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Switzerland, a coffee powerhouse despite its nation's size.

Switzerland, a coffee powerhouse despite its nation's size

Switzerland is a beautiful country dotted with lakes, majestic mountain ranges, and quaint picturesque stone homes. Companies appreciate the countryside settings for their offices as well as the many tax advantages a neutralized country has to offer.

The Swiss are a quality-conscious people, and they treat coffee in the same respectful manner. Unlike the U.S., where coffee is often considered a quick and cheap drink where nary a thought is put into the beverage, the Swiss treat their coffee with reverence. While the swiss feel coffee is an inexpensive brew, they pursue the better quality blends, looking for the best coffees to consume at all times and not just for special occasions. Coffee is consumed at home, but much is imbibed in the out-of-home market. The people have incorporated into their daily habit time out to sit at a cafe and enjoy the quality coffee.

I walked through the streets of Geneva, Z urich, zug and Bern and saw the myriad cafes during all different times of the day. The cafes were packed, and people were drinking coffee, among other items, in the heat of the June sun. Even in the middle of the business day they were present and this was not just the tourist trade.

Switzerland's coffee market is international. No one manufacturer or importer/agent relies solely on the country for business. Either all of Europe or several countries are in contact with the trade, and almost every importer/manufacturer deals on an international basis.

Switzerland is home to the international headquarters of the world's largest coffee manufacturer--Nestle--in beautiful Vevey. Both of Europe's largest roasters--Jacobs Suchard and Douwe Egberts have their commodity purchasing offices in Switzerland. In fact, the two are both situated in Zug, a 30-mile drive down from Zurich. Jacobs Suchard also has its headquarters in Zurich with a Coffee Museum open to the public on weekends. The Museum displays painting, porcelains, and books, all on coffee.

Even though the larger coffee manufacturers are here, none of these companies lead the market share in Switzerland. Migros is the world leader in coffee in Switzerland, followed by Coop. These companies are actually chains of supermarkets which do their own roasting. Migros has 50% of the market and Coop covets 18% of the household market. Jacobs Suchard, while it may be the brand leader in Europe, holds 11% of the Swiss market, and Nestle only has 2%.

The institutional market is covered solely by the local roasters of which there are approximately 100-130 small roasters dotted throughout the country. Two-thirds of coffee is consumed in the home, the remainder in the cafes. Switzerland saw a slight increase in coffee consumption in 1989, and tea consumpton is so low, it is considered nonexistent. Though showing on placards on the cafe tables in June were iced tea promotions, several roasters did tell me there is growth for that product. Iced coffee, some revealed, just cannot even be considered for the Swiss, "it's just not in their palate."

The Swiss are an affluent culture/society. The country has the highest cost-of-living which often makes its products more costly to the rest of the world. Labor is at a premium as the country has many job opportunities but is faced with a shortage of personnel. Coffee is purchased regularly with people searching for the most upscale quality coffee. Espresso machines are now part of the kitchen decor in 40% of the homes. The Swiss are fond of espresso coffee and have little interest in soluble. Soluble coffee has been in a continual decline and the decaf segment of r&g accounts for only 10%, but the trade feels this segment can be further developed.

At the time of my visit to Jacobs Suchard, I had just left the 7th International Coffee Congress in Berlin. The convention was buzzing with the latest rumor--Jacobs Suchard was to merge with Philip Morris. I asked the public relations people at Jacobs if there was any truth to the rumor, and they replied, "We never comment on rumors." On the plane ride home at the end of the week, I was reading in the Financial Times that Philip Morris was purchasing Jacobs Suchard. So much for being at the right place at the right time!

Jacobs did tell me that the company sells more chocolate than coffee and the largest European coffee factory is the Jacobs plant in Berlin. The company recently introduced Kronung Light which is a "light" caffeine product. The product is not 100% decaffeinated as it is regular coffee blended with decaffeinated coffee.

Jacobs Suchard's green coffee purchasing/trading operations are located in the city of Zug; a separate division maed Taloca sells coffee to the smaller Swiss roaster as well as to Jacobs. They have agents in El Salvador and the Ivory Coast and purchase quality Rios, Bogatas and Kenyas for their blends. Each European country has its own taste, Krochman, general mnager, told me. France prefers the West African Robustas while Germany and Finland like the Colombians and Kenyas. Immediately after last year's quota collapse, every roaster and trader acquired more Arabicas.

Krochmann, and Romeo Barbara, manager--coffee dept., would like to see more liners used in container transport. They have been experimenting with the transport system after experiencing damaged coffee arriving in wet plywood boxes, etc. into Bremen. But some countries, regardless, must use breakbulk as there are no facilities to transport containers within the producer country. The U.S. customers, as they require small quantities, must also be in breakbulk. But bulk containers are the future, they stressed.

Douwe Egberts has its coffee purchasing offices also in Zug, barely a mile away from Taloca, via their subsidiary, Decotrade. DE centralized its purchasing in 1985 in this office where one can actually see sheep grazing on the nearby hills. (I now realize this is the norm for Europe, but it was certainly an experience for this New Yorker!).

Douwe Egberts boasts that their coffee is the #1 coffee brand in Europe as well as having the largest market share in the Netherlands and Belgium. Speaking with Dick Engelsma, managing director, and Gunter Vock, coffee buyer, they claimed DE's blends were not changed after the quota collapse. "People are used to a certain taste; if we were to change the blend, some people wouldn't like it." They continued, "A quality upgrade takes a long time to accomplish." The traders do expect an increase in consumption, but only due to future volume in the Eastern Bloc countries. DE is proud to keep the company's packaging similar throughout each country in Europe. "It's easier for people to identify us. People see the logo and even purchase DE coffee while they're on holiday in another country."

Blaser Cafe, a medium-sized roaster, trader and agent since 1922, says it is amongst the top six roasters in Switzerland. The roasting facility, located in historic Bern, is a towering building with their logo on the top, flashing in a blazing neon orange and black sign. Their facilities presently roast 1,500 tons/year of which most goes to Switzerland's institutional and foodservice industries. The company also does private label packing. Their green coffee trading volume is estimated at 320,000 bags which they trade worldwide. The company also has 10 separate warehousing facilities. Every Swiss food manufacturer must have obligatory stocks of which the government informs each company of the quantity to be stored. Due to the country's caution towards war time, all food stocks are checked daily.

As with most of the traders I spoke with, the ICO quota system will not be missed. It was felt that the ICA just doesn't fit in today's world. El Salvador is now privatized, and Nicaragua is open. There should be other opportunities to support the producer, several traders said. Colombia and Central America are considered stable versus Brazil which, some traders complained, does not always have a quality crop year after year. Under the quota system, they still have to accept Brazil's coffee when maybe the previous year's quality was better. Brazil's exports to Switzerland have decreased, this year to date, due to the increase in Brazil's internal export market price.

The roasters have acquired more Milds as of last year, but they now need their filler blends. As purchasing was higher than usual, roasters' stocks are well supplied, and thus, the roasters are waiting as long as possible for current prices to decline. In the meantime, one trader explained, availability is diminishing and growers may not continue their crop planning.

Easier trading in 1992

The coffee trade is expecting its trading practices to be much easier come 1992 when Europe will become one common market without any trade barriers and no borders. Tariffs will be abolished and each country will have the same taxes or fees. It is also expected that there will be one European currency. Some traders feel 1992 may spur increased income for the European population and perhaps coffee sales will benefit. They expect a few countries to benefit from additional sales, but certainly not all. Problems cited include a problem in quality standards.

I visited with Alf Mildenberger who started his own trading company -- Amcafe -- in 1974. Mildenberger has sampled life both as a trader and a roaster at various times in his career, both in the U.S. and Switzerland. His company specializes in Brazil Arabicas and Swiss Water Decaf. Mildenberger emphasized that the company can supply any quantity as well as quality. If the customer needs a mix of origins, Amcafe can handle the need, and Mildenberger happily reports his importing volume increases each year. Mildenberger commented on the quality-conscious coffee nations in Europe being Switzerland, Germany and Finland, and it is Germany that is considered the most important European market. When querried on the effects of the quota collapse, Mildenberger explained market prices plunged, but that didn't attract additional consumers. "Lower prices don't increase consumption." Switzerland's coffee imports dipped slightly so far this year, but he attributed this to heavy purchasing last year. Talking on soluble imports, he explained, "While the producer nations who manufacture soluble would like to blend and pack as well for the consuming country, each consuming country prefers to import bulk, and then blend and quality pack itself.

Felix Staub of Centram specializes in estate coffees in Latin America. His company also deals internationally and prefers to trade high quality coffees from specific fincas. "We have more control over the fincas and our clients seek us out." The company began in 1637 and has today many subsidiaries throughout Europe, but in other fields. Staub, like Mildenberger, has seen a drastic consolidation in the European coffee market.

Wirth Trading, coffee traders in Geneva, overlooks the Geneva airport and is located in an ultra modern world trade center. The company originally started out as Selecta, but Wirth eventually formed its own venture. Both Marcel Wirth and Jack Trum feel that Switzerland has begun to be truly the international coffee center. The company trades mainly with Europe and North Africa, Turkey, Eastern Europe, the Far East and the U.S. The firm specializes in Brazils, Central Americas, Africa and Indonesia sources. Both gentlemen feel 1992 will allow more trading but not really in coffee. The company claims that, while they're a small firm, they're coffee specialists and are large on coffee.

Bozzo Trading, an Italian-owned company, has trading offices in many consuming countries as well as several origin nation. Speaking with Francisco Ourique in Geneva, he told me Vietnam and Thailand are enjoying a popularity run in Europe. Ourique told the magazine, "All the trading that took place immediately after the quota collapse did not justify the slight global increase in consumption. Much of that coffee is still in storage with the importers footing the bill. Mexico and Costa Rica's coffee exports shot up in that time. Ourique see the fertilizers being cut out of some of the producing countries' coffee programs and feels producers may be in crisis, especially among those nations whose general economic policy hasn't as an important consideration.

Looking ahead to 1992, Ourique feels the impact of additional income can generate more coffee sales in some of the ECC nations but not all, and there could be a problem within quality standards from one country to another.

Wahbe Tamari & Sons, a short distance from Bozzo and across the street from Walter Matter coffee

traders, are international coffee importers who started in Lebanon and Jordan over 50 years ago. Tamari has his offices now in Geneva since 1977, Tamari's ties to the Middle East are strong as his brother heads up coffee importing and tea packing operations in Lebanon and Jordan. Tamari claimed that import sales also rose for his company as well as for all trading companies last July following the demise of the ICA.

The allied industry is also present in Switzerland. Ditting grinders have long been held in high regard throughout the industry. The machines are manufactured in Bachenbulach, just northwest of Zurich. Ditting grinders are distributed in the U.S. through First Colony Coffee & Tea Co., in Virginia and Bezjian Imports in California.

Ditting offers several grinders for each aspect of the coffee business. The grind range of the machines go from fine Turkish powder (a specialty of Ditting grinders), espresso and filter fine to coarse, with intermediate setting also possible. High-precision mechanism assures uniform grinding at all times.

The Ditting KF 804 model with manual bag holder is suitable for small shops. The models KF/KFA 903, 1003, 1203 and 1403 are available either with manual or automatic bag holder; they are popular in chain stores and large supermarkets. Easy for customers to operate, fast and quiet. Switzerland's large supermarket chains and roasters, Migros and Coop, all employ self-service grinders in their coffee sections. And, of course, Ditting has large industrial grinders for roasters. For the espresso machine trade, Diting provides integrated grinders too.

Ditting prides itself on its simple, conservative design, sturdy steel construction and, of course, the excellent grinding performance. They claim their units can last up to 40 years. The only damage that could possibly occur would be through improper handling or if the unit was dropped physically.

Ditting's salels have seen Japan move to no. 2 market behind Europe, with the U.S. holding no. 3 position.

Wipf is a flexible packaging supplier to the tea and coffee manufacturers. Located in Volketswil, outside Zurich, the company supplies film and machinery for gusset bags. Wipf's main customers are located in Switzerland and Austria, but they reach all over and even supply the U.S. They are the largest film supplier in Switzerland and have been supplying film packaging for coffee for over 30 years, though it was only in the last 15 years that Wipf began supplying valves, Hans-Peter Horn told the magazine.

Switzerland's coffee industry is quite large and global in dealings. The coffee beverage is a quality beverage and treated with reverence, respect and care. We can all learn from their coffee consuming habits.
COPYRIGHT 1990 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:McCabe, Jane Phillips
Publication:Tea & Coffee Trade Journal
Date:Oct 1, 1990
Words:2516
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