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France: robustas continue to dominate the market.

When I told the trade I was visiting the Hediard store, I was teased that I had a cushy job and what a fabulous store it was. I had no idea of what to except. My European editor told me to get out and enjoy this famous shop in Paris, known for their excellence in gastronomic delights. Of course, my thoughts only included tea and coffee as I bounded over to the square which is known for its many haute couture food stores.

Hediard, founded in 1854, has a long tradition in fine foods and has developed its prestige among leaders of gastronomy. Ferdinand Hediard created, at the Palace de la Madeleine, the "Comptoir des Colonies et de I'Algerie" Ali Baba's cavern for connoisseurs. Three generations of the Hediard family then succeeded Ferdinand. They made the concern prosperous and set upon themselves the task of maintaining exceptional quality.

In 1957, Yves Brunon, descendant of the Hediard family, took control. In 1977, Philippe Brunon, his son, became managing director and created the Hediard cellar, at the Place de la Madeleine. In 1987, Guinness became the sole shareholder with 100% of the shares. In 1991, a group of industrialists and private investors, presided by Jean Louis Masurel, takes over 100% of the shares. Jean Louis Masurel becomes chairman of Hediard S.A.

Hediard is rather like Madame Tussaud's in London. Differences are in detail, what makes a tin of green paper exude a different flavor and sensuality when bought at the Madeleine, compared with any other store. There are 5,000 items on the shelves. They still wrap every one of their fruit jellies by hand, exactly as it was done 50 years ago; and it is not just chance that the same jellies which Colette and Alexandre Dumas were enjoying then are still today's most popular sales. Being a grocer at Hediard represents many different activities - they are manufacturers, wine merchants, fresh food producers, caterers, wholesalers, importers, and exporters.

Reviewing the elegant shop's catalogue, I found teas divided by origin, Hediard's own personal blends, imported brands, aromatic teas, and infusions (containing no tea). China (which is further broken down into smoked and non-smoked) teas are the largest origin group, followed by Ceylon, India, and Formosa (Taiwan). In coffee, Colombia is the only origin listed, the other coffees are blends or roast styles such as Italian and decafs.

In the elite shop, 12 varieties of coffee are fined up in bins on the coffee counter. Unopened coffee bags add to the vivid imagery, enhancing the store's visual appeal. And on the counter, there is one glass canister containing Blue Mt. Jamaican coffee. At the time of my visit in June, 100 grams sold for 49 FF (approximately US$ 10). Lining the back wall of the tea and coffee department are solid red and black tin canisters filled with almost every variety of loose tea, flavored teas, and mixtures of flavored teas. There are no teabags in this store. Packaged ever so elegantly in glass jars are soluble coffee and packets of pure Colombian coffee. Teapots line the sidewalls, sitting alongside tea sieves and filters. Not too many accessories here, the emphasis is on food. Over 100 varieties of tea are displayed. Most popular is the Hediard's own blend of orange, lemon, and bergamot flavors mixed in black tea. Also proven to be popular is the Darjeeling, second flush, which is the store's most expensive tea.

The store offers 15 varieties of coffee and 40 flavored teas. Customers are aware of which coffee comes in which season, and people will converge in July to obtain the newly arrived Moka Harare. Grinding coffee for customers on the side of the coffee counter is the Samiac coffee grinder. Approximately 500 customers shop at the store daily and the holiday season attracts anywhere from 1-2,000 customers a day. The clientele is international with many Japanese tourists shopping for the rare teas and Jamaican Blue Mt. coffees.

Roast styles offered are Italian and French roast. The ornate gold print on black background labels list the country origin to the extent that No. 4 Melande "La Madeleine" is comprised of 1/3 Costa Rica, 1/3 Guatemala, and 1/3 Kenya.

Mme. Blanchard oversees the stores and proudly showed me around the facilities and their world famous wine cellar where one can find select bottles of wine costing several thousands of dollars. The shop is currently undergoing massive expansion, which is expected to be completed by next summer. Hediard has a total of 12 shops located in and outside Paris, and other countries. Plans are under investigation to enter the U.S. market through the retail store, Bloomingdale's.

Hediard's tea and coffee are recognized all over Europe and the Far East. About 30% of all Hediard products are sold to Asia. The Asians seem to prefer the exotic French products and often purchase flavored teas, such as apricot tea rather than regular tea. Tea is the most popular item sold in the store, followed immediately by coffee.

There are three sections in the store: wines, which the company views as the most important, and chocolates and jellied candies are quite popular. Tea and coffee follow in importance. Communication manager, Beautimar Claisse informed me that there is no promotion for Hediard. The products have been present in airports worldwide for over two years. Exports represent 10% of the company's sales. Hediard accounts their sales amount to 160 million FF, of which 10% are for export and of that 10%, 30% are for tea and coffee in Asia.

Hediard exports to 30 countries, with some 50% of Hediard's total exports go to Japan. Shops are in Japan, Taiwan, Korea, Hong Kong, Singapore, and Indonesia. Shops in Europe are in Belgium, Switzerland, Spain, Germany, Greece, Portugal, Tahiti, and Guadeloupe.

Vocatrade

New kids on the block is the green coffee importing firm, Vocatrade. Headed up by Jean Emmanuel Jourde and Bertrand Poux, the office began trading coffee, cocoa, dried nuts, and pepper in 1992. Both men were originary with Merkuria Sucden. The company sells green coffee mainly to Europe, North Africa, and the Middle East.

Jourde was a trade advisor to the ICO. Commenting on the 1989 breakup of the ICA, he told the magazine, "The ICA was originally intended to help sustain the financially depressed producing countries in Africa and South America. Supported coffee prices were supposed to, not only aid producing countries' economics, but also to keep people on the plantations, and finally helped to fight cocoa production in some countries.

"The two-tiered market that was brought about by uniform quota prices helped the former Eastern bloc countries purchase coffee that they normally couldn't afford. The former Eastern bloc nations continue to need economic relief, so instead of allowing them to purchase lower priced coffees, we will have to send them money in order to survive. In either way, we are helping countries exist, why not continue through the ICA.

"In 1989, the U.S. was being totally liberal in their view-point, economically the breakup was meant to be. It was not only the awareness of the U.S. government that brought the ICA break, but it was a major factor" says Jourde.

On the producer side, there has been no increase in coffee production since the ICA breakup. Producers won't be able to produce the quality. They don't get money for what they do, and other crops such as cocoa may become more attractive to grow, empathized Jourde.

"In 1986, cafe grade 3 was priced at 30-35 FF/kilo. In 1992, that same grade sells for 3-3.5 FF/kilo. The drop in international prices and the drop in the U.S. dollar is killing the producer," Jourde says with a heavy heart.

Once coffee stocks in the producing countries were released, the industry thought the stocks would disappear. Thus, the origin countries exported more and green traders imported much more coffee. This was a total mistake, which brought a fall in prices similar to the 1929 craziness "Stock market crash."

Jourde explained the French coffee consumption market. The market of 320,000 tons is divided into two parts - price and brands segment (major roasters) and the gourmet segment. The gourmet segment represents the coffee shops, which may or may not have small batch roasting machines within the shops but also coffee beverages to be consumed both in the shop and take away. The gourmet segment accounts for 15,000 tons of all coffee imported into the country.

While Vocatrade may be a new firm, its company's principles have years of experience working with both consuming and producing countries. One only has to talk a few minutes with this company to find that they truly care for the product and the people associated with it.

Tardivat

Situated on the world famous, fashionable, rue du Faubourg St. Honore, is a magnificent French chalet which houses the headquarters of international green coffee trader, Tardivat. Upon my visit to the company's building, I couldn't help but marvel at the grandeur of the French architecture. Surely this was one of Napolean's chalets, I remarked to Sam Mezrahi, managing director of the group. "No," he replied, chuckling, "But probably one of his mistresses."

The Tardivat family began their coffee and cocoa operations in Cote d'Ivoire back in 1880. The company is one of the top five green coffee traders in the world with has branch offices in New York, London, Geneva, Cameroun, Guatemala, Peru, Mexico, Cote d'Ivoire, and Madagascar. Usicafe is also part of the group, and since 1990, is a 100% subsidiary in Brazil. With companies situated in origin countries, Tardivat has better access to coffee and shipping and can more efficiently control quality and logistics, Mezrahi told me. "It's easier to ship from origin, change destinations, and check quality."

"We're in a surplus market; there's too much coffee," Mezrahi told me when asked about the current international coffee market. "Roasters are still fighting to get more market share and so they are also in a price war."

Expounding on the market, Mezrahi commented, "The market is virtually a cash & carry market. Roasters have decided they can carry price without being at origin. Roasters feel that dealers are doing a good job as many dealers are good insurance for roasters. Dealers take the risk, not the roasters."

When asked if the former Eastern Bloc countries will help both the producers and traders, Mezrahi felt that it could only aid the international market. "The Eastern Bloc has 350 million people. Russia is a virgin market and they'll probably buy soluble. Soluble coffee gets consumed in developing countries, but as they get wealthier, they switch to R&G.

"The Robusta share of the market is 28%; Robusta has always been a major sector; 48-49% of the market is Milds (Unwashed Arabicas). French roasters are increasing roasting because Eastern European people are buying."

Mezrahi sees Robusta as continuing to fulfill its need in the coffee roasting world. "About 60% of French and Italian imports are Robusta. The roasters never use one single origin; they always blend Arabica and Robusta. Espresso can only be made with Robusta to get the crema."

Mezrahi sees the various international clientele and their tastes. "Hamburg imports top quality coffee and roasts it very little to give it their special taste, but the French and Italians don't like German coffee and consider it too weak."

"Slowly the U.S. is working on gourmet. Quality is going up, the major U.S. roasters are dedicated to better quality. The future growth market in the U.S. is the gourmet quality market."

As with other French and European traders, Mezrahi is sympathetic towards the producers. "The ICA Agreement is being set up even thought the U.S. says no to the Agreement. But without the U.S., an Agreement cannot be started. About 60-80% of the return of coffee is given to producers. For a free market, you can't ask an economically strapped country to accept lower prices, they can't make a living. The producers repay debts with coffee money." He concurred with other traders in that either we pay quota prices or give the producers financial aid.

Mezrahi is glad to be a trader. He deals only with coffee and cocoa, and happily states these markets are not loss markets as other commodities. He claims that there are two things the trader must learn in order to survive: humility and adaptability. Tardivat is still a major force because of those reasons. When one looks at the manipulations that have been attempted to control prices, they failed miserably. "No one won the Bogota Group or Operation Patricia. Behind the terminal, they lost money. Yet for the operations, they got best dealers to help producers and they still lost."

Mezrahi was vehement in his wisdom, "You cannot control the market, you have to adapt yourself to it. Otherwise, you will lose!

Douwe Egberts

Douwe Egberts has recently enjoyed favorable sales from its Arabica products, but the company cannot and will not discount its quality Robust products.

Robusta coffees have been enjoyed by the French for years, much owing to the fact that coffee came from the country's former colonies. Robusta was the predominant bean for the last 40-50 years. It was only about 10-15 years ago that the French discovered Arabica quality. It was Jacob Suchard's product, Carte Noir, an all Arabica product, that introduced the taste to consumers. In 1983, other manufacturers followed with their all-Arabica products.

The French consumers are pursuing higher quality. The market is still predominantly Robusta - it leads with 55%, Arabica following with 45%. In roasted blends, the Robusta segment is declining by 5% while Arabica initially up 2%, continued to grow to 12% and today, holds a market share of 15%.

The French coffee manufacturers are quite content to sell one another each other's brands. DE had Jacques Vabre and sold it to Jacobs Suchard. Today, Jacques Vabre is the market leader. DE bought Cafe du Maison, which had a 4-5% market share, and today holds a share of 15-17%.

There seems to be no real leadership in France among the brands. France Jacobs Suchard-Philip Morris has 45% of the market with three brands. France has a rather fragmented market: Jacques Vabre, 10%; Maison du Cafe, 15%. In blends, Maison du Cafe is the leader; in Arabica, Carte Noir is the leader.

In the advertising wars amongst the coffee roasters, DE felt that manufacturers really didn't portray any objective taste to coffee; what was advertised was the allure and sensuality of coffee. Consumers saw Arabica as sensuous. And as France is a gourmet country, consumers wanted a more gourmet product

DE decided to relaunch its Qualite D'Or coffee product in advertisements that told the consumer this particular product is the best coffee in the world - and that they should decide if the product truly is. Qualite D'Or - the highest quality Washed Arabica in France, DE proudly boasts The company distributed 5 million samples and 5 million "50% off" coupons. This accounted for 10 million pieces being sent to half of France's population. The product, which was launched in April, has now reached the same market share as Carte Noir.

There is cause for much celebration at Douwe Egberts. A new coffee product launch has just proved so successful that, in the time it made its small debut, the product has already shared the same market as the already established national No.1 coffee brand.

February 17th, 1992, the product was launched; in April and May, the product was couponed and sampled. There was tremendous success, perhaps due to the fact that this was the first time couponing was ever done in France. Merchandising research shows about 92% of people drink coffee in France, so DE targeted this number as their penetration rate. In that mailing, DE was talking to almost everybody. So high was the initial success of the product launch that the company temporarily suffered from massive out of stock items. In this mailing, 180,000 tons of roasted coffee was given away.

People see coffee as sensuous. DE destabilized the consumer as being the one who decided. "Campaign of conviction," said a DE marketing executive. Product and coupon mailings went through the national post in three days to 97% of the targeted people. Samples were sent to high revenue families and areas. The campaign spoke person to person, no sex this time, only questions and discussions with the consumer.

Packaging for all of Europe

Douwe Egberts is trying to be recognized internationally. In an effort for all of Europe to recognize a DE product, the company has introduced logos on all packs to show the consumer they all belong to the same company. The decaf market only has 7% of the total market and is declining. Caffeine is not an issue among the consumers. DE has no tea market in France.

Sara Lee owns 100% of Sara Lee DE, but has a 49% voice. DE is only a third of Sara Lee's product lines, which also includes underwear, shoe polish, and much more. DE professional sell R&G to horeca and liquid coffee to machines. There is no real brand leader in horeca. Little roasters supply to distributors for the horeca sector. The French consider the U.S. to have excellent packaging, but lousy coffee.

DE has valve packs, but it's a marketing gimmick. You still have to wait for coffee to degas. The French consumer prefers a soft pack so they can touch the beans. DE prints the product's expiration date on the packaging. The government is pushing manufacturers to reduce packaging. For its hard packs, SIG Hesser and Goglio equipment are used. High quality coffee for D'Or are Kenya, Costa Rica, and Colombian Arabicas and are blended into the product.

DE produces approximately 33,000 tons/years, says Christian Van Besien, though its capacity and volume can produce up to 40,000 tons. Roastings have increased due to recent developments in Eastern Europe. DE now has a solid presence in Hungary with Compact; in Chezoslavakia with Balirny D.E. in Prague which DE purchased in early 1992; and a roasting facility in Poznan, Poland

Douwe Egberts is a force to be reckoned with. Its products and branches are spreading throughout continental Europe, into the U.S. and more. Eastern Europe is just another territory where DE's products are distributed. This company is trying new things and if its latest product relaunch continues its growth, expect to see other manufacturers scrambling to change their media message.

All in all, discussing the intent of a future ICA with the European traders, the U.S. seem to be continually blamed for their inaction and selfishness in being unwilling to use the ICA as a vehicle of foreign assistance.

AFCASOLE

Situated near the Eiffel Tower since 1984 lies the office of AFCASOLE - the Soluble Coffee Association for the EEC which was created in 1961. The office, manned by Barbara Dufrene, also represents the Decaffeinators Association and since March 1992, the European Tea Committee. AFCASOLE, which represents the ECC, has only seven members. Portugal, Ireland, Luxembourg, Greece, and Denmark are not members because there is no soluble coffee production in these countries.

Problems tackled by this office includes food laws - issues concerning product specific provisions, labeling, claims, and additives. The EC coffee extracts directive covers coffee and chicory extracts including purity provisions and mandatory jar sizes.

The ECC's soluble industry is stagnant, says Dufrene, but if the product would show an overall quality increase, consumption will most likely increase. The ECC is also concerned that Brazil is dumping soluble coffee on the market, plunging world and European market prices. Soluble coffee has an image problem on some markets where it is considered to be an inferior product to R&G. But several countries, such as Spain and the U.K., favor soluble, and strive to make it a premium product.

The European Decaffeinators Association is made up of 21 members. Dufrene told me that companies are continuing to invest in the decaffeination industry. There have been new decaffeination plants constructed in Europe, as well as major renovations on existing ones

All decaffeination processes, whether it be [C0.sub.2], ethyl acetate, methylene chloride, or water are present in Europe. The Coffee Hag patent will run out by the year 2000 and it is expected that other companies will most likely duplicate their process.

The office also represents the European Tea Committee. This allows for cooperation in setting ISO standards for the industry as well as lobbying with the EC authorities on additives, pesticide levels, prescribed quantities, and other EC food law provision. Both tea importers and packers are members.
COPYRIGHT 1993 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:part 2; coffee traders in Paris, France
Author:McCabe, Jane
Publication:Tea & Coffee Trade Journal
Date:Jun 1, 1993
Words:3460
Previous Article:Colombian coffee in France: a case study.
Next Article:The espresso market - past, present, and future.
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