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Stirring up the market.

COFFEE is reputed to have been discovered by an Abyssinian goatherd, who noticed how energetic his charges were when they ate berries from a certain bush.

The local monks, to whom he turned for advice, were suspicious, and threw the berries on the fire -- only to discover that they gave off a distinctive aroma. The monks then roasted, steeped and drank the fragrant brew.

The legend comes from The Real Coffee Association, where it can be found alongside the commercial facts.

There are over 100 types of coffee plant, cultivated in over 50 countries. The two main species are arabica and robusta. Robusta is hardier and can be grown at lower altitudes than the arabica, which needs rain and sunshine as well as shade.

Coffee beans are the seeds inside the fruit, and ripe berries are hand-picked from a plant which is not only still flowering, but also has unripe berries, giving several harvests a year. The yield from each individual plant is about 2lbs annually.

Most ground coffee is a blend of arabica and robusta, and roasting and blending develops the individual characteristics of beans grown in different areas.

One third of the world's production comes from Brazil. The next largest producer is Colombia, followed by Costa Rica and Venezuela. In Africa, coffee is grown across the equator. Kenya produces arabica coffee, as does Rwanda, while Sumatra and Java grow a product with rich and soft flavours. The coffee plant is indigenous to Ethiopia, which produces the Mocha variety. (This is not the same as Moka, which is a Viennese drink.

The roasting of coffee beans takes place at temperatures above 200 deg C, and it is timing that determines the eventual taste. Light roasting for mild coffees; medium for stronger coffees; full or dark roast which appeals in the Mediterranean area; and high roast, which develops a strong flavour.

According to the RCA: "In Europe, the further south you go, the darker the coffee: the further north, the lighter the roast."

The most important consideration for coffee producers is cold weather, and Brazil's late frost in July did not just damage the mature fruit, but the unripe berries and the flowers. This will affect harvests as far ahead as 1996.

According to Brian Hopkins, managing director of Lavazza Coffee (UK), the situation will have an immediate and a longer-term effect on prices. "Nearly 24% of production has been wiped out, plus the damaged first year shoots take 2-3 years to mature," he said.

The RCA says that Brazil normally harvests 24 million bags of coffee a year, about 35% of world production.

In 1993. 24.5% of UK coffee bean imports came from South America; 30% from Africa; 33% from Asia; and 12.5% from Central America. Of these 45% were robusta, and 55% arabica.

Overall UK sales of coffee -- instant and roast and ground -- have risen from 365[pounds] million in 1980 to 568[pounds] million in 1993. They rose by 7[pounds] million alone from 1992-3.

Research from Mintel highlights the influence that raw material price fluctuations have on the coffee market. During the late 1980s an International Coffee Agreement introduced production quotas, causing a worldwide supply problem, which pushed up the prices.

On the other hand, lower prices can force producers to cease trading, which in turn can affect future supplies. Lavazza's Hopkins maintains that to forecast whether the price will stabilise or even come down after the last few months' rises is "crystal ball stuff". Coffee is the second largest commodity in the world, and matching supply to demand is very difficult, he says.

The main sectors of the market are instant -- 91% in the UK -- and roast and ground. Both showed growth in 1993.

According to Mintel, this is in sharp contrast to other European countries, where roast and ground coffee is more predominant. The impact of travel on the British however, is changing their attitude to quality and choice and widening their taste to include richer blends and roasts.

The introduction of freeze-dried instant granules sought to overcome the chief drawback of instant coffee over ground -- lack of an aroma. Freeze drying aims to stabilise and capture the oils, and return the 'aroma frost' to instant coffee.

The convenience of instant also attracts the consumer although again, UK coffee drinkers are increasingly familiar with the equipment necessary to brew ground coffee.

The European average per capita consumption of coffee is 7.8kg. in the UK we drink 2.8kg; the French drink 5.8kg; Italians, 5.2kg and Finns drink the most at 13.3kg.

"This is because drinking coffee is a special occasion, like British afternoon tea used to be," explained Richard Hancock, UK managing director of Paulig, the Finnish family-owned company who took over Lyons' Ground Coffee brands in March. "Most countries in Europe drink roast and ground coffee, and are very concerned with quality and richness of flavour."

Premier Beverages has produced a Hot Beverages report, which estimates the value of the instant coffee market at 567.2[pounds] million in June (Nielsen and PB estimates). Included is instant cappuccino, which has not really caught on; its share fell from 13.3[pounds] million to 11.6[pounds] million.

Nestle's report divides instant purchases into freeze dried, accounting for 32.9% (up 5.2%), and granules at 55.7%. Powdered coffee fell by 11.3% to 8.3%. Speciality coffees grew to take 3.1% (a 2.8% rise).

The instant market is dominated by Nestle, which claims a 57.6% share. Kraft Jacob Suchard, which acquired the Lyons instant brands in February, now commands a 21.5% share.

There is growth in speciality coffees, and niche products tend to be growing faster than mainstream -- taking 23.3% of the whole market.

Changes in taste to stronger, richer instant coffees have led to the introduction of 'super premium' brands, for example Colombian, Costa Rican and Kenyan blends such as Nestle's Alta Rica and Cap Colombie, and Lyons World of Coffees.

Distribution of instant coffee has further concentrated in the multiples, taking more than 82% of sales, with independents and co-ops still losing share.

The 100g glass jar accounts for half of sales value, with the 200g at 32.4% and the 300-750g at 10.2%. Special trial sizes are becoming popular for encouraging consumers to try a different brand or blend, and account for 3.6%. (This figure also includes the sachets of speciality coffees.

Roast and ground coffee has enjoyed a growth of around 6.2% in value to about 58[pounds] million (Nielsen), and 3% in volume to over 12,800 tonnes. (Advertising spend is also much lower than for instant.

Some consumers appear to be favouring richer flavoured coffee, but this is subject to price fluctuations which affect purchase.

Prices hit the headlines this year, as green coffee beans have consistently risen. One reason was an agreement by producing countries to limit supplies, with the aim of ensuring stable realistic prices. Another was the July frosts in Brazil, Zimbabwe, Indonesia and elsewhere, which also jeopardised future yields.

Sales of ground coffee are also affected by the equipment needed to prepare it. Percolated coffee has given way to filtered, and in 1993 it was estimated (Leatherhead Food RA) that 30.6% of households owned a filter machine.

The recent growth in cafetieres, now said to be a 14[pounds] million market, has contributed to increased sales of medium ground coffee, although fine ground filter coffee in 250g vacuum packs still dominates. The espresso machine is also becoming more popular, accounting for ground espresso being easier to find on supermarket shelves.

Sales of coffee bags, whole beans and decaffeinated coffee are declining, and according to Mintel, decaffeinated in the instant market declined by 13% over four years, mirrored in the ground coffee market.

According to Hancock: "Buyers of roast and ground are quite promiscuous, but the product range can be daunting. It can be a stressful purchase because people don't want to make an expensive mistake."

The Real Coffee Association members now put symbols on all packets to show the method of preparation, and details about the strength of the coffee.

According to Mintel, changing demographics, are expected to continue to favour the coffee market, with the number of 35-54-year-olds expanding to 15.8 million by 1996. Some are changing to tea, soft drinks and instant food drinks, but there will be some increases in coffee consumption.

The extent of price rises could set the premium sector back, however, while the reduction in negative press relating to caffeine will probably be reflected in inceased sales. The cheaper coffee lines' share is still expected to decline, as is that of decaffeinated.
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Title Annotation:coffee industry
Date:Nov 5, 1994
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