollar export sectors, such as the coal and fresh flower traces, and are aggressively pursuing new commercial openings overseas.

A case in point is coffee extract which is produced in Colombia solely for Japan, where it is utilized in the manufacture of canned coffee and a wide range of other products--among them chewing gum, cakes, cookies and even perfumes.

The extract is produced by the freeze-dried coffee factory of the Growers' Federation at Chinchina, in the central Caldas region. The factory was not designed to manufacture extract as a major line. But when the Japanese expressed interest in purchasing extract, the Colombians, with local technology, adapted the plant's facilities to this end, and so created a new coffee export product.

To date, the Japanese have imported hundreds of tons of extract and, as sales are expected to augment, the factory's capacity may be expanded to satisfy demand in what is today the world's fourth largest coffee-consuming nation (after the U.S., Germany and France).

Japan is now the third largest importer of Colombian coffee, despite the fact that the Oriental nation has traditionally been a tea drinking country. Yet according to surveys by the All Japan Coffee Association (AJCA), more than 81 million Japanese today habitually drink coffee, compared to some 71 million in 1980.

This growth of the coffee sector is all the more remarkable in view of the fact that there were virtually no coffee drinkers in Japan at the end of World War II because of supply problems during the hostilities.

Following the war, 15 years elapsed before Japanese coffee consumption recovered to its pre-war level. The industry's come-back was attributable to, inter alia, the abolition of coffee import restrictions and to tariff reductions.

More recently, according to a Growers' Federation study, consumption in the Far East has grown because coffee there "is predominately a young people's beverage in contrast to markets such as the U.S. where middle-aged or elderly people are the most important consumers." The study explains: "Coffee has been gaining ground at the expense of tea because the youth consider it a modish western drink."

In recent years, says the Federation, international currency fluctuations have also favored the growth of Oriental markets because they have had the effect of keeping down coffee prices in the region. This in turn has enabled Oriental roasters to maintain the quality of their blends.

Notwithstanding such factors, though, per capita coffee consumption is still relatively limited in the Far East compared with western Europe and the U.S. Per capita, for example, western Europeans on average purchased more than double the coffee consumed by the Japanese in the late 1980s. Japanese consumption per capita in 1989 is estimated to have been roughly the same as the modest Australian level.

The AJCA, however, has projected a rise of some 17% in Japanese coffee consumption in a six-year lapse ending 1992. Canned coffee sales, it estimates, should rise by more than a third in the period and roasted and ground varieties by slightly over a fifth. On the strength of this projection alone, then, the Colombians would seem to have reason to regard Japan as one of their more promising markets.

Peter Nares Columbia Correspondent
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Title Annotation:Colombia's Commercial Information Division of the National Federation of Coffee Growers
Author:Nares, Peter
Publication:Tea & Coffee Trade Journal
Date:Apr 1, 1991
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