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Spain's marvelous mosaic of coffee.

Spain is a land of promise, and for coffee just as much as for other Consumer products. The new Spain has a new coffee trade and industry to serve its demand and give it an important position in the international coffee community. No coffee market in the world has changed more rapidly than has Spain's during the past 12 years. The market has evolved with lightning speed from a completely controlled, closed and regional group of markets served by coffee product formats that had changed little since the beginning of coffee usage to a free market situation, characterized by the same elements that define other Western European coffee markets--strong presence by international green and roasted coffee companies, the dominance of new technology in packaging and processing, the creation of national distribution systems to serve sales in large supermarkets, the rise of national brand concepts, store brands, and a specialty coffee sector.

The landmark dates for the new Spanish coffee market are 1980, when coffee was officially de-controlled; 1983, when the ban on ground roasted coffee was lifted; 1991, when Barcelona warehousing interests were granted access to terminal market status and the Spanish trading community formulated the first Spanish Coffee Contract, served by a Board of Arbitration which is seated in Valencia; and 1991, when Spain, for the first time, is site for the meetings of the European Coffee Federation, and for the 8th International Coffee Congress. The "Year of Spain" is also its coffee year.

Some particular statistics show the striking changes brought to Spain's coffee market in quite eloquent terms. Consider that the nation imported in the range of 113,000 tons of green coffee in the years of 1981-82, but has had imports in excess of 170,000 tons in the years 1990-91. The growth index in Spanish green coffee imports over the 10-year period is thus slightly more than 50%. Relative to roasted coffee, consider also that, while in 1984, a year after ground coffee was permitted in Spain, 14% of retail volume was in the ground format; by 1986, the market share for ground had risen to more than 40%; by 1990 ground coffee accounted for almost 69% of retail sales. Today, it is well over 70% of the retail market ! As can be imagined, such an increase in only seven years has meant a tumultuous retail market. This awesome degree of change has taxed even the resources of large roasters. In context of the swift trend to ground coffee, to professionally packaged, marketed and distributed coffee, and too of a long and debilitating shelf price war, it should not be surprising that the period has seen a large number of casualties in terms of companies active in coffee. In 1980, there were more than 700 coffee roasters in Spain, in 1992, there are fewer than 300.

For now at least, it would appear that the dust of commercial evolution and warfare is settling and that the Spanish trade and industry can expect a calmer period of adjustment. Such concepts as cup quality, rather than price, are beginning to emerge as market place factors. It is very important to note that, despite the boom in coffee, the revolution in the consumer market, the much heralded arrival of international interests, and the rapid developments in trading, warehousing and roasting capabilities, Spain still remains a truly unique coffee world unto itself, marked most strongly by its regional tastes and traditions in coffee. As ever, Spain is a rich and marvelous mosaic of coffee interests.

The organization that has gone furthest and achieved the most as to bringing sense, sensibility--and a degree of harmony--to this sometimes wild and antagonistic coffee scene, is the Federacion Espanola del Cafe. The Federacion was created in 1985, with headquarters in Madrid; Jose Luis Baque is president, and Miguel Alvarez is general secretary. There are four member associations forming the Federacion--Asociacion Espanola de Torrefactores de Cafe, Asociacion Espanola de Fabricantes de Cafe Soluble, Asociacion Espanola de Importadores de Cafe, Agrupacion Espanola del Cafe. The Federacion is governed by an assembly which is composed of 16 delegates, four representing each association, and with a board of directors whose members are the four presidents of the participating associations. The member associations in turn represent the interests of their own membership, including some 240 roasters and about 17 traders.

Green Coffee Profile

In the early 1990's, Spain is positioned as the sixth largest market in the world for green coffee. The green market peaked in 1990 at an astounding volume of 175,826 tons ('astounding' in terms of the pattern of imports in the late 80's when annual landings did not exceed 160,000 tons). In 1991, imports retreated by about 2.8% to a volume of 170,417 tons.

Brazil holds the dominant share of the Spanish green coffee market, with 45,480 tons in 1991 (27.01%). Although Brazil's market share for the year by percentage is still not as high as it was in the early 80's, the volume is a record high. Colombia, as an origin, took second place in the import standings in 1991, with 21,583 tons (12.8%). Colombia green coffee has not recovered the position it held in Spain prior to 1988. In the early 80's it held as much as 20% of the market. Other traditional leading origins for Spain are Cote d'Ivoire and Uganda. In 1991, Cote d'Ivoire represented 11.1% of the Spanish market, 18, 673 tons; Uganda accounted for 8.8% and 14,817 tons. Cameroun was in fifth position on the market with a share of 7.8% and imports of 13,188 tons. Other key suppliers in 1991 included Zaire with 6,777 tons (4%), Indonesia with 5,940 tons (3.5%), Vietnam with 4,727 tons (2.8%), Kenya with 4,007 tons (2.4%), and Honduras with 3,080 tons (1.8%). Customs designations show 42 coffee producing nations as sources for Spain's total.

The market in 1991 was defined as 52% Arabica, 48% Robusta. It is clearly a price-minded market, and has been so for the past five years, as evidenced by the decrease in market shares for Brazilian, Colombian and Other Milds origins. Perhaps the most marked change has been in imports of Other Milds which, in the early 80's, accounted for upward of 20% of the sum market but held no more than 14% in 1991. The market has also shifted strongly toward Robusta coffees, as can be seen in the table given here. In 1981, Robusta origins held 24% of the total Spanish green coffee market; this share increased to 33% in 1986 and to more than 40% in 1988. For the past three consecu- tive years, Robusta coffees have represented about 48% of Spanish imports.

The main ports for coffee landing in Spain are Barcelona, Alicante, Valencia and Bilbao. Barcelona leads in landings, with, for example, a total of 107,740 tons in 1990 (out of 175,826 tons in sum). Barcelona is also the location for Spain's bonded warehouses with terminal market designation--these include BIT and now too the new warehousing/terminal market service just placed into operation by Berge y Cia. The nation's extensive warehousing facilities are of importance because Spain is likely to rank as one of Europe's leading coffee banks. No one seems certain of the size of the stocks on hand in Spain, but that they are considerable and are maintained at consistently high levels is substantiated by the fact that, for years, Spanish imports have significantly exceeded green coffee consumption and exports.

Consumption Profile

The exact size of the Spanish coffee market--roasted and soluble, home and out-of-home defies quantification. Due to its size, complexities and various distribution/retail structures, Spain is the market analyst's nightmare. Nevertheless, we bravely put forward the figure of 134,000 tons of products, roasted and soluble, sold to Spanish consumers in 1991. Assuming this figure is accurate, it would mean an advance of no more than 1.5% over the market of 1990, when 132,400 tons of products were sold. This would support those observers who say that coffee consumption growth has stalled in Spain.

In 1990, retail sales are credited with 57% of the total coffee market, or for 75,600 tons. The hotel/restaurant/care market remains very large in Spain, and has even increased by about 5% in recent years.

However, the most dynamic sector for coffee in Spain is in the retail area, and most assuredly so for roasted coffee where consumption has grown by more than 25% in the past seven years, led by the explosion in ground coffee sales. A sector that now seems to be stirring to life in Spain is decaffeinated. Decaf sales have risen sharply to amount to about 4% of all roasted coffee. Meanwhile, despite predictions to the contrary, soluble coffee sales have remained remarkably stable in Spain, and account for some 20% of the combined markets.

In the roasted coffee area, sales of torrefacto blends continue to dominate the sector. These are mixtures of regular roasted coffee and the pure torrefacto (coffee roasted with sugar). In 1990, the mixtures accounted for about 47% of sales. Regular roasted coffee then held approximately 25% of sales.

As elsewhere in consumer countries, the Spanish retail market has witnessed the swift development of the store brand labels. Distributor labels now hold about 22% of the retail market in soluble products and about 16% of the retail market in roasted coffee. According to store association statistics, roasted coffee ranked 12th among all food products in accumulated sales value in 1990; soluble coffees ran 2lst in accumulated sales value. In combination, `coffee' accounted for 3.11% of all foodstore sales and ranked 8th among all products.

Bar and Cafe

The actual number of HORECA establishments has been increasing at a good pace in Spain in recent years. By the start of the 1990's, there were approximately 210,000 foodservice outlets, most of which would serve at least some volume of coffee. Of these, 64% were in the bar-care-cafeteria class, 19% were hotels and restaurants. The remainder are classified as nightclubs and other sundry types of establishments.

Although the bar-care sector is dominant in number of establishments and in quantity of coffee sold, it is actually less dynamic than the hotel/restaurant sector. Coffee sales in hotels and restaurants in Spain have been increasing faster than the growth of establishments by number.

Spain ranks as the third largest market for espresso style coffee and espresso-making machines in Europe (behind Italy and France). In 1990, some 84% of all HORECA (foodservice) outlets used a professional espresso machine.

Imports of Roasted Coffee

Imports of roasted coffee products into Spain gained 2,224 tons in 1991 and are expected to continue increasing in years to come. Exports of Spanish roasted coffees are also increasing, and amounted to 1.935 tons during the past year. Imports of soluble products were at 1,965 tons in 1991, while exports gained to 2,148 tons.

In general, the coffee roasting and processing industries of Spain are becoming acutely aware of cup quality as an emerging market factor. Few coffee communities are more self-conscious about their own standards, or lack of them. Old habits die hard, but momentum is gaining in Spain for an emphasis on quality rather than price. This is not a matter of idealism, it comes as all business decisions must in capitalist systems, in answer to the evolving demands of the market place.
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Title Annotation:coffee market examined
Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Date:Sep 1, 1992
Previous Article:A unique coffee service range for a unique range of markets.
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