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Spain's Great Fertile Ground For New Ideas in Coffee.

More tourists visit Spain each year than any other country in Europe--excepting "La Belle" France. Spain's sweeping mountain ranges, vast empty tracks, endless expanses of beaches and fabled cities lure people by the millions to bask, sightsee, eat and drink.

Despite the bad reputation Spain has earned in recent years for the quality of its coffee, Spain today should be on the travel itinerary of any serious coffee tourist. The country is currently unsurpassed for the vigor of its coffee imagination--including new coffee drinks, new concepts in coffee bars and coffee service chains, new serving and brewing technologies, and new design fervor to make coffee in or out of the home visually exciting and young.

The out-of-home sector is especially active and creative. In my estimation there is no corner in Spain without a coffee entrepreneur--and cities large and small boast their own approaches. Some have risen to the status of small regional chain. A few have gone national. At least three or four seem, or ought, to have international ambitions due to their success, experience and bulk branding and marketing precepts. Among these latter include such successful concepts as Jamaica Coffee Shop and Te & Cafe. But many Spanish-designed and -concepted coffee bars could work well across Europe--and many indeed do so.

As point of fact, Jamaica Coffee Shop with more than 90 outlets (all in Spain) is the largest European-owned espresso bar chain in Europe. Its plans for expansion no more than hint now at international progression, but it would seem a natural growth pattern.

The frenetic inspiration infusing Spanish coffee circles today derives from a strange mixture of pride, shame and concern for the future. The Spanish coffee market boomed in all directions following its liberalization with the end of the Franco era. It gathered momentum with the nation's entry into the European Union. It was kindled by such events as the incredibly rapid process of concentration and control of the national retail market by multinational interests: the rise of the hypermarket as a virtually universal new way to shop in Spain: and again the concentration of these hypermarkets by three or so multinational groups which frantically altered distribution and shelf space costs and ushered in the attendant boom in store brand coffee products.

Such tight concentration of powerful production, distribution and retailing interests has been natural breeding ground for intense price wars. One important feature of Spain to remember is the recent history of coffee's shelf price. For many years in recent times Spain has had the cheapest retail coffee in Western Europe.

As a result, the many Spanish roasters (some 400 in number) found themselves virtually forced out, or left struggling hard to maintain regional store presence. For survival they began turning to developing or expanding their own shops for retail sales, and to concentrate hard on not only serving the out-of-home sector, but also expanding and developing it.


Spanish coffee didn't used to be so bad. In the old days, Spanish people knew a good blend of Colombian, Brazilian and Other Milds. But they also took quickly to torrefacto and mezcla blends. This is the second most important factor to consider in looking at the Spanish market: the unique role torrefacto/mezcla plays in consumption. Torrefacto, by the way, is said to have come to Spain from Mexico, where it began among Mexican miners as a way of preserving the coffee they took deep down into the ground and used as an easy source of quick energy.

Torrefacto is the process of roasting coffee and sugar together or as some say, caramelizing coffee. Originally, it was popular as 100% torrefacto. Now this segment has passed with the changes in generations and holds about 1% of its retail segment share. Instead, mezcla, or a mix of pure torrefacto and natural coffee, has become the standard. In this segment, blends can vary from 20-80% (in percentage of torrefacto to natural coffee) to 30-70%, 40-60%, 50-50%, and 60-40%.

Torrefacto/mezcla production has become quite controversial now in Spain, where purists in natural coffee are angry at the very word torrefacto. But it is important to note that the best torrefacto/mezcla processors can produce a quite interesting coffee drink that could surely have specialty status of its own inside or outside of Spain. Yet a major problem lurks within this peculiarity of the Spanish market--the conscientious roaster aside, torrefacto/mezcla also provides full temptation for roasters to buy cheap. The process, particularly when above the 30-70% blend range, can serve to basically mask the coffee quality itself.

That this temptation (in association with the chronically low shelf prices) proved irresistible to the majority of the country' s roasters is seen in the dramatically different import market shares for green coffee origins from (for example) 1985 to 1998. In that period, Spain moved from being a remarkably stable market for certain Arabicas, including a strong presence by Colombia and other milds, to one dominated by Robustas.

In other words, as the torrefacto/mezcla retail market rose dramatically with liberalization, particularly in the big store sector, and low shelf price became a major issue, the intrinsic quality of the Spanish cup fell drastically. This was so patent that it was not unusual in the early 1990s, for example, to hear both Spanish and foreign coffee interests comment that the nation had the dubious honor of serving the worst coffee in Europe.

In the early 1990s, however, a group of coffee roasters and green coffee importers realized that the cultural acceptance of bad coffee, either masked by caramellization or, if natural, just taken by consumers as routine "coffee," would leave Spain wide open for an eventual coffee market disaster. Already, by the early 1990s, retail and out-of-home sales began to flatten. Young people could see little to entice them either in the sweet, cream-infused drink their parents had for breakfast or the bitter swill found at the corner bar--not when Coke and other drinks offered assured delivery and quality, bottle after bottle.

Also, the Italians arrived in Spain and brought with them their master espresso blends, the emphasis on grind and cup quality. Truly a remarkable marketing event, a phenomenon of marketing, was witnessed in how rapidly the Spanish coffee consumer, particularly younger ones, came to closely identify "real" coffee with Italy and Italian imagery. It can truly be said that a rage of dressing coffee in Italian imagery swept Spain in the mid 1990s.

The more acute Spanish coffee interests then saw clearly that it would be merely a matter of time before multinationals or large Italian companies created a niche for themselves for "real" espresso, and that this penetration could then be followed by another for single origin coffees, and then by another and another. Just as the big store market had been lost to foreigners, visionary leaders of the Spanish coffee community foresaw the loss or partition of the specialized shop, bar/cafe market that was maintaining their existence. A coffee revolution in out-of home drinking was catching on--and the Spanish were quick to take control of it.

This explains why such innovations as espresso pods as well as the new emphasis on barista training were adopted so early in Spain. Creativity has come to coffee in Spain in a big way, and proof of this is at hand at numerous roasteries across the land, in stores, and most certainly in out-of-home coffee. Altogether, a brew of events, predictions, and market shifts created a unique bell-jar in Spain from which sprang some highly innovative thinking--partly inspired by Italian influences, partly by American, but also most certainly by Spanish initiatives.

It helps immensely, as well, that Spain has a huge and expanding market in its out-of-home sector, now one of the largest in the world.


Green coffee imports into Spain itself rose by 7.5% during the 12 months of 1999, setting a record at a total weight of 222,568 metric tons. The major sources of this coffee were Brazil (market leader) followed in order of share by Vietnam, Uganda and Colombia. In recent years, the Spanish market has been of major importance to Uganda and has seen a true boom in Vietnam buying. Vietnam was, in fact, the number one supplier of green coffee to Spain during the year 1998. In 1999, Brazil returned to preeminence as an origin in Spain, while Colombia' s share--formerly and traditionally stable and second only to Brazil in green market share--shrank further to 12%.

Together these "big four" sources account for 62% of the nation' s green coffee market. And, probably, for more than this, if the import figures for coffees cleared into the European Union in other member nations and then transported into Spain could be analyzed. For example, "Germany" without further specifics ranks as the fifth most important sourcer of green coffee to the Spanish market on official statistics.

In green coffee, Spain continues to be both a dollar and peseta market. By habit, Spanish roasters are inclined to protect themselves with large stocks on hand.


Spain's retail coffee market in 1999 showed signs of flattening out, at least for the period covering the past four to five recent years. The retail market is stabilized for now at an annual disappearance of about 70,000 tons, give or take a 1,000 tons difference from year to year throughout the late 1990s.

Within the retail sector, roasted coffee held 77.7% of sales in 1999, down somewhat in share, possibly due in part to the rise in soluble sales. Spain continues to be a strong market for soluble products. Retail tonnage rose to more than 8,000 tons during the year -- up about 10%. The gain is attributed to new interest in soluble, but most particularly to a strong growth curve in decaf soluble products. Soluble products represent better than 22% of retail sales in Spain.

In general, the only growth sectors in food store coffee product sales in 1999 were in store brand products, decaffeinated coffees and soluble coffees. Decaf now holds close to 11.5% of sales.

Gradual decline continues in the torrefacto/mezcla market in terms of the total Spanish coffee market, giving cheer to the natural coffee faction. In 1970 the torrefacto/mezcla sector represented a 70% sum share of all Spanish coffee consumption, in 1990 this had dropped to 30%, and in the year 2000, the natural coffee faction is predicting that mezcla should hold no more than a 20% share. Nevertheless, food stores sales figures show that a full 50% of buyers are still reaching for mezcla blends.

The explanation for change in retail sales and in the general overall Spanish consumption of coffee consumption is found in the rapid expansion and bold new direction taken by Spain's robust out-of-home coffee sector.


Out-of-home coffee consumption now accounts for approximately 50% of all cups drunk in Spain. It is also a sector with consistent growth and a real future to consider. Sales volume in tonnage expanded by 11% during 1999. Bar/Cafes, office coffee services, and vending--all sectors have seen expansion in coffee sales throughout the 1990s.

There are some 300,000 restaurants, hotel and bar/cafes in the Spanish out-of-home sector. Of this figure, about 230,000 are classified as bar/cafe establishments where, in general, coffee sales often represent as much as 40% of day-to-day turnover. As soluble disappearance in the out-of-home sector is no more than 3%, this means that in fact the sector is by far the leading sales venue for roasted coffee in Spain--47% of all Spanish roasted coffee goes to the HORECA sector, versus 39% to retail. The remainder being taken by institutional and vending sectors.

The rise in fast food establishments in Spain plays a major part in HORECA coffee usage expansion; the number of fast food outlets has tripled in recent times. Another factor in the boom is the amazingly rapid spread of the new wave espresso bar, which quickly became a very fashionable way of taking coffee in many Spanish cities. It is the norm for these establishments to serve 1,500 espresso drinks of one kind or another each day.

Vending has also taken off. "Vending" meaning in Spain all kinds of self-service coffee serving points. Machines for general public use account or 69% of this market, with the remainder mainly for the institutional sector. Vending consumed 9,000 tons of coffee product in 1999.

Here, too, coffee figures prominently in turnover. According to recent figures, 60% of Spanish vending users take coffee, 30% take cold drinks, and 10% take snacks.

When the vending unit distributes the three main hot drinks--coffee, chocolate and tea--79% of use is coffee, 11% is chocolate and 8% is of tea.

So, what is fueling the boom in all sectors of Spain's out-of-home market? For one, the economic expansion experienced since entry into the E.U. For another, Spanish people eat meals out regularly--more frequently statistically than most other cultures--and in growing volumes. Also, tourism continues to draw more and more people from northern climes to enjoy the lberian sun and drink coffee in Spain.

But also, Spain is gradually awakening to the pleasures of coffee--particularly so its young. There are indeed more and more good coffee experiences to be found, and each one can well be an illuminating and educational experience for a coffee-drinking public so poorly treated in years gone by. Coffee in Spain today is truly like the famous movie that was filmed there--it is The Good, the Bad and the Ugly. The bad--even worse--the ugly cup quality may still be common, but the good has arrived and gains strength. And it might even prevail.
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Title Annotation:developments, innovative products and services within coffee industry
Publication:Tea & Coffee Trade Journal
Article Type:Statistical Data Included
Geographic Code:4EUSP
Date:Dec 20, 2000
Next Article:Coffee's Love Affair with Kona: Kona Rises Above Scandal.

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