NCA converge in Boca Raton: the annual gathering of the National Coffee Association (NCA) provided a wide-range of programs and speakers that brought some good news amid a comprehensive update of the industry's current trends.
In his introduction, NCA chair Joseph Apuzzo Jr. of Armenia Coffee characterized the association as "the face of the industry" and an important player in moving the coffee business forward. "We can get the industry to go where it needs to go," he said.
Kicking off proceedings was International Coffee Organization executive director Dr. Nestor Osorio, whose presentation served as a preview of the negotiations aimed at bringing into force a new International Coffee Agreement next year. In this important work with the U.S. he highlighted the role of the ICO's Private Sector Consultative Board, in which the NCA takes an important part. While market regulation was no longer viable, Dr. Osorio said, the U.S. had an important function in helping to assure that the new agreement helped to promote aims such as sustainable rural development and the alleviation of poverty, besides providing a forum for consultation.
Assistant U.S. trade representative Mark Linscott, called the coffee sector "the most vibrant I have worked in." Re-stating the U.S. administration's lack of enthusiasm for the market intervention carried on by the ICO in its early days, he drew attention to the successes which the reformed international body had had recently--in increasing market transparency and in sponsoring useful coffee-related projects in origins and markets worldwide. However, more reform was needed with the new agreement, Linscott added; the ICO "should not and cannot drift into irrelevance," he said.
Making a Big Company Great
"A coffee leader disguised as a donut chain" was the way Dunkin' Brands' c.e.o. Jon Luther described his group's best-known chain, Dunkin' Donuts, whose outlets serve three million cups of regular coffee daily. Discussing the principles that stand behind a successful large company, he said that the refusal to drop standards was critical. "Dunkin' Donuts continued to use premium Arabica's and brew its coffee at least every 18 minutes with high throw weights," he said. "The masses are more intelligent than we think," he added, and will respond to these higher standards in coffee. Furthermore, they will be loyal if the chain innovates (giving the example of Dunkin' Donuts' recent moves into espresso-based beverages). Consider the tough questions, Luther urged his audience--including "Can we do it any better?"--and be sure that the business remains customer-focussed. "Ask the people who really matter," he advocated. "Talk to the customer and then get creative. Just showing up is a recipe for mediocrity."
Coffee trader Michael Nugent of finance group UBS reflected on many years in the business, and offered a look at the effects on the industry of the security-conscious first decade of the 21st century. Hedge funds (and their cash-laden activities on the coffee market) would continue to change the market, especially its middle sector of wholesalers and dealers, and the role of these funds in coffee would only increase, he said. The result would be a changed market and the emergence of a new mercantile class, he predicted.
Along with these challenges, Nugent said, there were great opportunities ahead. Developing communications were already increasing consumer awareness; therefore, "the Third World knows what the First World enjoys, and they want it." Meanwhile, increased population was predicted to bring onto world markets one billion new consumers with disposable income in the next 10 years--a figure which equated to the spending power of Western Europe. Especially in China and India, he added, "intelligent consumers want fine things too--and soon will be able to afford them. It will take some time, but it is inevitable."
Breakout sessions at the NCA event asked attendees to choose between discussions of new product trends, the latest findings about coffee and health, and an update on innovative coffee packaging. At the same time, David Dallis of Dallis Bros guided some of the attendees through the key aspects of Cupping in a practical workshop, while Tea & Coffee Trade Journal editor Jane McCabe led an innovative and wide-ranging session which asked four trade journalists to predict the coming year's most important coffee business trends. Jim Nolan, c.e.o. of Sara Lee Foodservice spoke at a luncheon to outline how his multinational roasting concern had slimmed down and restructured in the North American market, while the word on everyone's lips--sustainability--was the subject of a round table session that heard from representatives both of major roasters and of ethical trading organisations.
How Micro Roasting Became Professional
Another series of breakouts highlighted container availability and profitable roasting technology, while Terry Davis of Ambex delved into the subject of the revolution in micro roasting. He presented a picture of increasing professionalism in the sector (with fewer "second career" people involved, better funding and a decrease in the sort of "hippie" coffee bars seen at the beginning of the specialty movement). Many small roasters were also taking the short step from roasting for retail to roasting for wholesale and supplying other local coffee bars, Davis said, and they were being assisted by some brokers who would now actually split bags for micro roasters (offering less than 60kg of green coffee) because of the good returns involved. "Even some home roaster hobbyists were really in training to come into the industry in future," he added.
Lara Wyss of Starbucks presented an update on the NCA's generic "Coffee Delivers" program, started in late 2004 and which has already created 350 million media impressions. Using public relations instead of advertising to spread the positive impressions of coffee, the current year's campaign targeted editors in the New York City area, updated the NCA's www.coffeescience.org website and conducted an ongoing dialogue with the consumer press. Wyss concluded her presentation, which marked the halfway point in the three-year program, with a reel of clips showing a panoply of positive coverage for coffee in both print and broadcast media.
Coffee on Capitol Hill
The way coffee fits into the Bush Administration's overall strategy was revealed by Republican Congressman Dan Burton's presentation, which highlighted his role as chairman of the house subcommittee on western hemisphere relations. A declared supporter of the Central America Free Trade Agreement (CAFTA), Congressman Burton drew attention to what he called potential threats to free trade and to democracy in the Latin American region as a result of "leftist" movements such as the one represented by Venezuelan President Hugo Chavez. These developments amounted to "a problem in our backyard that will magnify our own security problems," the Congressman said. He defended President Bush--going through a period of intense unpopularity--as working on a set of unpopular and controversial policies that had long-term aims. One of these, the war on terror, would "go on for some time, and it is important that we realize what the stakes are."
Leaving behind the politics, a round table that included representatives of some of the major manufacturers of single-cup coffee systems and components, looked at the latest developments in this burgeoning sector. Scott Mazzini of Bunn stressed that, following poor experiences with low-end
machines, "Cost is not the single biggest issue," he said, as consumers are increasingly turning to premium machines and specialty coffees. The variety of offerings available was one of the key advantages to the system, explained Bruce Goldsmith of Baronet Coffee, enabling, for example, triple the volume of dark roast coffee to be consumed in one region's offices as compared to those in another area. Single serve was "not a novelty, but a tsunami," said David Manly of Keurig, pointing out that the office coffee sector was essentially flat, with the sole exception of single serve offerings. As evidence, he predicted that his company would sell around 500 million of its K-Cup pods this year, partnering with a number of roasters keen to access this growing delivery system.
One challenge with pods, Tom Martin of Pod Pack International said, was increasing their sales without cannibalizing the more traditional brew-by-pot business in the office coffee service sector. Standardization in pod sizes and weights was necessary, he added, as was education about the process. "For customers, you have to feed their desires," he said. "Is their first pod experience a good one? Make sure that it is."
Italy's packaging machinery firm IMA built its first espresso pod packing machine 12 years ago, explained the company's Marius Olszewski, opting for the method because it was an open system which brought variety to the market. Despite the challenges--too many formats and dimensions, the need to produce pods easily and efficiently--he said, the system "will influence the way we drink coffee."
Good News from the Consumption Front
The final presentation at the business sessions brought this year's NCA convention to a rousing close, as Mark DiDomenico of Sara Lee Foodservice was able to report on increases in coffee consumption identified by the 2006 National Coffee Drinking Trends Survey. Conducted annually in January on behalf of the NCA, the detailed telephone survey this year also found that coffee was as important to those surveyed as rival beverages like soft drinks and bottled waters, and that all age groups were showing an increased consumption. Cups per day for coffee drinkers rose to 3.4 this year, according to the survey, while young people aged 18-24 were drinking a higher average than last year at 2.9 cups daily. Interestingly, growth over the past two years has been in the traditional coffee sector, DiDomenico said; "the gourmet sector was still growing, but not as quickly as the mainstream offerings." The survey said that awareness of Colombia as a coffee origin was highest at 93%, followed by Brazil, Guatemala, and Mexico, as well reporting a more positive reaction to coffee in relation to health issues with customers. Summing up, DiDomenico said that strong overall growth was being driven by increased consumption of regular coffee and by positive health awareness.
In his usual closing remarks to attendees, NCA president Robert Nelson reviewed some of the association's work in the past year. He pointed out, for example, that NCA lobbying had helped to kill a rule on unreleased containers that would have added $5,000 per container to industry costs. NCA's role in the ICO agreement renegotiation, on a more international front, saw the association participating as an official U.S. partner, he added.
As attendees headed for the sporting and social gatherings that also highlight the NCA event, Nelson reminded the audience that next year's convention would be held at The Phoenician Resort in Scottsdale, Arizona, March 1-3, 2007.
About the Author." Michael Segal was the former editor of an international coffee magazine. He is a SCAE director and editor of CoffeeWorld, an electronic newsletter. Segal can be contacted at: firstname.lastname@example.org.
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|Publication:||Tea & Coffee Trade Journal|
|Date:||Jun 20, 2006|
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