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Poland: nation struggles to privatize in a difficult economy.

The past two years have brought many changes for Poland and its economy and industries. Where there were only state-owned monopolies controlling every facet of agricultural business; there are now thousands of private companies and more evolving each day. Competition, a word that was never uttered or needed even to be considered, is now very much a factor in everyone's manner of business. For the first time in over 50 years, Poland is trying to cope with these new concepts.

Tea and coffee packages didn't have any fancy wrapping--there was no need as there was only one brand. Today, brands are flowing in from Germany, England, the Netherlands, and Austria (some illegally and some legally). The black market for R&G coffee in Poland is practically non-existent. What is really thriving are the number of entreprenuers who are purchasing the lowest grades of green coffee from the European importers in Austria, Germany, and the Netherlands, smuggling truckloads past the customs and duty officers at the borders, and selling them in Poland.

Just two years ago, before all the political changes, free elections and Lech Walesa, the only purchasing company for Poland was Agros. The single roaster was Zosti, who had/has five roasting facilities. Now Agros is a private limited company with competitors in Warsaw, as well as smaller firms entering the market or dodging in and out of coffee and tea. Zosti, now renamed Posti, is a private company with state-controlled shares, and interested in foreign investment. In addition to roasting and packing, they have begun importing tea and coffee for themselves.

Agros, up until two years ago the only green coffee and tea importer, claims they are still the largest in raw green imports. They also import soluble and packeted coffees for a country with approximately 10 major roasters. Henryk Stefaniuk is the manager of the coffee and spice department. He is assisted by Teresa Zaleska, coffee expert. They have both been with the company and in the coffee business for 25 years.

The coffee department told me that taxes, tariffs, and customs charges add up for tea and coffee imports from the European network of importers, so Agros prefers to import directly from the source. A 20% duty on CIF value is added to coffee imports, and on top of that a 25% tax is also added. (If one purchases $1,000 of coffee; customs on CIF is now $1200, and then with a 25% tax, you are actually paying $1500.)

Between 50-60,000 tons of coffee are imported from Africa, Indonesia, Thailand and Laos through the port of Gdynia. Indonesian is preferred as it is competitive (and acceptable). The grades of coffee purchased through the European brokers affords Agros a markup of anywhere from 1-3%.

Stefaniuk tells me they would like to sell more quality but there just isn't available capital and purchase power from the consumers. Arabica is double the price of Robusta. In the past, the government was subsidizing all products and imports, but no longer. Agros stopped buying Arabica when the subsidies were discontinued.

Both Zaleska and Stefaniuk feel the coffee industry is growing: coffee is cheap, more firms are involved and everyone wants in on the action. But even though there is growth in the industry as a company, Agros is finding it difficult to find buyers.

Agros' Tea Department

The tea department at Agros is quartered in one large room with about 10 women filing, tasting and talking. Krystyna Kostera heads the department and has been with the company for 30 years. For an Eastern Bloc coutry, the office doesn't look any different from a Western tea importer's office. Posters from the Tea Board of India and Halssen & Lyon outlining the tea garden cycles are hung on the walls.

Tea and coffee consumption are just about equal, says Kostera. Coffee, which is not an everyday beverage, is consumed more now because of the lower consumer prices. Tea was also a subsidized product and is purchased in bulk or packets. Again, taxes and customs duties are also added to tea. Tea is not purchased through the London auction, as a 25% duty would be slapped on, so tea is imported from origin countries, preferably India as their CTC's are preferred.

Agros was the only tea importer until 1989 when Poland began its free market economy. Now anyone can be an importer. Posti, the coffee roaster headquartered in Warsaw, also packs and imports tea. Agros purchased their tea until companies became privatized.

The tea department purchases tea for the private market as well as small buyers (wholesalers) in the countryside. As Kostera explained, there is much unemployment and women hand pack tea and sell it to retail shops. Very little tea is imported from Argentina, as that tea needs to be blended and they don't blend As Argentinian tea is perfect for iced tea, no iced tea is consumed. A major tea importer to Poland was Russia but all tea exports have closed since the Chernobyl incident.

Tea drinking is a way of socializing in Poland. Conversations are centered around a cup of tea. Loose tea is consumed in the home and teabags, a small segment of the market, is usually served at the offices. The tea bags have no tags nor string. There is no desire for decaffeinated teas, she says, the taste is different and the Poles aren't as concerned with health as the other Western countries.

Privatization enables Rolimpex to enter tea market

Rolimpex is also a state-owned company that is in the midst of going private. The company does business in many agricultural products such as: potatoes, vegetables, seasonal products for the Polish market, and exports onions to Germany. Just this year, the company began importing tea from India. As of October, they had imported 800 tons and they plan to increase the quantity of imported bulk and packeted tea (granulated) for the upcoming year.

Rolimpex has shares in many different companies. One of their firms has machines which can pack loose tea into tin, thus enabling them to sell not only to the domestic market but also to the wholesalers. Poland sells only through wholesalers. Loose tea comes packaged in 100 gm poly bags and the Poles seem to prefer loose over teabags.

Rolimpex's manager, Eva Struminska spoke with me on the success of the company's foray into tea. Rolimpex entered into the tea market because the company director had been to India several times, and had established enough contacts to safely enter the import business. She foresees continued growth for the tea market and her company. Tea is the traditional beverage in Poland and the Poles need large quantities.

Rolimpex, while established 40 years ago, was well versed in handling agricultural commodities, but they have noticed many smaller firms entering the tea and coffee business, only to close their doors in a short time. Rolimpex does some advertising-feels it is a necessity and agrees that advertising helps get the product known to the consumer. The brands available from Rolimpex are: Padma, Hilltop Red Cup, Hilltop Gold Cup, Royal Tea (100 g) Golden Assam, Flying Horse Marc Pol, Mango, Agricoop, Hortex and Turteupegro.

PHOTO : Krystyna Kostera, stands amidst the busy tea department. Tea is mostly purchased from country of origin.

PHOTO : Emptying bags of green coffee into silos at Posti, Poland's largest coffee roaster.
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:privatized coffee company Agros faces competition from domestic and foreign firms
Author:McCabe, Jane
Publication:Tea & Coffee Trade Journal
Date:Jan 1, 1992
Previous Article:Recycle coffee grounds.
Next Article:A look into Poland's largest roaster: Posti.

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