coffee and tea international 1-2012 - free

PRESSING ISSUE: WINDS OF CHANGE

HANGXHOU, FUXHOU AND THE PHILOSOPHY OF THE MOMENT…

EUROMONIOTR INTERNATIONALABOUT COFFEE&TEA

CAFES AND BARS MARKET IN RUSSIA: THE PAST AND THE FUTURE# 1 (95) 2012

1

contents

Strangers in Tansania A Land of Opportunities Looking for ways to attract new customers and to increasetheir revenues

2 EDITORIAL

3 CALENDAR OF EVENTS

6 PRESSING ISSUE

7 NEWS

REVIEW&STATISTICS22 Nielsen statistics

24 Hot drinks. Coffee market

performance in Poland, Czech

Republic and Slovakia

26 Hot drinks in Germany

28 Hot drinks in Ukraine

30 Hot drinks. Hot Beverages

market in Belarus: Surviving

the Crisis

ECONOMICS32 Private Label Coffee

Potential in Eastern

Europe

34 Strangers in Tansania

38 A Land of Opportunities

WHO IS WHO?42 Going beyond paper: Sustainability

as the core of competitive

business

46 Cama announces strategic

partnership to meet record growth

in cups technology

HoReCa50 CafJs and Bars market in Russia:

the past and the future

52 ADVERTISER INDEX

№ 1’2012

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34 38 50

18 22Nielsen: coffee&tea statistics in RussiaThe brand-new Ritz-Carlton met the symposium guests When travelling, we often receive vast amounts of new

information

The Chinese New year is the final link

in a long chain of holidays – so long,

in fact, that one ends up feeling tired

instead of refreshed. We are now ready to fly

away on the Black Dragon: the year is promis-

ing to be dynamic and full of interesting

events.

The year started with a big international con-

ference on tea, organized by FAO in Sri

Lanka. This biannual event is eagerly antici-

pated by the tea community, because it allows

us to identify important industry trends and problems that we all are fac-

ing. One such problem is the issue of pesticide use (and I am sure that this

issue is important for the coffee community as well). On the one hand,

many developed countries are starting to introduce more stringent

restrictions on toxic substances in their food supply; on the other, growing

demand for tea and coffee cannot be met given the existing rates of plan-

tation expansion. This means that the only solution is to use new tech-

nologies aimed at increasing the yield of existing plantations, and this

involves some amount of risk of harm to the environment and

to human health. So the tea and coffee industry has an impor-

tant strategic decision to make: if effective measures for con-

trolling pesticide use are not implemented, the reputation of

these beverages, at present very good among consumers, may

suffer. Coffee and tea are natural, non-toxic beverages; fur-

thermore, tea is usually associated with a healthy way of life.

If this image is undermined, these beverages will lose their

mass appeal, and their consumption may greatly diminish.

This year, our magazine will keep a close eye on this issue.

In the last few years I have visited China quite often; but it is

only recently that I felt compelled to view my Chinese experi-

ences through the prism of the global developments that will be

taking place in the tea and coffee world in the next few years.

So, in full accordance with the dialectical principle of quanti-

tative changes leading to qualitative shifts, my experiences in

China during the last few years have led me to some general

conclusions, one of which I want to share with you in a piece

about the Hangzhou International Tea Expo (see pp. 18-20).

Ramaz ChanturiyaEditor-in-Chief

ED

ITO

RIA

LEDITORIAL

EstablisherZAO INTERNATIONAL TEA HOUSE

Distributed worldwide among coffee andtea producers, wholesale companies, shops, andrestaurants. Printed in Russia.According to the registration certificate of massmedia П И №77�7213 from 30th January, 2001.Reprinting of materials is allowed only by permissionof the magazine. The reference to the magazine«Coffee and tea in Russia» is obligatory. The editorsdon't bear any responsibility for reliability of dataplaced in advertising blocks or announcements. Theeditor's point of view may not coincide with theauthor's point of view. All provided materials will notbe returned or reviewed.

Coffee&Tea International magazine has been includedin the VINITI (All�Russian Institute of Scientific andTechnical Information of the Academy of Sciences �Vserossiisky Institut Nauchnoi i TekhnicheskoiInformatsii (VINITI)) list of synopsis journals and theinstitute's data base.Information about the magazine will be annually published in the «Ulrich's Periodicals Directory»,international handbook of periodic magazines andongoing publications.Coffee&Tea International is an appendix to theCoffee&Tea in Russia magazine.

№ 1‘2012

Editorial Address:

Russia, 123060, Moscow,Berzarina str., 36, building 2, of. 214

tel./fax: +7 495 935-87-07E�mail: [email protected],

www.coffeetea.ru

Printed in

Union Print, Nizhny Novgorod

PublisherZAO INTERNATIONAL TEA HOUSE

Chief EditorRAMAZ CHANTURIYA

Deputy Chief EditorSVETLANA BELIKOVA

Computer�aided makeupVALENTINA GUSKOVA

Advertising DirectorJULIA CHANTURIYA

Advertising ManagerANNA ANTONOVA

THE EDITORIAL BOARD

Chairman of the Editorial Board

R.O. CHANTURIYA,general director of Rusteacoffee Association

Members of the Editorial Board

S.G. BELIKOVA,deputy editor�in�chief of Coffee&Tea in Russia magazine,

PhD of Philology, Editorial Board Secretary

S.V. KASIANENKO,chairman of the board of directors of Orimi Trade company

I.V. LISINENKO,general director of May Company

A. MALCHIC,chief executive of Montana kofe company

R.D. PANZHAVA,Georgian Tea Producers Association

M. PEYRIS,International Tea Committee

V.A. TUTELIAN,Head of the Institute of Nutrition of Russian Academy

of Medical Sciences, Member of the Academy

G.V. SMIRNOV,general director of SDC FOODS company

A.V. ELSON,general director of KLD Coffee Importers

Photo on a cover:

Photo by Marina Parshina

COFFEE&TEA INTERNATIONAL # 2/20112

CALENDAR OF EVENTSMarch—November 2012

All materials are provided by support ofWWW.COFFEETEA.RU

16–18 August 2012

Country: Hong KongCity: Hong KongCompany Page: www.hkteafair.com

HONG KONGINTERNATIONALTEA FAIR

17 September 2012

27–29 April 2012

Country: United KingdomCity: LondonCompany Page: www.londoncoffeefestival.com

Country: RussiaCity: MoscowCompany Page: www.coffeetea.ru

LONDON COFFEEFESTIVAL

18–21 May 2012

Country: ChinaCity: ShanghaiCompany Page: www.tea-shexpo.com

CHINA TEA EXPO

25–28 June 2012

Country: BrazilCity: San PauloCompany Page: www.fispalcafe.com.br

FISPAL CAFI 2012

4–6 May 2012

Country: AustriaCity: MelbourneCompany Page: www.internationalcoffeeexpo.com

MELBOURNEINTERNATIONALCOFFEE EXPO 2012

13–15 June 2012

Country: AustriaCity: Vienna Company Page: www.scae.com

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3-d MOSCOWINTERNATIONALCOFFEE FORUM

17–20 September 2012

Country: RussiaCity: MoscowCompany Page: www.world-food.ru

WORLD FOODMOSCOW

30 October–2 November 2012

Country: United Arab EmiratesCity: DubaiCompany Page: www.coffeeteafest.com

THE MIDDLE EASTCOFFEE & TEACONVENTION

SCAE WORLD OF COFFEE


Country: GermanyCity: Hamburg Company Page: coteca-hamburg.com

COTECA


Country: RussiaCity: MoscowCompany Page: www.exhibition.pir.ru

PIR. HOSPITALITYINDUSTRY

25–27 March 2012

Country: AustriaCity: ViennaCompany Page: www.tcworldcup.com

TEA & COFFEEWORLD CUP EUROPE

28–29 march 2012

Country: United KingdomCity: LondonCompany Page: www.ukcoffeeleadersummit.com

UK COFFEE LEADERSUMMIT 2012

3–5 April 2012

Country: United Arab EmiratesCity: DubaiCompany Page: www.dttc.ae

GLOBAL DUBAI TEAFORUM

9–12 April 2012

Country: ChinaCity: ShanghaiCompany Page: www.expocoffeetea.com

EXPO COFFEE &TEA 2012

17–20 April 2012

Country: SingaporeCity: SingaporeCompany Page: www.foodnhotelasia.com

FOOD & HOTEL ASIA2012

24–26 April 2012

Country: RussiaCity: MoscowCompany Page: www.mirrestorana.info

RESTAURANT &HOTEL WORLD

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According to the organizers of the third MoscowInternational Coffee Forum, at the end of last year thetwo most influential raw coffee importers declaredtheir support for the largest industry event in Russia.They have become Golden Sponsors, demonstrating thesignificance of the event for the Russian coffee market.

MAJOR RUSSIAN GREEN COFFEEIMPORTERS DECLARE SUPPORT FOR

Moscow International Coffee Forum

ANDREY ELSON, General Manager, KLD Coffee Importers, Moscow:

When we learned about the idea of organizing the first Forum in 2008, we decid-ed to support the event. We did this in 2008 and 2010, and we are doing it again thisyear.

– Why?– Because we now have a forum for industry professionals to discuss current

issues. Market participants, regardless of their size and market share, have an oppor-tunity to participate, to present and receive information in their native Russian lan-guage, to meet other participants and engage in discussions with them. And our com-pany, KLD Coffee Importers, has an opportunity to state its own opinions on variousissues and trends, helping further develop the Forum.

This is very important and very beneficial!

ANDREY SAVINOV,General Director, SFT Trading,Moscow:

– Moscow InternationalCoffee Forum, which is beingheld for the third time this year,has become an important eventin the life of the Russian coffeecommunity. It is a rare opportu-nity for all those who are interested in the development of the Russian coffee indus-try to meet each other and to exchange professional opinions about the state of themarket, domestic as well as international, hear about new trends, learn somethingnew and simply taste good coffee.

The format of the Forum is unique: the whole event lasts only one day, and eachparticipant can choose the sessions that are the most interesting to him. This is a placewhere you can meet people from other countries who are well-known in the coffeeworld and where you can feel that you are a member of the international coffeecommunity.

SFT Trading, as a supplier of green coffee to the Russian market, has supportedand will support all initiatives that help improve the market’s overall quality level, andthe coming Forum is one such initiative. We are pleased that the coffee roastingindustry is spreading throughout Russia, and we hope that the Forum will give us achance to meet many new partners and friends from all over the country.

See you in September at the MICF-3!


NEWS

Andrey Elson

Andrey Savinov


PRESSING ISSUE

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MIKE BUNSTON,International TeaCommittee:

– The overriding factor whicheffects prices is supply and demand.Dramatic increase of world cropswith consumption going up createdlittle overhang in the market.Adverse weather conditions in Kenyaand Sri Lanka have pinned back theircrops and this helped to keep pricesreasonably firm. The problems inNorth Africa and the Middle EasternCountries have also led to disrup-tions in supply chains. Problems in the World economysince 2008 has affected ability tobuy or has led to a down grading inquality in some cases.The imponderables are, crop distrib-ution dependent on weather andhow quickly the economic situationwill show some improvement, thusenabling a more predictable buyingpattern.

TYEAB AKBARALLY, Akbar Brothers:

– Consumers worldwide are movingup the value-chain from packettedteas (loose tea) to teabags and RTDteas. The market leaders are pro-moting trendier tea based beveragesThe critical link between the con-sumer and the product is the Brand.The leaders in all tea markets areinvesting huge amounts on theirBrands Promotion. Branding hasemerged as a major factor thatinfluences the Tea market.Quality of tea has a major influencein the affluent tea markets.Connoisseurs of tea prefer qualitytea and pay higher prices for theproduct.

VINCENZO SANDALJ, Sandalj Trading Company:

– During 4 of the last 5 years cof-fee production has been in deficitcompared to world consumption.Stocks are now at their lowest levelon record. This year the exception-al Brazilian crop will alleviate theshortage of Arabica, while a goodcrop of Robusta is forecast inIndonesia. These factors may con-tribute to a slight easing of themarket levels.Investment funds have becomeeveryday players on coffee futures,bringing greater volatility to themarket. Nevertheless they can’t beblamed for the average levels ofcoffee prices in the medium term,since they can influence the marketonly in the very short term.Farmers have now plenty of alter-natives which have a much quickerreturn than the 5 years needed fora new coffee plantation to becomefully productive. We should notexpect therefore big increases inworld coffee production.

DICKIE JURIANSZ, Imperial Tea Exports:

– Currency fluctuations in consum-ing markets. Tea is generally sold atorigin by Auction and if your curren-cy is weak other countries withstronger currency will outbid you.

Political developments in consumingmarkets, for example PoliticalUnrest, Sanctions, etc.

Perceptions, for example the fear ofthe effect of a drought, of industri-al unrest, etc.

MANUJA PEIRIS,International Tea Commettee:

– Disposable incomes in developing countries. The greateraffluence of developing countries continues to drive con-sumption of tea where generally, per capita consumptionremains relatively low.Relatively cheaper cost base in baskets of goods with high-er food price inflation of food and beverages. Tea remainsa cheap beverage amongst consumer requirements and isin fact, at times used as a loss-leader at the retail level bysupermarkets. With food prices having increased worldover in recent times, the cost increases relevant to tea haveproved to be relatively less significant.Increasing availability of beverages fighting for share ofthroat. A profuse increase in the choice of both hot andcold beverages tends to have a bearing on the consumptiongrowth of tea as the population growth is not as high as itused to be.

WINDS OF CHANGE

Pressing issue:

We all live in the time of change. And the factors that bring the change have always been of a particular inter-est. Tea and coffee markets have their natural phases of development. But apart from that there are alwaysfactors that come unexpectedly and influence the situation, sometimes dramatically. We have turned to the teaand coffee experts with the question which is not easy to be answered: "What are the three factors that influ-ence tea/coffee market nowadays and why in your opinion?"The opinions that we got show the variety of these factors and at the same time different angles from which themarket changes can be seen.

Polling by Alena Velichko

NEWS

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Greenfield presents new assortment line

Starbucks takes on Nespresso in coffee capsule war

Coffee wars are set to take off withStarbucks expected to launch its cap-sule range. As more and more coffee

drinkers take brewing to their homes, ana-lysts expect the global coffee giant to makean announcement on a Europe launch ofcapsules as soon as this month, reports TheFinancial Times.Starbucks’ launch of their capsule coffee

has had huge success in the US market. Butthe coffee capsule market it not an easy oneto enter with Nestle building a formidablebarrier of patents around its capsules andthe machines that use them.In Europe alone, Nestlй has launched legalaction against rival capsule developers inFrance, Belgium, the Netherlands andSwitzerland.

The 20th session of the FAO has drawn up scope and the terms ofreference of the climate change working group at its meeting onSunday 29.01.2012. Discussions will now start formally with all

the producing and exporting countries, and consumers.The major producers – India, China, Kenya, Sri Lanka and Turkey –have to agree on the steps ahead for a meaningful strategy toemerge. Sri Lankan officials were of the view that there were manysteps that could be taken that did not need significant investment.Sri Lanka Tea Board chairperson Janaki Kuruppu said that while cli-mate mitigation efforts cost money, in the long term this would ben-efit the industry.On monday 30.01.2012 by FAO IGG on Tea presented report onCurrent situation and medium terms outlook for tea. Documentoverview market situation till 2021 and ivestigates production,exports, consumption and price situation.A second half of same day was discussed report of working group onMaximum Resiude Levels (MRLs) on tea and on tea brew. Member

countries recognize urgant needs to harmonize of tea MRLs to reducecost of compilance by exporting countries in meeting requirements ofimporting countries.

thehindu.com

FAO Tea summit discussed climate change effectand MRLs levels

news.com.au

Greenfield presents new assortment line – the collection ofleaf estate tea in transparent pyramid teabags is launched atthe Russian market. Greenfield today – is the most popular

brand of the premium segment and the leader of the Russian teamarket in terms of value. One of the key indicators of current brandposition is high consumer loyalty. Greenfield refers to the numberof the most popular and favourite tea brands by Russians. New col-

lection became a logical extension of progressive brand develop-ment, a prompt answer to expectations of Russian consumer’ audi-ence. Pyramid teabags is the most contemporary and the mostfunctional format of supply of the leaf tea: due to pyramid teabagleaf tea could be brewed directly in the cup. In new Greenfield col-lection each pyramid teabag is wrapped in individual sachet frommultilayered materials, that perfectly preserves flavour and aromaof rare sorts of tea.Collection is presented by 9 assortment posi-tions – exquisite varieties of black and green estate tea, oolong teaand excellent tea compositions with fruits, berries, herbs andspices. Rich Ceylon – leaf black Ceylon tea from Ruhunu province;Yunnan Wonder, leaf black Chinese tea from Yunnan; Royal EarlGrey, leaf black Ceylon tea with bergamot aroma; Harmony Land,leaf green black tea from Hunnan province; Milky Oolong, semifer-mented Chinese oolong tea with slight milky and creamy notes;Jasmine Symphony, leaf jasmine Chinese tea from Guangxi planta-tions; Blueberry Forest, leaf black Ceylon tea with blueberry berries;Oriental Spirits, black leaf tea with ginger, mint and lime peelandOrange Blossom, natural herbal tea with rosehip, apple, orangepetals and rosemary.

orimitrade.ru

HOSPITALITY INDUSTRY

This year was rich in interesting coffee events and expos. One of those events – Host 2011 Expo – took

place at the end of October in Milan, Italy and truly became a global innovation center for the hospi-

tality industry. This year the expo spread over 100,000 square meters and welcomed more than 125,000

guests from 153 countries. And it served as a venue for a new world record: 623 cups of espresso made in one

hour!

Virtually all large coffee companies presented a wide range of products: from green coffee beans to new

design ideas for coffee shops. This is the reason so many people attend this expo: to meet the manufacturers

face to face and see firsthand everything that is new, trendy and interesting. In addition, almost all large Italian

coffee equipment manufacturers offered expo guests trips to their factories, where one could learn lots of new

and interesting things.

I will not go into details here – as they say, a picture is worth a thousand words. All I want to do is highlight

several interesting points. First, even though coffee pods remain a niche product today, they are gradually con-

quering hearts and minds of consumers. Practically every manufacturer has pod machines in its product line-up,


GLOBAL INNOVATION CENTERtargeted at coffee houses, hotels and restaurants, as well as at the individual consumer. These

devices are easy to operate and do not take up a lot of space. Another popular item at the Expo

was coffee and tea tablets; the same machine can be used for both beverages, which is very

convenient. Many coffee maker manufacturers are using new technologies, trying to perfect

the design of their devices and also make them easy and convenient to use. And coffee grinder

manufacturers decided to implement a system of quality control and developed RFID-grinders

that work only when a special tag enclosed with the coffee bag has been activated (the patent

is held by Mahlk`nig, a German company).

Finally, I simply have to show you a wonderful roaster shaped like a train, a coffee cup tree

and a coffee maker that resembles a flying saucer.

In two years the Expo will once again bring together members of the HoReCa industry, and

if you want to stay ahead of the wave and see everything that is new and interesting, you sim-

ply have to be there!

Julia Chanturiya

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NEWS

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EUROPEAN COFFEE SYMPOSIUM

Berlin, a majestic city that constantly reinvents itself, is theideal setting for large events, especially if they have“European” in their name. The capital of Europe’s largest

economy adds status to every summit. This was the bet made byAllegra, the corporate organizer of the European CoffeeSymposium – and they hit the jackpot.The brand-new Ritz-Carlton met the symposium guests in all itssplendor, immersing them into a world of luxury and comfort. Atfirst, the luxurious atmosphere almost seemed distracting, but asthe event began, this worry disappeared – the setting turned outto be very conducive to productive work. The two-day event hada very tight schedule, with not a minute to spare, and this helpedthe participants to get a lot accomplished.On the first day, the participants had the opportunity to attend asmall exhibit and to have discussions with prospective clients; onthe second, the exhibit area was transformed to create room forinteresting presentations and discussions about the current stateof the industry. The only two guests from Russia were G. Neveikinand N. Motyl’kova from Coffeemania, who conducted their pre-sentation together and answered questions from the audience.But the most interesting and impressive presentation was byMaarten Dekker from Nespresso. Using high quality visual aids,he, perhaps without realizing it, identified the most probabledirection the mass coffee market will take: transition to capsules.

As far as I can see, the most important aspect of this new marketwill be not the product itself (it will be of consistent high quality),

but methods for creating brand loyalty. Instant coffee manufac-turers will have a lot to think about.

Ramaz Chanturiya

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NEWS

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The «Coffee OPEC» Elects New Leader

Coffeetea.ru

The 107th session of the International Coffee Council (ICO) took place in London on26-30 September, 2011. One of the main issues on the agenda was the impact ofhigh coffee prices on the world consumption of coffee.

Another central issue was the election of the new Executive Director of this influentialorganization. Three candidates were considered, from Brazil, India and Mexico; thewinner of the vote was RobJrio Oliveira Silva, Director of the Coffee Department andChief of Staff of the Secretariat of Production and Agroenergy in the Brazilian Ministryof Agriculture, Livestock and Food Supply.Russia, which has the observer status in the ICO, did not take part in the vote; butaccording to the Russian Ministry of Economic Development, the process of joining thisorganization has already been started.The ICO continues to pay close attention to the Russian coffee market: during one ofthe recent sessions Ramaz Chanturia, Director of the RosTeaCoffee Association, wasinvited to make a presentation about the current state and perspectives of the Russiancoffee industry.

Ethiopia is changing the rules: will the price of export coffee go up?

Coffeetea.ru

The Ministry of Agriculture ofEthiopia has announced a change inthe procedure of packaging and

loading coffee intended for export. Thedocument calls for discontinuing the useof burlap sacks for packaging of greencoffee for export and switching to bulkloading methods (using special contain-ers with 21.6 ton capacity). The govern-ment claims that this change will result inbetter preservation of coffee, a reduc-tion in weight and cost of export batch-es and will also alleviate the shortage ofburlap sacks.But this government initiative worriesthose who are in the coffee business.“Ethiopia is one of the major suppliers ofcoffee to the world market. Coffee fromthis region is used not only by transna-tional companies, but also by small play-ers who operate in the specialty coffeesegment of the market”, said AndreiElson, General Director of the largestRussian coffee trader KLD CoffeeImporters. According to Elson, thischange will hurt first of all small compa-nies who tend to buy small batches, upto several tons. “This change will force

those small companies to use the services ofthird parties who are able to warehouse largebatches of coffee and then repackage them insmall quantities. Given that the closest suchfacilities are in Germany, we may expect a con-siderable increase in the price of coffee for theretail consumer”, continued Mr. Elson. The costof premium coffee will rise, as it will now have tobe purchased in Germany from companies whoown specially equipped storage facilities. As far

as Russian consumers are concerned, there is noreason to worry: Ethiopia is not a major supplier of the Russian market; besides, those who drinkpremium coffee are not so sensitive to price thatthey will stop drinking it if the price goes up.According to the RosTeaCoffee Association, in2010 Russia imported 2608 tons of green coffeefrom Ethiopia, which was only 3% of the totalamount of coffee sold on the domestic Russianmarket.

Technology and art brought

This time, the coffee expo Coffeena, which takes place annually in Cologne,

Germany, was successfully merged with another expo, Eu’Vend, that focuses

on vending equipment. My immersion in the world of vending started right at

the hotel: on the breakfast table you could find not the usual thermos jar but a vend-

ing machine that offered you a choice of black coffee, coffee with milk, cappuccino,

macchiato and other beverages in different sizes. And if you

did not have time to enjoy the

superb morning coffee at the

hotel restaurant, you could

take it along in a convenient

to-go cup.

Julia Chanturiya

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together by coffeeAt the Expo, where the fresh issue of our International Coffee&Tea

Magazine had already been delivered, we had the opportunity to seethe latest industry innovations. What struck me there was the variety ofcoffee vending machines: from the very small, with only a few func-tions, to whole coffee shops.

A lot of attention has been paid to aesthetics of coffee equipmentlately, and the industry offers you an amazing variety of colors and pat-terns, from bright and silly designs to conservative corporate high-tech.

13

And even the roasting equipment lookedmodern and fashionable.

Expo participants presentedbrand-new solutions for thevending industry. One section,called Vending InnovationArea, displayed several tech-nological innovations. Therewas a programmable dis-penser that works with cupsof any size – from 30 to 90 mm(laminated paper or plastic),remote controls for vendingmachines and even a yogurt-dispensing machine!


One last note: it makes mehappy to see that manyEuropean companies todayare thinking not only aboutconstantly perfecting theirvending machines but alsoabout recycling disposablecups, which show more andmore variety every year. Wesaw several interestingmethods for stacking andrecycling used cups. Vendorswho use these methods notonly reduce the amount ofloose garbage but also offervarious programs to rewardcustomers who are proactiveabout recycling.

Leaving the Expo I realizedthat technology and art canexist side by side, and theforce that brought themtogether was one of themost delicious, multifacetedand enchanting beverageson the planet – coffee!

We also saw pod machines that take not only coffee pods, but also tea pods aswell as juices and other beverages. And if you get caught out in the rain, thecoffee machine will take you in under its roof and, of course, serve you hottea or coffee!

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NEWS

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Coffee consumption has grown in 2011 despite economic turbu-

lences in many importing countries, the International Coffee

Organization said in a report. Total consumption in calendar year

2010 reached 135 million bags; this represents a 2.4% growth compared to

2009.

Demand prospects for coffee continue to be promising, given the arrival of

new consumers in emerging markets and exporting countries, according to

the ICO. For example, the ICO estimates that domestic consumption in India

has risen by 7% in 2010 compared to 2009 and reached 1,03,500 tons.

Global coffee consumption grows despite economicturbulences: ICO

hehindubusinessline.com

Green tea business grows in India amid healthawareness

More and more tea makers are adding green

tea to their portfolio as consumers in India

are developing a taste for the beverage

for its many health-promoting effects. Green tea

consumption in India is rising at a rate of more than 10

percent annually.

According to Indian Tea Association (ITA) Secretary

General Manojit Dasgupta, Indian domestic market

for green tea has shown evidence of growth.

Dasgupta said people were adding green tea to their

diet as it is full of antioxidants that can reduce the risk

of cancer and help in weight loss.

smetimes.in

Coffee drinkers have no more risk of getting

chronic illnesses than non-drinkers, accord-

ing to a study published in the American

Journal of Clinical Nutrition.

German researchers collected information on coffee

drinking habits, diet, exercise and health from more

than 42,000 German adults without any chronic

conditions. For the next nine years, the team fol-

lowed up on the participants every two or three

years to see whether they developed any health

problems, particularly cardiovascular disease,

stroke, heart attack, diabetes and cancer. They

found no differences between drinkers and non-

drinkers.

in.reuters.com

Coffee drinking not linked to chronic illness

NEWS

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Coffee pulpingcompanies warnedabout waste water

With the coffee-picking season in full swing,water bodies are getting polluted with wastefrom pulping units. This year some villageshave started taking action against this type ofpollution. Waste water released from coffee pulpingunits is a health hazard, hence the Pollution

Control Board has strictly imposed methodsto treat water used for pulping. But in manyestates, these rules are not followed.This year, local village governments willinspect coffee estates in their areas and con-firm that they are adhering to the rules laiddown by the PCB or inform the board to takeaction..

articles.timesofindia.indiatimes.com

Starbucks targets Nestlemarket shareU.S.-based Starbucks Corp (SBUX.O) is plan-ning to strengthen its presence in Europe andgrab market share from Switzerland's Nestle(NESN.VX) in the area of instant coffee, itschief executive told a German newspaper.“Nestle has done a fantastic job withNespresso and created a billion-dollar busi-ness – it is time that we heat up the competi-tion”, Howard Schultz was quoted byFinancial Times Deutschland in an interviewpublished on Friday. Schultz added Germany should have about1,000 Starbucks stores, without giving a spe-cific timeframe. The company currently hasabout 150 outlets in Germany, FinancialTimes Deutschland said.

in.reuters.com

When travelling, we oftenreceive vast amounts of newinformation and do not always

have time to process everything we haveseen and heard. And when we returnhome, we get back into our routine and itbecomes impossible to go back to analyz-ing external data. However, this time thetransition from the “travelling” state to the“back home” state was more productive.

The International Tea and Coffee Expoin Hangzhou was attended by delegatesfrom Russia, a large group from Canada,colleagues from Great Britain, representa-tives from USA, Malaysia, Japan, Vietnam,Italy and even Brazil! The warm welcomefrom the Chinese Commodity Import andExport Board made us feel at home, andour wonderful guide and internationalgroup curator, Scarlett, who seemed tohave stepped out of a fairy tale, gave ourstay in China an unforgettable oriental fla-vor.

The trip schedule included visits to sev-eral cities: Shanghai, Hangzhou andFuzhou. All along the way we never putdown our photo cameras, because wewanted to take pictures of everything. Itook pictures not only of cultural land-marks and the faces of my colleagues, butalso of anything that spoke of the currentlevel of development in China.

When you visit manicured plantationsand modern factories, taste ridiculouslyexpensive tea, sit in a Starbucks, which are

Ramaz Chanturiya

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HANGZHOU, FUZHOUand the philosophy of the moment…

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Another year, another trip to China by a delegation of the RUSTEACOFFEE Association. This time, the dele-gation consisted of the representatives of Santi, Moscow Tea-Packing Company, Orimi-Trade and Sapsan.The trip was conventional, both with respect to its agenda and to the outcomes. No doubt, it is very importantfor market participants to see the achievements of their colleagues and to show off their own, to share expe-riences and opinions about the development of the industry and to enjoy the Chinese culture; but no less sig-nificant is the opportunity to analyze external factors, especially as they relate to the current situation inRussia.

scattered all over China, look at theprices of industrial and agriculturalproducts at Chinese supermarkets,you realize just how much this mar-ket has grown. Clearly, high pricesare the consequence of an increasein incomes in this densely populatedcountry that only very recently wasextremely poor. Today China is sec-ond only to the US in the number ofbillionaires, and according to unof-ficial counts it may have already sur-passed the US with respect to thisindirect but highly visible indicatorof economic growth. The price lev-els in downtown shops in anyChinese city show how attractivethis market is for importers. Judgefor yourself: prices for the fairlyexpensive English tea in theWhittard of Chelsea or Tesco super-market chains are 25 to 30% higherthan prices for comparable productsin London. Another example: theprice of roasted whole-bean HighMountain Jamaica Baronhall Estatecoffee exceeds 80$ for 227 grams.

But this is not the most signifi-cant observation. While it is impres-sive that in almost every provincialcity of the 1.5-billion-strong Chinayou can buy prestigious brands oftea and coffee, shop at the mostfamous international retailers andsee Porsches and Lamborghinisroaming the streets, what is trulyamazing is that you see high pricesall across the board in almost everydowntown district. This market isalready sucking in high-qualitygoods like a vacuum, and thisprocess is only going to accelerate.

Thus, if the influence of China onthe world economy continues toincrease, the demand for qualitymerchandise will become even moreimpressive. Chinese customers withthick wallets will raise the price ofhigh-quality coffee and tea, and we

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will have to ask ourselves whetherwe can still afford to buy ourfavorite beverage, given thealready existing shortages of goodcoffee and tea in the world.

I am certain that the Chinesefactor will soon have a great impacton the availability of quality foodsaround the world, and we have tokeep this in mind. Another piece ofadvice: look outward, to globalmarkets. Compete where thedemand is high, conquer new mar-kets, globalize your business – allthis will help make it more stableand secure.

By the way, these kinds of trips,during which you attend expos andconferences and visit manufactur-ing facilities, allow you to see thelevel of development and demandon a potential export market, toevaluate the achievements and fail-ures of your colleagues. We cer-tainly had such an opportunity dur-ing our visit. The enormous exhibi-tion in Hangzhou, which occupiedtwo levels of a modern expo com-plex, brought together representa-tives of every region of the countryas well as all major manufacturers.Here one could see packaged teasin all their variety and see what bulkvendors had to offer. An importantaddition to the expo agenda was aneducational conference wheremembers of various delegationspresented reports about the stateof the international and domesticmarkets. One session featuredAnton Makarov, the GeneralDirector of one of the oldestRussian tea companies, MoscowTea-Packing Company. I must saythat his presentation, which fol-lowed the presentation by Mr.Twining (the head of the name-sake company and a descendant ofits founder), generated great inter-est.

After the Expo our Chinese col-leagues took us around on a tour ofthe tea industry’s flagship facilities.Our group visited a modern teaextract factory belonging to theTata company, as well as factoriesbelonging to Zhejiang Tea Groupand Jiasheng Tea. Next stop wasthe birthplace of jasmine tea(Fuzhou, Fujian Province), wherewe visited Fujian Chunlun Tea, thelargest company in the region, andtook part in the opening ceremonyof Jasmine Tea Street, a street inone of the modern districts of thecity.

I had the feeling that even sever-al months would not have beenenough to see all the interestingtea-related places around China.But we had business waiting for usback home… Our departure was alittle sad but hopeful: it was clearthat we would visit China again.

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Main cities Tea in teabagsGranulatedLeafMixed

Share of Leaf, Granulated & Mixed Tea in Total Sales Volume of TEA

Source: Nielsen

Study of COFFEE Retail Sales in Russian Cities with the Population over 10,000. Data for April–November 2011

Source: Nielsen

Physical sales volume, percent Monetary sales volume, percent

Sublimated instantGranulated instantPowdered instantCoffee mixesGround coffee and coffee beans

Share in Total Sales Volume

Source: Nielsen

Study of TEA Retail Sales in Russian Cities with the Population over 10,000.Data for April–November 2011

Monetary sales volume, percent Physical sales volume, percent

blackblack flavoredmixed: Hedbal&Fruitgreengreen flavoredblack & greenredwhite

Share of Each Category in Total Sales Volume

Source: Nielsen

Source: Nielsen


Share of Packed Tea in Total Sales Volume of TEA

by urban typepopulation over 1 millionpopulation of 250 000 – 1 000 000population of 50 000 – 250 000population of 10 000 – 50 000 by distribution channelsupermarketsmini-marketsgrocery storespulse shops and open marketsby regionCentral NorthwesternVolgaSouthUralSiberiaFar EastSouthern

Distribution of TEA Sales in Terms of Money. Percent

June-July 2011April-May 2011

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by regionCentralNorthwesternVolgaUralSiberiaFar EastSouthernby urban typepopulation of 50,000 – 250,000population of 250,000 – 1 millionpopulation over 1 millionpopulation of 10,000 – 50,000 by distribution channelsupermarkets mini-marketsgrocery storeskiosks and pavilionsopen markets

Distribution of COFFEE Sales in Terms of Money. Percent

Source: Nielsen

Source: Nielsen

Physical sales volume, percent Monetary sales volume, percent

metal canglass jarbrickpacketother

Share of Various Packaging Types in Total Sales Volume of Instant Coffee

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Per capita coffee consumption, 2010

Source: Euromonitor International

Fresh coffee vs Instant coffee, 2010


Poland, Slovakia and the CzechRepublic are important marketsfor coffee in the Central andEastern European region. All threemarkets combined were responsiblefor 30% of total coffee volume con-sumption within all of Eastern Europe(including Russia). In total volumeterms in 2010 Poles drank more coffeethan in the whole of Russia with percapita consumption approximatelythree and a half times higher than inRussia. However, according to prelim-inary data, the size of Russian coffeemarket might top Poland in total coffeeconsumption already in 2011.

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On-trade volume sales growth


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2010 Category Retail Volume Share of Total Tea


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REVIEW&STATISTICS


According to Euromonitor Inter-national, both on-trade and off-trade Ukrainian hot drinks mar-kets declined in 2009-2010 and reached 56 thousand tonnes in volume terms. Off-trade value of hot drinks amounted to almost UAH9 bn in 2010, posting the slightincrease of 2% in comparison with 2009. Market was traditionally driven by coffeewith its 51% share in total hot drinks volume sales in 2010. However, during 2009-2010, tea strongly increased its share in Ukrainian hot drinks market, amounting for44% in volume sales in 2010 in contrast to only 33% in 2008. The most stable cate-gory in hot drinks market in Ukraine during 2009-2010 was the category of other hotdrinks with its 4% share in total hot drinks volume sales in 2010.

Hot Drinks market in Ukrain, total volume, tonnes


Tea categories, 2010. Retall value, UAH


Hot drinks market in Ukrain: future forecastsRetall value, UAH


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Strategic market research company EuromonitorInternational notes that in 2011 the total salesvolume of the retail hot beverage market inBelarus has grown by 78% and reached 1.2 tril-lion Belarus rubles (BYR). The main reason forthis significant increase is the doubling of retailprices following the national currency crisis,accompanied by devaluation and inflation.Another factor was the state of the global market:lower production of tea and coffee caused by adrought and an increase in demand for thesecommodities.Thus, by the end of 2011 many Belarusian con-sumers had to forgo the extra cup of coffee or sub-stitute tea bags for more expensive bulk teas. Thesame was true for other hot beverages; this led toa 15% decrease in total hot beverage consumptioncompared to 2010.

THE RISE OF THE ECONOMY BRANDSOf course, Belarusian consumers have always been interested

in imports. For hot beverages, this interest is explained by thefact that the country’s climate is not suitable for growing tea,coffee and cacao. Thus, as incomes increased by 2010,Belarusians could from time to time afford quality tea and cof-fee varieties. However, in May of 2011 the first step in the deval-uation of the national currency was taken, and the difference inprice of the same brand of coffee or tea imported before andafter that date could reach 50%.

After the store shelves were cleared of the “old supplies”imported at the 2010 exchange rate, cheaper brands took overthe market. It needs to be noted that this transition towardslower prices happened mostly in the medium-priced segment,whereas in the premium sector Chinese bulk tea and quality cof-fee have largely retained their loyal customers. Thus, in 2011green coffee beans were the only category that avoided theslump and actually increased by 1% compared to 2010. Thisincrease is due to the rise in the use of household coffee equip-ment and the general tendency toward more healthy and, con-sequently, natural products. But in the current economic condi-tions only the most affluent Belorusians and those whose incomewas indexed to a foreign currency could afford those luxuries.

A DROP IN CONSUMPTIONAccording to Euromonitor International, in 2011 virtually every

hot beverage category saw a decline in sales. The steepestdecline was observed in the category that included cacao andother flavored beverages, since they are not considered to benecessities and are the first ones to be cut from consumptionwhen incomes decline.

The next in line were niche tea varieties such as weight-losstea, fruit and herbal teas, etc. Every product that added a premi-um to the base price was left on store shelves. Thus, in 2011H

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Belarus saw its level of per capita hot bever-age consumption, already low compared tothe neighboring countries, decline even fur-ther. The easiest decision was to reduce teaconsumption, which declined by 15% com-pared to 2010. In 2011 the consumption ofcoffee stabilized at the level of 0.5 kg perperson per year.

STRUCTURAL CHANGES IN THEMARKET

There were some changes in the struc-ture of the hot beverages market in Belarusin 2011. For example, in the coffee segmentthe consumption of brewed coffeeincreased, mainly due to an increase in pop-ularity of coffee beans. This tendency is dri-ven by an increased health consciousnessand also by the increased availability ofhousehold coffee equipment. At the sametime, the share of instant coffee declinedby 2%: instant coffee lost some affluentconsumers who switched to brewing andalso those who had to reduce their coffeeconsumption because of a drastic decline inincome.

The tea market showed a preference fortea bags, which turned out to be the mostaffordable tea product under the currenteconomic conditions. Following an estab-lished trend, in 2011 black tea comprised thelargest share of the market by volume. Fruitand herbal teas saw their consumptionreduced slightly and lost 1% of the marketto green tea.

Other hot beverages that saw anincrease in popularity are plant-based vari-eties, produced, for example, from barleyor chicory. The main reason for this is theirattractive low price and their origin innature, which gives them healing proper-ties.

A LOOK INTO THE FUTUREWe should note that by the end of 2011,

the Ministry of Commerce took measuresaimed at slowing price growth by lowering

the maximum rate of value-added tax forcoffee and tea from 30 to 22%. This shouldhelp Belarusian tea and coffee consumers in2012; however, ifthings take a turn forthe worse and devalu-ation of the ruble anda slide in incomes con-tinue, this measurewill hardly be suffi-cient.

As a whole, the hotbeverages market inBelarus remains at-tractive, since the percapita consumption isamong the lowest in Eastern Europe.Besides, an emergingtrend towards health

and wellness awareness will causeBelarusian consumers to be more interestedin hot beverages than in alcoholic ones. Butthis will come only when the devaluationstage is over and incomes start rising again.

Thus, the transition towards natural hotbeverages and more refined varieties, suchas large-leaf green tea or organic high-qual-ity coffee, is clearly a possibility. But even inthe best case, this possibility will becomereality no sooner than in 5 years.

According to Euromonitor International,by 2016 the hot beverages market will attainannual growth rate of 0.5% in bulk volumeand of more than 2% in sales volume,adjusted for inflation. The main engine ofsuch growth will be natural (brewed) coffeeand green tea, since the increasing focus onhealth and wellness will remain a key com-ponent of the consumer market in the nearfuture.

The faster growth of the sales volumereflects the global tendency of increasing

prices for tea and coffee due to risingdemand and to various negative climatefactors that can lead to crop losses.

Hot Drinks Market Dynamics in Belarus, 2007-2011


The market share by type of tea, %


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Global private label coffee volume share stood at 11% in 2010, having risen slowly but steadily since 2005.Global private label coffee value share peaked at 8% in 2009, before falling to pre-recession levels in 2010.

By Richard Haffner, Head of Beverages Research

PRIVATE LABELCOFFEE POTENTIAL IN EASTERN EUROPE

PRIVATE LABEL - WESTERNEUROPE BACKGROUND

Private label is a strong competi-tor mainly in the developed marketsof Western Europe and NorthAmerica, where fresh coffee has astrong presence. Its share in theseregions, particularly in WesternEurope, is also a function of theoverall strength of private label in allfood and beverage categories.

Western Europe features thehighest private label share in theworld, with several countries whereprivate label coffees represent aquarter of the market or more. Ahighly developed retail environmentdrives much of this competitive situ-ation, with high profile discounterslike Aldi featuring a majority of pri-vate label products in their stores.Cultural acceptance of private labelcoffee also arises out of manydecades of presence in the market-place and, over time, demonstratingthat the product quality is close tobranded competitors.

GAINING A TOEHOLD INEASTERN EUROPE

Private label coffees in otherregions, like Eastern Europe, havemade share gains in recent years, butcultural and retail distribution barri-ers mean that private label's share isunlikely to reach double digits in thenear term.

Eastern Europe may be moreindicative of how private label coffeesales will develop in the rest of theworld. Only Slovakia had a privatelabel coffee share above 10% in2005. By 2010, private label had dou-bled its share in Croatia, while inHungary it increased by four per-centage points to 14%.

Once introduced, private label hasshown potential for rapid success inthe region. The expansion of privatelabel into fresh coffee and the con-tinued development of chainedsupermarkets and large retailers willdrive this growth.

It is unlikely that private label cof-fee in Eastern Europe will be able toachieve the near parity quality per-ceptions that it has achieved inWestern Europe over the period ofmany years. However, the retail bar-riers that have existed in the past arebeginning to be eroded.

FAVOURABLE DEVELOPMENTSIN THE RETAIL ENVIRONMENT

In 2006 supermarkets plus hyper-markets plus discounters comprisedonly 39% of Eastern Europe groceryretail sales. This lagged WesternEurope by a full 30 percentage point.By 2016 this gap between EasternEurope and Western Europe in for-mats that are conducive to privatelabel in general is forecasted to becut in half with supermarkets plus

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hypermarkets plus dis-counters growing to 58%of grocery retail in EasternEurope (Western Europeis forecasted to grow to74% of retail grocery).

So the grocery retailenvironment in EasternEurope is forecasted torapidly transform to moreclosely resemble WesternEurope. However, EasternEuropean consumers donot have the same long-standing familiarity withprivate label purchasingas those in WesternEurope, meaning that short-term potential is likely to be limitedto volume shares in the 10-20% range, rather than 30% andabove observed in Western Europe.

PRIVATE LABEL MAY SPURINNOVATION FROMBRANDEDMANUFACTURERS

If private label coffee is ableto achieve the same qualityperceptions that it has achievedin Western Europe, then theremay be even greater potential.In Western Europe private labelcoffee had over a 26% retailvolume share in 2010. EasternEurope, with only a 3% sharehas considerable potential fornot only short-term growth butfor sustained growth into the

medium-term. Branded manu-facturers, being aware of these developments, are likely torespond with improved product quality and innovation at anattractive price. The consumer will be the big winner.

Private Label Coffee: Eastern vs Western EuropeRetail Value, 2010





COMPANY SHARES (BY GLOBAL BRAND OWNER) | HISTORIC | RETAIL VALUE RSP | % BREAKDOWN

Categories Geographie Retail Value RSP(% breakdown)

Coffee Czech Republic 5,0

Estonia 1,8

Latvia 5,3

Poland 1,4

COMPANY SHARES (BY GLOBAL BRAND OWNER) | HISTORIC | RETAIL VALUE RSP | US$ MN | FIXEDEXCHANGE RATES

Categories Geographie Retail Value RSP (US$ mn)

Coffee Czech Republic 17,1

Estonia 1,2

Latvia 2,6

Poland 21,6

COMPANY SHARES (BY GLOBAL BRAND OWNER) | HISTORIC | RETAIL VOLUME | TONNES

Categories Geographie Retail Volume (Tonnes )

Coffee Czech Republic 1 782,9

Estonia 89,3

Latvia 250,4

Poland 3 042,0


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— Please tell us, what is it like todo business in Tanzania?

Vera: Well, you see, Tanzania is anexotic country located in EasternAfrica. It has 5 coffee-growingregions. Coffee makes up about 20%of the country’s total exports. And, tobe honest, it is a great place for doingbusiness. Rudolph and I we areGermans, coming from Europe. Ofcourse, European and African culturesare very different, and before we start-ed, we had to spend a lot of timestudying the new country, its laws, itspolitical and economic structure, thelocal business customs. But today wefeel very comfortable. There is an oldcoffee-growing tradition here in

Tanzania. The farm that we operatehas been started in the 1920s; this is anold and distinguished business. Wewere lucky to find experienced helpfrom the beginning. In general, peopleof Tanzania are very friendly, andalways eager to help.

— How did you come to the ideaof starting this kind of business?When did it happen?

Rudolph: I visited this country whenI was a child, and I literally fell in lovewith it! Visiting coffee plantations Irealized that I want to become theowner of one of them one day. In 1992my dream came true, and Vera and Ibought a coffee farm. Of course, in the

beginning everything was difficult, aswe had to learn so much.

Vera: Besides, in this area there arenot so many English-speaking people,and there are no German speakers atall. So one day I just picked up a text-book and started learning the local lan-guage, Swahili. I can’t say that I am flu-ent now, but my knowledge seems tobe enough to communicate withTanzanians.

— Everyone knows that competi-tion in the coffee industry is heatingup, and producers constantly haveto innovate and raise the quality oftheir products. What determines thequality of your coffee today?

STRANGERS IN TANSANIA

Anastasya Papandina

What is it like for Europeans, peopleof another culture and mentality, whogot used to life in moderate climate, todo business in a hot African country?To find the answer, we turned to Veraand Rudolph Meyer, a married couplefrom Germany, who own a coffeeplantation in Africa, in NorthernTanzania.Their farm called, the Ngila Estate,borders the Ngoro Ngoro national pre-serve, which adds some extra wilder-ness to the business in the form of fre-quent visits of elephants, monkeysand small antelopes. The ownersshare their experience and talk aboutthe challenges of running a businesson the sunny continent during a spe-cial interview for the Coffee and TeaInternational magazine.

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Vera: Coffee business is a very long,complex but incredibly interestingprocess. First of all, local growing condi-tions are very important. Our farm islocated at a high altitude, and has aunique climate and special volcanic soil(Tanzania has many volcanoes),uniquely suitable for growing coffee.Our farm is located in NorthernTanzania, 200km from the town ofArusha, 1600m above sea level, so thetemperatures can fluctuate from 5-7degrees at night to 25-30 during theday. In Tanzania there are two rainy sea-sons, so coffee plants bloom 3-4 times ayear. During each harvest, we need totake care of the fruit-bearing plants. Bythe way, coffee plants can reach 2.5meters in height. As we use the wetprocess, we can only take red beans; ittakes about 7-8 months for them toripen and acquire the proper color.Coffee is harvested by hand; it is a diffi-cult tiresome kind of work that requiresa lot of focus and drawing attention todetails. But it is crucial to ensure thequality of our future product! In order tofill a 1.5-liter jar with red coffee beans,you have to work for the entire day!

— And how do you monitor theharvesting process and the quality ofthe beans?

Vera: Our workers know all therequirements. When the beans havebeen harvested, we check them again toeliminate yellow and black beans.Besides, we have a whole crew of man-agers who monitor the harvest.

— What happens to the beansnext?

Vera: After the harvest and the firststage of processing the beans are sent inlarge containers to a factory for sorting.The best fruits end up in a specialmachine where the shell is removed andthe rest of the pulp washed off. Next,the coffee goes into a special movingdrum that screens for low-quality ordamaged beans. The next day, the bestbeans go through a 30-minute soaking.Lighter beans float and are removed,and the heavier ones go in a trough fordrying and then meet our “specialty”-team that inspects them once more (it iseasier to see defects when the beans arewet). Next comes another round of dry-

ing, and then it is off to packaging facil-ities where the coffee is once againinspected for quality and taste and,finally, is ready for export. Our uniqueapproach to coffee and our methods,along with the fact that we deal withspecialty coffee, make our product ill-suited for mass market. Our buyers (InGermany, USA, Spain, Japan) know ourproduct well and are interested specifi-cally in it. They are those who are willingto pay for our labor-intensive methods.

— By the way, what are yourthoughts about the increases in cof-fee prices?

Vera: Here’s an example. In 2001 youcould buy a kilogram of coffee for 1 dol-lar. But our production methods, obvi-ously, are incompatible with such prices.Especially since we spend more andmore money on equipment each year.Besides, in order to motivate peoplewho do this difficult manual work forus, we need to offer them a decent, liv-ing wage. We have to allow them to liveon one salary, not several at once.Manual labor should be well compen-sated: in the end, a well-motivatedworker is a boost to the quality of thefinal product.

— Do you agree that the time hascome to abandon the exchangemechanism of coffee price forma-tion? Those exchange prices are dri-ven not by the real demand on themarket but by rampant speculation,aimed solely at high profits.

Vera: Yes, we do see this a s a prob-lem. And this is one of the reasons whywe only work with trusted and reliablepartners. But what really sets us apart isthe fact that our production is “limitededition”. Of course, when it comes tosetting the price, we do look at the NewYork Exchange, as does everyone else;at the same time, the superb quality ofour coffee allows us to buck the generaleconomic trend. And even if theexchange price goes down, we try, asfar as possible, to stick to our price,which testifies to the great quality of ourcoffee. So our price is somewhat differ-ent from the exchange price, although,again, it is influenced by New York.

Rudolph: The consumer is interestedin quality and willing to pay for it. It is

important to him where the coffeecomes from and how much you cantrust the supplier, so the choice is madelargely independently of the price.

— Let’s change the subject a littlebit. We know that your farm bordersthe Ngoro Ngoro National Preserve.How do you handle the animals whoroam freely throughout the planta-tion? Do they present a problem?

Vera: Yes, elephants, buffalo, mon-keys and other jungle animals are fre-quent visitors to our farm. They all comefor different reasons: monkeys, forexample, like to eat ripe coffee beans,buffalo like to rub their heads on coffeeplants, and elephants use our plantationas a watering hole. 25 elephants on ourland is quite a sight! Of course, we donot bother them out of respect fornature. Nonetheless, we try to keepthem at a distance from the coffeeplants in order to prevent damage andprotect our coffee from the unusual vis-itors.

— And how would you describeyour business strategy? Apart fromrespect for nature, what is yourmotto?

Vera: Our goal is to be at peace withnature as well as with the people livingaround us. This is one of the reasons wedo not seek to expand our farm.Expansion can be detrimental to quality…And we need to maintain high standardsand strengthen the bond with the peo-ple who work with us. We understandthat our footprint has to match theregion in which we operate.

— And the last question. You arepartners not only business col-leagues, but also partners in yourprivate life. How do you divide theresponsibilities? Do you talk aboutbusiness at home or prefer to leavework at work?

Rudolph: Our secret is that we han-dle different aspects of the business.My wife is in charge of the agriculturalpart, and I handle the finances. Athome we are simply loving husband andwife, and at work each of us has ourown responsibility. This is the right wayto do it, and this is the secret of our suc-cess.


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MEXICO’S ROLE ON THE WORLDCOFFEE MARKET

At first glance, Mexico’s role in theworld coffee production is insignifi-cant. Its modest 3-4% pale in compari-son with Brazil, the world leader, sup-plying one third of all world coffee. TheAsian giants, Vietnam and Indonesia,also far surpass Mexican production.But if we realize that Vietnam andIndonesia focus mostly on Robusta andBrazil has only just begun exportingwashed Arabica, the picture changescompletely. Today the undisputedleader in world’s washed Arabica pro-duction is Columbia, despite a pro-longed slump in production volume. ButMexico and its two southern neighbors,

Guatemala and Honduras, are raisingproduction, and their combined volumehas exceeded Columbia’s every yearsince 2008.

According to industry experts, in2011/2012 Mexico, Guatemala andHonduras will harvest the equivalent of13.5 million bags of coffee, whereas

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A LANDof Opportunities

The shape of this country on the mapresembles Italy, only the tip of the boothas been turned from West to East; itscapital, located more than 2000 metersabove sea level, sinks several centime-ters each year because of its excessivefresh water consumption. Also, thiscountry is home to the world’s smallestvolcano, only 13 meters high, with aladder leading up to its crater. If you arestill wondering what this country is, I

can add that it is the birthplace ofchocolate and the resting place

of the secrets of the van-ished civilizations of

Aztecs andMaya. It is

Mexico!

V. Savinov, Director, SFT Trading

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Columbian production is unlikely toexceed 10 million. Thus, paired with theseasonal deficit of Brazilian coffee and ageneral deficit of the Columbian one,washed Arabica from Mexico and otherLatin American countries is starting toattract attention of the major players onthe world market. But it is unfair toattribute the increase of the role ofMexican coffee on the world marketsolely to the failures in Brazil andColumbia. We think that there are sever-al other factors that compel the worldcoffee community to treat Mexico as animportant element of their overall strat-egy.

MAJOR FACTORS LEADING TO THEINCREASE IN POPULARITY OFMEXICAN COFFEE

Flavor varietyRich volcanic soils, suitable climate,

moderate rainfall and availability ofwater attracted European colonists toMexico as early as the end of the 18thcentury, when the first coffeeseedlings were brought into the coun-try from Jamaica. Now the basic modeof coffee production on Mexico issmall farms, mostly less than 10hectares, producing shade-grown cof-fee. The production islimited to 13 states, butwe will focus only onfour: Chiapas, Vera-cruz, Puebla andOaxaca.

This is the placewhere the first Mexicancoffee was grown,where it took root underfavorable climate andsoil conditions; it is herethat 9/10 of all Mexicancoffee is produced.Finally, in these fourstates the number offarmers employed incoffee production is animpressive 400000. TheArabica varieties grownhere – Bourbon, Catur-ra, Mundo Novo andMaragojipe – differ inflavor, but can be char-acterized collectively as

light-bodied coffees with a slight nuttyflavor. This description is most suitablefor the variety grown at relatively lowaltitudes in Veracruz, which is consid-ered the most typical of Mexican vari-eties. But Veracruz also boasts varietiesof coffee that will satisfy the most dis-criminating connoisseurs. Сoffee loverswill no doubt notice the coffee grownaround the town of Coatepec: it has asour note resembling white wine andthe sweetness of white grapes.

As you go up the slopes of SierraMadre, the coffee from Oaxaca andPuebla acquires more intensity and ahigher acidity. One such variety isOaxaca Plumas, which is deservedlyfamous all over the world.

Finally, the highest altitude varietiesof coffee grow in the South-East of thecountry in the state of Chiapas, on theborder with Guatemala. According toexperts, this is the region where youcan find the most interesting coffee inMexico. In order to describe the coffeegrown here, we need to remember thedescription of the coffee grown innearby Huehuetenango, Guatemala.The two coffees have a lot in common:high intensity, balanced and complextaste, hints of milk chocolate and nuts,a slightly fruity aftertaste.

The last thing to mention aboutChiapas is Robusta, grown andprocessed here using the wet method.Its taste characteristics are comparableto the best Guatemalan varieties.Unfortunately, today the supply ofMexican Robusta, as well as itsGuatemalan rival, is very limited.

Geographical Location andMarketing

There is a saying in Mexico: “God isfar away, but the US is nearby”. Indeed,the US has been the primary buyer ofMexican coffee for many years now.Since Mexico has access to both thePacific and the Atlantic oceans, it caneasily and cheaply meet the demand forcoffee from the Eastern and Westerncoasts of the United States; also, a well-developed infrastructure allows coffeeto be delivered not only by sea, but alsoby trucks. As far as Europe is concerned,the port of Veracruz is the most impor-tant coffee hub, sending regular ship-ments of coffee across the Atlanticocean. The price of transporting coffeefrom Mexico to any European country iscomparable to prices for import fromthe majority of Central and SouthAmerican countries and from Africa. Interms of price, Mexican coffee is rela-

MEXICO, CHIAPAS, Guadalupe Zaju Coffee Farm, 2011


ECONOMICS

40

tively cheap: if we compare prices, wewill see that the undisputed leader is theArabica from East Africa (Kenya andTanzania), followed by Costa-Rica,Guatemala and Columbia. At the bot-tom of the price list are Mexican,Nicaraguan and Honduran varieties.

As a rule, Mexicans are very flexiblewhen it comes to price policy. Frequentlythe price of some particular batch ofcoffee depends on the number ofdefects; in addition, the seller and thebuyer can agree in advance on the per-centage of defective beans and thenature of the defects. The price of abatch of coffee with specified quality isalso agreed upon in advance. In coun-tries that have strict export classifica-tions, such agreements are in principleimpossible.

Thus, the price of Mexican Arabicagives it a marketing advantage, assum-ing comparable transportation costs.

Ecological and Social Programs

As many other countries who areconcerned about the preservation oftheir forest, water and soil resources,Mexico is doing all it can to develop itscoffee industry using intensive meth-ods. Thus, in order to increase their lowproductivity (360 kg/ha on average),Mexican farmers do not cut surroundingforests in order to increase the size oftheir plantations but participate in pro-grams that encourage them to plantnew hybrid high-yield varieties. Major

companies put a lot of effort into edu-cating farmers about recultivating thesoil, recycling the water and defendingtheir plants from pests; as a result, it ismuch easier for farmers to find infor-mation about protecting the environ-ment. According to Mexican experts,widespread use of hybrid coffee vari-eties and modern growing and process-ing technologies will allow Mexico toincrease its coffee production in thenear future by more than 15%. Also, afew international organizations thatwork on improving living standards ofMexicans have been active in the coun-try: Rainforest Alliance is a programaimed at preserving forest biodiversity,Organic Coffee focuses on sustainablemethods of coffee production; FairTrade and C.A.F.E. Practices can also be

seen throughout Mexico. The demandfor certified coffee is growing everyyear, and Mexico’s role in supplyingsuch coffee is only going to increase.

Mexico has enough potential to sig-nificantly increase its presence on theworld market. So it is not surprisingthat the world press agencies focusingon coffee, have been paying more andmore attention to Mexico, and coffeeblending professionals are increasinglyusing Mexican-grown varieties. Willthe Russian coffee market catch on tothis global trend?

SFT Trading expresses gratitude toour regular supplier of Mexicancoffee, AMSA (AgroindustriasUnidas de Mexico S.A. de C.V.,www.amsa-commodities.com.mx)for the help in organizing our trav-els in Mexico and for all informa-tional materials they provided.

COFFEE LOVERS, TAKE NOTICE:MEXICO, CHIAPAS, Guadalupe Zaju Coffee Farm

Growing region:Mexico, Chiapas, 15° 9' 28.68" N 92° 17' 13.36" W

Altitude:up to 1400 m

Certification programs:Rainforest Alliance, C.A.F.E. Practices

Mexico, Chiapas, Guadalupe Zaju Coffee Farm, 2011

Mexico, Chiapas, Tapachula, AMSA, 2011

AMSA offered us not only the best high-altitude Arabicas, but also varietiesthat contained 20 to 50 defects per 300g sample.


WHO IS WHO?

42

GLOBALIZATION IMPROVES LOCALSOLUTIONS

Glatfelter was founded in 1864 in the US.Now it is a company with 1.5 billion US dol-lar turnover, 4,000 employees, 10 manufac-

turing facilities in USA, Germany, Canada,the UK, France and the Philippines and salesoffices in 6 countries including Russia.

Having acquired several companies indifferent countries within the last 14 years

Glatfelter has embracedunder its roof severalbusiness units unitedwith one vision and com-mon values, processesand system of execution.

By becoming moreand more internationaland having offices inmany countries Glatfelterensures a more profes-sional approach to work-ing with national mar-kets. Opening new salesoffices in different coun-tries makes the servicemore convenient foreverybody. It also adds toa better footprint andjust by that makes thecompany already moresustainable.

Globalization alsoleads to having the samequality of service andproducts no matter inwhich country you are.“When customers askwhat will happen if we

have fire in the mill, we reassure them thatwe can produce the same product in anoth-er city with the same quality, measurementsand specifications”, says Petra Bursian,CFBU Quality Assurance Manager. “In par-

Going beyond paper:SUSTAINABILITY AS THE COREOF COMPETITIVE BUSINESS

Sustainability is a mega trend that has been putting its way through in busi-ness for some years. About a decade ago business people chose between theircompany paying attention to environmental issues or making more profits.Those used to be two different directions. Nowadays the situation has changeda lot and these two issues – environmental care and efficient business – gohand in hand. A good case to illustrate how the principles a company is basedon can support sustainable business is Glatfelter, the leading global filterpaper supplier. It also demonstrates the advantages a sustainable approach

can have for a company. “We understood that if we want sustainable changes, we have to invest a lot instrategy, people and quality,” - says Martin Rapp, Vice President & General Manager of Glatfelter.Sustainability has to be seen in a broader sense as it has become more than just ecological issues thatcompanies care about. Now it covers almost all spheres of company life – today, making a company sus-tainable has actually become a synonym for competitive.

Alena Velichko

Р


WHO IS WHO?

44

allel, Glatfelter is also continuously addingcapacity to insure the company can meetthe growing demand of our global andregional customers around the world”added Fabrice Werner, Sales and MarketingDirector CFBU.

Expanding the global influence has beenvery challenging. “The task was for us tobuild one organization and we used themotto: “one company – one culture”. Weneeded to have one face to the customersbecause in the end the customer wants todeal with one company,” remembers MartinRapp, the vice president and general man-ager of the company. “It required from us alot of efforts: building a new operatingmodel, a new culture, a new way how todeal with our customers. As a result our cus-tomers trust us and we are growing in themarket share.”

SPECIALIZATION AND INNOVATIONARE DRIVERS OF SUSTAINABLEBUSINESS

Being not the biggest company,Glatfelter has been focusing on its ownniche markets with special applications. Inthose markets they have a leading positiongradually getting even stronger in all theirthree production lines: Specialty Papers(58% of overall turnover), Composite Fibers(29%) and Advanced Airlaid Materials(13%). Strategic acquisitions of productionsites and companies helped Glatfelteralmost double its turnover during the last 5years with total expected revenue of 1.5 bil-lion USD. And the company income allows itto invest money in innovations, new capaci-ty and refurbishing existing equipment.

Leading the market, Glatfelter stresses itneeds to keep its flexibility and responsive-ness in a global and changing environment.“It is paramount we are capable of reactingswiftly to the requirements and ideas of ourcustomers” says Kai Wulff, General SalesManager F&B, adding: “Aligning our Sales &Marketing and New Product Developmentresources is key to staying at the heart ofthe market and enables us to respondaccordingly with value added products andtailor made solutions ”.

The company puts a lot of emphasis oninnovation and development of new prod-ucts, with the intention of enabling theircustomers to be more innovative on theirside. For example, the company plans toinvest 50 Million USD in the re-build of apaper machine, adding additional capacity.But new technology also means more effi-cient usage of raw materials and energy.“We try to invest in new processes and mod-ernization as we hope that our suppliers willbenefit from it, our customers will benefitfrom it and as a result we also will benefit.This is what we call a win-win situation ifinnovations support all stakeholdersinvolved in the process,” says FabriceWerner, Sales and Marketing Director,CFBU.

Right now the company is hiring a lot ofresearchers who will enforce the new prod-

uct development unit to stay ahead of com-petition and keep providing innovative,unique and relevant customer benefits.

THE IDEA OF SUSTAINABILITY ISREFLECTED BY PEOPLE

People are the focus of the company“compass” – the organization model bring-ing forth a strong set of core values thathave been adopted by all employees.Following these core values helpedGlatfelter to set and achieve many targets,one of them being health and motivation oftheir employees. The company is reallyproud of its reduction of injuries twicewithin the last couple of years. Such animpressive record can only be achieved byestablishing the necessary consciousnesswithin the whole organization. Safety isreflected in the basic mission: injury freeevery day.

“We want our people to come to workand enjoy what they do and we don’t wantthem to be injured” stresses Martin Rapp.”That is why we have trainings on safety andall core values especially on integrity andcode of business conduct. We spend a lot oftime on sharing the vision of where we aregoing. If employees don’t know where thecompany is headed, how can they con-tribute?”

According to Jan Nossent, ProductEngineer F&B, people like working in thecompany as they have fine colleagues andmutual respect, as well as a flat hierarchyand good spirit. And of course hiring theright people “is the approach that adds sus-tainability to the company,” admits UllrichBeyreiss, director of human resources.

Many employees feel that they do notsimply sell something but they participate inachieving common goals and consequently,they do their best to make clients happy,making the principle “customer first” muchmore than a motto. If customers have a spe-cific request the company can react fast bydeveloping a product solution.

KEY PILLARS OF THE SUSTAINABLEAPPROACH

For being recognized in the communityGlatfelter chooses the strategy of beingsocially responsible. It is implementedthrough developing local communities andinvesting in kindergartens, sports clubs anda puppet theatre, sponsoring a local hospitalfor children, orphanage and building a fishladder. Many social campaigns are also car-ried out in the Philippines, like supportingfarmers with equipment for better harvest-ing (special knives, e.g.) and fibers process-ing so that they can make more money overthe day. After the recent typhoon in thePhilippines in December 2011 Glatfelteremployees donated money to aid the fami-lies whose houses were destroyed. “They areour co-workers. How can we ignore it?” saysKai Wulff.

In the Philippines social responsibilitygoes hand in hand with environmental

responsibility. The concern for ecologicalissues started in the 80s when the companystarted using a lot of unbleached paper,then reducing the water consumption whenmaking paper and searching for advancedways of water treatment. The company alsoworks in the direction of reducing the car-bon footprint and achieving zero landfill.

According to Reinhard Schiebeler, opera-tions director and general manager, in thepast year the company increased capacity by5 percent just by utilizing equipment a bet-ter way. Reducing energy consumption andfinding more effective ways of utilizing itmade the company hire an energy manager.Through creating sustainability initiatives inthe new product development unit the com-pany is improving its carbon footprint.

But of all environmental issues Abaca isone of the most crucial elements of the sus-tainable approach for the company meetingcustomer requirements and supporting sus-tainable development. The company hasbeen investing in farmers and also drivesforward a certification initiative withRainforest Alliance for Abaca to promote itssustainable footprint and develop a fairtrade mechanism.

Additionally, the company values itsworking in compliance with all environmen-tal laws and regulations and is active at themarket by working on a solution to createthe second generation of biodegradablesynthetic fibers.

But Glatfelter is open and transparentnot only about their social and ecologicalissues but what is more: about financial dis-cipline. Being a US stock exchange listedcompany, their share prices are open for thepublic. Being transparent and acting finan-cially responsibly is highly important toensure reliability for their customers andthus, sustainable business as a whole. “If weare financially healthy company it means wecan invest in your products, your machinesand we can go with the customers whereverin the world they want to go. We can investin further training and education of ourpeople,” says Martin Rapp.

QUALITY IN EVERYTHING – SUSTAINABILITY IN EVERYTHING

One of the keys to success for Glatfelteris being consistent in quality and standards.Especially important are BRC/I/OP hygienicstandards, for their customers as well, asthey see the advantage of using goods withcertified quality.

If a company invests in people, stressessocial and ecological responsibility andfinancial transparency, and focuses oninnovation and quality as guiding principlesfor development, then it has laid the basefor being sustainably competitive and earn-ing trust of the customers i.e. – to survive infuture. Things are changing all the time andif you stand still and do not understandwhat is going on around you – a wave cancrash over you and wipe you away easily.

WHO IS WHO?

Cama’s partnership named‘UNIQUE’ has been created tomeet this trend, forming abrand new alliance of leaders intheir respective fields, compris-ing of three outstanding Italiancompanies. The ‘Unique’ part-nership consists of: SARONG(producing thermoforming sys-tems), OPEM (cup fillingmachines) and CAMA for thecardboard packaging lines. Thenew consortium is now able toprovide complete systems,starting from: cup thermoform-ing, filling, primary packaging(bag or flowpack), through tosecondary (cup packaging andcase packing).

Annalisa Bellante, Cama’sMarketing Manager, added:"Cama is not new to this type ofstrategic alliance. In these part-nerships, where each companygives their unique expertise, italways offers the best possiblesolution for our customers,offering cohesion, flexibility,technical skills and unrivalledprofessional advice from thebest of all three members. Since

the formation of this partner-ship, it has been a huge successfor Cama and we have subse-quently gained further trustfrom leaders in the internationalmarket for coffee/tea cups.Our unmatched high-speedtechnology and the knowledgethat we supply extremely reli-able lines are the main ingredi-ents to our success.”

Cama has enjoyed extensivegrowth and gained much expe-rience over the years in high-speed cup packaging and are nospring chickens to the field. In2003, the company provided alarge and reputable ‘multina-tional’ company with the one ofthe first robotic lines in theworld that was able to packageup to 1,400 cups per minute;arguably the fastest in theworld. The ongoing success isdue to Cama’s continuousattention to detail and commit-ment in constant innovation ofits packaging systems that is dri-ven by the customer.

Cama continues to offer itscustomers comprehensive tech-

CAMA ANNOUNCES STRATEGICPARTNERSHIP TO MEETRECORD GROWTH IN CUPSTECHNOLOGY

October 2011 (Cama Group). According to Politecnico Milan (State University),the ‘cups containing coffee, tea and herbal tea’ market, is now the fastest grow-ing sector in the beverage market. Cama of Lecco, Italy, the world’s leader in car-toning technology and one of the early pioneers in the cup sector, haveannounced a brand new partnership to meet the growing demand in superiortechnology for high-speed packaging systems.

P R E S S R E L E A S E


Р

WHO IS WHO?

nical advice on the bestcardboard packaging solu-tions in relation to projectspecifications. The compa-ny presents itself as a"global consultant", offer-ing customized technicalsolutions, combining bothskills in packaging androbotics, materials, pack-ing styles resulting in pay-back on investments.Cama also offers multiplecombinations that aremade possible for sec-ondary packaging.

Bellante adds: "Our cus-tomers tell us often thatwe are the "ideal partner".Our experience in coffeepackaging does not onlyconcern cups though. Weprovide multiple applica-tions for: pods, bags, doy-packs and instant coffeestick-packs. Stick-packsnow at run productionspeeds of 960 per minute,thanks to special hopperloaders used to handlehigh speeds."

For state of the art toploading solutions, Camacan pack at more than 780 cups perminute with special packaging configu-rations. The line, consisting of a boxforming machine, a double-loadingrobot, a box closing machine and a casepacker, has proven to be extremely flex-ible and reliable. Cups are loaded into aspecial configuration to optimize thesize of final packaging. They are thenplaced in cartons containing 8 to 48

pieces, gathered together and packed inan American case. The increase in sales,combined with the high-level relation-ship between technology and reliabilityof the production system, has led somecustomers investing again and subse-quently doubling the number of produc-tion machines.

For the primary packaging of coffeecups using flowpack or bags, Cama usu-

ally offers side loadingsolutions, equipped withits legendary range ofhigh-speed cartoning ma-chines. The cartoningmachines make light workof many different com-plex product configura-tions in a flexible and reli-able way, with addedreduced footprint andeasy maintenance.

Depending on require-ments and a wide range ofproject specifications, Ca-ma is able to offer itsclients custom made pack-aging systems from theirdiverse portfolio including:robotic solutions (toploading), cartoning (sideloading) and case packingwith wrap-around displaystands or display-boxes.

Cama produces ma-chines with what theydescribe as Italianitа (theItalian spirit) which livesright through the compa-ny philosophy today. It isstill a privately ownedcompany and headed upby the Bellante family.

Bellante adds, “The development ofcups is always intrinsically linked to themachine, they are like hand and glove.We have a strong cultural bond to coffeetoo here in Italy! This with our familyspirit and creative technology offerswhat I would say is an unrivalled packagein this exciting market. We are veryproud to be at the forefront with Opemand Sarong.”



HORECA

50

Overall, cafJs/bars saw a 7% increase in currentvalue terms in 2010 reaching RUB49.6 billion, whichwas in line with the compound annual growth rate

in the review period 2005-2010. After the channel saw somedecline during the times of turmoil in the economy, therebound in growth in current value terms started at the begin-ning of 2010. The improved economic situation in the countryresulted in increased consumer spending on dining and drink-ing out in cafJs/bars.

Chained specialist coffee shops saw the fastest growth in2010, with current value growth of 19%. The culture of drink-ing coffee out and “meeting up for a coffee with a friend” isnot yet strongly developed in Russia. However, Russian con-sumers, particularly those living in the major cities, are rapidlytaking on trends from Western Europe and North America.Amongst Russians living in Moscow and St Petersburg it isgradually becoming very popular to meet in a specialist coffeeshop such as Starbucks, Shokoladnitsa or Coffee House. It was

noticed that by the end of the review period, establishmentsspecialising in serving coffee were gradually becoming popularmeeting places not only for young people, but also amongstthe older generation, and even in the business environment.

Specialist coffee shops are gradually becoming seriouscompetitors for fast food outlets. In 2010, most specialist cof-fee shops were using menu diversification as a tool to maintainmargins. For instance, Costa Coffee, developed by RosinterRestaurants Holding, introduced a breakfast menu.

Shokoladnitsa, developed by Gallery Alex, alsoexpanded its menu with non-coffee products; forinstance various salads, new Italian hot dishes anddairy cocktails.

Selling coffee beans to-go has also becomemore popular amongst the leading chained play-ers in specialist coffee shops. Although, accordingto trade sources, sales of coffee beans to-go stillonly account for a minor share (less than 5%) ofoverall revenue in coffee houses, it is consideredto be a niche for stronger growth in the future.

Chained bars/pubs is another rapidly growingniche in Russia. Over the period 2008-2010, thischannel saw rapid expansion. A number of com-panies operating in fast food and full-servicerestaurants decided to expand into bars/pubs.Currently, most establishments offer both foodand drinks. According to trade sources, drinks-only outlets account for around 6% of the totalnumber of bars and pubs in the country; thismainly includes nightclubs and discos.

Whilst the majority of cafJs/bars are independently-ownedand operated, chained cafJs/bars achieved stronger growth interms of number of outlets in 2010. Consumers are increasing-ly inclined towards chained options, as those offer well-knownbrand names and reputation. Chained outlets invest more in thepromotion of their brands, such as advertising on billboards, inmagazines and on television, and running various campaigns onthe internet. Chained establishments accounted for a 11% shareof outlets in overall cafJs/bars in Russia in 2010.

CAFIS AND BARS MARKETIN RUSSIA:the past and the future

In 2010 affected by the economic instability in the previous years, the developing cafJs and bars inRussia were looking for ways to attract new customers and to increase their revenues. Both cafJs andbars introduced breakfast menus and business lunches, and offered coffee to-go; in this way success-fully competing with fast food outlets.

By Euromonitor International

CafJs/Bars market in Russia, 2010, Foodservice value

Source Euromonitor International

‘000

RU

B

HORECA

51

Over the next five years cafJs/bars is expected toincrease by a compound annual growth rate of 3% inconstant value terms, and by a compound annual growthrate of 2% in terms of the number of outlets. The chan-nel overall will be driven by the growth of the coffee cul-ture in Russia, and as result, increasing demand for spe-cialist coffee shops, as well as further expansion ofbars/pubs.

The continued development of a coffee culture inRussia is expected to help to maintain the further rapiddevelopment of specialist coffee shops in current valueterms, and in terms of the number of outlets and numberof transactions. It is anticipated that consumers will fur-ther acquire the Western European trend of more conve-nient and busier lifestyles, which will lead to the develop-ment of take-out coffee. Specialist coffee shops is fore-cast to increase by a constant value compound annualgrowth rate of 7% over the forecast period, being one ofthe driving engines for the growth of the wholecafJs/bars channel.

The competition between chains and independent out-lets, particularly those operating in Moscow and StPetersburg, is expected to become stronger. Consumers ingeneral will show an increasing preference for knownnames and brands in the market, given the consistency inquality of offerings, as well as the likely wider range ofchoices. It is also anticipated that players in cafJs/barswhich specialize in coffee will face more intense competi-tion from players in other categories of consumer food-service, such as convenience stores and fast food. Stand-alone outlets will be looking for unique selling points todistinguish themselves and to compete with the chains. Itis likely that companies will try to offer outstandingdesigns, additional activities or theme parties. An increas-ing number of pubs might use television screens, darts,table football or billiards tables in their interiors. The chal-lenge for players in cafJs/bars will be to find a conceptwhich appeals to consumers, and to market it appropri-ately.

Percentage of Chained and Independent Foodservice,Russia, 2010


Chained Foodservice

IndependentFoodservice


ADVERTISER INDEX

52

HALSSEN & LYON GMBH Pickhuben 920457 Hamburg, GermanyPhone: +49 (0)40 361 43-0Fax: +49 (0)40 361 [email protected]

HALSSEN & LYON GMBH

:

:

AHMAD TEA LTD.Tel: +44(0)23 8027 8900Fax: +44(0)23 8025 5867www.ahmadtea.comOfficial distributor in Russia:«SDC-FOODS» [email protected]: Tel: +7(495) 234 69 91Fax: +7 (495) 234 69 95

AHMAD TEA LTD.

DRAHTWERK ELISENTALW. Erdmann GmbH & CoWerdohler Str. 4058809 NeuenradeP.O. Box 1260, 58804Neuenrade, Germany Phone: +49 2392 697-31Fax: +49 2392 [email protected] www. elisental.de

ELISENTAL

TEAMAC S.r.L.

TEAMAC S.r.L.ViaMenghini,140054 Budrio(BO), ItalyTel.: +390516926276 Fax: [email protected] Agent in Russia: TEA HOUSE TONUSSt. Dubininskays – 90Office #402, 115093, MoscowTel.: 007 (495) 9527154Fax: 007 (499) [email protected]

ANCAP S.p.A.

Ancap S.p.A. — via Libia, 137066 Sommacampagna (VR)Tel. [email protected]

ZWIRNEREI A.D. WUTACH GmbH

Zwirnerei a. d. Wutach GmbH

P.O. Box 1163, 79780 Stuhlingen/ GermanyPhone +49 7744 9396-0 Fax +49 7744 [email protected]

..

KLD COFFEE IMPORTERS

KLD COFFEE IMPORTERS9 Pushkarev PereulokMoscow, 107045, RussiaTel.: +7 (495) 223 0347Fax: +7 (495) 223 [email protected]

MAI S.A.

MAI S.A. SOLIS 8250B7608FLR — Mar del PlataArgentinaTel.: (54-223) 482-1817Fax: (54-223) [email protected] www.maisa.com.ar

GLATFELTER COMPOSITE FIBERS BUSINESS UNIT

Worldwide contact:GLATFELTER Gernsbach GmbH & Co. KGPhone: +49 7224 66 [email protected] contact:GLATFELTER RussiaPhone: +7 495 775 69 [email protected]

CAMA GROUP

Cama Groupvia Como, 9, 23846 GarbagnateMonastero Lecco - ItalyTel: +39 031 879 811Fax: +39 0 31 856 [email protected]

ORIMI TRADE, Llc.

ORIMI TRADE, Llc.3, Tobolskaya str., St. Petersburg, 194044, Russia Tel: (812) 346 82 40 Fax: (812) 542 15 01 [email protected]

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