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Inside the German coffee market.

The Germans are still coffee thirsty. According to the Deutsche Kaffee Verbund (German Coffee Association), consumption rose by 1.3% in 1992 to reach a volume of 605,500 tons or over 10 millions 60 kg bags, with the new Bundeslander having the lions' share. Per capita consumption amounted to 7.6 kg of green coffee compared to 7.4 kg in 1991. Of the total volume, roasted coffee in household packs accounted for 420,000 tons, some 4,000 tons more than in 1991. 60,000 tons were sold in wholesale packs, marking a plus of 2,000 tons. The non-household sector thus, showed an overproportionate growth.

The market share of decaf coffee remained stable at 12%, whereas that of treated mild coffees lost by 1% to reach 16%. In contrast, the naturally mild coffees increased their share from 20 to 22%. Demand for caffeine-containing coffees was somewhat slackening to attain a reduced market share of 50%. However, the segment for espresso showed a growth of 7% amounting to a total volume 5,600 tons.

Soluble coffee achieved an increase too, though a rather moderate one, going up from 13,000 tons in 1991 to 13,200 tons in 1992. Exports of soluble coffee rose by around 1,500 tons to reach some 18,200 tons. Exports went into well over 50 countries with the EC member states getting the lion's share of around 80% of that export volume. Exports into the new countries of Eastern Europe, promising as they are, still were behind their potential. This was mainly because of lacking market structures, which are still in the phase of being developed after the crack-down of the once centralized state economies, and of lacking hard currencies. There is, however, a remarkable overall tendency for an increasing demand for quality.

In spite of relatively low consumer prices the growth in overall sales volume made it possible that the 1992 turnover of the German coffee market accounted for some US$ 4.6 billion, equal to last year's result. Consumer prices went up, however, as from February 1993 on.

Tchibo - Going East

Tchibo AG, one of the major coffee roasters in Germany, is intensifying its activities in Eastern Europe. New roasting plants will be opened in Hungary in June 1993 and in Poland in mid-1994.

The Polish project will see the installation of a new site at the outskirts of Warsaw utilizing the most modern technological standards. It will create some 300 jobs.

For the time being, Tchibo products are sold in 15,000 Polish outlets. During the last two years, coffee consumption increased by 60% accounting for a volume of 30,000 tons. The total market volume is estimated at some 85,000 tons; per-capita consumption at around 2.2 kg in 1992. In per capita consumption, Poland compares with Hungary (2.6 kg) and the Czech Republic/Slovakia (2.3 kg).

In the former CSFR, Tchibo has been operating for the past two years. The company holds, in both successor states, a market share of well over 300%. The coffee is roasted by the Moravian company Bahlirny Jihlava of which Tchibo holds and 80% share. The company is under way of being totally modernized and its production capacities expanded at a cost of some US$ 60 million. For 1991/1992, the total turnover of Tchibo holding amounted well over US$ 4.6 billion and earnings accounted for US $46 million. Dividends for holders of preferential shares will be 6%. For the year 1992/1993 earnings are forecasted somewhere between US$ 18 million and US$ 36 million, the smaller amount being more likely than the bigger one. Some 1,500 jobs will have to be cancelled, 800 of which in East Germany where the authorities have been too slow with administrative clearances for the company's projected investments.

Jacobs Goldene Tasse Expands

Market Position

The Jacobs Goldene Tasse GmbH (JGT) of Bremen, which dominated the German wholesale coffee trade in 1992 with a share of 27.2%, expects business to expand further in 1993. The JGT general manager, Ralf Konig, stated in Hamburg that the 1992 sales turnover jumped up from DM 317 million to DM 318 million.

Although the increase is modest, it reflects a growth of some 5%. As a direct result of its fusion with HAG, it had to give up some of its range of products and hand over to Klaus Jacobs its cocoa business sold through automatic machines throughout the country under the brand name Van Houten.

Meanwhile, the JGT has set up under the brand name Suchard its own automatic cocoa business and recaptured the market leadership with a share of over 20%. Konig attributed this positive trend to the growth in the roasted coffee trade. The group could increase its sales by 4%, particularly in the background of a 2% decline in the overall roasted coffee market in 1992.

Konig expects a similar growth also in the current year if the overall market growth of 2% is maintained. This target could be achieved in the first three months. As a result of the rising prices of raw coffee and the surge of the US dollar, JGT raised its prices on March 8 for roasted coffee - for the first time since 18 months - by an average of 6% or 1.70 DM per kg. JGT is also changing its market strategy. In the past, it had concentrated on supplying to the gastronomy, community catering, automatic machines, etc., sectors, JGT recently entered another area of specialization by setting up a catering sales section. At the recent specialized trade fair INTERHOGA - an event focusing on hotels and restaurants in Hamburg - JGT introduced a new premium coffee called "Royal Noir" for the high-class gastronomy.

The Jacobs-Suchard group generated a turnover of DM 3.30 billion in 1992 compared with DM 3.25 billion in 1991. The main source of business was the household coffee sector which accounted for DM 2.15 billion, outstripping the group's confectionery and large consumer business.
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Author:Korner, Manfred; Mehta, Manik
Publication:Tea & Coffee Trade Journal
Date:May 1, 1993
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