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The West German coffee market.

The West German coffee market

In spite of all pessimistic rumors and predictions, coffee sales again increased 1.2 percent in 1989. According to the German Coffee Association, 496,000 tons (on green coffee basis) have been sold in Germany during the last year. While high world market prices, the record consumption level of 1988, and a long and hot summer, caused a stagnation of sales in the beginning of the year, things changed in the second half of 1989. The lowest retail prices since the end of war and consistent good quality is one reason for the increase of coffee consumption.

Since July 4, 1989, when the economical regulations of the International Coffee Agreement were abolished, supply and demand regulate the market. Viewing the statistics, it is clearly noted that between July and December 1989 the percentage of Milds imported climbed up from 87 percent to 90 percent. Especially Kenya, Indonesia and Ethiopia profited from the free market. Due to the worldwide overproduction, Robusta prices fell more than 50 percent and has kept a low level since, and the price for Arabica and other Milds regained. Consequently there is a considerable price difference between the qualities reflecting the reality of the market much better than during the times of the ICA.

The Robusta producing countries notice the difference between prime costs and selling price painfully. Their balances of payments will get into disturbance, which is not at all in the interest of the German coffee trade and industry. Although it seems that the market for quality coffees will find its balance on the free market pretty soon, realistic alternatives to the old agreement, avoiding all its imponderabilities, are being discussed.

The low prices have been passed on to the consumers. According to G & I, a German market research institute, the consumer had to pay 8.23 DM in average for 500g roasted coffee at the beginning of 1989, prices dropped to 7.30 DM (DKV) at the end of the year. The average price for the year 1989 is 0.7 percent higher than for 1988 due to the relatively high price at the beginning of the year. For comparison: in 1987 the consumer had to spend 8.67 DM per 500g. This price may still seem relatively high but, if comparing prices with other countries, it has to be kept in mind that in Germany the governmental taxes sum up to 2.80 DM per 500g.

Spring in Eastern Europe

At least half of the consumption increase is due to changes in East Germany. Millions of citizens of the GDR visited West Germany and a pound or more of roasted as well as jug of soluble coffee were some of the most popular "souvenirs" to be taken home.

In general the less pricey blends or special offers attracted the visitors most, but West German proprietary articles, well known through western media, met lively interest, as well. Between 4,000 and 4,500 tons of coffee have been sold additionally this way. In this context it must not be forgotten that the West German population itself augmented due to evacuees from eastern Europe and resettlement of former citizens of the GDR.

New Products with Young Flair

Several new products are featuring convenience aspects and taking advantage of an interest in international specialities, have been very successful reaching especially the young generation.

Two I like to mention are from the soluble coffee sector: a cold coffee-shake and a cappuccino. Both compositions are readily mixed and only cold milk and hot water has to be added respectively. Both had a stimulating impulse for the sales of soluble coffee. It is difficult to predict if that stimulating effect will last. Looking back to soluble premium qualities and espresso, it was experienced that after causing a considerable growth rate when being introduced, sales flattened out later. But the new products are in a better position as there are not directly competing products and the shake is imbibed just as a soft drink would have been drank.

Very successful in the roasted coffee sector was espresso and here even more when offered as a convenience product. It reached a share of one percent of the total market.

First attempts have been made to offer organic coffee to a broader public. A G&I study found out that in 1989, 58 percent of the consumers think that environmental protection is more important than growth of industry while in 1980 only 37 percent thought so. Consequently, the concern for environmental questions is increasingly influencing the buying decision. Even though this cultivating method offers many advantages, it is for the time of no real importance. Presently organically grown coffee is twice as expensive as other coffees of a comparable quality. It would be a success if it will reach a market share of one percent, that is the share of espresso today, in the long run.

"Gently Ennobled" and "Decaf" Gained

The sensitivity for healthy food brought yet another increase for specially treated coffees in the household market. The percentage of decaffeinated coffee rose from one percent to 16 percent and the mild treated coffees went up from two percent to 12 percent of the total. Consequently the non-treated qualities lost three percent declining to 72 percent. While the naturally milds could hold their market share of 22 percent, the others lost three percent and went down to 50 percent. This decline is by far the most noticeable and will certainly continue. If one could talk about one single German market in the future, different consuming priorities in Eastern parts could have an impact during the first years.

Soluble coffee

After a decline during the last years on the soluble coffee market this tendency could be turned. Thanks to successful innovations, the market share climbed up to 11,700 tons. This is an increase of 1.7%. The decaffeinated was also successful here reaching 12%.

The household share is to be fixed somewhere between 75 and 80% of the total. The remainder is bulk consumption. Household consumption includes all coffees consumed out of home, e.g. at work, but bought for private consumption.

The seven largest roasters supply 85% of the household market. The estimations about their exact share differ from panel to panel and are difficult to verify. To give exact figures is impossible. For the time being it can be given a ranking as follows: The two largest, Jacobs and Tchibo, are followed by Aldi and Eduscho, Hag GF, Melitta and as a newcomer in this ranking - Dallmayer.

What factors will influence the market in the future? Development of the coffee price, new trendy products reaching other than the traditional consumers, successful marketing of new consuming occasions, development of population, health aspects, development in the East and East-Germany and last but not least the temperature during the summer of 1990!

Table : Production in Plants with more than 20 Employees (tons)
 1986 1987 1988 1989
Roasted Coffee with Caffeine 308,744 311,847 324,796 327,347
Roasted Coffee Decaffeinated 39,316 45,190 43,014 48,031
Soluble Coffee 22,228 21,835 24,155 23,266

Roasted coffee with and without caffeine in 1989
January - March 92,236
April - June 88,177
July - September 89,735
October - December 105,230

Total Volume of the West German Coffee Market (tons-green)
1986 1987 1988 1989
457,000 483,000 490,000 496,000

Table : Market Shares of Roasted Coffee (%)
Quality 1986 1987 1988 1989
Not treated 76 76 75 72
 Naturally mild 16 20 22 22
 Others 60 56 53 50
Treated 24 24 25 28
 Decaffeinated 13 14 15 16
 Mildly treated 11 10 10 12

Table : Sales of Soluble Coffee (tons)
 1986 1987 1988 1989
12,000 11,900 11,500 11,700

Table : Share of the Household Market (%)
Jacobs, Tchibo 18.5 - 20.5
Aldi, Eduscho 14 - 17.5
Hag GF 5 - 6
Dallmayer, Melitta 3 - 4
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Article Details
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Author:Kuhrt, Cornel
Publication:Tea & Coffee Trade Journal
Date:Jul 1, 1990
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