GCR Jan 2013

January/February 2013

SUSTAINABLE ROASTING

Overview of leading technologies

MARKET BALANCE 2013

What production will look like

PRICE PROJECTIONS

Factors to look out for

EXACTING EXTRACTIONS

Nuova Simonelli invests in the study of espresso

US FAIRTRADE SPLIT

WEIGHING THE SCALES

FLO’s new American representation

4C ASSOCIATION CHAIRMAN ON WHY INCREASING YIELDS IS THE FIRST STEP IN SUSTAINABILITY

www.globalcoffeereview.com 29.00

LEADERS SYMPOSIUM 22 MAY 2013

OFFIC IAL EVENT

THE GLOBAL COFFEE REVIEW LEADERS SYMPOSIUM WILL WELCOME THE INDUSTRY’S MOST INFLUENTIAL VOICES TO DISCUSS PRESSING ISSUES AFFECTING THE COFFEE INDUSTRY. Sessions to cover: * Doing business in Asia The coffee deficit Coffee price overview

Research and Development at origin Single-serve surge Certification *subject to change

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SCAN TAG

CONTENTS January/February 2013

COVER STORY AFRICA’S KILO PARADIGM

The 4C Association’s new governance structure is designed to bring producers closer to decision makers. Its leader tells Global Coffee Review why yield rates in Africa need to come first.

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“WHEN YOU’RE LOOKING AT HALF A TONNE PER HECTARE, YOU’RE LOOKING AT POVERTY. IN AFRICA, YOU FIRST HAVE TO ADDRESS THIS ECONOMIC SUSTAINABILITY.”

IN THIS ISSUE FEATURES

10 THE KILO PARADIGM

Chairman of the 4C Association says why economic sustainability in Africa is paramount to the future of the industry.

14 PRODUCTION OUTLOOK

The changing face of consumption is shifting demands, with potential outcomes on production.

26 AMERICAN GROUNDS

36 PROBAT

How this top company stays ahead of the trends.

38 NEUHAUS NEOTEC

These plant solution providers help clients balance wish lists and costs.

40 BUHLER

An overview of the food processing industry helps on the modern trail.

42 DIEDRICH

Fairtrade International’s interim US leader talks about sharing Fair Trade space in this vast market.

Whey these classic designs still carry an edge over the most modern bells and whistles.

28 FUTURE PROOFING SUPPLY CHAINS

44 LORING

Various industry segments talk about their strategies to prepare for the unexpected.

PROMOTIONAL FEATURE 33 SUSTAINABLE ROASTING

Why energy costs and emissions regulations worldwide should be on every roaster’s radar.

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The incidental advantages of a clean burning system.

46 BRAMBATI

Why flexibility in use is a truly sustainable solution.

COFFEENOMICS 19 THE PRICE IS RIGHT

Leaders take their turn at guessing which way coffee prices will head in 2013, and why.

RESEARCH & TECHNOLOGY 23 EXACTING EXTRACTIONS

Nuova Simonelli and Camerino University join forces to better understand the science of espresso.

Robert Waggwa Nsibirwa Chairman, 4C Association

49

58 THE CAPSULE WITHOUT A CAPSULE

The coffee ‘puck’ that could revolutionise the single-serve industry.

ORIGIN 49 PERU’S COFFEE BOOM

How this mid-level nation has quintupled production.

REGULARS 4 EDITOR’S NOTE 7

NEWS DRIP BY DRIP

52 A VOICE AT THE SOURCE 54 DIARY DASHBOARD 56 MARKETPLACE 58 LAST WORD

56 JA N UA R Y /FE B R UA R Y 2 013 | GCR

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EDITOR’S NOTE Global Coffee Review

PUBLISHER John Murphy john.murphy@primecreative.com.au EDITOR Christine Grimard christine.grimard@primecreative.com.au



JOURNALIST Sarah Baker sarah.baker@primecreative.com.au

WHY EVERY LITTLE BIT HELPS

There’s a local radio station that hosts an afternoon segment entitled “First World Problems”. Callers ring up to complain about their favourite café closing down, their air conditioning that’s not quite cold enough, and the like.

After writing reports for our special feature on sustainable roasting equipment, when I came around to interviewing the new Chairman of the 4C Association Robert Nsibirwa (see page 10) I couldn’t help but think about this program.

Let me explain. From smaller specialty roasters, to full turn-key plant solutions, the technological advancements available in roasting equipment are absolutely astounding, no matter which part of the world you come from (see page 33). So many of these brilliant improvements have been dedicated to the sustainability realm, in limiting energy consumption and reducing odour and particle emissions, all the while improving the quality of roasted coffee. These incredible resources are available worldwide to help roasters optimise business operations.

Nsibirwa’s comments on what he’s hoping to achieve on the sustainability front in Africa, however, provided a rather stark perspective.

Far from looking to implement any complex technological advances, Nsibirwa’s main goal is – at the surface – relatively low-tech: to help African farmers feed their families.

His point is heart-wrenching. Before anyone tries to tell a coffee farmer to limit their use of pesticides, wear gumboots to

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protect the earth or even send their children to school, he’d like them to be able to make enough money from their crop to cover the basic necessities. To achieve this goal, all the charity money in the world will do little compared to the ability to increase their yields to something remotely comparable to their peers in Brazil and Vietnam.

This poverty gap is of course nothing new. The conundrum, however, that arises on the sustainability front, is that the vast majority of environmental damage in the coffee industry today is done at origin. Global Coffee Review has previously reported that agricultural practices account for as much as 70 per cent of damage in a life cycle analysis.

Does this mean efforts to improve the roasting process are moot?

Absolutely not. Our reports show that these technologies are widely available at various price points for every size of roaster. Surely, before even beginning to preach sustainability to struggling farmers, every investment should be made on the roasting front to ensure those who do have the resources to invest, are doing so.

Even if it is a First World problem.

ART DIRECTOR Joel Parke DESIGN Blake Storey, Alice Ewen, Karen Sloane, Michelle Weston, Sarah Doyle BUSINESS DEVELOPMENT MANAGER Steve Roberts steve.roberts@primecreative.com.au GROUP SALES MANAGER Brad Buchanan brad.buchanan@primecreative.com.au PRODUCTION COORDINATOR Michelle Weston michelle.weston@primecreative.com.au ADMINISTRATION MANAGER Hayley Blain hayley.blain@primecreative.com.au PHOTOGRAPHY Bernd Arnold Pham Thi Diep Giang Maja Wallengren CONTRIBUTORS Maja Wallengren David Swinfen Oscar Schaps Rodolfo E Mora Keith Flury Dang Le Nguyen Vu HEAD OFFICE Prime Creative Pty Ltd 11-15 Buckhurst Street South Melbourne VIC 3205 Australia p: +61 3 9690 8766 f: +61 3 9682 0044 enquiries@primecreative.com.au www.globalcoffeereview.com SUBSCRIPTIONS +61 3 9690 8766 subscriptions@primecreative.com.au

Global Coffee Review Magazine is available by subscription from the publisher. The rights of refusal are reserved by the publisher.

ARTICLES

All articles submitted for publication become the property of the publisher. The Editor reserves the right to adjust any article to conform with the magazine format.

COPYRIGHT Global Coffee Review is owned by Prime Creative Media. All material is copyright and no part may be reproduced or copied in any form or by any means (graphic, electronic or mechanical including information and retrieval systems) without written permission of the publisher. While every effort has been made to ensure the accuracy of information Prime Creative Media will not accept responsibility for errors or omissions or for any consequences arising from reliance on information published. The opinions expressed in Global Coffee Review are not necessarily the opinions of, or endorsed by the publisher unless otherwise stated.

ROASTERS GRINDERS CONTROLS S E R V I C E AND PL ANT CONCEPTS

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NEWS In Brief

NEWS DRIPBYDRIP A study in Italy conducted by the University of Camerino, in association with espresso machine manufacturer Nuova Simonelli, has revealed the effects of pressure and temperature on the quality of extracted coffee (see page 23).

The study, led by Professor Sauro Vittori and Doctor Manuela Cortese, aimed to define the ideal conditions for a “quality” extraction. By varying parameters, the researchers analysed chemical changes in the infusion process.

To measure these outcomes, the professors used the Aurelia Competition espresso machine, the official machine of the 2011-13 World Barista Championships.

Initial findings indicate that the best espresso coffee, in terms of extraction efficiency, is obtained at 9 bar, 92 degrees Celsius.

Italian coffee company Caffemotive have designed what they say is the world’s first portion system without individual packaging requirements (see page 58).

The Tablì is a single portion of coffee powder, compacted, held together without the need for a capsule or a coffee pod. The product is the result of work by Imat, Puro Aroma, and Kompresso.

The London Coffee Festival, the flagship event of UK Coffee Week, will return to the Old Truman Brewery from 25 – 28 April 2013.

The event is expected to attract more than 150 exhibitors and 15,000 attendees.

Many additions have been made

to the 2013 program, with the festival now including an extra industry day, new ‘Innovation Stands’ and a Lab education program designed specifically for the industry. The UK Barista Championship Finals will also return to the event in 2013.

In 2012, the festival attracted almost 12,000 attendees across three days at the Old Truman Brewery on Brick Lane. The event included features such as: La Cimbali’s Sensory Sessions workshop; La Marzocco’s popup coffee shop, The True Artisan Café; live coffee roasting demonstrations from Union’s Roastery on Tour and United Coffee’s Make Decent Coffee Lounge.

“At last year’s event we saw some inspired stand concepts and marketing campaigns running throughout the festival period,” says Ludovic Rossignol, Head of Events for Allegra Events. “It is very rewarding to bring the industry and the general public together in one place for the UK’s largest coffee and artisan food event.”

AMERICAS

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EUROPE

Fairtrade International (FLO) appointed Enrique Hennings as Interim Operations Manager for Fairtrade International USA (see page 26).

The new organisation will represent the FLO system in the United States. The need for new representation follows Fair Trade USA’s (FTUSA) official resignation from the FLO at the end of 2011.

The decision was largely based on FTUSA’s move to certify coffee outside of smallholder farms.

Hennings will lead the process of establishing a new office, and work with stakeholders and businesses to build recognition of the Fairtrade mark in the US. Coffee prices in New York and London markets have fallen steadily over the last few months, with the November 2012 International Coffee Organization (ICO) composite price hitting 136.35 US cents, the lowest level since May 2010. These price drops follow reports of expectations for a record level of world production at 146 million bags, an increase of 8.4 per cent on the 134.6 million bags produced in the 2011-12 coffee year.

Opinions are mixed on where prices will head in 2013 (see page 19). With Arabica being called “the worst performing agricultural commodity in 2012”, most see prices rising, although with different expectations on how high those prices might climb. Robusta is generally expected to lift, with high demand from increasing Asian consumption.

Peru produced more than 5 million 60-kilogram bags in the 2011-12 crop cycle, an impressive jump from less than 1 million 60-kilogram bags two decades ago (see page 49).

In a year of tight supply-demand balance, trade has increasingly turned to Peru for their beans, when other countries failed to deliver.

From a cultivated area of about 200,000 hectares in 1994, Peru’s more than 150,000 coffee growers have today expanded output to some 340,000 hectares, according to estimates by the Peruvian Coffee and Cocoa Chamber.

9 bar A study’s initial findings show the best espresso, in terms of extraction efficiency, is obtained at 9 bar, 92 degrees Celsius.

See page 23.

JA N UA R Y /FE B R UA R Y 2 013 | GCR

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NEWS In Brief

After such massive growth, however, many sources say this is unlikely to continue unless Arabica coffee prices reach, and stay above, US$2 per pound.

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AFRICA

Robert Nsibirwa, originally from Uganda and the former Executive Director of the East African Fine Coffee Association, has been appointed Chairman of the 4C Association (see page 10).

The organisation, that aims to provide a baseline standard for farmers to enter certification programs, announced a new governance structure this past October. A recent re-organisation aims to mainstream the duplication of roles and responsibilities to ensure efficiency. The executive oversight body should be much leaner and closer to management for faster decision making and activity implementation.

The restructure also follows an announcement from Fairtrade International in mid-September that it will join the 4C Association as a member. Lee Byers, Senior Adviser on Coffee and Tea for Fairtrade International, said that the move was to “continue making sure the voice of small coffee farmers is heard on a global stage”.

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ASIA

In good news for Vietnam, Indonesia and other Robusta producing countries in Asia, Robusta has continued to drive increases in exports in recent months.

October 2012 saw a 17.3 per

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Agriculture Certification Thailand (ACT), a private non-profit foundation, or the Organic Crop Institute, a public agency under the Ministry of Agriculture and Cooperatives.

cent increase in exports to 7.6 million bags, driven mainly on the back of Robusta, the International Coffee Organisation (ICO) reported, which grew an astounding 17.3 per cent over the period.

Much of this increased demand has come from booming Asian and Russian markets (see page 14).

Roasters started increasing their use of Robusta in blends last year, following record-high prices of Arabica in 2011.

This shift was reflected in certified stocks held in New York and London, where Arabica and Robusta are traded respectively. As of September 2012, the ICO reported that stocks in New York reached 2.4 million bags, the highest level since June 2010, while London stocks stood at 2.2 million bags, the lowest level since November 2007.

500%

Peru produced more than 5 million 60-kilogram bags, up from 1 million bags just two decades ago.

See page 49

With a limited number of certified organic growers in Thailand, some merchants are working directly with non-certified farmers to secure their supplies.

Luke Salway, Director of Business Development at NLP Top Coaching, says this is one example of a low-cost improvement in supply chains (see page 28).

In Thailand, organic coffee farming has only come along slowly, with a limited number of Certified Organic producers. Certification in Thailand is handled by Organic

The 18th United Nations climate change negotiations took place in Doha, Qatar from 26 November to 7 December. The main achievement was an agreement to extend the Kyoto Protocol term.

With coffee production almost entirely concentrated in countries close to the equator, Global Coffee Review has previously reported on why the crop is especially at risk.

While the majority of environmental damage from coffee production is done at origin, the energy used and output of coffee roasters is an industry concern.

In a special report, Global Coffee Review looks at the direction of rules and regulations set to affect coffee roasters (see page 33), and highlights efforts by a select number of roasting manufacturers to produce the most clean-burning, and energy efficient roasting equipment available on the market. This special promotional feature highlights Probat (page 36), Neuhaus Neotec (page 38), Buhler (page 40), Diedrich (page 42), Loring (page 44), and Brambati (page 46).

COVER STORY 4C Association

THE ‘KILO PARADIGM’ CHAIRMAN OF THE 4C ASSOCIATION, ROBERT WAGGWA NSIBIRWA, TELLS GLOBAL COFFEE REVIEW WHY IMPROVING YIELDS MUST BE THE FIRST STEP IN ANY SUSTAINABILITY WORK IN AFRICA.

R

obert Waggwa Nsibirwa, the newly appointed Chairman of the re-organised 4C Association, can put on a scale what he’s hoping to achieve – and it only weighs a couple of kilograms.

Originally from Uganda, Nsibirwa is the former Executive Director of the Eastern African Fine Coffees Association (EAFCA) and currently a director of the African Fine Coffees Association (AFCA), and knows all too well the challenges that exist for African farmers. While Vietnam and Brazil are thriving (relatively) on the sustainability front, he points out that their average yields range from 3 to 7 tonnes per hectare. Comparatively, an average African smallholder coffee farmer is looking at half a tonne per hectare. As this level of yield is a recipe for poverty, Nsibirwa says there can be no advances on the sustainability front in Africa until this disparity is resolved.

“The biggest challenge, for sustainability in Africa, is that you have to build a business case for the smallholder farmer,” he says. “When you’re looking at half a tonne per hectare, you’re looking at poverty. In Africa, you first have to address this economic sustainability before you can do anything else. It’s hard to tell a farmer to wear gumboots or stop cutting down trees for firewood, when he can hardly feed his family.”

Nsibirwa is coining this challenge as the “kilo paradigm”. In speaking to Global Coffee Review, he’s clear that one of his primary goals in his new position will be to improve the yield of African smallholder farmers, who are responsible for upwards of 90 per cent of Africa’s coffee production.

Only then, he says, can farmers move on to implement further sustainable initiatives.

Nsibirwa’s leadership of the 4C Association follows a long history with the organisation. Interestingly, it was this same cost/income issue that, back in 2004, led him and other EAFCA members to initially be critical of the association. “Members were adamant because they were saying the smallholder farmer did not have the money to meet the additional costs of these standards,” he recalls.

What won over Nsibirwa was his understanding that the association was not just some agency looking to add yet another burden on producers. Rather, the goal was to be a “highway to coffee sustainability”,

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giving producers the opportunity to understand and meet a baseline standard, to start gaining access to more lucrative certification markets.

Nsibirwa went on to become the first professional from Africa to be trained and qualify as a Master Trainer for the 4C Code of Conduct. Over the past five years, he has gone on to train other trainers, helping to inform farmers about the 4C Code, and thus spread market access.

With a number of certification systems available on the market, even the most savvy customer can get confused between systems: from Fairtrade, to Organic, to Utz Certified.

Nsibirwa says these consumers can hardly imagine what it’s like for farmers.

“Imagine you have all these guys coming to the farm, telling farmers all these different things,” he says. “But in the end, they are all talking about the same direction, there’s just a different emphasis. This is why it’s so important to have this baseline standard in Africa.”

Nsibirwa says that the importance of certification systems working together to simplify the process cannot be over-stated. He says Fairtrade International’s (FLO) landmark

“THE BIGGEST CHALLENGE FOR SUSTAINABILITY IN AFRICA, IS THAT YOU HAVE TO BUILD A BUSINESS CASE FOR THE SMALLHOLDER FARMER.” Robert Waggwa Nsibirwa

Chairman, 4C Association

IMAGES Bernd Arnold

Robert Waggwa Nsibirwa, Chairman 4C Association JA N UA R Y /FE B R UA R Y 2 013 | GCR

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COVER STORY 4C Association

“I WOULD LIKE TO TELL MY COLLEAGUES THAT IF THEY WANT TO ENSURE A SUSTAINABLE SUPPLY OF COFFEE TODAY AND TOMORROW, THEN THEY NEED TO LOOK AT THIS ECONOMIC SUSTAINABILITY FIRST.”

Robert Waggwa Nsibirwa Robert Waggwa Nsibirwa, Chairman 4C Association

Chairman 4C Association

announcement in September 2012, that they were joining the 4C Association, was a welcome step in this direction. FLO, one of the world’s most recognised certification systems, joins the likes of Utz Certified and Rainforest Alliance in working together to amalgamate their farmer requirements in a baseline standard, from which farmers can “step-up” to gain certification if and when possible.

With more and more roasters committed to purchasing certified and verified coffee, Nsibirwa says market access is becoming a big advantage for farmers to take part in this system, and fits well with his goal to build a business case for farmers.

“In the past two years and going forward, whereas productivity and quality are still key advantages in the production of sustainable coffee, sustaining market access in light of the firm demand by international markets is now the core reason,” he says.

This is not to say that African farmers are struggling for basic market access. Currently, Nsibirwa says high demand from Europe means that farmers are more or less “able to sell whatever they produce”. A concern, however, is that as the European Union implements regulations following concerns of sustainability. The day might come when regulators start restricting the sale of noncertified or verified coffee. With 80 per cent of the African crop sold to Europe, Nsibirwa says now is the time to move towards broader certification, to prepare for that potential development.

In his new position, Nsibirwa should be able to provide a strong producer voice. He’s helped by a new governance structure introduced in October 2012. Nsibirwa explains the previous structure had a duplicate layer of command, the Executive Board and the Council, with no clear differentiation of roles. The two have been fused, so that the executive level is driving the organisation.

“The new structure is simple and faster for the current size and business model of the organisation,” says Nsibirwa. He notes that the new structure should not only help farmers better communicate with

the leadership, but ensure more transparency in communicating with their membership.

Nsibirwa is already seeing the benefits of the reorganisation come through, in understanding the different priorities of the membership.

For him, bringing attention to Africa’s “kilo paradigm” has been paramount.

“Two years from now, what I would like to see is African farmers producing the same yield as Vietnam,” Nsibirwa says. “I would like to tell my colleagues that if they want to ensure a sustainable supply of coffee today and tomorrow, then they need to look at this economic sustainability first.”

While consumers have grown educated enough to become concerned about sustainability by purchasing certified coffee, Nsibirwa says they need to understand that gaining those certifications is next to impossible for many smallholders.

“The challenge we have now as leaders in the African coffee industry is that we have to have an attitude that focuses on making a business case for coffee farmers,” he says. Productivity and improved quality will come at a short-term cost to farmers in the need to prune or re-plant.

“We need to manage the short-term immediate needs for cash, to help them improve their yields,” he says. “Only when we see those kilos starting to improve, and there is some income insurance for farmers, can they truly participate in environmental and social sustainability.” G C R

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KILOTALK Yields in Vietnam and Brazil average from 3 to 7 tonnes per hectare, while an average African smallholder coffee farmer is looking at half a tonne per hectare.

FEATURE Production Outlook

The

production

divide 2013 in

WHILE ARABICA USED TO ACCOUNT FOR BETWEEN 65 AND 70 PER CENT OF THE WORLD’S GLOBAL OUTPUT, IN THE LATEST CROP CYCLE ROBUSTA’S SHARE HAS CREPT UP TO 40 PER CENT. A LOOK AT WHY THIS SHIFTING BALANCE IS A RESULT OF BOOSTED GLOBAL DEMAND.

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I

n times of economic crisis, the world is drinking more coffee than ever. It’s a development that took many by surprise, that consumer demand has proven to be so resilient to negative growth.

At the retail level, however, roasters have struggled to keep prices at bay, fully aware of reduced household incomes, especially in the Euro zone across southern Europe. One way of coping has been looking out for cheaper beans, and for many the answer has come in the form of Robusta.

“In Italy it’s all been about Robusta for years, but until about four years ago we still maintained a balance of 55 per cent Arabica to 45 per cent Robusta. Today, it’s moved to between 55 and 60 per cent Robusta and 40 to 45 per cent Arabica,” says Elio Vercelli, Sales Representative for Green Elite Coffee, which imports some 750,000 60-kilogram bags of green coffee a year.

The impact of the economic crisis on the coffee market has mostly unfolded in two stages. The first was the United States’ sub-prime mortgage crisis in late-2008, that helped plunged the US into recession, followed by the Euro zone debt crisis spiralling out of control. While average household incomes are still recovering from the crisis, the coffee industry met another challenge as the production crisis in Colombia started to surface in early 2009. This led to a steep increase in the premiums paid in addition to the New York Arabica prices for top quality beans, which is when the Arabica-Robusta balance really started to shift.

“We were forced to drastically reduce our imports from Central America and Colombia, because the purchasing prices we had to pay at the import level reached as high as US$3.80 per pound and we just couldn’t pay these levels,” Vercelli tells Global Coffee Review. With the prospect of raising retail prices out of the question, due to the state of the economy, roasters were forced to look for alternative blends.

“It was impossible to add to the retail price, not just in Italy but also in France. As an industry as a whole we were obliged to change our blends and start using more Robusta coffee,” Vercelli says.

Changing consumer trends, and shifts from Arabica to cheaper Robusta, is nothing new to the coffee industry. The first major shift away from Arabica to Robusta came in May 1997, when New York Arabica prices rallied to near historic highs of US$3.19 per pound. Just as today, roasters looked to Robusta to keep retail prices in checks.

Of total world production of 103.8 million bags in the 1996-97 cycle, Robusta represented 36 per

cent, or 37.2 million bags.

By the end of the 2011-12 cycle there was no indication the latest rise in demand for Robusta beans had softened, with production rising as a result.

The most recent report by the International Coffee Organization (ICO) said that world production of Robusta coffee in 2011-12 reached a historic record of 53.3 million bags.

The ICO noted that the most significant change in exports was observed in Robustas, which grew by 13.2 per cent to reach 41.8 million bags, representing 38.8 per cent of the world total.

In the new 2012-13 harvest, the ICO projects these figures will support a boom in Robusta production, in a crop year forecast to produce a record total of 146 million bags. Robusta output is forecast to rise 5.1 per cent to just over 56 million bags – or 38.4 per cent of the total market – while Arabica production is expected to rise 10.6 per cent to 89.9 million bags, thanks primarily to the on-cycle in the world’s largest grower Brazil.

Consumption, meanwhile, continues to enjoy the prospects of solid demand, and was estimated to be at least 139 million bags by the end of 2011, according to the ICO. The strong growth seen in the past 10 years is expected to continue for at least another 5 to 10 years in most markets, according to the US Department of Agriculture, ICO and independent analysts. The most conservative projections say that demand will grow by at least 1.5 per cent. At these rates, world consumption could reach 141 million bags by the end of 2012 and approach between 143 million and 144 million bags by the end of 2013.

ROBUST GROWTH Robusta last year represented 38.8 per cent of world exports. Depending on crop outputs, Robusta buyers could face a deficit of 6 million bags in the next crop year.

Drying Robusta in Vietnam

JA N UA R Y /FE B R UA R Y 2013 | GCR

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FEATURE Production Outlook

More generous estimates put growth figures at 2.5 per cent a year, matching those seen in the past decade. This would put total demand by the end of 2013 at over 146 million bags.

At these rates, the world supply-demand balance will continue into a sixth year of deficit.

History has proven that when it comes to coffee forecasts, there’s a long way to go until the final harvest is picked, processed and shipped. This will ring true with the current crop, perhaps more than ever, with climate change making weather patterns highly unpredictable.

“There are a lot of ‘ifs’ going around,” says Somkuan Priyawat, Managing Director of Thai coffee traders Rung Rueng Kaset Charoen Co. “If Brazil has a great flowering, if Colombia has no more weather upsets, if Vietnam produces another bumper crop, if we have perfect weather… quite frankly, the truth is that we don’t know yet. The end of the harvest is still a long way away and a lot of things can go wrong or change.”

Many industry officials echo these sentiments, that hanging climate patterns have increasingly played the wild card in world coffee forecasting during the past five years, with the most likely scenario predicting crop damage down the road. Depending on how these forecasts pan out, in the 2012-13 cycle, new Robusta consumers may face a deficit as high as 6 million bags.

The growing demand for Robusta isn’t being welcomed with open arms by all. A number of traders and analysts have voiced concerns as to how this shift could impact the quality equation. “We have already seen the same thing happening in 1997 when higher retail prices led to a dramatic drop in the quality used in blends, as roasters switched from Arabica to Robusta. This in turn resulted in weaker consumer demand for several years until producers started to improve quality,” says one US trader from the New York green coffee market.

Other roasters and importers disagree, saying not just Arabica producers but Robusta growers too have lifted their game in the quality equation. “We buy about 1 million bags from Vietnam in Italy but these are good Robustas, Grade 1 and polished Robusta. Consumers have found the taste difference is not so bad after all; they have been happy to sacrifice a little

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on the quality to be able to continue to drink as much coffee as they did before the crisis,” Vercelli says. “At the end of the day, coffee is still cheap, you can get a coffee or a shot of espresso for 1 Euro but a Coke or other soft drinks will cost you 2 Euros.”

Export figures from Vietnam confirm that the share of coffee exports certified as Grade 1 beans accounted for around 30 per cent of shipments in the last crop, compared to between 10 – 20 per cent 10 years ago. That was at a time when the overall export volume was significantly lower than today.

Brazil’s second largest producing state of Espirito Santo is another region that has contributed a large share of the new Robusta to the market. The region is gaining increased recognition for producing much more mild and neutral Robustas.

“In the past, much lower qualities were blended, like black and green beans. But conillons, that is Robusta beans, can be more neutral than, for example, fermented beans. In the past few years, the quality of the conillons has improved dramatically,” says one veteran trader with Brazil’s Santos-based exporters Comexim.

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Higher productivity and more resistant, Robusta coffee has been popular with growers, pictured here in southern Vietnam.

Cheap prices and improvements in the quality of Robusta aren’t the only factors in increasing demand for this varietal. The growth of consumption in emerging markets, with a large share of instant, has also helped boost up this varietal, according to Raymond Neogh, General Director of FES Vietnam Co Ltd, a leading manufacturer of soluble coffee in Vietnam.

“World demand for instant coffee has doubled in the last seven years, and even in the Vietnamese market this segment is expected to grow 6.9 per cent a year,” says Neogh.

“The growing demand in emerging market is by and large fuelled by instant coffee.”

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Perhaps the most encouraging news is that roasters across the world are increasingly learning to mix blends according to availability. This helps keep retail prices down as international economies show little sign of picking up.

One factor to consider going into 2013, is that the price gap between Arabica and Robusta narrowed considerably in the last quarter of 2012. Combine this with the possibility of Brazil’s strong off-cycle in the next 2013-14 harvest, and some of the Robusta deficit “could be offset with Brazil naturals and allow for a quality switch back into Arabica”, according to Alex Gruber, Director of the coffee division for Singapore-based green coffee traders Tong Teik Pte Ltd. Whether the coffee that comes in is Arabica or Robusta, for many the most important concern is that roasters can meet overall demand.

“We are not really that concerned,” says Toyohide Nishino, Executive Director of the Japan Coffee Association. “Because our roasters need both Robusta and Arabica coffee in order to maintain their blends.” G C R

FEATURE Price Outlook

THE

PRICE IS RIGHT

GLOBAL COFFEE REVIEW PETITIONED THE INDUSTRY FOR A CROSS-SECTION OF OPINIONS ON WHAT DIRECTION COFFEE PRICES WILL TAKE NEXT YEAR, AND WHY. Oscar L. Schaps Global Head of Soft Commodities, FCStone, LLC The coffee market during the recent past has been quite volatile, to say the least. Many factors affect the direction of price movements; some are quite clear, others not.

At first glance the coffee world looks at fundamental factors such as straight out supply and demand to attempt to discover reasons for price movement. Unfortunately for many players several other fundamentals have been impacting the coffee market and it seems that those external influences are here to stay.

Historically, the world mainly focused its efforts in knowing how much coffee would be produced, thereby driving prices. During the early 2000s the paradigm shifted to finding the true figure behind real consumption as the driver behind price movements. Consumption became the key when emerging markets developed the ability to drink more coffee, due in part by internal economics or better product offerings which made coffee more accessible or acceptable to more people.

As we closed the first decade of the new millennium, and the world economies became more intertwined, capital markets began looking for innovative investment vehicles. Some of the new vehicles allowed more people easier access to commodities, making commodities a new and interesting asset class as an investment. As capital flows around the world seek balanced returns, the commodities markets became just one more place were investors could put their money to work. So what does this mean for coffee?

In pure terms, it means that the macro world matters.

Currently, and most probably in the future, coffee traders will have to watch and understand how the global macro factors influence our commodity. We will have to learn to incorporate the relative value between currencies.

We will have to realise and accept that what happens in Europe affects all commodity values around the world. We will have to keep our eye on the US to see if policy will provoke capital flows to exit the commodity markets.

Now, we can’t ignore the basic factors of our underlying product, so let us look at what our commonly used factors have to offer. Looking back in the mid-term, we have had four years of above average prices which have caused a natural consequence of business practices

provoking producers to expand plantations. In response to good returns, producers all around the world have invested in their farms. As we see it, the days of very tight supply demand balance are behind us. Looking into the immediate future we see a surplus, and a considerable one at that. We see that for the 2012-13 coffee year we will have at least a 10 million bag surplus. This surplus will help rebuild stocks around the world. So what does this mean for prices?

Prices have already started assimilating the change in supply/demand dynamics and currently we are trading at the same levels as we were at the start of 2010, you can see the market has adjusted. As we look to the future we need to keep in mind that the macro world changes and that business people respond to market realities and adjust portfolios accordingly. From my vantage point it feels like coffee prices will be moving sideways within a relative wide volatile range of prices between 120 and 160 US cents per pound as the markets react to external news from around the world.



“THE DAYS OF VERY TIGHT SUPPLY DEMAND BALANCE ARE BEHIND US… WE SEE A SURPLUS, AND A CONSIDERABLE ONE AT THAT.” Oscar L. Schaps

Global Head of Soft Commodities, FCStone, LLC

*The trading of futures/options involves substantial risk of loss and you should fully understand those risks prior to trading JA N UA R Y /FE B R UA R Y 2013 | GCR

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FEATURE Price Outlook

Keith Flury, Senior Commodity Analyst Agri Commodity Markets Research, Rabobank International Arabica prices are expected to find strength in 2013. The worst performing major agricultural commodity in 2012, Arabica may also find support in index rebalancing, and weakness in the US dollar.

Fundamentally the Arabica market remains over-supplied and demand is lacklustre, however I view this as priced into the market. With the managed money gross short equivalent to more than 14 million bags of Arabica, and Brazilian farmers holding a sizable share of the previous harvest off the market, it is likely higher prices are needed to get the coffee out of farmer warehouses.

For Robusta, the main supporting factor is the need to increase output to meet growing emerging market demand. As the developing world’s appetite grows for coffee much of that new growth is based in soluble coffee and Robusta. The last few seasons have seen this growth in demand, as well as a significant substitution of Robusta for Arabica, increase the tightness in Robusta fundamentals. Harvest pressure from Vietnam and the unwinding of a large net long speculator position have pressured the market in London, but we anticipate higher prices to spur production investment and ensure exports.

 “FOR ROBUSTA, THE MAIN SUPPORTING FACTOR IS THE NEED TO INCREASE OUTPUT TO MEET GROWING EMERGING MARKET DEMAND.”



“THESE PRICE LEVELS WERE EXPECTED EVEN TWO YEARS AGO. FOR 2012-13, SOME TRADERS ARE TALKING NOW OF A US$1.30 PER POUND LEVEL.”

Rodolfo E Mora, General Manager, Hacienda Tobosi Costa Rica Lately, New York Arabica prices have demonstrated less sensibility to supply and demand as a whole, tied more to economical and political events.

Brazil’s 55 million bags from its biennial year, and a consumption forecast increase on 3 million bags, might balance scales; but we can’t put aside the fear among investors who keep an eye on geopolitical events.

These price levels were expected even two years ago. For 2012-13 some traders are talking now of a US$1.30 per pound level. If global economics and politics remain ‘stable’ there’s still a probability to experience a $1.80 – $2.20 negotiation level for exporters. Global politics and economics is where we have to focus our attention to negotiate and determine where the market is heading.

This is not the case for Robusta, which is still strongly tied to supply and demand of countries like Vietnam, expected again to produce a bumper harvest. Farmers are better prepared to hold their coffee and negotiate, but can’t hold on long enough due to lack of space, or the fear of selling when roasters are already full, like we’ve seen. This has maintained Robusta prices under $2000 per tonne, but this behaviour is probably based on emotional factors. Once more information is gathered, we might expect some slight bullish behaviour with $2000 per tonne a negotiation level during 2013.

Dang Le Nguyen Vu, Chairman, Trung Nguyen Coffee I see many factors that would affect to the global price of raw beans, especially Robusta.

Firstly, we see a remarkable trend from tea-drinking countries moving to coffee, such as China and India.

We also see increasing domestic consumption inside coffee growing countries such as Brazil, Indonesia and Vietnam. Meanwhile, crops are being affected by climate change and the need to replant coffee trees in main producers like Vietnam and Brazil. By 2020, Vietnam is aiming to replace 25 – 30 per cent of old coffee trees.

Last but not least, coffee farmers today have a better understanding about what they can demand from the market, and are better informed on market price.

What could strongly affect to the global price of raw beans will be the responsibility of major coffee giants. For instance, the initiative of the Worldwide Sustainable Coffee Fund, raised by Walter Zwald in 2001, called for the justice in the coffee industry by asking the giants to pay more taxes to help support farmers from growing countries.

Programs like these need to get off the ground, because lifting the price of raw beans and processed coffee will help everyone. While I think the price of raw beans will increase in 2013, the problem here is not about the price, it’s all about finding a win-win solution between the coffee consuming countries and growing countries.



“FARMERS HAVE A BETTER UNDERSTANDING ABOUT WHAT THEY CAN DEMAND.”

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RESEARCH Nuova Simonelli

Exact

Extractions

NUOVA SIMONELLI AND CAMERINO UNIVERSITY HAVE TEAMED UP TO HELP UNLOCK THE SCIENTIFIC FORMULA BEHIND A QUALITY ESPRESSO.

JA N UA R Y /FE B R UA R Y 2 013 | GCR

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RESEARCH Nuova Simonelli

I

t can fit into the palm of your hand, but the scale of the multi-billion dollar espresso industry is not something to be taken lightly.

Nuova Simonelli, leading manufacturers of espresso equipment and Official Machine Sponsors of the World Barista Championships, know all too well the effort that goes into that tiny cup. For decades, the company has led technological advances in espresso equipment, under the guidance that knowledge is power when it comes to perfecting extractions.

“At the foundation of our innovation efforts is the desire to continually improve the quality of coffee served to the customer,” says Maurizio Giuli, Marketing Manager for Nuova Simonelli.

“We believe that the technological progress of the espresso machine is generally not made in large steps, but through a continuous stream of small steps.”

The latest “small step” that the company has contributed could prove to have a significant impact on our understanding of a quality extraction.

The Italian company has paired up with two scientists from the University of Camerino to Maurizio Giuli, Nuova Simonelli study the effects of pressure and temperature on extracted coffee, as well as its chemical and physical composition.

The project was led by Professor Sauro Vittori and Researcher Dr. Manuela Cortese.

An initial literature review showed that previous studies have looked at the correlation between the quality of espresso with the type and degree of coffee roasting, the effects of the roasting process, and the composition of water.

However, less scientific work was found on how the parameters of pressure and temperature affect the finished product. The researchers, in association with Nuova Simonelli, took this task under tow, to see if they could define how these parameters affect the quality of the coffee.

“The project was conducted with the objective of defining the ideal conditions for excellent quality extraction,” Vittori says.

“By varying the parameters of the coffee machine we analysed the chemical changes in

Nuova Simonelli Aurelia

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G C R | J A N UA R Y / F E B R UARY 2013

the infusion process.”

The study itself is part of a wider research project aiming to create a mathematical algorithm that defines the effects of set parameters on coffee. The ultimate goal will be scientific support to identify the ideal conditions for extracting each type of coffee.

Because the objective was to look at the effects of these two specific parameters, Vittori says the key was to ensure that all the other elements in a complex product such as coffee remained constant in the experiments.

Vittori says a big help was using the Aurelia Competition machine for the study. Because they needed to carefully control the parameters, the machine’s reputation for consistency, and its ability to control the variables, proved especially useful.

In a product as complex as coffee, Vittori stresses that maintaining all other parameters – other than the two being studied – as constant was absolutely key. For the experiment, researchers started with parameters considered typical for Italian espresso: 7 grams of coffee (+/- 0.5 grams); 90 degrees Celsius water temperature (+/- 2 degrees Celsius), 9 bar water pressure (+/- 1 bar), 25 seconds extraction time (+/- 2.5 seconds), and 25 millilitres volume of coffee in the cup (+/- 2.5 millilitres).

From this reference data, the scientists then identified three pressure values (7, 9 and 11 bar) and three temperature values (88, 92 and 98 degrees Celsius) as the variables in the experiment.

To correlate these variables to what was produced in the cup, the scientists used existing literature to identify which chemical-physical parameters of coffee could be measured against what was considered a “quality” extraction. To this end, they measured acidity, total dissolved solids, and density.

While some of the results of the experiment matched the scientists’ hypotheses, other findings came as a surprise. For instance, Vittori says they expected greater pressure in the filter would produce an increase in the volume of the espresso coffee produced in the cup. Although this theory was confirmed in the difference between the 7 and 9 bar extractions, at 11 bar the volume delivered was lower than at 9 bar.

Vittori explains that the impact of water at a higher pressure causes mitigation of smaller particles towards the bottom of the filter, leading to the formation of a compact layer

“WE AT NUOVA SIMONELLI PROVIDE OUR RESEARCH AND OUR EXPERTISE TO HELP OPERATORS OF SPECIALTY COFFEE CONTINUE TO ELEVATE THE QUALITY OF THE DRINK, AND THUS RAISE THE ENJOYMENT OF THE FINAL CONSUMER.”

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that inhibits the passage of water. This phenomenon was particularly evident when moving from 9 to 11 bar, explaining the drop in volume produced.

The experiment also found that temperature affects the volume of coffee produced. Initial conclusions are that as the temperature ruses, there is an increase in the resistance, and therefor a decrease in the volume of coffee output.

The experiment also looked at the results of temperature and pressure parameters on protein levels. With protein molecules highly soluble in water, but especially sensitive to temperature, Vittori says that the roasting stage is critical. The results of the study show that the dispensing temperature, however, affects the amount of protein in espresso.

Analysing the data, the scientists found some similarities between the graph of the protein extraction and the volume of crema measured under the same conditions, supporting correlation between the two found in existing literature.

The data from this most recent study also confirmed that the best extraction conditions, where there is a greater volume of crema, were under the parameters of 92 degrees Celsius and 9 bar of pressure.

Vittori and Cortese’s initial overall conclusions show that “in terms of extraction efficiency” the ideal parameters are 9 bar, 92 degrees Celsius. As for any larger conclusions, Vittori says these trade secrets will be reserved for Nuova Simonelli.

Giuli says that Nuova Simonelli will use the results of this research in the design of future espresso machines. He notes that the Soft Infusion System (SIS), introduced in 2003 to the Aurelia, came from similar research, and T3 technology came from other scientific work.

Giuli says the work of scientists like Vittori and Cortese complements the contributions of top performing baristas.

“To push and guide this process of innovation, the contribution and expertise of various participants is needed,” he says. “We at Nuova Simonelli provide our research and our expertise to help operators of specialty coffee continue to elevate the quality of the drink, and thus raise the enjoyment of the final consumer.” G C R

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FEATURE FLO USA Interim Head

AMERICAN

E

GROUNDS

FAIRTRADE INTERNATIONAL’S INTERIM UNITED STATES LEADER TALKS ABOUT THE IMPORTANCE OF THE GLOBAL BODY’S REGIONAL PRESENCE.

nrique Hennings isn’t wasting any time in his new position as Interim Operations Manager for Fairtrade International USA. “There are a lot of things to do, and we need to do them now, and we need to do them faster,” Hennings tells Global Coffee Review.

Hennings is referring to setting up an official American unit of Fairtrade International (FLO), the international labelling organisation under which most regional Fairtrade certifications falls. The United States has been without a national branch since Fair Trade USA (FTUSA)’s official resignation from membership of FLO as of 31 December 2011. The decision was largely attributed to FTUSA’s decision to certify coffee outside of smallholder farms, in an initiative entitled ‘Fair Trade For All’. The result of FTUSA’s resignation – what has been called the “Fair Trade break-up” – has forced American roasters to choose between Fair Trade labelling initiatives.

Hennings says that the American office is not about “competing” with other labelling organisations, but rather doing everything they can to help promote the Fairtrade movement. “Fairtrade International has been around a very long time,” he says. “We’ll continue with the same work we’ve been doing.”

In terms of differentiating the two labelling organisations, following FTUSA’s decision to withdraw from FLO, Hennings says: “I think it’s up to FTUSA to differentiate from us”.

“We are concentrated on smallholder farmers in coffee, we always have been, and we’ll continue along that line of work,” he says. “We’re following a movement that’s responsible to the stakeholders.”

While this differentiation may be more easily communicated to roasters, Hennings says consumers are less likely to understand the difference. As both organisations are encouraging general education of Fair Trade, he says a strong US presence by both groups can help the movement as a whole.

“Whether it’s from FLO or Fair Trade USA, it’s getting the information out there to consumers that’s important,” says Hennings. “It is about the people. It is not a competition. It is about doing the right thing.”

To this end, Hennings says setting up a US office for FLO has for a while been on the cards for the organisation. “Stakeholders have for long wanted to feel the presence of the international movement here in the US,” he says. “New stakeholders want to know more about the international system.”

FLO USA will follow the same guiding principles it does elsewhere, ensuring stakeholders’ needs and opinions are driving the organisation.

“Our mission is to improve market access for producers, and we’ll do that as we always have, through labelling initiatives and working with roasters and the trade,” he says.

This is a key component in FLO’s new strategy entitled “Unlocking the power of many”. In the US, Hennings says engaging with grassroots Fair Trade movements will be important in this regard.

“There are a lot of stakeholders in the US, they want to see our structure and see how our initiatives work,” he says. “Fair Trade is not only a labelling initiative. It’s so much more than that.”

To engage these stakeholders, Hennings says he plans to hold different workshops to get input on the best path for FLO to take in the US. “We have a lot of supporters in the US, and they know the market best. We need to ensure to learn from them,” he says.

This won’t be the first time Henning has set up a new unit for FLO. He joined the organisation two 26

G C R | J A N UA R Y / F E B R UA RY 2013

and half years ago, applying his background in agri-business and finance helping producers access financing. His FLO efforts saw the creation of a new unit dedicated specifically to this cause. The unit now mainly oversees the access to two funds. One is managed by the Deutsche Bank in Africa, where FLO facilitates producer access to these funds. The other is the Fairtrade Access Fund, which provides farmers’ cooperatives and associations longterm loans needed to renew their farms, or adopt new technologies and equipment.

“This is really a great fund, as it is intended for long-term finance for producers, something that they are really in need of,” says Hennings.

“The majority of funds available elsewhere are concentrated on trade finance, but these producers also need long-term funds for renovations of their farms.”

Hennings says these initiatives are set up to fill the gap of the US$1.2 billion of financial resources needed to cover the needs of Fairtrade Producer Organisations.

Hennings plans to bring this experience to the US, in working with funding organisations to help link them with producers.

As Interim Operations Manager, Hennings will oversee the appointment of an official FLO USA board, set to be announced by the time this publication goes to print. As applications for Executive Director of the new unit were due at the end of 2012, Hennings says the board will appoint a new leader in due course, and he will help the new leader in the transition period.

“For us, this is a very good moment in what’s happening in the Fair Trade movement,” he says. “We have a lot of support from different companies and roasters, and we’re doing our best to deliver what’s needed.” GCR

“IT IS ABOUT THE PEOPLE. IT IS NOT A COMPETITION. IT IS ABOUT DOING THE RIGHT THING.” Enrique Hennings

Interim Operations Manager, Fairtrade International USA

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FEATURE Future Proofing

supply chains against

future

DAVE SWINFEN SPEAKS WITH VARIOUS LEVELS OF THE COFFEE SUPPLY CHAIN ON STRATEGIES TO DEAL WITH UNAVOIDABLE VULNERABILITIES.

A

few years ago, Stephen Hurst, from specialty coffee merchant Mercanta, received some rather unpleasant news.

After undergoing all the effort needed to transport two containers of coffee across continents, he was told that the shipping line had gone bankrupt in the midst of the shipment.

“Our containers were simply unloaded at the nearest port at the time,” he explains. “We had to figure out how to recover them.”

While this is the “one of the worst examples” Hurst can remember, situations like these are not uncommon in the coffee trade, one that relies on a vulnerable supply chain, spread over countries at varying levels of development.

Dexter Geertman, a specialist in supply chain management and modern manufacturing resource planning (MRP-2), knows the complexities of trying to find some security in the chain. While businesses can protect against disruptions by adding supply chain redundancy, he says this sits at odds with modern trends for streamlined supply and “just-in-time” inventories. So how can companies balance the need for supply chain efficiency while having enough flexibility to deal with shocks in the chain?

This is a paradox that could have an impact on stakeholders at every point in the global supply network.

To understand how supply chain disruptions are relevant to a company’s operational situation, Geertman recommends that the first step should be a supply chain vulnerability audit.

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He says it’s best to start at the end: look at the needs of customers, and then work backwards to product suppliers, and finally material suppliers.

“The aim of this initial step is to identify vulnerabilities at every link in the chain,” he says.

The second part of this scenario analysis is a “what-if” audit, looking at the knock-on effects of macro events.

“Companies which are supply Sean Cairns, Sonoco Consumer Products Europe chain resilient identify disruptions and develop contingencies to overcome them,” he says. “This creates a strategic supply chain design optimised against shocks, laying the foundation for complete business continuation planning.”

The results of these two steps, he says, should hopefully provide decision-makers with an overview of their operations. This facilitates the next step of implementing a strategic supply chain plan to mitigate the impact of disruptions. The trend towards lean inventory means modern coffee supply chains are already stretched, resulting in inherent vulnerability.

Experts like Geertman are calling for customers to reconsider their inventory positioning, sourcing and transportation options to create a more flexible, resilient supply chain.

Dr. Jeff Karrenbauer, President of supply chain solutions provider Insight, recommends a minimalist approach to inventory.

“Companies should compare the cost of stockpiling inventory against the risk of losing sales and customers, creating a negative impact on bottomline profitability,” he says. “Too much inventory at the wrong location adds to bottom-line costs. Determine optimal inventory policies and levels to sustain your company, and build efficiencies from there.”

Recent natural disasters have highlighted the fact that logistics is an area subject to on-going threats.

Consider the release of volcanic ash into European skies, or the global implications of localised flooding in Thailand.

Karrenbauer says a sensible approach is to have several routes built into delivery frameworks. This would include a back-up solution, and applies to all elements of the supply Jim Cain, Kopi.co.uk chain. He says that for buyers, this

“RELYING ON CANS PRODUCED FROM ONE MATERIAL WOULD TETHER US AND EXPOSE US TO SUPPLY SHORTAGES AND CHANGES TO RAW MATERIAL PRICE.“ Sean Cairns

General Manager, Socono Consumer Products Europe

means having more than one source of supply.

For deliveries, it’s about having a short-notice transportation company who is able to step in and fill a gap – albeit at a higher cost.

Sean Cairns, General Manager of Sonoco Consumer Products Europe, a large packaging company operating in the coffee sector, says that he takes a similar approach when it comes to sourcing materials.

“We developed a robust and integrated supply chain for producing paperboard for the coffee industry,” he tells Global Coffee Review. “Relying on cans produced from one material would tether us and expose us to supply shortages and changes to raw material price. Our mills use recycled fibres rather than virgin timber to enable us to be a low-cost provider.”

He says that analysis of the supply chain and the formulation of contingency plans are just the first steps in a process that should be continually evolving. New government regulations, supplier changes, the opening of new hubs and changes in the location of customers all require alterations to the resiliency plan.

“Consider it something which should be under constant evaluation and modification, and reflective of a company’s dedication to providing security to itself and to its customers,” he says.

The current appetite for ‘skinny’ chains might have created some instability where

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FEATURE Future Proofing

there was none before. How a stakeholder responds to this issue may depend on their own ability to absorb and mitigate as a result of their location and capacity.

Hurst says that Mercanta’s embracement of packaging and cupping improvements has meant that he can now monitor the ageing of goods in-warehouse, giving him greater flexibility.

“Some product lines are in great cupping condition six to 12 months after arrival,” he says. “Other lines are losing their quality after three months. This is a matter of cupping and re-cupping inventory. Old raw coffee beans rarely become un-saleable.”

Hurst describes the company’s approach as somewhat holistic. Although he recognises the need for redundancy Stephen Hurst, Mercanta

DAMAGE In 1999, Brazil lost 40 per cent of its crop when cold fronts from the Atlantic swept into the country causing frost,

Coffee producers in Caranavi, Bolivia

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G C R | J A N UA R Y / F E B R UA RY 2013

in managing stocks, he tries to plan a considered approach by taking advantage of improvements in packaging, and subsequently, marketing. This results, says Hurst, in a flexible management system for buffer stock, plus the additional benefit that the right customers are getting products appropriate to them in a much more targeted way.

The use of new products or technologies may also bring value to the reinforcement of supply chains in the future. Jim Cain is an international sourcing expert who selects high quality coffees for gourmet coffee club, Kopi. co.uk. He says investment in bio-technology to cultivate more resistant strains is underway in all coffee growing regions. He notes that this in itself adds redundant protection from the one thing that cannot be truly controlled – the weather. He says that the force of nature is the largest contributor to supply chain instability.

“Brazil supplies over 30 per cent of the world’s coffee and the coffee producing regions are situated mainly on high terrain,” he says.

“Cold fronts from the Atlantic sweep in to these regions causing frost, and resulting in damage to crops. The last time was in 1999 when 40 per cent of the crop was lost.”

Cain says it’s important that, when planning for shocks, decision-makers have mitigation strategies that span all the way up to major disaster levels.

Insight’s Karrenbauer agrees, saying that CFOs and others involved in corporate risk analysis and reporting need to take a realistic view of business risk from “unimaginable realworld events”, which have a high chance of taking place. He highlights the importance for long-term reviews of supply chains, not just short term corrective action.

He says that longer term mitigation strategies might include a review of office locations, production facilities and hubs. This is not something likely to happen overnight for most operators. He adds that the location of customers also has a bearing on this, along with associated issues regarding capacity at location, and accessibility of raw materials or product from one’s own suppliers.

Karrenbauer insists it is important a company’s mitigation strategy goes hand in hand with the organisation’s own strategy for growth. Relocating a production facility to an area which does not flood, for example, may seem sensible, but if the company plans to invest in staff or new machinery, then extra

facility costs may be untenable.

Cost implications, particularly those involving large single lump sums of capital expenditure, may be an answer to the original question: namely, why are there companies which still do not have plans in motion, or at least in place, for effective supply chain disaster proofing?

José Aguilar, Mercanta

There are examples of progress being made in areas of supply chain resiliency which are less expensive for operators. Luke Salway, Director of Business Development at NLP Top Coaching, which operates throughout South-east Asia, gives an example of a low-cost improvement in supply chains. In Thailand, organic coffee farming has only come along slowly, with a limited number of Certified Organic producers. Certification here is handled by Organic Agriculture Certification Thailand (ACT), a private nonprofit foundation, or the Organic Crop Institute, a public agency under the Ministry of Agriculture and Cooperatives. Thai farmers have proven to be reluctant to undergo what they often see as unnecessary levels of bureaucracy. This means that merchants who want to sell organic beans have a restricted choice of sourcing options – something that could represent a threat to the supply chain.

Some merchants are now working directly with small, noncertified Northern Thai farmers who are already producing crops to organic standards to get certified. The result is an increase in the number of organic growers at relatively little cost to merchants. Additionally, both parties benefit from an emboldening of the relationship, and an increase in the value of the product.

This improvement, Salway says, is the result of conducting an effective supply chain vulnerability audit as a very first step in setting up business.

“Rather than presenting additional costs to stakeholders, the supply chain review has revealed a resiliency improvement,” he says. ‘This has a positive effect throughout the entire chain.

Everyone, from the grower to the final buyer, is happy.” G C R

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FEATURE Sustainable Roasting

A sustainable trajectory EMISSIONS COMMITMENTS, REGULATIONS AND GUIDELINES ARE NOW A GLOBAL PHENOMENA, WHICH ALL COFFEE ROASTERS SHOULD BE KEEPING ON THEIR RADAR.

T

he draft of the Fifth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), leaked last December, gave little wiggle room for climate change sceptics.

Published online by Alec Rawls – himself a climate change sceptic who volunteered to review the draft – the report builds on past papers that use scientific evidence and modelling to strengthen the links between man-made carbon emissions and climate change.

“Multiple lines of evidence show that the climate is changing across our planet, largely as a result of human activities,” the draft states.

Carbon dioxide (CO2) and methane (CH4) both get a mention in the introduction, as their levels of concentration in the atmosphere are measured and observed to detect pollution caused by human activity.

These gasses have another thing in common: they are both an unfortunate by-products of coffee production. Methane is mainly an issue at origin, produced in the fermentation process of coffee beans. At the coffee production level, CO2 has long been on the radar. If it haven’t in the past, reports like this will see them the radar in the very near future.

While few regulations apply directly to coffee roasters, most developed nations have national and regional regulations that are applicable to industry emissions. Laws apply to CO2 and NOx emissions, as well as smells emitting from factories, among other aspects.

For some countries, these laws stem back for decades. For instance in Germany, the Technische Anleitung zur Reinhaltung der Luft (Technical Instructions on Air Quality Control or TA Luft) was first established in 1964, ten years before the fundamental law for the protection against air pollution was established as the Federal Environmental Protection Law of 1974, according to a government paper by Prof D. Ubing and Dr L. Kropp.

The regulation covers the performance of licensing procedures for every plant, with emission standards that must be met and modern technologies applied. The law has been amended several

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FEATURE Sustainable Roasting

“MULTIPLE LINES OF EVIDENCE SHOW THAT THE CLIMATE IS CHANGING ACROSS OUR PLANET, LARGELY AS A RESULT OF HUMAN ACTIVITIES.”

times since it’s been set up, setting out stricter emissions and output guidelines, while also extending the application of the law to different plant types.

At the European Union level, although no specific regulations apply to coffee roasters, the European Commission’s (EC) Sarah Trioni points to the potential application of a report published in September 2012 looking at industrial and laboratory furnaces and ovens. The report was compiled by the EC’s Integrity Unit in association with the Bio Intelligence Service.

The report notes that industrial and laboratory furnaces and ovens consume large amounts of energy, most of which in the European Union is derived from fossil fuel. As such, this range of equipment should be considered as “significant emitters of greenhouse gases (GHG), most commonly carbon dioxide via fuel’s combustion”.

The definition of this equipment falls close to coffee roasting equipment, as “a device whose primary function is to apply heat to the interior of an enclosed chamber to achieve at least 90 degrees Celsius internally”.

The report points out that while there are many European, national and other standards that affect industrial and laboratory furnaces, very few are concerned with energy consumption or efficiency. The report notes that an initial estimate of potential energy savings, with newer technologies replacing standard designs, could be as much of 100 terawatt-hours per year, the equivalent of around 30 per cent of the United Kingdom’s annual electricity consumption.

The report notes that much larger energy savings could eventually be achieved by replacing a large number of old, inefficient furnaces in the European Union. The report’s recommendations include a policy that would see the full implementation of minimum energy performance standards over three tiers, with the first tier coming into play as early as 2014. In enforcing these standards, these policies fall in line with the European Union’s goal to reduce greenhouse gas emissions and energy consumption by 2035.

To help achieve this goal, Europe first introduced a cap and trade system, the EU ETS, in 2005, limiting the amount of GHG that can be emitted in factories, power plants and other installation systems. Companies can receive emission allowances, which they can then sell or buy from one another as needed.

Over the Atlantic Ocean, the United States has been more

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POWER One report notes that potential energy savings from newer technologies could be the equivalent of 30 per cent of the United Kingdom’s annual electricity consumption.

reluctant to commit to reducing emissions.

California has taken the lead in terms of emissions reductions, committing into law a plan to reduce GHG to 1990 levels by 2020, then by an additional 80 per cent by 2050.

California recently joined forces with its French neighbour to the north, Quebec, in actioning their concerns of climate change with a joint cap-and-trade system to create a carbon market in North America. The US state and Canadian province announced in December that they planned their first joint auction of emission allowances for August 2013.

California already has some tough emissions regulations in place, supervised by the South Air Quality Management District (AQMD), with codes applying to coffee roasting equipment on the emission of CO2 .

Advancements in reducing emissions have been slower to come in developing markets.

With the man-made emissions of climate change stemming back to the industrial era, developing nations, including powerhouse China, are reluctant to commit to cut on a problem they don’t see themselves as having caused. The most recent international climate change talks in Doha were widely criticised for having achieved little except for extending the world’s only climate change treaty, the Kyoto Protocol.

This is not to say that companies in developing countries have a ‘wild card’ for polluting. In Vietnam, the Deputy Minister of Natural Resources and Environment warned that fines would be quadrupled to over US$95,000 to serious polluters. China is said to be adopting similar air ‘smell’ laws to the United States, where complaints against companies emitting smog or smells will be actioned.

With looser emissions laws, however, a main driving factor in these countries will undoubtedly be power supplies. Even where power is cheaper, usage quotas is a driving factor for companies to keep energy usage down, as are tight profit margins.

All this to say, reducing power consumption and emissions is undoubtedly a global trend, and one that coffee roasting equipment manufacturers are quickly picking up on.

In the following Special Feature in Global Coffee Review, we highlight six companies who are leading the way towards sustainable roasting equipment. G C R

A NATURAL

RESPONSIBILITY PROBAT’S THOMAS KOZIOROWSKI HIGHLIGHTS WHY AND HOW ROASTERS SHOULD PAY SPECIAL ATTENTION TO THEIR CARBON FOOTPRINT TO PROTECT THE FUTURE OF THE COFFEE INDUSTRY AS A WHOLE.

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n the coffee industry, Thomas Koziorowski, Probat’s Director of Product Technology and R&D, says there is a particular synergy where sustainability is concerned.

Koziorowski says sustainability has long been hotly discussed in coffee, even before climate change was on the political agenda. “Sustainability has always been a topic for our customers, even when this term was not yet commonly used as it is today,” he says.

“All involved in coffee tend to be pushed via sustainability concerns. With coffee being a natural product, this alone lends itself to the beans being processed in a way that is socially and environmentally responsible.”

As coffee is mostly harvested in countries around the equator, Koziorowski points to the link that it’s these countries that are experiencing the most dramatic climate changes.

With increasing evidence that climate change is caused by man-made carbon dioxide emissions, limiting these emissions in the production of roasted coffee makes sense for the sustainability of the industry as a whole.

“What we have in coffee is this natural, organic substance. We have to take responsibility to focus on that,” he says. “We see the effects of climate change in areas where coffee is grown, or could be grown in the future. That is why we

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have to focus on sustainability, for the future of not only present, but future consumers.”

To this end, Koziorowski explains that Probat has a long history of looking into the sustainability of its equipment. The company’s view has been a broad one, extending all the way from the longevity and quality of the equipment it sells, product refinement under ecological aspects, as well as social commitments in how Probat operates.

The longevity of Probat’s equipment has been a key focal point for the company in its sustainability efforts. In ensuring its equipment can serve companies for decades, this limits the wastage of disposing old equipment that’s only run for a few years. If they were to adopt a narrow-minded business perspective, Koziorowski points out that the company would profit the most if equipment had to be replaced every five years. However, this wouldn’t fit into the company’s sustainability principles.

“The potential lifetime of equipment is really important. We have received confirmation, with almost each roaster delivered, that our highly sophisticated designs are a lifetime investment.

Equipment over 25 years old is not rare, and the prices for used Probat equipment in the market underline this,” he says.

Although modern trends have favoured the use of lighter materials, Probat has balanced these trends with a preference for recyclable materials, mainly steel. The company also “practices what it preaches” in limiting energy consumption in its own manufacturing processes, opting to bend frames rather than weld them. This helps dramatically reduce energy consumption in processing factories.

These efforts in reduced energy usage extend into their equipment. Koziorowski says there isn’t a development at Probat that doesn’t keep in mind a desire to minimise energy input during the operation of roasting equipment on the client’s site.

One such development is Probat’s coffee preheating device. The system uses the heat released from the roasting process, most often from a catalyzer, that generates heat at 450 to 600 degrees Celsius. While traditionally that heat has just been released out of the factory, Probat’s green coffee preheating device traps that energy to heat green coffee from its average room temperature of 20 degrees Celsius, to 100 degrees, ahead of the roasting process. This helps save 20 per cent of energy consumption, which in turn reduces emissions and decreases fuel usage.

On the exhaust treatment side of the equation, Probat has developed its own Proforte exhaust air treatment system to filter emissions while also using a fraction of the energy requirements of other catalyzer systems. The Proforte is a Flameless Regenerative Thermal Oxidation (FRTO) system. It works similar to other thermal catalytic converters, however it doesn’t need an additional burner to operate, hence less energy consumption. Rather, the system stores the thermal energy released during pollutant combustion in a ceramic bed, and uses it for further heating of exhaust air. The temperature of the exhaust prior to cleaning is between 150 to 200 degrees Celsius, and is

PROMOTIONAL FEATURE////////// heated to around 1000 degrees Celsius, the temperature needed to combust pollutants. The air flows into the second half of the bed, where it releases thermal energy. This energy is then stored to fuel cleaning the next intake of exhaust.

In addition creating new technology, Probat’s dedication to sustainability has also focused on offering upgrades to older models.

For instance, their new Saturn roaster series has been designed with a gap adjustment, to ensure less cold air is sucked into the machine, lowering energy usage. Probat has extended this offering to the Saturn predecessor, the type RZ centrifugal roaster.

“We set at Probat, within the scope of further development, great value on the fact that our customers can also update their existing equipment with regard to sustainability,” Koziorowski says.

“Thus these customers can improve their old roaster’s efficiency.”

Looking beyond the sustainability of singular pieces of equipment, Probat offers consultations on the processes and optimisation of their client’s plant as a whole.

Koziorowski explains this involves two major phases. The first is taking from Probat’s expertise in roasting equipment, and looking at all the plant’s roasting operations. From the burner to the motors, Probat experts analyse the energy demands and emissions output of equipment, to see what adjustments can be made to optimise operations.

The second phase is looking at the factory’s full process, from how green beans come into the factory to where roasted coffee goes out. From the use of bucket elevators to frequency converters, Probat staff can analyse how processes can be adjusted to limit ecological footprints. This further lends itself to Probat’s focus on the long lifetime of its equipment.

“EQUIPMENT OVER 25 YEARS OLD IS NOT RARE, AND THE PRICES FOR USED PROBAT EQUIPMENT IN THE MARKET UNDERLINE THIS.” Thomas Koziorowski

Director of Product Technology and R&D, Probat

“Sustainability does involve the maintenance and inspection of plants and roasters, and this is why we offer that as a service to our customers,” he says. “Only an adequately maintained plant can be safely operated over years and decades.”

As for the future of where Probat’s sustainable developments will head, as the man driving these research and development efforts, Koziorowski says the company is constantly working on innovative ways to improve the quality of their equipment. For instance, very recent innovations are the new tangential roaster Jupiter Hybrid or the newly designed roll mill which also fulfil the requirements of the latest coffee product developments. With increasing research about the potential energy use of the processes of coffee, only the future will tell where the rest of this technology will lead. GCR

PROFORTE Probat’s Flameless Regenerative Thermal Oxidation (FRTO) system stores the thermal energy released during pollutant combustion in a ceramic bed, and uses it for further heating of exhaust air. www.probat.com Probat’s recently opened Research and Development facility.

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BALANCING

ACT

LEADING ROASTING PLANT SOLUTION PROVIDERS NEUHAUS NEOTEC DISCUSS THE CHALLENGES OF MANAGING COSTS AND SUSTAINABILITY REQUIREMENTS.

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ealing with the world’s largest roasters, Neuhaus Neotec are used to clients who are well aware of the emissions regulations and requirements that apply to them.

While these guidelines vary vastly between clients in Western markets to those in developing nations, Andreas Juerss, Neuhaus Neotec’s Marketing Manager, says he’s noticed a certain merging of trends in recent years.

“It’s not only legal requirements that are proving attractive for roasters, but the major advantages in cost savings from energy reduction,” Juerss says. “Whatever market a company is operating in, roasters everywhere are thinking about the long term, and they’re thinking about efficiency.”

This need to limit energy and emissions, Juerss says, is always balanced in consideration with costs. “A client knows he or she has a legal obligation to fulfil, but they also have a budget,” he says. “Our job is to find a way to consider both requirements.”

Fortunately for Neuhaus Neotec, their leading air roasting technology is known for its ability to cut down on emissions through the use of an enclosed system, while also limiting energy consumption to a fraction of comparable machines.

Air roasting in itself, as a closed system,

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offers major advantages in terms of energy savings. In using an air flow to roast the coffee, the temperature is maintained consistently throughout. Because the heat is forced through the bean, it roasts in a fraction of the time of drum roasting equipment.

As leaders in this technology, Neuhaus Neotec has developed some major advancements to make the best of this process. One has been the introduction of Intelligent Control Systems. The online control system can monitor and control the entire process. Programmers can tap into the system not only to perfect the roast profile, but also to optimise the process from an energy usage perspective. This advanced programming can help reduce the energy consumed.

“With these Intelligent Control Systems, you can watch the parameters of the roasting process, and observe the temperature of the system,” explains Thomas Boeckmann, Head of Research, Development and Design for Neuhaus Neotec. “We take careful control with the storage of data and record what has happened in past roasting processes. We receive the data from the machines and do calculations in-house, to optimise the process.”

While previous systems made use of only three variables: time, temperature, and air speed, Boeckmann explains that the Intelligent Control Systems can control 21 different temperature values and air qualities at a time.

Setting these variables has as much to do with roast profiling as it does with sustainability.

Boeckmann says that the advantages of hot air roasting are evident, in that the temperature of the air being pumped into the bean is so carefully controlled. Furthermore, the air process is gentler on the bean than drum roasting.

“Our clients discover with hot air roasting, as they watch the beans come out, they see that the colour is always the same. Also, they notice that we’re not smashing the beans,” he says. “Once you’ve perfected a recipe, you can repeat it one time after another.”

Because every bean is different, the company fits their equipment with Copy-Roasting units.

These units are fitted with an intelligent algorithm that automatically detects deviations from ideal roasting profiles, and compensates by adjusting temperature and air quality.

Back on the energy savings front, one major advancement by Neuhaus Neotec has been the introduction of green coffee preheating. Depending on the roasting machine used, an exhaust air temperature of 260 degrees to 400 degrees Celsius is created. This energy is recovered by preheating the coffee immediately before the next batch is roasted. This preheating reduces energy costs by up to 25 per cent, reduces CO2 emissions by up to 25 per cent, and increases the capacity of the machine by 20 per cent or more.

Building on this theme of energy recover, Neuhaus Neotec have led ground-breaking work on making use of the energy in the roasting process for factories as a whole. This is what Boeckmann says is truly the “future” of energy recovery. With large plants spending money to contain the energy from roasting equipment, and at the same time heat up their factories, Boeckmann says it

PROMOTIONAL FEATURE////////// only makes sense to find a way to make the best of this energy.

The system makes use of high exhaust temperatures to heat up an inlet, that can then warm up the plant as a whole.

These systems, he warns, are designed for factories that run constantly, six to seven days a week for 24 hours a day. It’s a big investment, but one that should prove attractive to large plants looking to save on energy costs while doing their part to help reduce their company’s environmental footprint.

For the emissions that are created, Neuhaus Neotec offers the optional installation of advanced catalytic after-burner systems. The company has invested heavily in developing its own Regenerative Thermal Oxidisation (RTO) system. Other catalytic converter systems use high temperatures to combust the exhaust.

“You can imagine, these systems use up a lot of energy,” Boeckmann says. Conversely, the RTO system makes use of platinum and gold particles. These particles help remove carbon hydroxide and nitrogen oxides produced in the roasting process.

Many of these advancements have come about in Neuhaus Neotec’s pilot plant. The in-house facility is equipped with a laboratory and pilot roasting machines, enabling research on how different roasting conditions affect coffee quality.

Boeckmann says potential clients can first send their samples to the plant, and the company can roast the coffee on their own

“WITH INTELLIGENT CONTROL SYSTEMS, YOU CAN WATCH THE PARAMETERS OF THE ROASTING PROCESS… WE TAKE CAREFUL CONTROL WITH THE STORAGE OF DATA AND RECORD WHAT HAS HAPPENED IN ROASTING PROCESSES.” Thomas Boeckmann

Head of Research, Development and Design, Neuhaus Neotec

small lab roaster. From there, they move onto bigger trials on fuller-scale machines, to show the client the results of the roast.

In 2010, Neuhaus Neotec opened a new R&D centre, able to handle the entire manufacturing process from green bean sorting, roasting and grinding.

“It’s like a small production line,” Boeckmann says.

In addition to offering the latest advancements in modern equipment, Neuhaus Neotec also works with customers to fit out their old equipment to optimise energy usage levels and limit emissions.

Going back to the balance of costs and sustainability, Boeckmann says he understands that purchasing all new equipment isn’t exactly an option for many roasting operators.

He notes that some of Neuhaus Neotec’s technology, such as the green bean heating unit, can be fitted to different brands of machines.

As for the future of where Neuhaus Neotec roasting and other equipment is heading, Boeckmann says it will largely depend on the The Neuhaus Neotec customer and the direction of the industry. As green bean preheating unit a client-focused company, Boeckmann says the reduces energy costs by inspiration will always come from the needs up to 25 per cent, reduces of the market.

CO2 emissions by up to 25 “The ideas are not only coming from our per cent, and increases the lab, they’re really driven by the customer,” capacity of the machine by he says.

20 per cent or more.

“We believe in a high degree of customer Neuhaus-neotec.de contact, we’re always out there looking at our clients’ facilities. We get out there, and we see the problems, and we see ourselves as here to solve them.” GCR

CUTS ALL ROUND

Neuhaus Neotec green bean preheating unit.

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THE

PERSPECTIVE

BUHLER’S STEFAN SCHENKER EXPLAINS WHY AN OVERVIEW OF THE FOOD PROCESSING INDUSTRY HAS HELPED THIS COMPANY STAY AHEAD OF THE SUSTAINABILITY TRAIL.

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s a company working across the food manufacturing industry, a major advantage for Buhler, and its partner Petroncini, has been observing the crossover of trends.

When it comes to sustainability, Stefan Schenker, Head of Market Segment Coffee for Buhler, says that the earliest concerns can be traced back to large multinationals. Schenker says these large companies started looking at their environmental footprints early on, as a way to cut down on costs while also ‘cleaning up’ their corporate image.

Leading up to 2007 and beyond, when energy prices started to peak and showed few signs of dropping back, Schenker observes that sustainability has since become a true “hot topic” among every level of industry. In coffee, from the smallest boutique shop roaster to the largest factory manufacturer, no one is being spared swelling energy costs. Couple those costs with an increasing number of current or anticipated regulations aimed at cutting emissions and limiting air pollution, and these days Schenker says you’d be hard pressed to find a company not looking into the long-term sustainability of their roasting equipment.

“For smaller companies it may just be about cost reduction,” Schenker says. “But what we’ve

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really seen in most developed markets is that the norms and regulations about exhaust air are becoming stricter and stricter. This is probably the biggest single problem in the roasting industry in terms of regulations. The authorities are simply less and less tolerant of roasters. And since you cannot completely avoid odours, this is increasingly becoming a problem.”

With this broad view of the food processing industry, Buhler is well placed to see what trends are set to come. “We take sustainability very seriously,” says Schenker. “Buhler started on this path towards sustainability long ago in other fields, and we’ve been able to take all that experience and bring it into our roasting equipment.”

In terms of energy efficiency, Schenker says the key starts with optimised design in the roasting chamber. Through an efficient transfer of heat from the air to the beans, this can limit energy usage dramatically. Along with its partner, Petroncini, Buhler has worked over the years to optimise the roasting chamber for efficient heat transfer. The beans are evenly distributed throughout the chamber to benefit the most from air transfer. The next step has been to optimise the speed of the chamber. Because beans vary in size, and require different speeds from the beginning to the end of the process, Buhler’s multi-step speed control system optimises these speed cycles.

Another step to maximising energy efficiency has been to offer air recirculation. Schenker remembers two decades ago when the norm would see open systems that allow a full escape of air, requiring high amounts of energy to continuously reheat the system. Modern Buhler equipment recirculates most of that air, resulting in significant energy savings.

Because recirculated air has largely become the norm in air-roasting equipment, Schenker points to the next step that Buhler has taken. Buhler’s equipment combines the main process of hot air recirculation with the exhaust gas cleaning process, all in one combustion chamber. This means that as the heat is generated for the main process, it also serves to clean the air as a secondary process. This saves a high amount of energy, compared to systems that use catalytic converters in an afterburner process to clean the exhaust gas. Some Buhler equipment still uses catalytic converter systems, and Schenker says the company works individually with clients to see which is most appropriate for them.

An exciting advancement Buhler launched at time of publication, is a coffee preheating unit.

Although not unique to Buhler, combined with the company’s leading-edge efficiency in design, this preheating unit is set to push the company to the forefront in terms of energy saving. “It’s a very important system, one that can save up to 30 per cent of energy costs,” Schenker explains. The preheating unit works like a second roasting chamber, using hot recirculated gas to preheat the beans.

“But you have to take care not to overheat the beans, because you don’t want to affect the quality,” Schenker says. “This process control is very important.”

Beyond just offering the latest advancements in sustainable equipment, Schenker says that Buhler is dedicated to working with clients on an individual level to help them reduce their environmental

PROMOTIONAL FEATURE////////// footprints. The company offers an energy audit service, where they look at the complete processing plant. The Buhler team visits the client’s factory, and looks at both the energy and production streams. The team then produces a Sanki diagram: a tool that shows the plant’s energy and production flows in the plant. “With these diagrams, the client can visualise in the plant the most efficient ways to save on energy,” says Schenker.

In all these energy savings measures, Schenker says that there is no need to compromise on quality. He assures that when these technologies are applied properly, there is no impact on quality.

“Especially with these air recycling systems, we’ve had many clients ask if this will affect the quality. And the answer is ‘No’,” he says. “As long as the process is optimised, there really is no impact. Quality is the last thing that we would want to affect.”

Quality takes priority in all of Buhler’s extensive research and development activities. The company invests an impressive 5 per cent of its turnover into R&D. In the coffee arena, Buhler is currently working on a number of projects with Petroncini.

Different to other dedicated roasting equipment manufacturers, Schenker says Buhler’s big advantage will continue to be its ability to leverage across food production fields.

“From chocolate to cocoa beans, there are some common sustainability projects that spread out,” he says.

In terms of future projects, Schenker says research is heading mainly in two directions. The first is energy recovery, making the most of off-gasses. “I think there’s still a lot of work to be done in terms of recovering energy from that hot off-gas,” he says.

Buhler’s partner Petroncini currently holds patents on an RTO system, a thermal oxidation cleaning system that combines the working principle of an after-burner with the energy-saving heat storage capacity of ceramics. The chambers are filled with ceramics,

“BUHLER STARTED ON THIS PATH TOWARDS SUSTAINABILITY LONG AGO IN OTHER FIELDS, AND WE’VE BEEN ABLE TO TAKE ALL THAT EXPERIENCE AND BRING IT INTO OUR ROASTING EQUIPMENT.” Stefan Schenker

Head of Market Segment Coffee for Buhler

through which the off-gas can flow and collect heat that was previously stored.

By directing the gas through a sophisticated stream and pathway, this helps to maintain an exothermic oxidation process in the cleaning unit for decreasing the impurities at lower energy input.

Another technology Buhler is only just developing is cold off-gas cleaning through the use of plasma. This is in development with external partners.

It generates radicals that clean off-gas at low temperature.

Schenker warns not to look out for this plasma technology too soon, because it’s really just the future. However, as one of the earliest providers of sustainable food processing technology, he says you can expect to see it from Buhler first. GCR

WARM-UP, CUT DOWN Buhler’s newly released green coffee pre-heating system is able to cut down on gas usage by up to 30 per cent. The system makes use of recirculated off-gasses to maximise energy efficiency. www.buhlergroup.com Buhler’s air roasting system.

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INCIDENTALLY

SUSTAINABLE, PURPOSEFULLY FOCUSED ON QUALITY

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STEVE DIEDRICH EXPLAINS WHY HIS 30-YEAR-OLD DESIGNS ARE STILL BEATING THE MOST MODERN TECHNOLOGICAL ADVANCES IN CLEAN COFFEE ROASTING EQUIPMENT.

n discussions of roasting technology, there’s one thing Steve Diedrich wants to make clear.

“There is nothing sustainable about coffee roasting,” Diedrich says. “At least not that anyone’s really contemplated.”

Working for most of his adult life in an incidental career designing coffee roasters, Diedrich’s point is rather distinct. It is difficult to view an industry that is based on the output of heat and energy to change the chemistry of a raw product as “sustainable”. It’s an interesting point from someone whose original designs, dating back to the 1980s, have turned out to be some of the most sustainable on the market.

With his parents owning a coffee farm, and his brother Martin leading what used to be the giant Diedrich Coffee, Steve’s interest in the industry would seem inherent. Yet he says that he never intended to build roasting equipment, with plans to get into aeronautics engineering.

This was until a certain series of events changed Diedrich’s career path.

“I was just very fortunate that my first coffee roaster caught on fire,” says a straight-faced Diedrich. “So I had to build a new one.”

In seeking out a new heat source for this second model, he looked no further than a few blocks down to, what was then, one of the first US manufacturers of infra-red burners.

His father, Carl, told him there was no way

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he could build a coffee roaster with infra-red technology. A naturally defiant child, Diedrich set out to prove him wrong.

Three decades later, these events proved a turning point in Diedrich’s career. In challenging industry norms by using infra-red technology, he managed to build a roaster that burns just 3 – 4 per cent of the oxides of nitrogen (NOx) gases of an equally rated blue flame burner. Other gases and emissions, including carbon monoxide (CO), carbon dioxide (CO2), sulphur oxides (SOx) and aldehyde, are reduced by an impressive 65 – 70 per cent compared to similar equipment that use atmospheric burners. With government regulations in California starting to crack down on NOx gases, Diedrich can reflect today on his rather fortunately-placed neighbour.

“There is a whole new generation of roasters looking at the sustainability of their equipment,” Diedrich says. “With moves in emission controls and environmental concerns, people are really looking at the design of their roasters. Fortunately for us, a 30-year-old roaster actually exceeds the requirements that governments like California are putting in place. While other manufacturers are scrambling to meet the codes, we’re just cruising along.”

Diedrich admits that his interest in reducing emissions had less to do with environmental concerns, and more to do with his interest in coffee roasting. While he initially knew little about the process, from what he had picked up from his family members, he worked out that using cleaner technology would fit well into the quality equation. “It made sense that in the chemistry of coffee, the cleaner the air, the less it would influence the chemistry change,” he says. “That’s where I really got interested in infra-red. Energy efficiency was really just secondary.”

Putting quality aside for a moment, the energy efficiency of Diedrich’s technology cannot be over-stated. In looking alone at the roaster, Diedrich roasters use half the gas of blue-flame burners.

“But sustainability wasn’t the main intent,” Diedrich emphasises. “What I really wanted was just to create a way to clean roast coffee.”

By using infra-red instead of blue flame, Diedrich quickly achieved his goal. Over the years, Diedrich’s design has evolved to provide unmatched control over the process. Working with mechanical engineers, Diedrich equipment employs an impressive heat exchanger that controls the airflows into the coffee.

This process is important, he explains, because green coffee contains 9 to 14 per cent moisture, and this moisture acts as a good conductor for heat. Early in the roasting process, Diedrich technology allows roasters to work with this moisture content, using it to elevate sugar levels in the coffee.

PROMOTIONAL FEATURE////////// The Diedrich system works moisture by controlling the airflow via a vacuum system. By decreasing the airflow early in the process, the roaster limits how much moisture is drawn out. Later on in the process, the system increases the airflow to whip out the moisture.

“As the moisture reaches 100 degrees in the core of the bean, this creates tremendous energy,” Diedrich explains. “Then, working with the air, we’re able to suck the pressure out while still getting the heat into the coffee.”

For the operator, to be able to control how much and when the hot air passes through the roasting system, combined with precise control over temperature, allows the user to implement sophisticated and nuanced roast profiling. Diedrich uses an apt metaphor to explain this level of control.

“Roasting coffee is a bit like steering an oil tanker,” he says.

“You need to know where you’re going ahead of time, and think ahead. You can’t make any last minute turns. It’s the same with coffee roasting. If all you’re doing is turning the flame up and down, you’re not able to fully control where your roast profile is heading. Your temperature is going all over the place, and usually by the time you change it, you’re too late.”

Diedrich points to four main elements as key to roast profile.

The first two elements can be controlled on most conventional roasters: that is the temperature of the roast and the time frame.

The third element, however, is the temperature ramping rate, that is how the temperature of the bean itself is changing throughout that time period. In raising and lowering a blue flame, Diedrich says it’s virtually impossible to accurately control this ramp rate. Because the Diedrich system is able to accurately adjust the conductive heat via the infra-red system, the accuracy is virtually unmatched.

The fourth element is the ability to control the velocity of the airflow, another characteristic unique to the Diedrich system.

It’s these final elements, this fine-tuning of the control, that help specialty roasters create a nuanced and repeatable roast profile.

“Air is responsible for 70 to 80 per cent of the energy produced in coffee roasting,” he says. “The other 20 to 30 per cent is controlled via conductive heat. This is exactly the part we’re controlling with the roast profile, we’re working with that last 20 to 30 per cent. At the end of the day, if all you’re doing is changing

“IT MADE SENSE THAT IN THE CHEMISTRY OF COFFEE, THE CLEANER THE AIR, THE LESS IT WOULD INFLUENCE THE CHEMISTRY CHANGE .THAT’S WHERE I REALLY GOT INTERESTED IN INFRA-RED. ENERGY EFFICIENCY WAS REALLY JUST SECONDARY.” Steve Diedrich

Diedrich Coffee Roasters

the temperature, you’ll always be behind in your steering.”

The process is perhaps best exemplified in the ability to roast a 200-gram sample batch of coffee on a 25-kilogram roaster. Because the energy is concentrated on the beans, the size of the roast doesn’t matter.

The sustainable advantages of not requiring a sample roaster speaks for itself. Diedrich also points to is the limited temperature loss of the machine. He challenges a user to touch the top of a Diedrich roaster after nine hours of use, or measure room temperature just a few centimetres away. He assures that neither action will be affected by the heat of the roaster.

“With the heat-exchangers, we’re really compounding efficiency by not losing any temperature,” he says.

With just a fraction of the emissions to deal with, Diedrich has taken an interest in afterburners that use limited amounts of energy.

In this end, he opts for catalytic oxidizers over thermal oxidizers. The catalytic system neutralises emissions with organic compounds, balancing out the effluence of the roaster.

“With thermal systems, you’re just burning In using infra-red the air so you can’t see or smell the emissions, technology, Diedrich but it’s still emitting the same pollution,” he roasters burn just 3 – 4 explains. “With the catalytic oxidizer, you’re per cent of the oxides of actually cleaning the air.” nitrogen (NOx) gases of All this is a lot talk and technological savvy a blue flame burner, and for someone who only ever wanted to prove his reduce aldehyde emissions father wrong. As Diedrich puts it, his systems by 65 – 70 per cent. have come to the point now that they are largely Diedrichroasters.com considered the “Rolls-Royce of the roasting industry”, the product of engineering savvy meeting incidental sustainability, with a few lucky breaks along the way. GCR

SAY NO TO NOX

Diedrich coffee roaster with infra-red technology.

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UP IN

SMOKE

THE INCIDENTAL ADVANTAGES OF THE LORING SMART ROASTER HAVE TAKEN THE GLOBAL SPECIALTY COFFEE INDUSTRY BY STORM.

M

ark Loring Ludwig, the inventor of the Loring Smart Roaster, is surprisingly rapt to be receiving some press.

“It’s strange for me,” he tells Global Coffee Review from his home base in California, United States.

“We still see ourselves as this small, start-up company.”

Interviews like these, however, are likely something Ludwig will need to get used to. Last year, he was recognised by the Specialty Coffee Association of Europe (SCAE), receiving the ‘Innovation’ Award for Coffee Excellence. After just over a decade on the market, this “small, start-up” has sold equipment to roasters as far as Europe, Japan, and Australia.

Interestingly, what’s capturing the attention of the coffee industry is a patented roaster design that Ludwig explains he came across “serendipitously”.

With a background in food processing equipment, Ludwig was familiar with various types of burners before his start in roasting equipment. When he grew tired of all the travel, in the early 1990s he leapt into the coffee industry, starting the US-based Loring Coffee Company.

Even with this new business, the ever-active Ludwig needed extra activities to keep him busy, and he started learning Computer-aided Design (CAD) on the side, while also teaching himself some welding and machinery.

All this experience came to a head as he got to know the coffee industry, and realised there was an opportunity to create more environmentallyfriendly roasting equipment.

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“People put the idea in my mind, that if someone could invent a smokeless roaster, that could roast well without an afterburner, then they’d be set,” he says. “With that in mind, I started toying around.”

After 20 or so designs, Ludwig found himself staring at a schematic that seemed to meet this need for a smokeless roaster. “I just couldn’t figure out why this one wouldn’t work,” he recalls.

This design – which is called the Flavour-Lock Roast Process and is commercially available today from Loring Smart Roast Inc. – is what Ron Kleist, Loring’s Vice President of Sales, describes as “a miracle”.

The key to the Loring roaster is the highly efficient gas burner placed inside the cyclone, something unique to the Smart Roast system. The heat from the gas burner is divided by the cyclone into two zones. One zone heats up to such a degree that it incinerates all the smoke and odour before leaving the roaster while the second zone is at the right temperature for roasting the coffee. The result is a completely enclosed system that simultaneously roasts coffee and incinerates the smoke and odour that occurs during roasting.. Because the smoke is incinerated in-situ (at the source), there is no need for an after-burner or filter of any kind.

This makes the Loring amazingly efficient: compared to a traditional roaster with an afterburner, the Loring can save as much as 83 per cent on fuel costs, which means it produces 83 per cent less CO2, a known greenhouse gas. A huge additional bonus is that there is no need to clean the cyclone or stack; in fact the complete air passage for the air used to roast the coffee remains clean for the life of the roaster because the machine is in a constant, inherent “self-cleaning” mode. The result is also safer equipment, with minimal risk of roaster fires, and less roasting time lost due to cleaning.

The other zone generates the heat to roast the coffee. Here, Ludwig discovered a few rather convenient and valuable features of the enclosed systems. Firstly, with virtually no contact to the outside atmosphere, the consistency of the roast is guaranteed. Whether the roasting warehouse is steaming from a sweltering summer day, or personnel are rugged up on the coldest of winter nights, the enclosed atmosphere of the roaster stays the same The second major bonus, one that Ludwig admits is entirely incidental, is the decreased oxygen and increased level of humidity produced within the roaster. Because the burner is fired on a stoichiometric ratio, there is little or no residual oxygen left in the air. Oxygen is considered an “enemy” of the flavour of coffee. And the burning of gas produces water vapour resulting in this amplified humidity in the Loring because it recycles the air and the humidity.

A study by the University of Zurich confirmed that increased humidity leads to a higher quality roast. Because the beans are less dried out during the roasting process, more oils are contained within the beans, leading to better results.

Kleist calls this Loring Smart Roast design a truly “sustainable” model because it balances business requirements with cost savings, all the while reducing a company’s environmental footprint.

With a background in venture capital and finance, Kleist says that maintaining this balance of cost efficiency, while reducing the environmental impact of operations, is absolutely critical to a successful model. “It’s important that people don’t lose sight of the fact that when a business slips, the first thing they do is look at their costs,” he says.

It’s this balance of reduced operational costs and consistently clean coffee flavour, coupled with inbuilt smoke reduction, that Kleist says has catapulted Loring roasters forward into mainstream attention.

An important factor, however, of what’s really helped the company gain international attention

PROMOTIONAL FEATURE////////// among specialty roasters has been the quality of the roast produced, says Kleist. No matter the efficiency of a machine, he says no roasting technology will be truly “sustainable” among top roasters unless it consistently produces great tasting coffee. Ludwig made use of advanced digital controls in his design so the every roast master could enjoy improved control of the roast environment.

“If you think about the holy grail of what specialty roasters are looking for, it’s the ability to be able consistently reveal the native flavours of high quality beans,” he says. “To be able to correctly balance that acidity, sweetness, and mouth-feel, that’s what roasters are looking for.” Coffee roasted in Loring roasters took first and third place at the 2012 World Roasters Cup in Taiwan, adding to first place awards at this year’s Nordic Roasters Forum in Stockholm for both espresso and filter coffee.

It took several years to get Ludwig’s design, that is able to meet these needs of the specialty coffee industry, from paper to reality. It wasn’t until he met Chris Martin in early 2002-03 that the first prototype got off the ground. Ludwig can’t help but laugh at how far they’ve come, remembering their first prototype. They opted to skip on the cooler to save on costs. As they started roasting, they were absolutely enamoured as the coffee was gently roasted without smoke.

“PEOPLE PUT THE IDEA IN MY MIND, THAT IF SOMEONE COULD INVENT A SMOKELESS ROASTER, THAT COULD ROAST WELL WITHOUT AN AFTERBURNER, THEN THEY’D BE SET. WITH THAT IN MIND, I STARTED TOYING AROUND.” Mark Loring Ludwig

Inventor, Loring Smart Roast

That was until they started dumping the beans into a tin garbage can without cooling them off, filling the room with smoke. They had to laugh as they could hardly see across the cloudy room, as they tested out their first “smokeless roaster”.

A decade after the cooler was soon added to the first fully working prototype, Ludwig has enjoyed taking advantages of modern advances to continue to improve the Smart Roast equipment. He says he’s amazed to see how slowly some companies have taken to adding on these technologies. He recalls one US$350 million-factory that’s still using Relay Logic to control the system, a set of buttons that are individually wired and rather “antique”. On Smart Roast equipment, Ludwig has wired up complex Programmable Logic Controller (PLC) systems that allow the user and programmer advanced control via touch screen technology.

Moving forward, Ludwig is looking to take advantage of this technology to move towards iPad control and other advances.

Today, anything seems possible after seeing his small Loring Smart Roast system design has come to life on such a incinerates smoke without global scale. It was a risk he says the need for an afterburner, he’s never regretted taking. meaning that Loring roasters “To think for a minute that use up to 83 per cent less I could compete with all those gas than other conventional big companies, some of whom roasters, while reducing have been building machines for carbon dioxide output. a century, it was rather naïve of www.smartroaster.com me,” he says.

“But I just kept pushing forward. At the end of the day, I’m pretty happy I was so naïve.” GCR

GOOD-BYE BURNER

Loring Smart Roast Merlin model JA N UA R Y /FE B R UA R Y 2 013 | GCR

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WHY

FLEXIBILITY IS KEY HOW BRAMBATI’S MULTI-USE ROASTERS ARE A TRULY SUSTAINABLE FIT IN THE MODERN COFFEE INDUSTRY.

“

S

ustainability is not just about energy reduction and environmental concerns, it’s about ensuring that the money a company spends is optimised in their investment, minimising equipment requirements and working cost.”

From commodity coffee, to high quality specialty, to instant, Dr. Andrea Brambati, Brambati S.p.A. Vice President, says that Brambati’s equipment is able to roast different kinds and origins of coffee, depending on customer needs, thanks to an extremely flexible roasting machine.

The machine, offers the ability to roast homogeneously also pre-blended green beans, minimising labour and optimising efficiencies.

“The highly automated equipment can produce all the type of product a client wants, just by changing the roast profiling,” says Brambati.

This flexibility certainly comes in handy, considering all the markets where Brambati equipment can be found. From North America to Australia, Europe to South America, in all five continents, Brambati’s experience across these markets has shown that sustainability requirements vary throughout. While some markets were early to show concerns over energy usage and emissions in their roasting equipment,

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this philosophy is now becoming more and more common all over the world.

“The majority of markets have started to demonstrate that productivity, energy consumption and environmental concerns are now all important issues,” says Brambati.

At Brambati, sustainability requirements don’t apply just to their equipment, but are part of the company philosophy as a whole. Two years ago, the company installed a large scale solar power system, capable of producing 200 kilowatts of power an hour, generating approximately 230,000 kilowatts per year. Complementing other in-house energy savings initiatives, this represents the company’s “360 degree” approach to sustainability.

In roasting equipment, this can be defined as a well-rounded approach to sustainability as an effort to reduce power consumption, gas consumption, emissions production, and increase efficiency.

Going back to the roasting equipment, it can be set up with hot air recycling capabilities, which reuses much of the heat created in the roasting process. Without penalising the quality, but reducing power needs and emissions considerably.

In the exhaust emissions space, Brambati offers modulating burners. These burners work in conjunction with roasting equipment, and automatically adjust their power levels based on roasting activities.

“These burners only work to the level that is required,” says Brambati, “Because various phases of the roasting process produce different levels of exhaust, these burners ‘speak’ with the roasting equipment, to limit energy usage maintaining high efficiency.”

Limiting emissions has become increasingly important, as new regulations keep popping up across various markets. A company’s awareness of the regulations that apply to them typically varies depending on the size of the company. Brambati can easily work with larger companies that have a team of engineers with full knowledge of their requirements and is dealing also with smaller roasters to help them understand equipment requirements, as well as what trends may affect them moving forward.

“Depending on the company we’re working with, and what market they’re operating in, we try to present the various options available,” says Brambati. “But we’re not just providing them with options that will fit their needs today, but also for tomorrow and going forward.”

While some developing countries may still have limited emissions regulations, increasing political concern about global warming means that these rules could change any day.

PROMOTIONAL FEATURE////////// “Even if it’s a large investment, we work together with our clients to prepare a machine that will work for them in the future,” says Brambati. He highlights that Brambati designs flexible equipment with upgrades in mind. As regulations change, the company can work with roasters to fit the equipment as needed.

Regulations aren’t alone in driving a company’s sustainability initiatives. In many emerging markets, where regulations are limited, power supplies can also run short.

“It’s not the law that’s dictating these requirements, but often just common sense,” he says. “One way or another, as a company we get involved to help clients understanding the advantages of more sustainable equipment.”

The key to analysing sustainability needs in equipment requirements is all about balancing what a company wants, with what it can afford, and what it needs.

“The challenge is to find that perfect equilibrium between all these parts,” he says. “You need to roast coffee first and foremost, in the way your customer wishes and that’s the ultimate goal. In terms of sustainability you need to think about efficiency, energy consumption and space requirements.”

Brambati has had three generations to work on the refinement of this equilibrium. Originally founded in 1945 by Francesco Brambati, the privately-owned Italian company began producing flour mills, and other materials equipment, before building roasting equipment in the 1960s.

Their success in the coffee industry has blossomed ever since, and today up to 80 per cent of their roasters are exported to companies around the globe. From receiving green coffee, to roasting, grinding and fitting packaging equipment, Brambati is specialised in fitting out full roasting plants.

“DEPENDING ON THE COMPANY WE’RE WORKING WITH, AND WHAT MARKET THEY’RE OPERATING IN, WE TRY TO PRESENT THE VARIOUS OPTIONS AVAILABLE. BUT WE’RE NOT JUST PROVIDING THEM WITH OPTIONS THAT WILL FIT THEIR NEEDS TODAY, BUT ALSO FOR TOMORROW AND GOING FORWARD.” Dr. Andrea Brambati

Brambati S.p.A. Vice President

A keen eye for flexibility in this full design has helped drive the company’s success.

“Our clients know that with Brambati equipment, we deliver on these promises of producing every kind of quality, to maximum efficiency while limiting power consumption and reducing emissions always exalting the quality of the coffee beans” says Brambati “If they don’t know it yet, they inevitably come back to tell us.” GCR

Brambati, Italy

TECHNOLOGY Brambati offers flexible equipment that is able to roast coffee from specialty to instant. www.brambati.it

JA N UA R Y /FE B R UA R Y 2 013 | GCR

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ORIGIN Peru

Peru’s coffee

BOOM

THIS SOUTH AMERICAN COFFEE-PRODUCING NATION HAS SEEN OUTPUT GROW FIVE-FOLD IN THE LAST TWO DECADES TO 5 MILLION BAGS. THE QUESTION NOW IS: HOW LONG CAN THIS BOOM BE MAINTAINED?

I

n the 1990-91 crop cycle, Peru produced just 937,000 60-kilogram bags.

This was at a time when world production had collapsed following years of massive oversupply. The imbalance led to the end of the International Coffee Agreement on export quotas and minimum prices, which in turn resulted in world prices crashing to then historic lows.

Mirroring activity all over the world, coffee fields across this South American country were abandoned. For most of the 1990s, Peru’s annual output averaged between 1.4 and 1.6 million bags.

A little over a decade later, production has Average Peru yields are around 12 bags per hectare. more than tripled. Although the initial focus on raising yields remains a priority, many seem to agree that output is unlikely to grow by more than 1 to 2 million bags under current conditions.

“During the past 10 years the producing area has increased some 50,000 hectares, and average production per hectare is now around 12 bags, compared to 7 bags per hectare in 2000,” says Eduardo Montauban, General Manager of the Peruvian Chamber of Coffee and Cocoa.

From a cultivated area of around 200,000 hectares in 1994, Peru’s more than 150,000 coffee growers have today expanded output to some 340,000 hectares, according to Chamber estimates.

Official figures from Peru, however, vary greatly depending on the source. As 2012 came to a close, authorities started working on the first coffee census since 1994. Production in the last harvest reached a record 5.2 to 5.4 million bags, according to some sources.

Montauban tells Global Coffee Review that room for further expansion of Peru’s planted area is now minimal. Most future increases in production will most likely come from older trees being replanted with more productive varieties and higher tree density. Other industry officials agree, saying that Peru has the potential to boost output to 6 million bags in the next five years if Arabica prices stay above US$2 per pound. It’s only at this level that growers can generate enough income to provide for investments and renovations of farms. If prices recover to levels above US$ 2 per pound, for several consecutive years, sources are optimistic that output could reach 7 million bags by 2020.

“There is no doubt that with the prices we’ve had in the last few years, producers were motivated

to do a bit of investment in their farms,” says Javier Dominguez, Manager of SolCafe Coop.

“All the producers here are small farmers with just a few hectares, but since 2005, when we started the coop, we have been promoting renovation to improve yields.”

With 1047 producers, the SolCafe cooperative in northern Cajamarca is an illustrative example of how the Peruvian coffee industry has grown in the past decade. From an average of just 9 bags per hectare, current yield has doubled to 18 bags. A total of 300 hectares, or some 12 per cent of the total cultivated area of 2583 hectares, has been fully renovated either through replanting or pruning. While the coop had embarked on some small-scale renovations in 2008, it wasn’t until funds from a government-financed project started to kick in,

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ORIGIN Peru

in 2009, that full renovation efforts got underway.

“We will never have much influence on the prices, but we can increase the volume we get from the harvest and make sure that we’ll get a better income,” Dominguez says. “It has especially been younger producers who have understood that the only way to do this is by maintaining production, raising yields through renovation of old coffee farms, regular pruning and better application of fertiliser.”

Interestingly, Peru’s initial coffee boom was less about lifting incomes, and more about cutting down on illegal drug production.

A project was launched as a joint strategy between the United Nations Office on Drugs and Crime (UNODC), the Peruvian Government’s narcotics fighting agency DEVIDA and other international partners, including the US Agency for International Development (USAID) in the 1990s, with the goal of replanting 15,000 hectares of illegal coca crops.

Implemented at a time when smallholder coffee growers were facing unsustainable low prices, Peru’s coffee producers were seen as at particularly high risk of being lured into the

NORTHERN PROSPECTS From a share of 30 to 35 per cent of Peru’s national production 10 years ago, the northern region today accounts for as much as 55 per cent of total output.

illegal coca growing and drug trade in the Andes region. Coca cultivation thrives in the same climatic condition and high altitudes that are idea for high quality coffee. Most of the main coca regions in Peru still coincide with the same regions where coffee often is found. Just a few years into the program, Peru’s rising coffee production was already firmly on track, with output reaching 1.87 million bags for the 1995-96 coffee year.

As that program ended in 2010, Peru’s Agriculture Ministry ensured incentives to coffee cultivation prevailed by launching an ambitious US$10 million coffee renovation and replanting program.

High prices in 2010 and 2011 helped producers invest in renovation, replanting and even buying small amounts of new land. However, as the official renovation project ended in 2012, and with prices dropping, further expansion and renovation is not guaranteed. The drop in futures prices in 2012 has already cut significantly into earnings, which fell to about US$950 million in 2012 from $1.58 billion just a year prior.

It’s these dropping prices that has put a short end on the rosy outlook for Peru’s coffee boom. Add to this the challenge of infrastructure, and even high prices may not be enough. “Where we really need to see much more work on renovation is in the central and southern regions, and this renovation will require a lot of support in the form of improved infrastructure,” Montauban says.

Centered around Cajamarca and Moyobamba on the border with Colombia, the northern region has grown over the past 10 years to become the largest of the country’s three coffee regions.

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Industry officials estimate that cultivation in the northern region has expanded by 20 to 30 per cent in that period.

“In the north, we have seen 90 per cent of all infrastructure needs for coffee processing met through individual investments, and the northern area also benefits from the availability of cheaper hydro-electric power outlets,” says one exporter in Cajamarca.

But in the central region – home to the Chanchamayo region known for some of Peru’s best quality coffee – and the southern region of Cuzco and Puno, still hold vast potential for growth. But, much of this growth is said to be limited by poor infrastructure.

Most of the coffee areas in Peru’s central and southern areas have still not been connected to the national electricity network. Roads to the remote highlands of the central region are in poor condition. This makes something as simple as getting the coffee to the main ports either in Lima or further south a long and costly affair. Travelling through regions still rife with road and rural security problems can also be a challenge, says one senior official. Peru has had a significant number of incidents in the last few

Drying coffee beans in Peru.

years where trucks were robbed and entire container loads of coffee were lost.

From a share of 30 to 35 per cent of Peru’s national production 10 years ago, the northern region today accounts for as much as 55 per cent of total output, with the central and southern region roughly dividing the remainder, according to Chamber data.

“Of course Peru could produce 10 million bags, but that is not going to happen overnight,” says the Chamber’s Montauban. “Yes, Peru has all the right conditions for that to happen, the right soil, the land and the climatic conditions, but we don’t have any national policy for the development of coffee and everything to date has come from private investment.” G C R

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Photo: Pham Thi Diep Giang

HOW CAN LOCAL DAVIDS WIN OVER GLOBAL GOLIATHS? Đặng Lê Nguyên Vũ

Chairman of Trung Nguyen Group

THERE IS A PARADOX that exists in the coffee industry, that leading global brands typically don’t come from countries where coffee is grown. These ‘Goliath’ brands and products are so powerful, they even dominate markets in origin counties. Coffee is grown and sold cheaply, shipped overseas where it undergoes its most value-added process in roasting, and then sold back to the poor countries that grew them. One could make the old joke: it’s a bit like selling ice to Eskimos.

How to overcome this paradox? These brands are so powerful, how can local entrepreneurs thrive? How can these ‘Davids’ – small, but strong and smart – match up to their giant competitors?

This was the situation we faced nine years ago when we introduced a domestic instant coffee brand in Vietnam: G7. With instant coffee around the world largely supplied by a single European-based brand, we could only compare ourselves to David, up against this powerful Goliath. Almost a decade later, we are now the leading instant coffee brand in a country of 87 million people, with Neilson data confirming our 38 per cent market share of the Vietnamese market.

It feels like a miracle, but it was actually a lot of strategic work that led us to this point. I’d like to highlight the four main factors I attribute to our success.

The first important factor is the entrepreneurial spirit. Domestic businesses need to develop a strong ‘winning’ culture. They should choose to challenge the status quo by confronting and setting out smaller objectives that will help them defeat the Goliath. The success of domestic business can’t just be about personal profit, but should be considered a matter of national pride. Strong domestic businesses help grow economies in producing nations, which are inevitably poorer compared to their consuming nation counterparts. This winning spirit needs to be widely communicated throughout the whole organisation, to drive the work and become a source of inspiration.

The second important factor is to differentiate your product compared to overseas competitors. It is impossible to compete – let alone win – in a market with a bad product. A good product should start with quality raw materials and utilise advanced production technology, quality control, and hygienic principles.

In addition to quality, to truly set the product apart it must be unique and advanced compared to the competition, with at least one or two

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defining characteristics. It must be truly remarkable.

Typically, Goliath start off with a singular formula for success, and apply it across all their markets. ‘Localising’ their product can often come in the form of lowering quality to maximise profits. It’s this exact strategy that Davids can exploit. Domestic companies are best placed to understand their local culture and palates. They can be confident that no multi-national will ever be able to develop that level of understanding.

This local knowledge can be used to create a truly extra-ordinary strategy, to develop a product that will be embraced.

In Vietnam, instant coffee was previously dominated with the same product that was sold around the world. In launching G7, we developed our own recipe that catered to Vietnamese tastes. With the global brand a bit sour, our recipe was more bitter, something palatable to the Vietnamese people. We also developed a more appealing aroma, the key to which is our own little secret. When we launched the product in November 2003, we offered a blind taste test to 11,000 people. A full 89 per cent of them chose our product over the 100-year-old global brand.

These points of differentiation helped us expand our consumer base to markets with similar palates, including Korea and China.

The third vital factor to success is to trust your gut feeling in marketing

TYPICALLY, GOLIATHS START OFF WITH A SINGULAR FORMULA FOR SUCCESS, AND APPLY IT ACROSS ALL THEIR MARKETS. ‘LOCALISING’ THEIR PRODUCT CAN OFTEN COME IN THE FORM OF LOWERING QUALITY TO MAXIMISE PROFITS.

efforts. It’s important to have a good connection between the David brand and the consumer. Domestic brands should be cared, loved, supported and protected by consumers.

The key here is all about marketing and branding. Sharing a winning product and a winning spirit with customers can bring the public on your side in the market battle. It’s good to communicate that domestic brands contribute to the national spirit and sovereignty of the economy. This should be communicated with consumers and stakeholders, and especially influential people who will choose, protect and support your products, almost as if it were a family member. This is a great advantage of offering a domestic brand. Loyalty can be more genuine and sustainable compared with the manufactured loyalty of multinationals.

The final key to success is wisdom and consistency in execution. Consistency is achieved when every level of an enterprise commits to the competing spirit, product quality, and branding strategy. Wisdom is about applying innovation and creativity in every critical point of the value chain, from raw material input to production, logistics, distribution, trading, marketing and branding.

Marketing needs to be smarter, more unique and efficient than global competitors. Experience has shown that these Goliaths are successful for a reason. They will not stand by idly and watch market share trickle away, but will adopt their strategy as required. After our first successful blind test of G7 instant coffee, the other global brand moved quickly to localise their strategy. They mobilised a team of researchers from their headquarters to research the palates of Vietnamese people. They used these findings to launch a new product line specifically for the Vietnamese market, in both the product formula and marketing tactics.

Davids should be warned to be consistent and smart in their strategy, to maintain their points of differentiation to the public.

Goliaths will undoubtedly continue to dominate the global market, they provide ample employment around the world, and the goal is not to clear them out completely. The point here is that diversity is key to a sustainable industry, and the small victories of Davids like us are important in maintaining that diversity. To have a single brand dominate the market isn’t good for any industry. This is a point I made in the seven initiatives for the global coffee industry that I shared with you in the last edition.

In encourage local brands, we can add more value to coffee products in producing countries, leading to the sustainable development of the international market. A robust industry will benefit everyone, even the Goliaths.

Let’s work together to create more favourable conditions for these Davids. Let’s give them more opportunities to emerge and thrive. Diversity is good not only for the 2.5 billion coffee drinkers in the world, but for the millions of coffee farmers and our industry as a whole. G C R

JA N UA R Y /FE B R UA R Y 2013 | GCR

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DIARY Dashboard COFFEE AROUND THE GLOBE

WORLD COFFEE EVENTS SCAA SYMPOSIUM AND EVENT 10TH AFRICA FINE COFFEE CONFERENCE & EXHIBITION

MUNYONYO COMMONWEALTH RESORT

KAMPALA, UGANDA

14 – 16 FEBRUARY The 10th African Fine Coffee Conference & Exhibition will employ the theme ‘Uganda: Discover a Diversity of Coffees, from the Pearl of Africa.’ The event will host over 1500 delegates, an interactive conference program, large exhibition areas, engaging social events as well as exciting afternoon activities.

BOSTON, UNITED STATES

10 - 14 APRIL The annual Specialty Coffee Association of America (SCAA) Symposium is set to take place from 10 –11 April at the Harvard Club in Boston, just ahead of the 25th SCAA Event. The fifth edition of the Symposium is entitled ‘The Realm of the Possible’, and will look at ways to solve the unique challenges the specialty coffee industry is facing. From 11–14 April, the 25th edition of the SCAA Event will take over the Boston Convention Centre. www.scaaevent.org

www.eafca.org

INTERNATIONAL COFFEE & TEA INDUSTRY EXPO

MARINA BAY SANDS

FOOD&HOTEL VIETNAM 2013 SAIGON EXHIBITION & CONVENTION CENTRE HO CHI MINH CITY, VIETNAM

SINGAPORE 24 – 26 APRIL 14 – 16 MARCH Singapore will open its doors to the debut presentation of the International Coffee and Tea Industry Expo, a B2B exhibition dedicated to the machinery and industrial equipment sectors of the café, coffee and tea industries in Southeast Asia. The event is aimed at serving as a springboard for local and international industry players to tap into Asia’s market potential. It will also aim to create a platform for them to gain an in-depth insight of up-to-date market trends and developments. www.intlcoffeeteaexpo.com 54

G C R | J A N UA R Y / F E B R UARY 2013

Food&HotelVietnam, Vietnam’s premier food and hospitality sourcing and networking trade event, features at least 70 per cent of overseas exhibitors in all its editions. Since its first edition in 2004, the event is now in its sixth showing, and will bring industry professionals in Vietnam high quality equipment, services and solutions currently available in the global marketplace. Food&HotelVietnam is organised by Singapore Exhibition Services Pte Ltd (SES) and co-organised by VCCI Exhibition Service Co Ltd. www.foodnhotelvietnam.com

THE LONDON COFFEE FESTIVAL

OLD TRUMAN BREWERY

LONDON, UNITED KINGDOM

25 – 28 APRIL The London Coffee Festival is the flagship event of UK Coffee Week featuring artisan coffee, speciality teas and gourmet food stalls; tastings; interactive demonstrations; live entertainment and music. More than 15,000 coffee lovers and foodies, professional baristas, coffee shop owners and top decision-makers are expected to attend this year across the four days to celebrate London’s vibrant coffee scene.

The festival will start with two industry days on 25 and 26 April and then open to the public on the evening of the 26th with a Martini Espresso Launch Party from 5pm. www.londoncoffeefestival.com

GLOBAL COFFEE REVIEW

LEADERS SYMPOSIUM

ZINC FEDERATION SQUARE

MELBOURNE, AUSTRALIA

22 MAY 2013

KEEP A LOOK-OUT Tea & Coffee World Cup 28 February – 2 March Singapore www.tcworldcup.com/singapore Coffee Fest 8 – 10 March New York, United States www.coffeefest.com National Coffee Association Annual Convention 21 – 23 March San Francisco, California www.ncausa.org Caffe Culture Show 15 – 16 May London, United Kingdom www.caffecultureshow.com Melbourne International Coffee Expo Hosts of World Barista Championships and World Brewers Cup Melbourne, Australia 23 – 26 May www.internationalcoffeeexpo.com

The GCR Leaders Symposium will welcome the industry’s influential voices to discuss pressing issues, with vivid presentations and panel discussions aimed to help grow and inform the coffee industry. The event will be launched in Melbourne, Australia, in conjunction with the Melbourne International Coffee Expo and the World Barista Championships 2013. With its strategic geographical location, Melbourne serves as the ideal venue for an event catering to the needs of the blossoming Asia Pacific coffee industry. The GCR Leaders Symposium will be held at Zinc, Federation Square. www.globalcoffeereview.com/gcr-leaders-symposium JA N UA R Y /FE B R UA R Y 2 013 | GCR

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PRODUCTS Marketplace

KEURIG VUE SYSTEM WITH RFID TECHNOLOGY Green Mountain Coffee Roasters expanded the commercial application of its single cup brewing system, Keurig Vue, with radio frequency identification (RFID) technology. Engineered for use by professional services firms with frequent users, the Vue V1200 is a premium single cup brewing system designed with a customisable technology allowing users to have control over the strength, size and temperature of their beverages. The UL certified commercial Vue V1200 brewer incorporates RFID technology to the beverage packs to simplify and enhance the brewing experience.

This My Brew technology was engineered by Keurig to guide users who might not be familiar with the Keurig single cup brewing system by enabling the brewer to default to optimum settings for the chosen beverage based on a ‘recipe’ tag. The new Keurig Vue V1200 brewer received the Gold Award for Innovation in the OCS & Water Equipment Category at the 2012 National Automatic Merchandiser Association’s One Show. www.keurig.com

AIS STAINLESS STEEL FRONT OPERATOR INTERFACE COMPUTERS American Industrial Systems Inc. (AIS) is an ISO 9001:2008 certified supplier and manufacturer of stainless steel front operator interface computers that meet code of US Federal regulations title 21, Sec. 110.80 processes and controls regulations requirements in the manufacturing of consumer packaged goods. The ruggedised operator interface computers with IP66 stainless steel front bezels have been designed for use in the food and beverages, cosmetics and personal care products, pharmaceutical and healthcare packaging industries, to improve processes and enable consistent delivery of higher quality products. With a high degree of hardware and software flexibility and comprehensive device management, more intelligent functionality, greater compliance with environmental regulations, AIS industrial operator interface computers offer visualisation and control solutions for brewery operations, optimised processes for coffee and tea manufacturing, food safety and compliance for dairy manufacturing, process management for snack food & confectionery. www.aispro.com

RESPRESSO Respresso is a creative drink that contains four times more antioxidants than green tea. Because it doesn’t contain caffeine, Respresso is appropriate for children, pregnant women and nursing mothers. Respresso is available in six flavours: Classic, Goji Berry, Chamomile with pollen, Guarana, Ginseng with Orange and Mint. Every flavour is intended to have a functional effect on the body. The main element of Respresso is the biologically grown South African red plant rooibos, added carefully as a super food. Respresso can be prepared on classic coffee machines found in bars and restaurants. All that is needed is a special Respresso handle. Respresso is naturally sweetened with coconut sugar. www.respresso.si

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S1 ARMONIA The S1 Armonia by La Spaziale is a professional solution for baristas and restaurant operators looking for a high quality cup in venues with limited coffee output. The machine is small and flexible, and can be used with ground coffee, pods and capsules. It is a compact two-group machine, weighing just 30 kilograms. It does not need to be plumbed in, only connected to power. The machine offers two vibrating pumps (one for each group) and three boilers, with a separate steam boiler. www.laspaziale.com

BUNN TRIFECTA FOR HOME Bunn-O-Matic Corporation launched earlier this year a domestic version of its famous trifecta brewing device. The domestic trifecta features the same technology for coffee and tea brewing as the patented Air Infusion features found in the commercial trifecta machine from BUNN. This home brewer features 25 adjustable brew settings that allow consumers to explore the taste profiles unique to each coffee and tea origin. The trifecta features five adjustable Turbulence Cycles and five Infusion Time controls, resulting in the 25 unique brew setting combinations. It enables adjustment for perceived acidity, sweetness, earthy flavours, and extraction level. The coffee or tea is pressed through a fine-gauge, permanent metal filter, preserving oils and aromatics. It is able to brew in small batches, from 6 to 12 ounces at a time. www.bunnathome.com

ANCAP CUPS Ancap introduced a new range of classical ivory cups catering to the designs of modern cafĂŠs. All Ancap cups are kiln fired at 1400 degrees Celsius and are 100 per cent made in Italy. State of the art production techniques, thick hard glazed porcelain and a dedication to functional design and quality ensure that every Ancap product preserves coffee aroma and flavour. For information visit www.ancapcups.com

JA N UA R Y /FE B R UA R Y 2 013 | GCR

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LASTWORD Tabli system

THE CAPSULE

WITHOUT A CAPSULE IT’S A CURIOUS LITTLE PRODUCT THAT, upon first glance, looks more like the after-product of espresso rather than an input.

The Tablì system, by Caffemotive, was unveiled at last year’s TriestEspresso exhibition in Italy. As a pre-packed, portioned serving of coffee, the Tablì system joins a long line of single-serve releases in what it’s offering. But what is particularly revolutionary about this system is the same characteristic that makes it look like a used puck of coffee. At a time when households, businesses and municipalities are seeing the waste pile up from used singleserve packaging, or spending ample fuel trucking around recyclable capsules, the Tablì system offers the convenience of single-serve – with no individual packaging requirements.

In simplest terms, the Tablì is pre-ground, packed, and portioned coffee in ‘puck’ form. It sticks together without the need for any individual, external packaging requirements. Still in its development phase, the Tablì is currently sized for use in stove-top coffee makers.

The main ‘revolution’, however, will come around with the developers’ plans to release the Tablì for commercial espresso machines, and eventually for use with a compatible single serve system.

Fabrizio Polojaz, a co-founder of Caffemotive, explains that they first came across the tablets a few years ago by the original inventor, a company called Kompresso. While Kompresso had this idea for a compact tablet, they had no machines or direction for where the product would lead.

“Together, we started to experiment with this idea, playing around with the advantages and disadvantages,” Polojaz says. “The main advantage that kept coming up was the environment.

As we saw that the Tablì could work, we realised here we could create a coffee without sin, so to speak, in combining the convenience of single-serve without the guilt of all that waste.”

Following some trials of the Tablì among family and friends, the group underwent laboratory tests to show that the Tablì could maintain its freshness for at least a few months. The next step was to test the general market, and the The Tablì system is a group chose TriestEspresso as its waters. pre-dosed, pre-ground, “Our aim was to better understand if the compact serve of coffee, market would accept this product with that stays fresh and enthusiasm,” Polojaz says. “And the answer together without individual to that was an absolute ‘Yes’.” packaging requirements.

Following this positive market reaction, the company is now entering the next phase in producing the Tablì on

ZERO WASTE

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a commercial scale. At present, they’re able to produce just 15 to 20 units a minute, not enough for any level of industrial production. Once the Tablì can be produced at 50 to 60 units a minute, then Polojaz says they’ll be ready for commercial release.

A major advancement, however, will be the move towards using the Tablì in espresso machines and with a compatible domestic and office singleserve system. With a large amount of restaurants and other venues offering espresso coffee, Polojaz points out that many of these venues aren’t serving high volumes. These venues have turned to coffee capsules to ensure the freshness of their coffee, as single-serve systems offer a longer shelf-life than whole beans. Furthermore, low-volume venues are unable to employ trained baristas, so capsules have allowed these venues to serve well-prepared espresso from any staff member.

In fitting the Tablì system to espresso machines with an adaptable group head, these venues will be able to serve quality espresso, produced on their flash equipment, with the same convenience of a capsule – without the waste.

Even for high volume venues with well-trained staff, however, Polojaz says the Tablì could prove useful in enabling them to serve a wide variety of coffee without the restrictions of equipment. “This is not only a revolution for the environment, but a revolution in the way coffee can be presented,” he says. “Think about a venue with one machine, and one grinder, or even one machine and two grinders. They will always be restricted to serving one coffee per grinder. With the Tablì system, there are no equipment restrictions.”

The commercial potential for the Tablì system in the at-home singleserve space has not escaped Caffemotive. Polojaz says consumers may be able to look as early as next year for a system that offers all the convenience of a capsule system, without the “sin”. All good reasons not to dismiss this coffee puck too quickly. G C R

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