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Consumption trends in coffee.

Dr. Frieder Rotzoll evaluates coffee quality, market niches, gourmet coffees, and other trends in Europe.

When it comes to market niches, do all the European countries have the same development and are market niches in one country already very popular consumption trends in others? For example, soluble coffee is the common beverage in Great Britain and roasted coffee presents a market share of only 10%. In Italy though, soluble coffee, with a share of only 1%, may be rightly called a market niche.

In order to concentrate on the subject, market niches which have developed traditionally by the time factor have been ruled out. This does not imply that these outdated market segments cannot become an accelerating factor for coffee consumption in the future. There are many examples where special types of coffee preparation, packaging, roasting, and distribution came back to the consumer in a modern form and have had a significant impact on the market.

It is easy to look at the U.S. market and find a segment called specialty coffee growing steadily, showing a future trend for U.S. quality coffee consumption. Another example are the Japanese with their preference of a high priced, quality coffee, for example, Jamaica Blue Mountain. Japan already buys the total crop of this country, marketing it in their country at high prices to sophisticated consumers.

There is another product on the Japanese market which is appearing on the U.S. market but has not, as of yet, made its way to Europe. This is canned coffee. Since the Japanese have no coffee tradition themselves, they are very flexible in adopting new consumption trends and combining them with sophisticated ideas like a canned coffee which heats itself.

One special aspect of a market niche, however, has already come to Europe and, for the moment, is having a great impact on the German market. It can be summarized under the name of coffee specialities, which are made out of soluble coffee using additives and also appear aromatized.

In Germany, the most interesting developments are currently taking place in the field of soluble coffee. While sales of the traditional forms of this coffee type are stagnant - every 10th cup is prepared from soluble coffee - the rather recent introduction of specialty coffees are proving to be true hits. They include espresso, cappuccino, iced coffee, and Turkish mocha as soluble products. The volume of sales of these specialties practically doubled in the second third of 1992 as compared with the corresponding period in the previous year.

While the share of specialties in the extract market in the old states of the German Republic was a good 40%, it reached almost 60% in the East. Here, the convenience advantages are taking effect. Originally, these coffees could be prepared only with great difficulty at home, and even the comparatively high prices have not reduced the popularity of these products.

It is interesting to note how these special coffee preparations have developed. For example, Nescafe appeared some years ago with a type they called "Presso Presso." This was a product that created an espresso-like coffee without a machine just by adding hot water. The results were astonishing. Even experts could not, at the first glance, decide whether this espresso came from a machine or was made out of soluble solids.

The firm went one step further in technology. They developed the same type of coffee with addition of milk powder, sugar, and other ingredients and called the product "cappuccino." In portion packs suited for one cup, it was sold on the German market with high success. Due to this success, other companies went into this market niche and now all the big market participants are offering the same products. This is an example of how a market niche developed into a consumption trend with remarkable market shares, i.e. over 1% of the national market.

In Germany, a story can be told about aromatized coffees. In the U.S., this type of aroma coffee has been around for years, and nobody really though that it would be consumable in Europe. But now, under the new development of coffee specialities in Germany, these types of aromatized soluble coffees are on offer. As aromatized coffees were already on the market over 10 years ago and had no success, it remains to be seen if the time is now right for such a product. Please remember that these types of coffees come on top of the market, adding to the overall sales and are not replacing other forms of coffee consumption.

Another example of a special coffee type which is very popular in Germany is the so-called treated coffee containing caffeine or no caffeine. This treated coffee is for people who have health problems, either with their heart, stomach, or liver. For these coffee drinkers, the treated coffees are available and they already have gained a high market share. These types of coffee are literally unknown in other European countries. A treated coffee, especially for people who have stomach problems, is a non-seller in southern Europe or in Scandinavia. This shows clearly that trends in one country are not necessarily going to be successful in others.

A type of coffee product which started in the Netherlands and is gaining more and more foot in European countries is the so-called "ethic" or "charity" coffee type which started some five years ago. It means the marketing of special small farmers green coffee which is bought under the "Max Havelaar" system at a higher price than the world market in order to help small farmer cooperatives in coffee producing countries.

This type of initiative has been fairly successful in the Netherlands and it is said that the market shares of coffees with the Max Havelaar label have reached an amount of 2-3%. As these so-called fair-traded coffees spread from the Netherlands to Belgium, then to Switzerland, Germany, and Great Britain, we see another market niches which may become a trend for future coffee products on a European-level.

In this special segment, coffee is sold with the side effect of a good conscience for the buyer. People are suggested to pay some marks or guilders more in order to help some small farmers in the coffee producing countries and may be used to finance special development projects in these countries.

Another traditional market niche and a possible trend in Europe was thought to be the marketing of one country coffee brands. Here, coffee producing countries like Brazil or Colombia made supporting efforts to promote coffee mono-blends, made solely of the beans from their country.

The Juan Valdez initiative of the Federacion Nacional de Cafeteros de Colombia is known to everyone. Today, we find on the shelves in Europe and the U.S. coffees which are 100% Colombian and bear a label certifying this. The efforts of other countries to market their coffee in this way remains limited.

This mono-blend concept dates back years ago when coffee consumers went to their local roaster and had the choice to buy a pure high grown Guatemala, Kenya, or Ethiopia coffee. This nostalgic selling of coffee beans, roasted before the very eyes of the consumer, packed in paper bags, and accompanied by a higher price typical for a gourmet product is seen in some European countries. This type of marketing is, in general, possible on small scale.

The marketing of these types of new products is not as profitable for big companies with a large turnover. Market niches are strictly reserved for small firms and depend on the degree of concentration in the coffee industry.

In the U.S., the gourmet market has been seen by some observers as a backlash and a protest of the consumer to the low quality of coffee served. If a consumer wants real quality and is willing to pay a higher price for it, he has to go to the gourmet coffee shops and bars. This is not known in European countries where the general quality of coffee is still so good that there is no need to ask for a better coffee.

One could develop from this phenomenon an economic coffee law. It means the lower the quality of coffee in a country, the higher the probability that other products - be it the gourmet market for traditional coffee or be it soft drink imitating coffee products - come to the market.

You could also reverse the law and say the more popular or the more accepted these products get in a country, the quicker the market niche will develop into a normal trend in consumption, setting another stepping stone for the development of a country's coffee culture. These laws have their exceptions, though.

Scandinavia (with a high quality coffee tradition) is going Italian. Espresso and cappuccino are promoted as the modern art of coffee preparation and enjoyment. To formulate a lesson from this enumeration of possible market niches and product varieties, the consumer can, at every step from the green bean to the beverage, decide whether they want to go gourmet or soft drink style. If they are ready to pay a higher price for their special requests, they can go to the very extreme of "Chateau Lafitte" coffees, spending a considerable amount of money for convenience, soft drink-like taste and appearance.

In order to classify the development of new coffee products and market niches, we have to follow the coffee bean from plantation to cup. At each and every stage, you will find coffee specialties which vary from the mainstream trend, settle more or less successful in their niche, or promise to become the coffee product of the future.

One even could dare to go so far as to predict a certain development, not only out of the example of other countries, but according to the cycle of a coffee product or a preparation method.

Take coffee roasting. At the turn of the 19th century, housewives bought green coffee beans and roasted them in pans. Small and local regional bowl roasters were the sign of beginning industrialization, followed by extensive research and century long development to sophisticated high-yield or aroma protective roasting.

Soluble coffee, in itself, was a development of a more and more improved product. Then, back to in-shop roasting, and attempts were made to introduce a household coffee roaster which was too early for the market and may return in the next century.

For example, I mentioned the old times in Europe when small roasters supplied the market locally with French roasted coffee. Then, the development went to coffee in tins, and then to vacuum packs. Now, because of environmental concerns, this type of packaging is questionable. Future development may be a coffee product which respects this trend and develops an ecological package for coffee products which protects the product and is also accepted by the consumer.

The preparation method, of course, also influences future coffee products. In the past, people just put ground coffee in a can and poured hot water over it. After that, so many different types of coffee preparations had been developed that it is very astonishing to see what ideas have left in the market and what remains popular today.

The success or failure of these types of products may indicate what coffee products and quality we could expect to see in the future. This, in effect, borders on science fiction. It is difficult to predict the future with the present knowledge because it is impossible for mankind to know now what they will know in the next 50 years. But the innovation leaders - the United States and Japan - will steer the development in the European coffee products market of the future.

So, it remains questionable whether a coffee especially designed for the microwave oven is the right product for the future. Or should it be a soft drink-like coffee containing all the necessary vitamins and being low in calorie but high in caffeine, or vice versa, with the fruity aroma of mango and cherry combined? Of course, this product will give a certain percentage of the selling price to coffee producing countries and will sponsor the preservation of the tropical rain forest.

With all these ideas of convenience in preparation, or genetic operations with the coffee plant, or imitation of soft drinks in order to catch the youth with non-coffee aromas, we will probably forget the main aspect of coffee itself.

This is, of course, pure traditional coffee quality. What does the consumer really expect from coffee and the classic coffee beverage? It should taste appealing to a maximum amount of consumers and should be easily available at a reasonable price everywhere. This will still be the backbone of coffee consumption in the future.

Let us not be misled, for if the quality of coffee deteriorates so much, we may be forced to search for substitutional products which only imitate coffee, but are not the real thing. This is especially important for our younger generation which has a right to have the same pleasant experiences with coffee that we share with our ancestors.

Dr. Frieder Rotzoll is general secretary, Raffee Verbund. This article was excerpted from a speech delivered in Trieste, Italy.
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Title Annotation:Europe
Author:Rotzoll, Frieder
Publication:Tea & Coffee Trade Journal
Date:Nov 1, 1993
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