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Interview with Michael Neumann.

His company may be one of the largest importers in the world, but owner, Michael Neumann doesn't consider his firm to be the largest, maybe just one of the largest worldwide, but certainly not the largest. Such ranking does not seem important, he stresses to the Tea & Coffee Trade Journal. The group's companies number between 20-30 different interests, in 21 countries. Neumann Gruppe AG's worldwide share in green coffee amounts to roughly 13-15% of green imports. Group companies also represent 5% of all coffee exports. Companies include exporters, importers, agents, warehouses, decaffeination processors, and millers/processors.

Michael Neumann explained the rather intricate partnership Neumann Gruppe AG has within over 20 firms worldwide. The AG is a shareholder group to which the various companies belong. When trading or doing business, they have the option to do business with Neumann or others. Synergy often makes them prefer other operators of the same group but other sources, respectively importers, are utilized; it is not an exclusive, says Neumann. The producing and consuming countries are in partnership.

He feels the local/regional partners are a good concept and the AG may hold anywhere from a majority share to a full 100% share. For historic reasons, in a few cases, minority stakes are also entertained.

When asked about his past statements on industry consolidation in a speech delivered at the Berlin Coffee Congress, Neumann reiterates his views on consolidation within the coffee industry--"the trend is to consolidate!"

"Formerly Socialist consuming countries which had state monopolies are now going corporate. Poles are entrepreneurial; they kept up individualism. The group has established a green coffee importing office in Warsaw. Legal obstacles are immense and the lack of knowledge represent a viable market. Hungary --coffeewise--is almost divided up between three transnational roasters and the CSFR is continuing to be a consumer of very good coffee qualities. In Eastern Europe, coffee has had luxury status. In order to obtain higher percapita consumption, it must make the transition to an enjoyable staple beverage."

"With the termination of the ICO; a large transfer of stocks went to consuming countries, who purchased 10-11 million bags overstock."

"This overstock was distributed in North America, Far East and the European ports. In addition, approximately one million bags came free from Government reserve stocks in Eastern Europe, which event just happened to coincide. Meantime, stocks have been built down; Europe is in a more or less balanced situation as stocks came down to about 1988/89 levels even though a little ill distributed qualitywise. Excess stocks in consuming countries are mostly in the U.S. and to a lesser extent, the Far East."

For many producing countries, the price in the world market dropped below production cost in the second half of '89. However, for 1989/90 crops, the impact was softened as retention stocks were exported, taxes were removed, currencies devalued, etc. For the period of 1990/91 crops, exporters and international trade houses absorbed very large losses. In many countries the interior markets were bolstered by this circumstance.

During 1991/92 the trade is sitting back, waiting for sound business to come along, finance is tight in spite of low interest rates, and the disastrously low world price is fully hitting the farm price. All of this has delayed the cycle of adjustment. At this printing, however, production appears to be dropping dramatically, while consumption continues to grow slowly. Large price swings will be the consequence."

Neumann feels privatization in market economies is good business-also in producing countries. However, while state agencies are giving way to private business, the orderly functioning of markets must be upheld-a difficult and dangerous transition.

Despite many importing firms closing their doors or diversifying into other commodities, Neumann sees the world trade as a service industry and it is the full range of services that gives Neumann Kaffee Gruppe the strength to play its role between producing countries and the roasting industry.
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Title Annotation:owner of Neumann Gruppe AG, coffee import and export
Publication:Tea & Coffee Trade Journal
Article Type:Interview
Date:Jan 1, 1992
Words:655
Previous Article:A look into Poland's largest roaster: Posti.
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