GCR Mar 2013

March/April 2013

RUST OUTBREAK

Special report from Latin America

INSTANT SUCCESS

Soluble coffee reshapes the market

AS SEEN ON TELEVISION

Strategic product placements

PARTICULAR SUCCESS

The next level of coffee grinding

AN EXTRACTION IN TIME

The history of espresso

TRADING OUT OF POVERTY GOOD AFRICAN COFFEE FOUNDER ON WHY A POSITIVE BUSINESS ENVIRONMENT IS KEY IN DEVELOPMENT

www.globalcoffeereview.com 29.00

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CONTENTS March/April 2013

COVER STORY A STORY ABOUT AFRICA

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Good African Coffee founder tells Global Coffee Review about start-up struggles and the key to success.

“AS TOUGH AS IT WAS AT THE BEGINNING WITHOUT SUFFICIENT RESOURCES, ONE LESSON WE LEARNED WAS THAT OUR VULNERABILITIES WERE A DEMONSTRATION OF OUR DEPTH OF COMMITMENT.”

22

Andrew Rugasira Good African Coffee Founder

IN THIS ISSUE FEATURES

PROMOTIONAL FEATURE

RESEARCH & TECHNOLOGY

10 A STORY ABOUT AFRICA

44 MODERN PROCESSING EQUIPMENT

37 THE HIGHS AND LOWS OF COFFEE CONSUMPTION

Good African Coffee’s Founder Andrew Rugasira says why encouraging local entrepreneurship is key to Africa’s development.

17 RUST ATTACKS

The outbreak of coffee leaf rust is spreading across Latin America, causing supply concerns and job losses on the mass scale.

22 THE FUTURE OF INSTANT

Robusta demand rises as instant coffee consumption increases in Asian and Latin American markets.

27 SELLING THROUGH THE SCREEN

A look at Canada’s Tim Hortons product placement strategy to expand its presence in the United States.

A business focused on precision grinding and consistency.

46 MAHLKOENIG

How disc grinders are filling a necessary niche between the retail and industrial space.

17

A study on whether

coffee consumption can

reduce the risk of Type 2 diabetes.

41 GRINDING FORWARD

Academics discuss their work on the advancement of coffee grinding technology.

COFFEENOMICS 33 A MARKET DENIAL?

A look at whether an Arabica price comeback in on the cards for producers.

INDUSTRY PROFILE 49 ESPRESSO BACK IN TIME

Coffee historian Jonathan Morris and LaCimbali educate consumers on the history of espresso.

REGULARS 4

EDITORS NOTE

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NEWS DRIP BY DRIP

52 GUEST COLUMNIST 54 DIARY DASHBOARD 56 MARKETPLACE 58 LAST WORD

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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



ASSISTANT EDITOR Sarah Baker sarah.baker@primecreative.com.au

CHAMPIONING CAPITALISM OVER CHARITY

Leading United Kingdom journalist Jon Snow describes Andrew Rugasira’s new book A Good African Story as “utterly inspiring”.

Rugasira’s story of launching an African-branded roasted coffee is indeed an inspirational tale. However, from an industrial perspective, it seems more apt to highlight the educational nature of the text.

The coffee industry is filled with feelgood stories of companies and individuals striving to improve the lives of coffee farmers.

Unfortunately, with our mainstream media mostly produced in developed nations (this one included), those people highlighted more often than not come from richer, Western countries. The stories are familiar accounts of travelling or living in a coffee growing country, identifying a cause, and importing Western knowledge and technology to improve that cause. Little context is given to the nature of what caused the problem to begin with.

The people who have done this great work should by all means be applauded. Western initiatives such as certification programs and work by private traders and large coffee roasters have brought much needed technology and resources into coffee producing countries.

However our cover story (see page 10), and our column by Trung Nguyen Chairman Dang Le Nguyen Vu (see page 52), tell a story of a different sort. These local entrepreneurs have seen that aid programs bring in only a fraction of the income that Western companies are making selling roasted coffee. Because the roasting process is the largest value-add in the equation, both companies are marking milestones in launching strong brands from

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within coffee-producing nations.

The question arises: are domestic coffee brands to be feared by Western companies, who have long enjoyed dominant market share? Positive news here can be found in this edition’s look at the boom in instant coffee consumption in producing markets (see page 22).

Rugasira’s story tells of the frustrations he had in getting into foreign markets, however his domestic efforts proved a smoother transition. Although most local consumption may not be enough to support a strong business model yet, the potential is there. Brazil is a shining example of how local marketing efforts can help boost consumption at home.

Rugasira’s new book, however, is educational in pointing out that increased at-home consumption is not enough. A toxic business environment has arisen in much of Africa, with limited interAfrican trade, following on from a complex historical context. His calls for improvements in local infrastructure and the availability of credit and finance are ones that should be heard loud and clear.

Western programs that pump dollars into developing nations aren’t the answer.

Local entrepreneurship and a better business environment may be.

Christine Grimard Editor

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 Nick Ensing Pham Thi Diep Giang Maja Wallengren CONTRIBUTORS Maja Wallengren Natalie Dunleavy Campbell 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.

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NEWS In Brief

NEWS DRIPBYDRIP 

Countries across Central America have declared a state of emergency, following an outbreak of coffee rust.

As the physical picking of the 2012-13 harvest comes to an end in this region, international analysts and traders are already making adjustments to their forecasts.

As of the end of February, losses from the five Central American countries stood at between 2.5 – 5.5 million 60-kilogram bags, while production in the next 2013-14 harvest is expected to drop by 30 to 40 per cent. Regional industry leaders have expressed alarm at how rapidly the presence of rust disease in farms has gone from a regular outbreak to an unprecedented social crisis. The crisis could last for three to four years, unless swift action is taken.

See full report page 17.

Canadian coffee chain giants Tim Hortons is hoping to expand its presence in the United States by placing its product in the hands of American stars, including Jake Gyllenhaal and Robert De Niro, in Hollywood movies and television this year.

The tactic is part of the company’s latest marketing strategy to use product placement to increase its brand recognition in the US. With more than 3300 locations, Tim Hortons is the largest fast-food chain in Canada. This represents more locations per capita than McDonalds in the United States. See page 27.

Coffee prices recovered slightly in January, the International Coffee

ASIA

Organisation (ICO) reported in February, citing growing concerns about the outbreak of coffee leaf rust across Central America.

Prices reacted to the news after months of steady decline, with Colombian Milds, Other Milds and Brazilian Naturals increasing by 2.9 per cent, 3 per cent, and 3.2 per cent respectively.

Nevertheless, some analysts are saying these prices don’t reflect the physical realities of production.

While recent estimates for this year’s production represents an increase of 7.3 per cent over last year, in November 2012, the ICO had initially estimated production levels to hit a record 147 million bags. See price report page 33.

MPE Chicago has pioneered the patented Normalizer Vortex. This device is able to increase the density of ground coffee by 100 per cent more than normal. This means that capsule manufacturers can increase the strength of a brew – for instance, to brew espresso – without increasing the capsule size. The device works alongside the company’s advanced roller mill grinders, ideal for precise Turkish coffee grinding and coffee capsule grinding. See page 44.



AMERICAS

The share of Robusta on the market is rising, just in time to meet growing consumer demand from instant coffee consumers.

With developing and producing countries increasing coffee consumption, much of this rising demand has come in the form of instant, soluble, and 2 or 3-in-1 type coffees.

Asian markets are largely driving this trend, with statistics in Indonesia, Korea and Vietnam supporting this rise, as well as from Russia and a number of Latin American markets.

The rise in demand for Robusta coincides with increased production.

The jump in Robusta growers follows the price crash of 2001-2003, when many producers in lower-altitude regions shifted production from Arabica to Robusta. See page 22.

The Global Coffee Review Leaders Symposium will take place on 22 May in Melbourne, Australia.

In the lead up to the Melbourne International Coffee Expo, which will host the World Barista Championships and World Brewers Cup, the event provides an ideal professional development opportunity for industry leaders looking to keep abreast of developments in the global coffee industry.

Confirmed speakers include Dang Le Nguyen Vu, Chairman Trung Nguyen Coffee; Miguel Medina, Vice Chairman Anacafe; Albert Scalla, Executive Vice President INTL FCStone LLC; Rainer van der Beek, Vice President Sales and Marketing, Probat Werke; Santiago Pardo, Director Asia Colombian

3300

With more than 3300 locations, Tim Hortons is the largest fast-food chain in Canada. This represents more locations per capita than McDonalds in the United States.

See page 27.

MARCH/APRIL 2013 | GCR

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NEWS In Brief

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G C R | M A R C H/ A P R I L 2 013

to use an artificial neural network to replicate that learning and adjustment process.

Professor Chahan Yeretzian, Head of Analytical and Physical Chemistry at the Zurich University of Applied Sciences, has similarly been working on advances in the grinding front.

See page 41.

Andrew Rugasira, the Founder of Good African Coffee, released a book published by Random House on his experience in launching the Ugandanbranded roasted coffee.

Good African Coffee is currently distributed in Tesco stores throughout the United Kingdom, as well as online in the United States. It stands today as one of the widest distributed, African-owned and branded, roasted coffee sold directly into Western markets around the world.

Uganda currently produces around 3 million bags of coffee a year, which is exported mainly in raw green bean form. Rugasira tells Global Coffee Review of the challenge in gaining financial backing and the support of Western retailers in launching an African product. See page 10.

EUROPE

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These durable discs are appropriate for markets where the coffee going through the machines may be a little “rougher”. Compared to the steel discs which grind at a speed of 280 – 300 kilograms an hour, cast steel discs are a bit slower at 230 – 250 kilograms an hour. However, the durability of the material means these discs stay sharp, and have a longer lifetime than steel discs.

For even longer lifetimes, Mahlkoenig offers an additional upgrade to the tungsten carbide discs. With a grind speed of 260 – 280 kilograms per hour, these discs work at a speed and volume capacity similar to steel discs, with an impressive 18 times the lifetime.

See page 46.



India’s coffee crop for the 2012-13 crop year was on average 85 per cent complete by the end of February.

According to traders at Ecom Gill Coffee Trading, the Arabica crop is lower than the previous year due to lack of blossom showers in 2012, with low elevations experiencing a blossom/ fruit set failure. Later in the year, further problems were also reported from white stem borer.

Ecom noted that regions which received good rainfall, or where large estates have irrigated their crop, have produced good quality coffee.

The trading company said that its foolproof quality analysis system has helped identify these crops, where the company will focus its buying efforts.

A shift from Arabica cultivation to Robusta was noted, due to dropping Arabica prices, and the high incidence of pests and disease in the warmer weather.

On the Robust end, India’s crop production and quality is reported as positive in an “on year”, particularly in Karnataka, the main Robusta growing state. Ecom said that crop production was low in Kerala, due mainly to a lack of rains during blossoming time.

Around 80 per cent of the crop in this region depends on rain for blossoming.

Overall, quality and bean size of Robusta was reported as “better and bigger” than the previous year.

Ecom anticipates more Robustas to be washed due to the good prices last year, where for a brief two weeks washed Robusta was more expensive than washed Arabica.

AFRICA



Coffee Growers Federation; and Alain Poncelet, CEO Ecom’s global Sustainable Management Services division. See page 58.

The Institute for Scientific Information on Coffee (ISIC), based in the United Kingdom, released a report highlighting the links between coffee consumption and the development of Type 2 diabetes.

The report points to epidemiological evidence that shows drinking three to four cups of coffee per day is associated with approximately 25 per cent lower risk of developing Type 2 diabetes, compared to consuming none or less than two cups per day. See page 37.

A study, by the Electronics Department of the Politecnico di Torino in Italy and the Research and Development Department of Lavazza, looked at the use of artificial neural network approach to control two grinders used for coffee production.

Just like an experienced machine operator would learn over the years to adjust machine settings to refine the grind, the Lavazza project aimed

25%

A report by the Institute for Scientific Information on Coffee (ISIC) says that drinking three to four cups of coffee per day is associated with approximately 25 per cent lower risk of developing Type 2 diabetes, compared to consuming none or less than two cups per day.

See page 37.

Coffee historian Jonathan Morris will be giving regular presentations at the LaCimbali booth at the upcoming London Coffee Festival.

The event is taking place from 25 – 28 April 2013 at the Old Truman Brewery, as the flagship event of the UK Coffee Week from 22 – 28 April.

At the LaCimbali booth, Morris will discuss the evolution of espresso machines. In addition to Morris’s public talks on the history of espresso, the M100 LaCimbali model will be set-up to brew coffee at parameters consistent with these different periods of history. Last year, LaCimbali contributed to documenting the history of espresso, with the opening of a museum in Milan in October.

See page 49.

COVER STORY Good African Coffee

A STORY ABOUT

AFRICA (AND NOT ABOUT CHARITY)

GOOD AFRICAN COFFEE’S FOUNDER ANDREW RUGASIRA TELLS GLOBAL COFFEE REVIEW WHY ENCOURAGING LOCAL ENTREPRENEURSHIP WILL BE KEY TO THE POSITIVE FUTURE OF HIS POVERTY-STRICKEN CONTINENT.

A

ndrew Rugasira’s new book A Good African Story starts off as anything but the happy tale the title leads on.

The first chapter ‘What’s Wrong with Africa’ begins with an account of a childhood encounter with drunk and violent soldiers. The chapter moves into a political essay on the warlordism, corruption, and repressive regimes that have long haunted Africa.

Yet those already familiar with the story of the coffee brand Good African Coffee know of the eventual happy ending. The roasted coffee brand that Rugasira founded in 2003 is now being sold by hundreds of retailers across Uganda and the United Kingdom, and via one of the largest online distributors in the United States. In an environment not conducive to business, Rugasira has managed to persevere, resulting in the most popular African-branded roasted coffee sold directly in Western markets.

As Rugasira tells Global Coffee Review, providing the historical context for his personal journey from start-up to success was an important part of writing his book, released in early 2013 by UK publishers Random House. “There is a lot of information that comes out of Africa that’s taken out of context,” he says. “It’s important to take a step back, and get a sense of that historical context. Not only to understand the story of the company, but also because I have grown up in this history, and it has shaped my own thinking.”

Rugasira’s success has not only been shaped by the politics of his upbringing, but from a businessminded background. Far from being an umpteenth generation coffee farmer, Rugasira comes from a family of business entrepreneurs. His father started a manufacturing plant to produce chalk in 1973,

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and was one of few Ugandan businessmen at a time when Asian migrants largely controlled the commercial affairs of the country.

Rugasira studied law and economics at the University of London, and went on to work in research positions looking at the industrial sector. He took over his father’s business when he passed away. Rugasira then went on to found and run a promotions, logistics and events management company, expanding into advertising and communications services before starting up Good African Coffee.

Rugasira largely credits this strong branding background for his eventual success. With coffee an important part of the Ugandan economy, Rugasira had plenty of resources at his disposal to fuel his coffee efforts. Marketing knowledge, however, was scarce in a country with a limited number of international brands.

“One of the big challenges I’ve found by

“IT’S IMPORTANT TO TAKE A STEP BACK, AND GET A SENSE OF THAT HISTORICAL CONTEXT. NOT ONLY TO UNDERSTAND THE STORY OF THE COMPANY, BUT ALSO BECAUSE I HAVE GROWN UP IN THIS HISTORY, AND IT HAS SHAPED MY OWN THINKING.” Andrew Rugasira

Good African Coffee Founder

M A R C H/A P R I L 2 013 | GCR

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COVER STORY Good African Coffee

Good African Coffee is sold direct into hundreds of retailers across the United Kingdom and online in the United States.

the way of roasted coffee is the need to develop this brand,” he says. “Brand appreciation in Uganda is not at a high standard, but this is a vital element when working on the global stage. This was something I could bring to the game. I understand what global brand standards are, and what people expect. I could develop a road map to communicate that brand in a way that would get consumers to pick up our product from the retail shelf.”

With limited resources for advertising or promotion efforts, Rugasira says this brand appreciation became especially important, as the only communication tool he had with customers.

“I think if anything my limited knowledge of coffee and my background in branding was certainly an advantage,” he says. “I came to this industry with a fresh set of eyes.”

This is not to say that Rugasira’s learning curve wasn’t a steep one. He remembers being especially caught off guard in his initial interactions with farmers.

When he launched the company, one of the first steps he took was to meet with farmers, and explain to them his plans to purchase their coffee at a higher price, and incorporate them as shareholders in the company. Expecting a warm welcome, Rugasira admits now that he didn’t expect the level of cynicism he received. Farmers were initially quite sceptical of Rugasira’s intentions.

“This reaction really caught me by surprise,” he says. “The farmers didn’t feel they were being paid the correct price for their

PRICE SLAVE Due to the fluctuating price of raw coffee, ­Uganda’s earnings dropped from US$430 million to $108 million in five years, despite an increase in volume.

coffee, and felt like they were being cheated. That surprised me, but I quickly came to understand where they were coming from.”

As the business progressed, Rugasira says that sharing Good African Coffee’s vision and objectives was helpful in winning farmers over.

This vision in its context was simple enough.

With the majority of the profits in coffee being gained in the roasting process, the idea was to roast coffee in Uganda and then sell it directly to Western consumers at the retail level. By incorporating farmers as stakeholders in the company, they could profit from this final sale, and not be as vulnerable to the fluctuations of market prices.

In his book, Rugasira points to the historic challenges farmers have faced in receiving only the market price for their coffee. He points out that from 1994 to 1995, the country exported 2.7 million bags of coffee, earning more than US$430 million. During the coffee price crisis at the turn of the millennium, that figure dropped to US$108 million, despite an increase in volume.

His main argument is that aid money will do

M A R C H/A P R I L 2 013 | GCR

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COVER STORY Good African Coffee

“AS TOUGH AS IT WAS AT THE BEGINNING WITHOUT SUFFICIENT RESOURCES, ONE LESSON WE LEARNED WAS THAT OUR VULNERABILITIES WERE A DEMONSTRATION OF OUR DEPTH OF COMMITMENT.” Andrew Rugasira

Good African Coffee’s founder

Andrew Rugasira initially struggled to explain his vision to farmers, that he intended to include them as stakeholders.

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little to help the country, and indeed Africa in general, compared to profits from commercial activities. It’s the “trade not aid” philosophy that is a strong underlying theme throughout Rugasira’s book, and indeed his business model.

While simple enough in its vision, the actualisation of Rugasira’s social enterprise was no easy feat. Interestingly enough, he says the company’s early trials and tribulations, in the form of financial troubles and strife, were helpful in gaining farmers’ favour.

“As tough as it was at the beginning without sufficient resources, one lesson we learned was that our vulnerabilities were a demonstration of our depth of commitment,” he says.

Rugasira laughs as he recalls the farmers cheering when the company finally had enough money to purchase a utility truck, rather than drive out on their old motorbikes. “It was that humility that helped farmers see our situation, they felt like they were connected to us,” he says.

Lessons in humility were something Rugasira had in abundance. In his book he describes the frustrations of trying to access capital in a country with financial policies not conducive to business credit. It took a personal visit to the governor of the Central Bank to acquire initial support. When Rugasira did finally secure a loan, he and his family faced incessant phone calls, letters and eventually foreclosure notices, when a deal with UK retailer Waitrose fell through.

Fortunately for Rugasira, a deal with Sainsbury’s came just in time to salvage the company. However, even that deal didn’t come easy. Although several positive meetings – and expensive trips to London – seemed like they were going to bear fruit, Rugasira received almost a flat no from the company via email. Desperate to save all his work, he emailed Sainsbury’s chief executive, with a plea that if the company was serious about fairer trade, it should reconsider its decision. The tactic worked, and a few weeks later he received a reply that the retailer would be stocking Good African Coffee.

Different to the company’s UK entry, Rugasira recounts that the move into the US was much more fortunate, and incidental. In actively

seeking out business connections with religious organisations, he was invited to a leadership event. On this trip he was partnered with Jerry and Jan Kehe who would serve as his hosts. He recounts to Global Coffee Review that it wasn’t until two days into his visit that he asked about their business, which turned out to be one of the largest online retailers in the US. “That was rather fortuitous,” he says. “That happened to be my way into the US.” Religion has helped Rugasira in more ways than just connections. He largely credits his faith for guiding him throughout his journey – from foreclosure notices to neglected promises. He says he was also encouraged by a belief that pursuing such a grand vision could only be achieved through some sacrifice.

“I figured maybe it’s this tough, because the potential impact is so great,” he says. “At the end of the day, what I went through was nothing compared to the lives of these farmers.”

Rugasira’s book is an inspiring and highly educational account into the context of Africa’s economic environment, as well as his lessons learned in the process of setting up his business.

While many memoirs like these are written years after a person retires, Rugasira is still in the height of his success, with plans for further expansion. He says this was important for him, to write the book while the experience was fresh in his memory. With 70 per cent of Africa’s population young, he says the possibilities for local entrepreneurship in the very near future are endless. The key will be to unlock the institutional and infrastructure hindrances that have made the journey so difficult for Rugasira.

“The sooner we remove these constraints, we’ll unshackle all these entrepreneurs,” he says. “The book is intended as a source of encouragement.”

He advises other entrepreneurs, especially in countries like his with environments less conducive to business, to seek out their own approach depending on their product or service.

“The most important thing is just don’t give up,” he says. “The journey is as important as completing the objective.” G C R

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FEATURE Rust Disease

RUST ATTACKS IN

CENTRAL AMERICA THE LATEST OUTBREAK OF RUST DISEASE ACROSS LATIN AMERICA HAS ESCALATED FROM SUPPLY CONCERNS FOR WASHED ARABICAS, TO SOCIAL DISASTER.

F

or most of the past decade, rust disease has been among the most damaging crop pests in the world’s Arabica growing regions.

It’s for this reason that alarm raised about the current attacks in Central America is one to be taken seriously. Across the region, governments have declared national emergencies. Coffee officials, producers and traders are openly talking about the “rust disaster” rapidly turning into a social crisis.

Some are even saying the current situation could prove more dire for farmers than when coffee prices collapsed just over a decade ago.

“The rust outbreak, combined with low prices in the market, has turned into a disaster and the social impact will be severe because we are not only talking about the loss of harvest, but a massive loss of jobs too,” Nils Leporowski, President of the National Coffee Association of Guatemala, Anacafe, tells Global Coffee Review. “We have lost 100,000 direct jobs already and this will affect millions of people.” Figures released to date show job losses in Central America already surpassed 300,000. With the number of cherries to pick diminishing rapidly, that figure could surge to half a million before the end of the year.

The latest wave of rust was first reported

Fumigation efforts in Central America aim to contain the spread of rust disease, which has turned into a regional social crisis.

M A R C H/A P R I L 2013 | GCR

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FEATURE Rust Disease

“THE PROBLEM REALLY WILL BE IN THE NEXT 2013-14 HARVEST, AND WE COULD SEE THE CROP END WITH CLOSE TO HALF OF THE ORIGINAL PRODUCTION FORECAST FOR THIS YEAR WITH ONLY 10 MILLION BAGS, OR LESS, FOR THE MEXICO-CENTRAL AMERICA REGION AS A WHOLE.” Albert Scalla,

Senior Vice President, Miami-based INTL Hencorp Futures

across Central America and the Caribbean in late 2011. Rust is caused by a fungus that first attacks the leafs and stems of coffee trees and results in trees losing foliage and becoming too weak to sustain any fruit at all.

“We saw the first outbreaks in December 2011 in the Dominican Republic, but at that time it did not appear to be anything out of the normal,” says Maria Isabel Balbuena of Fedecares, a group of cooperatives with 7600 producer members. “Then, in only six to seven months, the rust was everywhere. In the current crop we are not going to have more than 300,000 bags.”

Production in the Dominican Republic, which shares the Hispaniola Island with Haiti, has seen output slump to around half of the 1 million bags it produced up until the late 1990s. The Caribbean used to produce over 2 million bags, however the past 10 years of relentless hurricanes has cut its production in half.

“In the next 2013-14 harvest we won’t have any coffee at all and the last report we received was that rust is now also all over Haiti,” says Balbuena. “This could be the end of coffee production here.”

Preliminary estimates for losses from the current 2012-13 harvest in Central America and Mexico are for production to drop a minimum of 20 – 30 per cent. This could result in a drop to between 13 – 15 million bags, from a region that accounts for 25 per cent of the world’s Arabica exports. Initial forecasts for the region were looking for a harvest of 18.5 million bags.

“In Central America, outbreaks of coffee leaf rust have now been reported in all major coffee producing countries. This outbreak could have serious long-term implications for the production of Washed Arabicas in Central America,” International Coffee Organisation (ICO)’s Executive Director Roberio Silva said in his last market report. The report stated that the region stands to lose 2.5 to 3 million bags.

Private analysts have been quick to not only agree with the ICO about the extent of the situation, but to say these official production loss estimates appear conservative.

“We are going a step further than the ICO,” Albert Scalla, Senior Vice President of Miami-based INTL Hencorp Futures L.C. told the IWCA convention in Guatemala in February. “We have a serious problem at a regional level in Central America and the rust situation will clearly have an impact on production.”

Scalla described the visible devastation of the current rust attack in farms covering more than half of Central America’s coffee acreage of around 1 million hectares. He went on to compare the situation to the major frost in Brazil in 1994, which saw the world’s largest coffee producer lose half its crop.

“The first thing that came to mind, when I saw the pictures of farms, was that this rust attack we are seeing now is to Central America what the frost in 1994 was to Brazil,”

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Rust disease leads to a drop in cherry production. As a result, with no cherries to pick, the Latin American region could lose half a million jobs this year.

Henry Hueck, the owner of Nicaragua’s Ramacafe estate group, shows the damage from rust disease. His farm is “one of the lucky ones” to only see 20 per cent impact.

said Scalla.

According to Hencorp, a conservative forecast suggests that if damage is limited to 20 per cent of production in Central America and Mexico, the 2012-13 crop for the six-country region will drop by 3.7 million bags, to a total 14.8 million bags.

But if damage is more severe, at 30 per cent, the world would lose 5.5 million bags of coffee, with regional production dropping to 12.95 million bags, Scalla said.

“There is a lot of ignorance about the real impact of the situation,” Henry Hueck, the owner of Nicaragua’s Ramacafe estate group, tells the Global Coffee Review. Local producer groups in Nicaragua say that an average 35 per cent of Nicaragua’s coffee area has been hit. Hueck describes Ramacafe as among “the lucky farms” in the country.

“We don’t have more than 20 per cent affected, but it could get worst. Today it rained twice and then we had lots of sun, which is the perfect

Rust is caused by a fungus that first attacks the leafs and stems of coffee trees and results in trees losing foliage and becoming too weak to sustain any fruit at all.

condition for rust,” he explains. “As people are picking coffee, if they come from a plantation with the same clothing, they will carry the pest over to the next farm they go to work at.”

Rust disease has been especially damaging in tiny El Salvador, adding to producers’ decade-long battle with hurricanes, volcano eruptions, earthquakes and more. Official numbers show that 98 per cent of the entire coffee acreage of 152,000 hectares is cultivated with varieties that are extremely vulnerable to plagues such as rust. The Salvadoran Agriculture Ministry has reported that 40 per cent of the tree population is infested.

“The problem we have is that 98 per cent of our entire coffee tree population is planted with varieties like bourbon that are highly susceptible to rust. We have 2 per cent planted with varieties that are resistant to rust disease,” says Juan Quijano, a Scientist with the Salvadoran Coffee Research Institute, Procafe.

SATURATION Guatemala’s Anacafe reported that 70 per cent of the country’s 270,000 hectares of coffee is infested with rust disease. Of the area hit, farms are reporting minimum infestation rates of 20 – 30 per cent, with a big percentage reporting infestation rates between 40 – 50 per cent.

Procafe has said that at least US$400 million would be needed to renovate the 75 per cent of coffee land considered in “urgent need” of renovation. El Salvador remains one of the coffee countries with the most heavily indebted industry, with current debts standing at around US$88 million. The Arabica price hikes of 2010 and 2011 weren’t enough to help them pay off these debts.

The government of El Salvador has set aside US$3 million in emergency funding toward fumigation, but growers groups say this is only enough to cover only one application in half of the area affected.

Fumigation is a costly affair, at around US$80 – $90 per hectare to apply the three rounds needed, according to producers in the region.

Even with fumigation, this would only provide a short-term solution by curbing the spread of the plague. It will take trees at least two to three years to recover cherry production.

“The problem with fumigation is that even if you fumigate, if your neighbours don’t, then it won’t work. The rust will come back,” says Guatemalan grower Juan Luis Barrios, who is also a member of the Board of Directors at Guatemala’s Anacafe.

Information and figures available suggest Guatemala has been the most severely hit, with Anacafe reporting 70 per cent of the country’s 270,000 hectares of coffee infested. Of the area hit with rust disease, farms are reporting minimum infestation rates of 20 – 30 per cent, with a big percentage reporting infestation rates between 40 – 50 per cent.

“In order to bring the outbreak under control in Central America, we need US$300 million and this won’t bring production back next

M A R C H/A P R I L 2013 | GCR

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FEATURE Rust Disease

Fumigation efforts aim to contain the outbreak. However, as pickers move from one farm to the next, they risk carrying over the disease.

“IN ORDER TO BRING THE OUTBREAK UNDER CONTROL IN CENTRAL AMERICA, WE NEED US$300 MILLION AND THIS WON’T BRING PRODUCTION BACK NEXT YEAR, ONLY STOP FURTHER SPREAD OF THE RUST. AND IF WE WANT TO RENOVATE THE ENTIRE AREA THAT HAS BEEN HIT, WE ARE TALKING ABOUT FOUR TO FIVE TIMES THAT FIGURE.” Nils Leporowski,

President of the National Coffee Association of Guatemala, Anacafe

year, only stop further spread of the rust,” says Anacafe’s Leporowski. “And if we want to renovate the entire area that has been hit, we are talking about four to five times that figure.”

Honduras and Costa Rica declared national emergencies over coffee rust in January. The region’s smallest growers in Panama say the fungus has affected around 60 per cent of the new crop.

Honduras, which surprised markets in the last crop year by producing an unexpected record harvest of 5.5 million bags, had early expectations for a new record crop. However, those hopes have been slashed by losses in the first week of February reported at between 10 – 15 per cent of the crop.

Victor Molina, General Manager of the official Honduran Coffee Institute, Ihcafe, said at a local press conference in February that 25 per cent of the country’s 280,000 hectares in production has been infested with rust, and that production losses are expected to reach 15 per cent of the harvest, in addition to losing 100,000 jobs. Some exporters believe the final losses may turn out to be even higher.

“The port here normally works in three shifts 24 hours a day at this time of the year when the harvest is at its peak. But, in the last month activity has slowed down to 10 hours a day because there is just not any coffee coming out of the region,” says one large exporter in the Honduran coffee town of San Pedro Sula.

In addition to concerns over this year’s crop, the nature of rust disease means that outlook for the 2013-14 harvest is likely to be even more severe.

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“If we don’t take the needed measures, in 2013-2014 our production could drop by 40 per cent,” said Guatemala’s President Otto Molina Perez, as the third country in the region to declare a state of emergency in early February.

Hencorp’s Scalla puts a “conservative estimate” of losses in the next 2013-14 crop cycle at 30 per cent. This will translate into additional losses of 3.44 million bags, for a total crop of 10.36 million bags. Even more worrying, he said, is the very real possibility of losing 40 per cent of the crop. This would see 5.92 million bags drop off the planet in the next crop cycle, with regional total production cut in half to a mere 8.88 million bags.

“The problem really will be in the next 2013-14 harvest, and we could see the crop end with close to half of the original production forecast for this year with only 10 million bags, or less, for the Mexico-Central America region as a whole,” he said.

The long-term consequences of rust outbreak are evident in Colombia’s production figures.

After several years of erratic weather patterns, rust disease broke out in the first quarter of 2010 in the southern coffee producing belt of Narino, Huila and Cauca. By March 2010, producers reported that between 25 – 50 per cent of all coffee was affected. Infestation rates were said to be reaching as high as 70 – 80 per cent in the most severely affected regions. Colombia’s southern regions previously accounted for up to 40 per cent of the country’s total national output. Three years after the initial outbreak of rust disease, the country is still struggling to get production back on track with most analysts pegging the 2012-13 crop to reach around 8 million bags.

The Colombian Coffee Growers Federation (FNC) has invested heavily to fight the disease, largely via tree renewal. It will take another three to four years to have 90 per cent of all trees rust resistant. In 2011, the FNC helped finance US$400 million to assist farmers in the renovation process, and provided another $25 million for fertiliser and fungus control.

Financial aid will be needed in Central America to replant and prune infected areas. From the moment coffee plantations are fumigated and trees are either pruned or replanted, the natural cycle of recovery takes at least two to three years. This means the earliest hope for recovery is unlikely to emerge until the 2015-16 crop cycle.

Until then, the market might be lucky to get anything above 10 million bags from Mexico and the five Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

“The situation is critical and we are alarmed as to what will happen. The impact on the harvest and farms is a disaster, but what are all the people who are losing their jobs going to live on?” says Ana Teresa Beltran, a producer from El Salvador. “In this region many people see the only alternative in the illegal drugs trade.” G C R

FEATURE Instant Coffee

THE

FUTURE OF INSTANT WHILE TALK OF QUALITY ARABICA DOMINATES DISCUSSIONS, VOLUME GROWTH IN ROBUSTA DEMAND CONTINUES TO SURGE FORWARD. THIS GROWTH IS BEING LARGELY FUELLED BY INCREASED CONSUMPTION OF INSTANT COFFEE IN NEWER MARKETS.

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G C R | M A R C H/ A P R I L 2 0 13

I

n the past decade, the instant coffee market has expanded at annual growth rates of 7 – 10 per cent. In most emerging markets, many industry officials put that growth at 15 – 20 per cent per year.

This level of growth – of an already established product – makes instant coffee by far one of the most lucrative segments in the industry. Especially when one considers the volume it represents.

In the 2011-12 crop cycle, soluble coffee exports accounted for 12.7 million 60-kilogram bags of green coffee, more than 11 per cent of total world exports. Early forecasts for the 2012-13 cycle project that soluble exports will rise 5.6 per cent to 13.4 million bags, according to the United States Department of Agriculture (USDA).

The growth in demand for instant may come as a surprise for those seeing coffee capsules dominate Western at-home consumption.

The jump can be explained by demand from populous producing countries that are choosing affordable instant as their first step into coffee consumption, as well as non-producing emerging markets such as Russia and Ukraine.

Russia, for instance, is forecast to see imports of soluble coffee in the 2012-13 financial year grow by more than 51 per cent over a year ago, to the equivalent of 3 million bags. Overall local consumption increased to 4.9 million bags, according to the USDA. Green bean imports into Russia, meanwhile, has grown to 1.9 million bags from 1.24 million bags four years ago. Similar trends are reported from Ukraine and South Korea.

Euromonitor International recently reported that “growing demand for instant coffee primarily in emerging markets” has helped Swiss food giant Nestlé to become the world’s leading hot drinks manufacturer, with its key brands such as Nespresso and Nescafe, according to a 2012 report.

Emerging markets have been so important to Nestlé that the Swiss multinational has adopted a special “Popularly Positioned Products Program strategy to adapt to the particular needs of its high-growth, but price-sensitive, emerging markets”. This involves selling Nestlé brands in smaller quantities and in cheaper packaging to sustain margins, Euromonitor said. Nestlé’s global share of instant coffee reportedly stood at 51 per cent in 2010.

While such growth rates are impressive by any standard, they pale in comparison to the double-digit growth reported year after year from emerging coffee-producing markets. In this realm, Vietnam, India, Indonesia and Brazil have been leading the way.

As for the vast Chinese market, while limited data is available, all signs point to positive growth. “Nobody really knows how much [coffee] China drinks,” says Alex Gruber, Director of the coffee division for Singapore-based green coffee traders Tong Teik Pte Ltd. “It’s a big black box and consumption could be anywhere from a quarter to a third of a cup per capita. But from imports and other statistics we know that they are increasing consumption. Instant coffee is certainly growing in China. As well, as we have new domestic markets like Indonesia, where they ran out of their own coffee and had to import Robusta coffee from Vietnam.”

Vietnam is currently the world’s largest grower of Robusta and

“IT’S A MAGICAL CHANGE AND WE ARE SEEING IT ACROSS THE MARKETS WHERE WE HAVE BEEN SELLING OUR PRODUCTS FOR YEARS AND REALLY GOT TO KNOW THESE MARKETS.” Anwar Ahmed

General Manager, SSP PVT Ltd

DRINK UP Weekly coffee consumption in Japan reached 10.93 cups per person in 2010.

Of that figure, reports say 4.69 cups consumed were soluble coffee.

second biggest producer overall after Brazil. The country’s leading coffee company Trung Nguyen estimates instant coffee to be growing at between 15 – 20 per cent, while overall consumption is forecast to grow 22 – 25 per cent in 2013, Trung Nguyen Chairman Dang Le Nguyen Vu told the USDA. Trung Nguyen holds a market share of around 38 per cent of local consumption in Vietnam. Around 30 – 35 per cent of demand is met by the instant and soluble sector, according to the USDA, which expects to see rising demand in the years to come.

“Vietnam’s instant coffee market is expected to continue to grow steadily in coming years due to rising demand among adolescent and young adult consumers, who seek convenient and timesaving methods for consuming hot drinks with their modern and busy lifestyle,” the USDA states. “Instant coffee manufacturers in the country have added different types of coffee to meet changing consumer preferences such as 2-in-1, 3-in-1, and 4-in-1 coffee products, coffee with ingredients such as sugar, milk and cream.”

As Vietnam is embracing coffee drinking on a larger scale, local consumption will likely be approaching 2 million bags by the end of 2013, according to Raymond Neogh, General Director of FES Vietnam Co Ltd, another manufacturer of soluble coffee in Vietnam.

“We are seeing a lot of progress for the further development of instant coffee, with Nestlé announcing last year they are investing US$270 million in a new processing plant. The state-controlled Vinacafe, which holds around 30 per cent of the total domestic market in Vietnam, starting construction of its third processing plant,” Neogh tells Global Coffee Review.

“As people are getting more busy, they start

M A R C H/A P R I L 2 0 1 3 | GCR

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FEATURE Instant Coffee

Instant coffee consumption in Vietnam is said to be growing at 15 – 20 per cent, while overall consumption is forecast to grow 22 – 25 per cent in 2013.

looking for easier, more convenient and time saving products like the 3-in-1 types of instant coffee. We have even seen coffee shops starting to use instant coffee in their ice coffee blends because it makes the preparation easier,” he says.

It is avenues like this that explain why world consumption continues to grow so exceptionally well, even as a few traditional markets in Europe and the US have seen a drop in local consumption because of the global financial crisis.

These consumption figures are supported by companies producing parts and machines for soluble manufacturing plants, who have been doing well in recent years.

“It’s a magical change and we are seeing it across the markets where we have been selling our products for years and really got to know these markets,” says Anwar Ahmed, General Manager of India’s SSP PVT Ltd processing machinery makers.

In India alone, new plants and upgrades represent an increased capacity of at least 20,000 metric tonnes in 2013. At the standard conversion rate of 2.5 used for green coffee, this is equivalent to between 50,000 and 70,000 tonnes of green coffee needed to fuel these plants.

“We are talking about over 1 million bags of coffee in new instant coffee processing capacity being installed in India, a lot of which is for the domestic market and a lot of which is aimed at the export market,” says Ahmed.

He adds to this a 7000-tonne plant underway for Egypt, projects worth 8000 tonnes in Vietnam, 3000 tonnes in the Ivory Coast, and smaller investments in Ukraine and Russia. “My

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G C R | M A R C H/ A P R I L 2 0 13

US SPILL Reports say that most Americans have moved on from instant, which now accounts for just 8 per cent of the US market.

only concern is where is all this coffee going to come from to feed this demand,” he says.

The convenience and cost factor of instant coffee speaks for itself. For a few cents, simply pour a teaspoon of powder into a mug of boiling water. For these reasons, coffee consumption in nontraditional coffee markets has almost always started with instant coffee. While this growth in instant coffee is nothing new, these figures are a good reminder that roast and ground coffee, especially coffee capsules, are still a luxury of the relatively rich.

“Instant coffee is associated with Robusta coffee and there has been a clear campaign against Robusta for years,” says one senior trader with a large global green coffee buyer. “This reached its lowest point when some parts of the industry started referring to Robusta coffee as not being real coffee.”

A switch in consumer appreciation of instant coffee may have been sparked when Seattle-based Starbucks Coffee Company entered the soluble market in 2010 with a high-quality Arabica-sourced soluble coffee brand.

“The Via blend is just fantastic, and that’s the main reason for its success,” says the senior trader. “When you see the way this little powder stick transforms into a truly great coffee experience, just by dissolving into hot water, that suddenly makes instant coffee very attractive.”

With US$180 million in sales in 2011, US industry data puts Via as one of the top five instant coffee brands in the US. Folgers continues to lead the American market, accounting for 20 – 23 per cent, although Via is creeping up with a market share of more than 10 per cent just a year after its launch.

These figures, however, are on the small end considering most American consumers have moved on from instant. In 2010, instant coffee accounted for just 8 per cent of the overall coffee market in the US compared, to 77 per cent in the United Kingdom and 89 per cent in Ireland, according to Euromonitor International.

“The UK is a prime example where consumption is rising overall, and in particular out of home, but overall you should never forget that instant coffee is still king there,” says Mick Wheeler, Executive Director of the Specialty Coffee Association of Europe (SCAE).

This same trend can be observed in Japan, the world’s third largest importing country. Even though the market share of instant coffee has come gradually down, with consumption of roasted coffee on the rise, instant coffee still holds a leading 43 per cent market share.

The All Japan Coffee Association reported that weekly coffee consumption reached 10.93 cups per person in 2010. Of that figure, 4.69 cups consumed were soluble coffee while 3.27 cups were roast and ground.

Whether instant or roast and ground, industry experts say that increased coffee consumption is a good thing. This is especially true for producing countries, who can increase their financial security through domestic demand.

“The really good thing is the fact that with domestic consumption rising in origins, growers there have a more secure future,” says the SCAE’s Wheeler. “They are, to a limited extent, insulated against the trials and tribulations of the world market.” GCR

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FEATURE TV Placement

SELLING

THROUGH THE

SCREEN NATALIE DUNLEAVY CAMPBELL LOOKS AT HOW STRATEGIC PRODUCT PLACEMENT IN TELEVISION SHOWS AND MOVIES IS PLAYING A CENTRAL ROLE IN CANADA’S TIM HORTONS’ MOVE SOUTH OF THE BORDER. M A R C H/A P R I L 2013 | GCR

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FEATURE TV Placement

W

ith an average television consumption of around five hours a day, when they’re not working or sleeping, the average American will spend much of his or her time glued to the TV screen.

These are figures that Canadian coffee giant Tim Hortons is taking on board in its efforts to further expand into the United States market. In looking to win over the hearts and minds of Americans, Tim Hortons hopes to expand its US presence by placing its product in the hands of the likes of actors Jake Gyllenhaal and Robert De Niro in Hollywood movies and television. The tactic is part of the coffee chain’s latest marketing strategy to use product placement to increase its brand recognition in the US. “As we expand our brand and presence in the US and internationally, we’re looking to raise our brand awareness,” says Alexandra Cygal, Senior Manager of Public Affairs at Tim Hortons.

“We recognise that putting our product on the big screen is a good way to achieve that.”

These placements might include Gyllenhaal enjoying a “double-double” on the upcoming film Prisoners, De Niro eating “Timbits” in Grudge Match, and Vin Diesel going on a “Timmy’s Run” in Fast and the Furious 6. While the company can’t guarantee these placements will make the final cut, these products have all made the run-sheet of these Hollywood productions. Tim Hortons also landed a second appearance in the American award-winning television series Homeland.

If the upcoming placement opportunities are anywhere near as successful as the brand’s recent appearance on the hit American sitcom How I Met Your Mother (HIMYM), Tim Hortons might well have struck product placement gold. A season eight episode, aired on 5 February this year, featured a scene located in a Canadian coffee shop clearly branded as Tim Hortons.

While the brand was heavily featured in the episode, the agent of its social media success came from a company tweet touting the new donut it created in honour of the 90210 star and Canadian Jason Priestley, who was also appearing in the episode.

The tweet read: “@Jason_Priestley, we loved the idea of ‘The Priestley’ so much, we made a batch. A Timbit IN a donut? Genius.”

The tweet was in reference to a scene in which several Canadian celebrities, including Priestley, reminisced which Tim Hortons they were in and what donut they were eating when the show’s Canadian teen superstar character “lost it”.

The reaction on social media was instant and impressive. The tweet was shared more than 1500 times on Twitter, while the accompanying post on Facebook garnered more than 12,000 likes and 3500 shares.

According to Cygal, it is this kind of success Tim Hortons is hoping to further generate with product placement efforts this year.

She says it was Tim Hortons’ first product appearance on the television show HIMYM in season five that prompted the idea of using product placement as a key tactic to expand the brand in the US. Producers of HIMYM – who have a Canadian as one of their lead writers – approached Tim Hortons about a scene in which they wanted to create a Canadian coffee shop setting for two of the show’s main characters played by Neil Patrick Harris and Cobie Smulders (who is also Canadian).

“We had so much brand placement in that one episode,” says Cygal. “That really opened our eyes to the possibilities of what product placement can do for our brand.”

Cygal says the social media reaction was instant.

“That’s when we stepped up that game last year,” she says. “There was definitely a bigger push to put our name and brand in more movies.”

Tim Hortons is not the only coffee company seeing the potential of product placement.

While product placement has long been legal and widespread in North America, it is just starting to gain acceptance in Europe. Coffee companies such as Nescafe and Kenco have already jumped on board to take advantage of the situation.

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“WE HAD SO MUCH BRAND PLACEMENT IN THAT ONE EPISODE. THAT REALLY OPENED OUR EYES TO THE POSSIBILITIES OF WHAT PRODUCT PLACEMENT CAN DO FOR OUR BRAND.” Alexandra Cygal

Tim Hortons, Public Affairs Manager

When Ireland legalised paid product placement in May 2011, Kenco was among the first on the bandwagon. TV3 producers cut a deal worth more than US$350,000 to have the show’s presenters drink Kenco instant coffee from branded mugs.

When British telecommunications regulator Ofcom made product placement legal in February 2011, a Nescafe coffee capsule machine was the first legal placement on British television. Nescafe paid US$160,000 to have the machine on air during a morning show, where it was featured in the kitchen with chef Phil Vickery.

Unlike North America, though, it would seem that brands in the UK have been slow to see the potential benefits of product placement. Gary Knight, commercial content director at ITV, which featured the Nescafe placement, told Marketing Week in February 2012 that UK product placement is currently in its “pre-toddler” years.

With fewer than 20 brands featured on the network in the first year since product placement was legalised, Knight told Marketing Week he believed advertisers were reluctant due to a lack of evidence on the return on investment.

From top: Tim Hortons has more than 3300 locations across Canada; How I Met Your Mother featured a scene in Tim Hortons; Homeland has twice featured Tim Hortons; a TV placement inspired tweet was retweeted 1862 times.

Canadian grown Company If advertisers wanted proof of a return on investment, they could certainly use Tim Hortons as a case study.

To Canadians, it’s probably no surprise that appearances HIMYM and Homeland, both of which are available on national television networks in Canada, would resonate so well with viewers.

The company that was started in 1964

by Ron Joyce and former National Hockey League and Maple Leaf player Tim Horton is well-ingrained in the hearts and minds of Canadians.

“Hortons was absolutely unique in what they did,” Ron Buist, former director of marketing at Tim Hortons of 24 years, tells Global Coffee Review.

He explains the company is impregnated in the Canadian psyche because it was one of the first shops of its kind to offer fresh coffee and donuts 24 hours a day. The shop had a built-in audience from the get-go, appealing to many different population segments of day and night workers.

“The only place you could go to in the middle of the night was Tim Hortons,” he says.

Buist says the key to the company’s early growth and success was largely due to starting locations in smaller communities and cities. Marketing efforts focussed on grassroots campaigns and involvement in the communities they worked and served.

Its Timbits Minor Sports Program, for example, currently sponsors more than 200,000 kids aged four to eight who play on sports teams in hockey, soccer, lacrosse, t-ball, baseball and ringette in communities across Canada and the US. Buist says that as the company grew, it moved into larger communities. “They started with one store with no marketing plan,” he says. “They worked hard at it and they did a job that no one else really wanted to do.”

Buist, who is author of the Canadian best-seller Tales from Under the Rim, now tours as a public speaker. He is credited with some of Tim Hortons’ most successful marketing campaigns still relevant to presentday consumers.

He initiated the company’s ‘True Stories’

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FEATURE TV Placement

campaign in the 1980s that used testimonials as a base for advertising. He is also the marketing brain behind the annual Roll Up the Rim contest that gives consumers a shot at winning grand prizes, including cars.

While large-scale product placements are a big strategy shift for the company, Buist says that Tim Hortons would probably do well in continuing its grassroots approach to marketing in its locations south of the border.

VENTURE SOUTH The spread of Tim Hortons’ locations across Canada is clear evidence of the brand’s role as a well-established national icon.

With more than 3300 locations, it is the largest fast-food chain in Canada. It’s also the fourth largest in North America, based on market capitalisation.

To put things into perspective, its number of locations per capita is double that of McDonald’s in the US. But while Tim Hortons made it big at home, can it dream of achieving that kind of success south of the border?

Cygal says Tim Hortons currently has more than 750 locations in the US, and is significantly increasing its marketing efforts to expand its presence south of the border and internationally.

“It makes sense to expand our brand in terms of awareness beyond Canada,” says Cygal.

According to Alan Middleton, PhD and Assistant Professor of Marketing at York University in Toronto, the challenge will be competing in a market already saturated with well-

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G C R | M A R C H/ A P R I L 2 013

established coffee brands like Starbucks and Dunkin’ Donuts.

Dunkin’ Donuts has a similar value proposition to Tim Hortons, offering fresh coffee and donuts 24 hours a day, seven days a week. Its tagline, “America runs on Dunkin’,” is comparably as catchy as its Canadian competitor’s “It’s time for Tims.”

Middleton says, however, that product placement could be an effective strategy into a saturated market.

“They have to become a more accepted part of the scenery and contextualise something people haven’t seen before,” he says.

He explains that the value in using product placement is having people see something they haven’t been aware of in the past, or reinforcing the dominance in ubiquity of what they are.

He highlights Coca Cola as a product that often uses this strategy. For example, a Coke logo, featured in the opening scene of 1982’s futuristic flick Blade Runner, was intended to signify the company being around in the future.

Middleton says the reason product placement is so coveted in Hollywood movies is the aspirational lifestyle it promotes.

“It’s not only the people using it,” he says. “It’s the context in which they’ve seen it which helps establish the brand.” He says the type of movie, style, and scene in which a product is identified helps make it identifiable and reflects the lifestyle a company wants its brand associated with.

Cygal says Tim Hortons is working hard to introduce the company’s story to studio executives in the US and participate in film festivals, in the hopes of getting authentic brand product placement opportunities.

“I think the studios are really interested in trying to build authentic settings,” she says. “If someone is walking with a cup of coffee down the street it makes the production that much more real.”

Middleton cautions that product placement also carries its risks. He says filmmakers could make the film look like a two-hour commercial, or make the product so subtle it is completely missed because of the nature of the scene.

There are numerous cases of product placement gone wrong. In November 2012, American beer company Budweiser asked producers of the movie Flight to remove an unauthorised use of their brand from scenes that have Denzel Washington drinking the beer behind the wheel.

In 1996, Reebok famously sued TriStar Pictures over the misuse of its brand in the American film Jerry Maguire. The company took issue when it paid US$1.5 million to have their brand in the movie, which had Cuba Gooding Jr.’s football-playing character angry at the brand throughout the movie for not sponsoring him.

According to Middleton, what determines if the cost of product placement is worth the benefit depends on how many eyeballs are expected to view it. He says if Tim Hortons only had to supply product, it would be a lot cheaper than BMW’s placement in the James Bond movie series.

Cygal says that most productions only require the supply of products and brand collateral for placement, such as those on How I Met Your Mother.

Middleton suspects Tim Hortons will keep playing the social media card in combination with the upcoming placements to make the campaign a success.

And then there is the type of advertising you can’t pay for.

In January 2013, a loyal Tim Hortons customer posted a video of a group of elderly gentleman singing a barbershop version of Can You Feel the Love Tonight,

by Elton John, in one of its locations. The video was an instant hit with nearly a million views on YouTube within a month.

“It’s entirely consistent in continuation of product buzz,” says Middleton. “It’s that kind of thing they (Tim Hortons) are trying to get started in the US.” GCR

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COFFEENOMICS Price Outlook

A MARKET IN

DENIAL? IN THE LATIN AMERICAN ARABICA MARKET, WEAKENING PRICES HAVE LED TO A STANDOFF BETWEEN TRADERS AND PRODUCERS. AFTER FOUR MONTHS OF UNCHANGED DIFFERENTIALS, SIGNS ARE STARTING TO EMERGE THAT A REBOUND MAY BE COMING.

F

ollowing widespread reports of failing crops in Latin America, some producers are dismayed that ICE futures prices in New York show little indication of recovering.

The rust outbreak, which is affecting an average of 20 to 30 per cent of the entire Central American coffee belt, has come at a time when Latin American farmers are worried about the future of their industry. As tree populations are getting old, unproductive and lower yields have left smallholder coffee farms in a state of semi-abandonment, and prices are hovering well below the cost of production at around US$1.80 per pound.

So why – some producers are asking – with production in a downfall and buoyant demand, is the market defying against higher price?

The sad answer, recent history has proven, is likely found in the multiple factors of outside influence, drive by the global economy, which are the main drivers of prices in the market.

Most of these have nothing to do with the core fundamentals of the physical market.

At the onset of the world 2012-13 crop cycle last October, the International Coffee Organisation had pegged the new crop to reach a record 147 million 60-kilogram bags. The US Department of Agriculture (USDA) was just slightly more ambitious, saying it expected 148 million bags. After years of significant difference between the two main forecasting institutions, many would have welcomed a more unified view.

Optimism on both accounts, however, has quickly fizzled out. Following the rust outbreak in Central America, and the ensuing announcements of national emergencies, the ICO has since lowered its figure to 144 million. Incidentally, the USDA actually lifted its estimation figure to 151 million, citing higher crops in Indonesia, Vietnam and Brazil.

And so the market finds itself in another tug-of-war between the trade-led USDA and the producerled ICO. Much of the dispute surrounds differences in projections of Arabica and Robusta supply.

The USDA has supported bears in the market, saying the world’s top Robusta producer Vietnam is expecting another bumper crop this cycle. Indonesia is now posting a significant recovery. Brazil by most accounts is pegged to produce its best off-cycle crop of close to 50 million bags. Early reports indicate that flowering for Brazil’s new 2013-14 crop is looking good, with harvesting set to begin in May. The ICO, meanwhile, says that rust disease could lead to losses of 2.5 to 3 million bags in Central America. As consumption should grow by at least 2 million bags, these factors could bring the 2012-13 cycle to end at a tight balance, with either a small surplus or a small deficit in the supply-demand balance.

Part of the explanation for Arabica’s struggle to recover could be found in Robusta’s success.

Robusta has enjoyed a sharp increase in both demand and prices. This could be a sign that demand is shifting away from Arabica, and thus creating a potential over-supply by Arabica producers.

M A R C H/A P R I L 2 0 1 3 | GCR

33

COFFEENOMICS Price Outlook

Source: International Coffee Organisation

300

Colombian Mild Arabicas ICO Composite Other Mild Arabicas Brazilian Natural Arabicas Robustas

Prices US cents per pound

250

200

150

Monthly averages

“The market has been coming down and we are fundamentally justified,” said Analyst Judith Ganes-Chase, speaking at the 10th AFCA convention in Uganda last month. “I am negative on the market and I still think there is room for a further downside to come.”

Ganes-Chase cited a “massive shift in demand from Arabica to Robusta” as explaining the downward correction.

Not everyone agrees. While some analysts say that recent indications in differentials suggest prices could be on the verge of recovery, the real issue that has to be addressed is the imbalance in Arabica-Robusta markets.

“I continue to believe the futures markets are struggling to accommodate the reality of three distinct underlying commodities being

34

G C R | M A R C H/ A P R I L 2 0 13

15 FEB

14 FEB

13 FEB

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served by two exchanges,” says Ric Rhinehart, Executive Director of the Specialty Coffee Association of America. He is referring to the competition between mild washed Arabica, Robusta and Brazilian natural Arabicas.

Most roasters are cautious, however, working in an environment of disagreement and uncertainty.

Climate change has added an increased level of volatility to the supply chain. One senior coffee trader said that as a result, many are preparing themselves for more dramatic needs to increase flexibility in coffee purchasing, based primarily on the availability of supply and price.

He notes that funds are currently holding a net short position equivalent to at least 5 million bags, meaning that any sudden impact could set off a “destructive volatility” in prices.

“Many in the market actually agree with the ICO and we believe the market is becoming too bearish, which is not good for anyone as this leads to more volatility,” says the trader. “And more volatility could lead to a situation where coffee just becomes coffee, regardless of the bean type.”

This is where the Latin American differentials become all the more important. These differentials are premiums or discounts quoted against the New York Arabica futures and paid in the cash market in producing countries.

History has proven that an increase in differentials could be an early indication for a surge in prices. In the spring of 1997, cash differentials started moving higher long before the New

York Arabica market rallied to near historic highs of US $3.19 in May that year. Colombian premiums started rising in earnest in late 2008, alerting the market to the extent of serious supply problems that eventually lead to the highs seen in May 2010.

In early February this year, top quality strictly hard beans from Guatemala climbed to differentials of around 10 US cents per pound, then spiked to 15 cents by mid-February, according to trader and exporter reports.

Nicaraguan and El Salvadoran strictly high grown beans, meanwhile, have risen to premiums of 5 US cents per pound after being quoted at around level money for most of the past four months. Honduran strictly high grown beans have moved back into premium territory at around 2 US cents per pound.

“The rust issue can be a real factor on both sides and differentials could get back to last year’s levels soon, once producers sell most parts of the current crop toward the end of March,” says Davide Rocca, a Trader with Genoa-based Italian coffee buyers CICE Spa. “In my opinion, at this point it’s becoming

“IN MY OPINION, AT THIS POINT IT’S BECOMING WORTHLESS TO TENDER CROP AGAINST THE ICE. SO EVEN IF THE RUST OUTBREAK HAS RUINED SOME COUNTRIES MORE THAN OTHERS, WE ARE GOING TO SEE CERTIFIED STOCKS PILING SLOWLY.”

Davide Rocca

Trader with Genoa-based Italian coffee buyers CICE Spa

worthless to tender crop against the ICE. So even if the rust outbreak has ruined some countries more than others, we are going to see certified stocks piling slowly.”

The main alternatives considered as replacements for Central America come from Peru, or natural Arabicas from Brazil. With these in limited supply, many say the market could be headed for a correction within the next six months, before the 2013-14 cycle starts in October. Whether this correction will be reflected in the cash market via differentials, or in the futures prices, is yet to be seen. G C R

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RESEARCH Coffee & Diabetes

THE

HIGHS &LOWS OF COFFEE

CONSUMPTION

EXPERTS DISCUSS A RECENT STUDY THAT SUGGESTS COFFEE INTAKE CAN REDUCE THE RISK OF DEVELOPING TYPE 2 DIABETES.

S

cientific research has found another reason why consumers should indulge in additional cups of coffee. In January, the Institute for Scientific Information on Coffee (ISIC), an industry funded organisation, released a session report highlighting the links between coffee consumption and the development of Type 2 diabetes.

“Recent scientific evidence has consistently linked regular, moderate coffee consumption with a possible reduced risk of developing Type 2 diabetes,” Roger Cook, Science Manager at the ISIC, tells Global Coffee Review.

According to the ISIC session report, overall findings from studies published in the past five years point to epidemiological evidence that drinking three to four cups of coffee per day may help prevent Type 2 diabetes by up to 25 per cent, compared to consuming none or less than two cups per day.

In order to further understand the latest findings, the ISIC sponsored a session at the seventh World Congress on Prevention of Diabetes and Its Complications (WCPD) on 12 December 2012. The session brought together a panel of experts in this field to further explore and understand key findings.

The session was titled ‘Good things in life: Can coffee help in diabetes prevention?’. According to Professor Edith Feskens, Professor of Nutrition and the Metabolic Syndrome at the Wageningen University in The Netherlands, the answer to that question in yes.

“Yes, our work definitely confirms this,” Feskens said at the WCPD congress. “Our previous

research showed that people who drink coffee have a reduced risk of Type 2 diabetes, and lately we saw that also.”

Feskens said the reduced risk has been confirmed despite the fact that the standard amount of caffeine in a cup is unknown.

“I think it’s an important issue, but also a difficult issue,” Feskens said. “In the United States you have coffee in a mug, [in Spain] the cups are small, some places serve less strong coffee, but absolutely with every cup the risk reduces.”

According to The World Health Organisation (WHO), Type 2 diabetes, formerly called noninsulin dependent diabetes, is caused by the body’s ineffective use of insulin that results in high blood glucose and insulin resistance. Type 2

M A R C H/A P R I L 2 0 1 3 | GCR

37

RESEARCH Coffee & Diabetes

diabetes is the most common form, affecting 85 to 90 per cent of all people with diabetes. It is primarily influenced by lifestyle factors such as diet, physical activity, alcohol consumption and smoking.

More than 220 million people worldwide were diagnosed with diabetes in 2011, according to the WHO. The organisation estimates that by 2025 that number will increase by 65 per cent, affecting an estimated 380 million individuals worldwide.

Professor Jaakko Tuomilehto, Professor of Public Health at the University of Helsinki, Finland, presented his research findings from coffee intervention trials at the 2012 WCPD. Tuomiletho’s study selected diabetic patients and followed their coffee intake for 10 years. Follow-up results showed that mortality risk and cardiovascular risk were lower in individuals drinking more than five cups of coffee a day.

“In our population studies we [had] people drinking up to 10 cups of coffee a day,” Tuomiletho told the delegates at the congress. “Especially in women, it seems the diabetes risk goes down by 80 per cent if you drink over 10 cups of coffee.”

Tuomiletho said his research clearly shows that those individuals who were drinking more than five cups of coffee a day had reduced risk of liver cancer. Individuals who had an increased marker of liver damage were also found to benefit more from coffee drinking, in the context of diabetes incidence.

To discover the different effects coffee has on bodily functions and biochemical measurements, Tuomiletho said a clinical trial with people drinking different amounts of coffee would be beneficial.

However, his initial findings put coffee consumption in a positive light.

“It’s very clear that people should not avoid coffee drinking. It seems to be a healthy habit. And like many other plants, the juices and extracts [of coffee] seem to be one of the healthy drinks,” he said.

Tuomiletho’s findings are not the only ones pointing in this direction. Several population studies have suggested a consistent dose response – meaning that the higher the consumption level, the lower the risk of developing Type 2 diabetes.

In 2002, a Dutch study of 17,111 adults aged between 30 and 60 years were investigated on the association between coffee consumption and risk of clinical Type 2 diabetes. After a follow-up period, 360 new cases of Type 2 diabetes were identified. Subjects drinking at least seven cups of coffee per day were found half as likely to develop Type 2 diabetes. Since then, the ISIC report says that more than a dozen other studies have confirmed this same finding in other populations.

In 2010, D.S Sartorelli et al. published a study that analysed the long-term effects of coffee, decaffeinated coffee and tea consumption on Type 2 diabetes. This meta-analysis covered 457,922 individuals and 21,897 newly diagnosed cases of Type 2 diabetes from eight different countries. The combined data showed that up to six to eight cups of coffee per day was associated with a 5 – 10 per cent lower risk of developing Type 2 diabetes.

The study also suggested that the time of coffee drinking plays a distinct role in glucose metabolism.

Results concluded that drinking coffee, particularly at lunchtime, reduced the risk of developing diabetes, compared with those who didn’t drink coffee at lunchtime.

Since the 2010 study, five more epidemiological studies have been published on the subject, including that of American Indian men and women, and population studies in The Netherlands, France, Japan and the United States – each confirming a strong association between consumption of coffee and a lower incidence of Type 2 diabetes.

Despite the encouraging results, Cook says no “recognised mechanism of action” has been established to explain the link.

Further research is needed to confirm what exactly is responsible for the association.

Dr. Nathan Matusheski, Associate Principal Scientist at Mondelez International, discussed the potential mechanisms driving the strong association between coffee and the risk reduction of Type 2 diabetes at the 2012 WCPD, including caffeine as a possible source.

“Caffeine’s a tricky one,” Matusheski said. “Some short term

38

G C R | M A R C H/ A P R I L 2 0 13

studies have shown caffeine acutely disrupts glucose tolerance, which has got a little bit of press. But really that’s only happened with really large doses of caffeine. There’s limited data on longer-term exposure to caffeine over time of what those effects might entail.”

The ISIC report says that because coffee and tea are the main sources of caffeine in diets in most countries, it is difficult to separate the effects of caffeine from either coffee or tea.

However, since decaffeinated coffee is reported to have a similar level of association as regular coffee, it is unlikely that caffeine plays a role in the negative association for development of Type 2 diabetes.

Matusheski said that “possibly” in some cases, antioxidant compounds found in coffee (such as chlorogenic acid and trigonelline) or compounds that have antioxidant activity, could interact with some cellular pathways that affect glucose and acutely reduce sensitivity to insulin.

At the WCPD, Matusheski discussed a number of possible key mechanistic theories that could underlie the relationship between coffee consumption and the reduced risk of diabetes. These included the Energy Expenditure Hypothesis, which suggests that caffeine in coffee stimulates metabolism and increases energy expenditure; and the Carbohydrate Metabolic Hypothesis, where it is thought that coffee components influence the glucose balance within the body.

Subset theories also suggest other components of coffee could change the way the body handles carbohydrates or sugars during digestion, or that Type 2 diabetes affects 85 to 90 per cent of all people diagnosed with diabetes.

“ESPECIALLY IN WOMEN, IT SEEMS THE DIABETES RISK GOES DOWN BY 80 PER CENT IF YOU DRINK OVER 10 CUPS OF COFFEE.” Professor Jaakko Tuomilehto

Professor of Public Health at the University of Helsinki, Finland,

coffee components may improve insulin sensitivity in the body. However, Matuskeski speculates that the compound causing the effect could be a number of things not yet determined.

“The bottom line is that we see a strong association between coffee consumption and the reduction of risk for Type 2 diabetes, but that’s what it is right now, it’s not a cause and effect relationship,” Matusheski said. “Future and further research into the possible implications, especially in a clinical context, will help better understand this.”

The good news for individuals already diagnosed with Type 2 diabetes is that coffee consumption can do no harm, said Riobó, Associate Chief of Endocrinology and Nutrition at the Jiménez Díaz Hospital of Madrid.

“Coffee doesn’t result in the worsening of diabetic complications and it does not result in worse metabolic control,” Riobó told WCPD delegates. “There is no need for diabetic or obese patients to refrain from drinking coffee. It is very useful in clinical practice.”

Riobó’s research found that coffee consumption is associated with lower C-peptide, a byproduct

created when insulin is produced, especially in overweight or obese people. Her studies were also associated with higher levels of hormone adiponectin, a protein involved in regulating glucose levels as well as fatty acid breakdown.

In the ISIC report, Riobó clarified that coffee consumption is not responsible for the increased risk of cardiovascular disease, hypertension, stroke or any chronic disease, even if it has been associated with lower mortality in the general popular and also in diabetics.

“The association between coffee consumption and the risk of Type 2 diabetes is of considerable relevance because coffee is a widely consumed beverage worldwide and any effect on health that it may cause will have public health consequences,” Riobó said.

“Although more research is needed to make firm conclusions, the findings suggest that coffee can be safely enjoyed by the health and as well as by the diabetic population and might even be helpful in diabetes prevention.” GCR

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CONTENTS July/August 2011

COVER STORY

10

AFE INSIDE VOLCition

by ED&F Man

experience, After an acquis centuries of of the and over two one emerged as nies in Volcafe has trading compa largest coffee the world.

16

IN THIS ISSU E FEATU RES

THE FRONT QUIETLY LEADIN G nal

16

A look at the s for vast opportunitie as tea growth in China, g the makin drinkers start switch to coffee.

DS AFRICA N GROUNtic market

Africa’s domesopportunity presents clear a handful and for growth, are working of companies to entrench to get in early potential themselves in markets.

38

B Community

Not every brand, however, finds its way onto the human body, so what is it about the likes of La Marzocco that foster such strong examples of brand loyalty? Academic literature demonstrates the role of the tattoo as a signifier of social membership and suggests contemporary tattoos act as symbolic markers of sub-cultural membership.

Terry Ziniewicz of Espresso Parts is one example of how tattoos can represent modern signifiers of social membership. In discussing the La Marzocco logo tattooed on his calf, Ziniewicz speaks of this idea of community that first attracted him to the coffee industry.

“La Marzocco is family to me and my tattoo connects me to the coffee community at large,” he says, noting how his introduction to La Marzocco coincided with his introduction into this community. In the early 1990s Ziniewicz met CEO of La Marzocco International, Kent Bakke, to discuss using his machines in his burgeoning coffee chain. “We spent three days playing around with coffee and when it was all said and done I bought a whole bunch of machines from him and we have been great friends ever since.”

Lizz Hudson of Seattle’s iconic Stumptown Coffee has the La Marzocco logo tattooed across her chest. For her, it is also this notion of familial ties that she finds appealing about the brand. “La Marzocco is family,” she says. “They look out for one another. They listen to, and involve, their customers and other coffee professionals in the design of their products.”

HistoRy Historical brands tend to denote quality, tradition, craftsmanship and reliability. The sense of history is embodied in La Marzocco’s logo, taking its iconography from the classic Marzocco statue, a seated lion sculpted by Donatello. Synonymous with victory and triumph, it is the emblem of the La Marzocco’s founding city of Florence.

Hudson credits the beauty of this image for some of her motivation in acquiring a La Marzocco tattoo. Even before the offer of a free machine, Hudson notes that she’s wanted to get the tattoo for a while because she “loves the company that designed it” and brand aside “the design of the logo really is beautiful.”

Espresso machine technician, Peter Droste, who has an image of the logo tattooed down his bicep, was similarly attracted to the aesthetic beauty of the logo, as well as its historical roots. He says he wanted his La Marzocco tattoo shortly after seeing Donatello’s sculpture in a Florentine museum.

“I’m really proud of it, it’s a bad-ass lion holding a shield,” he laughs. But, his motivations weren’t entirely aesthetic. “If it wasn’t for La Marzocco I certainly wouldn’t have picked the symbol. It’s the fact that I’ve worked at their factory in Florence and the fact that I work with their machines every single day.”

The tattoo comes in handy, as Droste notes that occasionally when repairing or servicing

NOLO GY

TA, YOUR ARABIC A & ROBUS I NEW FRIEND BRASSI

28

aren’t just Coffee prices and demand. about supply rising prices A look at how necessities of oil and otherincreased are leading to costs of coffee. production

rand loyalty and identification manifests itself in many ways, from what we choose to consume, to the logos displayed on the front of t-shirts. Recently, company logos have found their way onto the human body in the form of tattoos, as perhaps the ultimate sign of brand identification.

La Marzocco has been manufacturing artisan espresso machines in its hometown of Florence, Italy, since 1927. Today, on the other side of the globe, American baristas and coffee industry workers are tattooing the iconic brand on their bodies.

Anthropologists note that historically tattoos signified membership in a clan or community. The images used within these communities belonged to a shared mythology of cultural iconography.

The human desire for community and belonging is just as strong today as it was back then, but the cultural landscape has changed. The village is now global; cultural iconography is no longer dominated by religious symbols, but images of pop culture, Hollywood stars, advertising, and of course, brand names. It is little wonder then, that modern forms of tattooing incorporate iconic brand images.

50

WMF’s coffee talks or Export Direct new ing about explor across s opportunitie markets.

RESEA RCH & TECH

of The discovery indigenous Australia’s firstis an coffee species for important step coffee the future of production.

43

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33

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INPUT COSTS

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G C R | j u ly / a u g u s t 2 011

of The significance f with a tattooing onesel as the company’s logo brand of ultimate sign . identification

48

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22

34

BRAND ED

33

Volcafe’s Divisio or speaks Managing Directprices, the out about rising of trade and changing face will come where growth from next.

Jan Kees van

How compo ing is material in packagof the face changing the ry. coffee indust

INDONE SIAN COFFEE ECONO MY g an

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REGU LARS

56 43

4 EDITOR’S NOTE DRIP 7 NEWS DRIP BY ARD 54 DIARY DASHBO 56 MARKETPLACE

research Coffea Brassii

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58 LAST WORD July/aug ust

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arabica rabica & Robusta, 2011 | GCR

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meet youR new ffRiend,

BRassii BR

 “La Marzocco is faMiLy L Ly to Me and My tattoo connects Me to the coffee coMMunity at Large.”

The discovery of AusTrAliA’s firsT indigenous coffee beAn species is An imporTAnT sTep for The long-Term fuTure of coffee producTion.

Story by Sarah Baker

Terry Ziniewicz

Espresso Parts

espresso machines he’s questioned by his clients on his knowledge of La Marzocco. “Now I just pull up my sleeve and [the tattoo] displays an interesting bit of a credibility.”

Connection with place was a similar motivation for Espresso Parts’ Ziniewicz. He notes that it was a family trip to the La Marzocco factory in Florence that cemented his idea to get his tattoo. What struck Ziniewicz was that La Marzocco Hon. President Piero Bambi, whose father and uncle established the company, took time out of his day to meet with them on their visit.

“That sense of family really showed itself and the tattoo idea came in through this dedication to family,” he says.

Much like a historical tattoo’s traditional role in demarcating community, it seems this sense of the La Marzocco family is a common thread among those sporting this brand. La Marzocco’s Marketing Director, Chris Salierno, says he’s proud of the company’s family traditions.

“We’re a small company, but we don’t want to grow so much that we lose connection with our customer,” he says. “We’re small enough that when people come to Florence our doors are always open to our customers.

I think that makes us unique.”

Salierno explains that knowing your product and being able to have a dialogue with your customers across all facets of the industry is paramount. He says the company invests quite a bit internally in technical training for all employees.

Salierno further attributes La Marzocco’s success, in part, to the culture within the company that encompasses a genuine passion for what they do.

“We pride ourselves on our ability to communicate with our customers. There are a lot of companies out there whose employees don’t even know how to use the espresso machines they manufacture,” Salierno says.

Photo copyright 2011 K. Schulte.

10

58

MARK ETING

a Tim e d The re was wou ld sen wh en we wor k in ex-paTs To believe i origin, buT gon e. has e Tim ThaT

28

G C R | j u ly/ a u g u s t 2011

n 1801 botanist, Robert Brown, joined Commander Matthew Flinders on the HMS Investigator for the first circumnavigation of Australia. On 2 November, 1802 the Investigator weighed anchor at Goods Island (Palilug Island) in the Torres Strait, allowing Brown to collect a rather insignificant and unknown plant belonging to the coffee family (Rubiaceae).

This same plant was collected again in 1821 by botanist and explorer, Allan Cunningham, from Sunday Island. It was not seen again on Australian soil for 150 years until 1971 on the island of Dauan in the Torres Strait.

Three years later, rainforest botanists, Len Webb and Geoff Tracey, found the same plant growing on a remote headland on the east coast of the Cape York Peninsula, near the mouth of the Pascoe River. In the meantime, this unknown plant was finally named as a new species, Paracoffea brassii, which later changed to Psilanthus brassii.

Nearly four decades later, this plant would find itself the subject of discussion among the coffee industry at large, after taxonomic research undertaken earlier this year – led by Dr Aaron Davis at the Royal Botanic Gardens, Kew, in the United Kingdom - confirmed a close relationship between the coffee genus, Coffea and the genus Psilanthus. As it turns out, what Brown had discovered 209 years ago, was Australia’s first and only known indigenous coffee species.

Scientists can now confirm that Psilanthus, which includes 20 or so species, is now accepted as part of the natural variation of coffee. Subsequently, to reflect the latest findings, this wild Australian coffee has been reclassified as Coffea brassii. Genetic analysis of C. brassii shows that it is closely related to the Asian coffee species, which in turn, are related to the all-important cultivated species, Robusta (C. canephora) and Arabica (C. arabica).

Records show that Coffea brassii was collected in 1933 in the Central Province of Papua New Guinea. However, it is possible that the plant was collected earlier and that specimens have languished in piles of unidentified specimens in herbaria.

According to Professor Darren Crayn, Director of the Cairns-based Australian Tropical Herbarium at James Cook University and who is heading the Australian side of the research on C. brassii, the genetics of the Coffea genus and Psilanthus are very similar and the one thing they both have in common is that they possess coffee beans.

Since the discovery, Crayn has spent four days on the Cape York Peninsula collecting fresh samples of the native species for further testing. Between 50 and 100 plants were found in a localised area. “The plants themselves don’t look anything like commercial coffee plants,” Crayn says. “They were found to be much smaller and they don’t produce as much fruit. We now know what the species is related to, but we don’t know what the beans contain or how the plant behaves ecologically or in cultivation.”

It is thought the plant could be known to Indigenous tribes that inhabit the Cape York region, as Indigenous people elsewhere in the world use a number of wild coffee species as a stimulant. Quite a few wild coffees are cultivated on a small scale and consumed locally, such as the Kafé kely species from Madagascar.

Translated as “small coffee,” this plant contains tiny beans that are more or less caffeine free. Davis says this coffee is collected from the wild and consumed directly by the collectors or sometimes sold in local markets and roasted by the Indigenous community who seem to favour Kafé kely over Robusta.

Roasters eager to sip this new bean, however, should hold off on warming their machines just yet. Scientists are yet to determine if the latest find even contains caffeine, but the new discovery is an exciting feat for the coffee industry and scientists alike. The scientific community has historically found that wild

july/august 2011 | GCR

july/august 2011 | GCR

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TECHNOLOGY Coffee Grinding

GRINDING FORWARD INDUSTRY IS PAIRING UP WITH ACADEMIA IN THE ADVANCEMENT OF COFFEE GRINDERS, AS A VITAL ELEMENT OF A QUALITY CUP.

T

he division of labour is credited for the advancement of the industrial era. It would seem that when it comes to coffee grinding, too much segregation could be stifling progress.

Professor Chahan Yeretzian is Head of Analytical and Physical Chemistry at the Zurich University of Applied Sciences. He has dedicated much of his recent work to the science of coffee and the whole value chain, including the study of coffee grinding. In these efforts, he’s noticed an uncomfortable barrier between the engineering work that goes into the technological advancement of coffee grinding equipment, and the empirical taste measurements that will ultimately judge a good cup of coffee.

“In all of our work, we’ve focused on making that link between engineering and the results in the cup,” he tells Global Coffee Review.

“It’s about understanding what parameters are affecting the cup quality.”

Yeretzian says that the link between the surface modification of particles and cup quality has been largely neglected in the academic space. While some in the industry will provide explanations, he says these justifications are largely speculation and incidental, rather than scientifically proven.

Over the past few years, Yeretzian has worked closely with grinding machine manufacturers to provide scientific support in the coffee grinding space. One such project has been the use of ceramic materials in the place of steel for grinding plates in disc grinders, and how this may affect cup quality. Because steel is more malleable and susceptible to heat, it has a tendency to shift in the first month of use, and requires more servicing. Ceramic, conversely, will better hold its shape, and thus requires less initial servicing if that shape is accurate.

Yeretzian points out, however, that this stability has its downfalls. While a bit cheaper to produce initially, ceramic discs can’t be reused, recycled, or adjusted after they have been cast. Yeretzian plans to release his full findings on the use of ceramic discs later in the year. Throughout his work, he looks at how the different use of materials manifests in the cup.

While this project is limited in scope to the hotel, restaurant and café (HORECA) sector, and retail grinders, he points to another area of his work that could have a wider impact in the industrial space. His second focus has been a look at how the temperature of coffee, during the grinding process, affects cup quality. Initial results have shown that the temperature has an end result on the crema.

Yeretzian and his team have found that this differentiation in crema is the result of degassing from elevated temperatures during grinding.

“What we’re finding is that the temperature has a significant effect on this degassing process,” he says. “The higher the temperature of the grinder, the bigger the degassing effect.”

This could have benefits in the industrial space, Yeretzian explains, especially when grinding coffee is destined for capsules. As capsules are immediately sealed, they require some degassing stages. This storage time in degassing silos could be decreased if the grinding process were able to accelerate degassing, thus improving the production line.

In his work, Yeretzian says he’s noticed grinding manufacturers are starting to pay more attention to how their equipment fits into the overall production line, and on the final cup of served coffee.

“There used to be a lot of talk about the quality of materials used in the equipment, and little talk of cup quality. The link to the coffee was extremely low,” he says. “Since as early as last year, I’ve noticed a greater focus on quality. It’s similar to trends we’ve seen with coffee machine companies, they’ve realised they can’t be removed from the final product.”

As for the future of grinding equipment, Yeretzian predicts that the need for precise grinding, especially with coffee capsules, will lead to greater controls in the grinding process. He points to

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FEATURE Coffee Grinders

double and triple stage grinders – popular for coffee capsules – as a major advancement in this front. By grinding the coffee in two or three stages, coffee fines (too small particals) can be greatly reduced in the final product.

He predicts that the next phase of development could be direct monitoring of size distribution that could be used to automatically adjust the grinder setting.

“With the end goal of highest consistency, one direction companies can go will be to analyse the size distribution and readjust the machine to reach a target distribution,” he says.

As it turns out, this future isn’t too far off. A study by the Neuronica Laboratory of the Politecnico di Torino and the Research and Development Department of Lavazza has been working on just that.

In a paper presented at the 2012 International Joint Conference on Neural Networks, Professor Eros Pasero, Head of the Neuronica Laboratory of the Politecnico of Torino together his team (Luca Mesin, Diego Alberto and Alberto Cabilli) presented their findings on the use of artificial neural networks to control two grinders used at the Lavazza factory.

Biological neural networks are the neurons and the synapses inside our brain that allow us to learn and improve functions.

Artificial neural networks aim to reproduce that process via computer modelling and programming – essentially a form of artificial intelligence which tries to emulate human reasoning and actions. Data is inputted, then goes through a hidden layer of calculations (the brain), before outputting a result.

Just like an experienced machine operator would learn over the years to adjust machine settings to refine the grind, Pasero’s project aimed to use an artificial neural network to replicate that learning and adjustment process. The aim was to have an automated

Professor Chahan Yeretzian, Head of Analytical and Physical Chemistry at the Zurich University of Applied Sciences, has focused largely on coffee grinding research.

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“IN ALL OF OUR WORK, WE’VE FOCUSED ON MAKING THAT LINK BETWEEN ENGINEERING AND THE RESULTS IN THE CUP. IT’S ABOUT UNDERSTANDING WHAT PARAMETERS ARE AFFECTING THE CUP QUALITY.” Professor Chahan Yeretzian

Head of Analytical and Physical Chemistry, Zurich University of Applied Sciences

system that would systematically measure coffee particles, and adjust the grinders accordingly.

The input data consisted of what operators would normally measure when they suspect some parameter is going out of range. A laser diffraction analyser measured the size and density of the particles.

In the study, the authors describe how they were able to generate an optimal level for this input data, to then adjust the distance between the wheels of the two burr grinders when the measured product didn’t meet those optimal limits. The authors are quite positive about their results.

“Simulations indicate that the resulting control is in line with the choices than an experienced operator would take,” the study states. “Thus, the results are promising for a future integration of the control system in the production line, to support operators in controlling burr grinders.”

Pasero is introducing also the temperature and the humidity among the inputs of the neural network to improve the performance.

The authors point to extending their findings to other processes related to the food industry in a national research project called ITACA .

And so it would seem that this meeting of the minds between research and industry may prove beneficial for not only the coffee industry, but the advancement of food production as a whole. GCR

NEURAL Professor Eros Pasero, Head of the Neuronica Laboratory at the Politecnico of Torino, has jointed theoretical research on the human brain with coffee grinding.

Quality

in every way.

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The Plus 4 You and the Green Line logos are sole property of CMA MACChine Per CAffè S.r.l. * Data certified by intertek, an independent body for security approval and product certification.

Think espresso.

www.astoria.com

ON TECHNOLOGY AND TRENDS

MODERN PROCESS EQUIPMENT (MPE)’S GRINDERS HAVE LED THE FOREFRONT OF DEVELOPMENTS IN THE COFFEE INDUSTRY.

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an Ephraim, President of Modern Process Equipment (MPE), has seen quite a few changes in the coffee industry since he and his brother, Phil, purchased the company in 1981.

He tells Global Coffee Review, however, that no change has been quite as remarkable as the increase in the quality of coffee – a welcome shift that’s benefitted the industry as a whole.

“We used to see that coffee consumption was stable, even declining. Coffee was just seen as a commodity, and everyone was looking at how to make it cheaper,” says Ephraim. “Now we’ve seen the bar raised with a new level of quality coffee, and it’s really lifted the playing field for everyone. And as the market’s been driven to higher quality, it’s increased coffee consumption as a result.”

As the quality of coffee has increased, Ephraim says roasters have inevitably required an improvement in production processes. MPE has seen demands for better roasting, packaging and grinding technology increase to keep up with a sophisticated industry.

“Our application of scientific and technological advancements in grinding has certainly evolved to a higher degree,” he says.

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“From temperature control and PLC (programmable logic controller) control to density control, it all has to be fine tuned to the greatest possible extent.”

Ephraim points out that no coffee trend requires greater precision than Turkish coffee grinding.

In this front, MPE carries a strong standing, as the first company to build an industrial Turkish coffee grinder using modern technology 18 years ago.

“That really started a revolution,” says Ephraim. He notes that MPE currently produces around 90 per cent of the world’s industrial Turkish coffee grinders.

The main challenge in grinding Turkish coffee, Ephraim explains, is that every coffee bean must be divided into around 30,000 particles. Since MPE’s machines can grind at a capacity of 1000 kilograms of coffee an hour, this equates to an astounding 145 billion particles an hour.

“Because Turkish coffee is put directly into the water, of those billions of particles, we need to ensure there is not even one that is oversized, or it will float and result in a poor brew,” says Ephraim.

“That’s a pretty big challenge.”

The advent of single-serve has posed an additional challenge to coffee roasters everywhere looking to take advantage of the fastest growing segment of the industry. Scott Will, Director of Sales for MPE, says that the refinement of single-serve systems, in terms of short brewing times and less coffee needed to brew each cup, has further limited the “room for error” in the grinding process.

“It’s the difference between walking on a tightrope versus an open sidewalk,” says Will. “You have to be perfect in your execution in grinding. You’re dealing with exact brewing times and very small amounts of coffee in a fixed volume at high density. Everything has to line up perfectly.”

This exactness, Will explains, must start from the coffee being ground for the very first capsule at the beginning of the day down to the very last. Any errors could result in a loss of capsules, which equates to a loss of capital not only from wasted roasted coffee, but expensive capsule material as well.

Quality equipment, Ephraim adds, is the key to this smooth process, with the potential for the entire production line to be thrown off if the grind isn’t properly set. In addition to advanced technological settings and controls, the grinder must be made of durable and advanced materials.

In this space, MPE offers a vast array of materials to suit different budgets and needs. The two most popular include a unique nickel-chrome-magnesium-cast iron alloy, which is bound together using a centrifugal casting method.

The second material is one developed by the US National Aeronautics and Space Administration (NASA). This proprietary material is ideal for the precision of very fine grinding, with limited wearing and long lifetimes.

As the precision of grinding increases, and the size of particles shrinks, the need for effective temperature control in the grinding process is augmented. In this end, Ephraim says that MPE’s

PROMOTIONAL FEATURE////////// cooling devices are highly effective.

Another challenge that stands out with capsules is the particular need for density control. Every capsule not only needs to be filled with the right amount of coffee, at exactly the right grind, but the density must be carefully controlled as well.

For this purpose, MPE has pioneered the patented ‘Vortex’ Normalizer. This device is able to increase the density of ground coffee by 100 per cent more than it’s normal capabilities. This means that capsule manufacturers can increase the strength of a brew – for instance, to brew espresso – without increasing the capsule size.

To service all of this advanced equipment, MPE employs engineers across almost every aspect of the business, from management right down to salespeople. “Customers feel comfortable working with us,” says Ephraim.

As to where the company’s ideas come from for all these new innovations, Ephraim says customers are a key inspiration.

“They come to us and say they wish they could do something new or different, and this inevitably leads to a new project for us,” says Ephraim. “We’re always receptive to our customers. With a staff full of engineers, we are very attuned to the needs of the market.”

In determining what is the best technology for each client, Will says MPE first works to understand potential customers’ operations to the highest extent, to get a good idea of their needs and provide a solution.

“We get pretty involved on the sales side,” he says. “We find out the specifics of the brew method, the packaging and so on. All this will determine the optimal configuration.”

Ephraim echoes these sentiments, saying that a deep understanding of the customer’s goals is the best way to fulfil their requirements. “You have to be intimately familiar with the end product,” he says.

“OF THOSE BILLIONS OF PARTICLES, WE NEED TO ENSURE THERE IS NOT EVEN ONE THAT IS OVERSIZED, OR IT WILL FLOAT AND RESULT IN A POOR BREW… THAT’S A PRETTY BIG CHALLENGE Dan Ephraim

President, Modern Process Equipment

MPE operates a full-scale pilot plant, where the staff can work directly with a customer’s product to test and evaluate what equipment works best to provide them with a solution. Will notes that customers will sometimes send thousands of pounds of coffee, so that MPE staff can optimise their offering. Equipment is fully set-up and tested at MPE headquarters before it’s shipped off, and it is all fully guaranteed.

MPE sales and service representatives around the world keep an active line of communication with its customers. That communication is about gaining inspiration for the next innovation as much as it is about serving customers. If this is the case, then the next innovation from MPE is likely just one suggestion away. GCR

Modern Process Equipment was the first company to produce a modern Turkish coffee grinder 18 years ago. Today, they produce around 90 per cent of the world’s industrial Turkish coffee grinders.

PARTICLE POWER Dan Ephraim, President of MPE, says their industrial coffee grinders operate at the highest precision, to produce the exact grind size and density needed for Turkish coffee and coffee capsules. www.mpecoffee.com

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FINDING A NICHE

MAHLKOENIG LEND THEIR RETAIL AND HORECA EXPERTISE TO THE INDUSTRIAL LEVEL, WITH A GRINDER IDEAL FOR A MID-VOLUME MARKET.

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hen it comes to coffee grinding innovation, few companies have pioneered on so many fronts as Mahlkoenig.

At the retail level, the company partnered with roasting giants around the world to encourage selfserve grinding on grocery shelves. At the hotel, restaurant and café (HORECA) level, Mahlkoenig drew a few raised eyebrows back in 2000 when they introduced the first grind-on-demand machine. Five years ago, the company further pushed the innovation front, with Radio Frequency Identification Technology (RFID) that locked cafés into only grinding as much coffee as they purchased from their roasters.

In addition to innovating in these markets, Christian Klatt, Product Manager for Mahlkoenig, says that the company’s efforts in the industrial space have filled a necessary niche for mid-volume commercial roasters. With the choice of grinder largely dependent on grind speed, capacity, and, naturally, budget, Klatt says there has been a rift between the highest capacity retail grinder and industrial roller mill grinders.

Klatt explains that companies looking to grind from 100 – 300 kilograms a day of

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coffee could probably use Mahlkoenig’s largest size retail grinder. However, for companies looking to grind 150 – 450 kilograms an hour, then an industrial grinder is absolutely vital to keep up with that level of capacity. To fill in that gap, Mahlkoenig offers the DK27 disc grinder.

“These disc grinders are great for filling that gap between retail and roller mill grinders,” Klatt says. “For a roaster who’s grinding 400 kilograms a day, it doesn’t make sense to make such a high level of investment. It’s better to get a simple machine that’s going to minimise costs.”

Klatt points out that major companies looking to grind around the clock are more likely to opt for roller mill grinders. However, at a quarter of the price flat disc grinders are ideal for companies working in volumes of up to 450 kilograms an hour.

Price considerations further come into play with flat disc grinders when companies are budgeting for servicing. Klatt explains that disc grinders are easier, quicker and cheaper to maintain, and can often be serviced in-house. With roller-mill grinders, an off-site skilled technician is often required, leading to higher costs and more equipment downtime.

The durability of roller grinders over disc grinders is often cited as a major advantage, but in this regard Klatt cites Mahlkoenig’s efforts in durable disc materials. While the standard steel discs work great on “clean” coffee – i.e. coffee that has been properly filtered for sand, rocks and other by-products – he says when coffee has not been as well cleaned, steel discs can rapidly go blunt.

In these cases, Mahlkoenig offers the option of upgrading to cast steel discs. These more durable discs are worth the extra investment, Klatt says, especially in markets where the coffee going through the machines may be a little “rougher”. Compared to the steel discs which grind at a speed of 280 – 300 kilograms an hour, cast steel discs are a bit slower at 230 – 250 kilograms an hour. However, the durability of the material means these discs stay sharp, and have a longer lifetime than steel discs.

For even longer lifetimes, Mahlkoenig offers an additional upgrade to the tungsten carbide discs. With a grind speed of 260 – 280 kilograms per hour, these discs work at a speed and volume capacity similar to steel discs, with an impressive 18 times the lifetime. As a significantly higher investment, Klatt says companies looking for durable grinders, especially in markets where coffee may not be “as clean”, should consider these carbide options.

Mahlkoenig’s industrial grinders can be fitted for ultra-fine Turkish coffee grinding. The company’s steel Turkish discs can grind particle sizes of 90 – 1200 micrometres, at a capacity of 180 kilograms per hour. Alternatively, the up-scaled, longer-life carbide Turkish fine discs can grind down to the same sizes, but at a capacity of 220 kilograms per hour.

At such a sophisticated level of grinding, Klatt says Mahlkoenig sales representative around the world can help with adjustment and maintenance. In addition to this network of representatives, the company has offices in the United States, France, Italy, United Kingdom,

PROMOTIONAL FEATURE////////// China, Australia, Scandinavia, Japan, Switzerland and India.

“Our sales representatives have undergone an extensive training program,” he says. “They can fit all our versions and adaptations to the customers needs. Most of them can put together an industrial grinder from scratch.”

The key to a successful grinder, Klatt says, is one that will ensure a smooth flow of operation. A break of a few hours can lead to a significant loss of capital and resources for any level of business.

“Everything has to work together. You can’t have a grinder that’s blocking up every day,” says Klatt.

As Mahlkoenig produces every part of its grinders inhouse in Germany, Klatt says the company is able to adapt the grinders to individual customer needs. The company offers six basic models of industrial grinders, however with at least 100 adaptations available on each model, tailored to individual clients.

“We’re always looking for new solutions,” says Klatt.

Outside the industrial area, Mahlkoenig’s efforts in innovation continue to push the forefront of the coffee community. With a goal to invest in research and innovation, in 2009 the company partnered with Marco Beverage Systems

“THESE DISC GRINDERS ARE GREAT FOR FILLING THAT GAP BETWEEN RETAIL AND ROLLER MILL GRINDERS… IT’S BETTER TO GET A SIMPLE MACHINE THAT’S GOING TO MINIMISE COSTS.” Christian Klatt

Product Manager for Mahlkoenig

Ltd., an Ireland-based specialty coffee equipment developer known for its exact water brewing device the Uber Boiler. Together, they worked on a grind profile project to help limit fines in filter coffee. Discovering that many of these finer grinds are extracted via screw holes in the grinder, the company developed discs that fit together magnetically. The result is the Ubergrinder exclusive to Marco as an advancement of the Tanzania grinder, that improves freshly ground coffee for popular brew methods.

In working across the depth of the coffee industry – from niche specialty coffee to the industrial scale – Klatt says Mahlkoenig is able to offer a unique level of expertise in the industry.

“From the ‘coffee geeks’ in the industry, we hear a lot of about the finer refinements we need to make. For the chains we need to deliver 200 grinders that produce to the exact same setting. For retail we consistently improve our user interface,” he says.

“All these segments of coffee really give completely different inputs, that we’re able to use to improve all of our products across the board.” GCR

COST BENEFITS Mahlkoenig’s Christian Klatt says that the company’s disc grinders fill a necessary niche between the highest capacity level of retail grinder, and the lowest capacity level of industrial roller mill grinders www.mahlkoenig.de Mahlkoenig’s DK27 model of industrial grinder can work at a capacity of 280 – 300 kilograms an hour, and can be fitted to grind fine Turkish coffee.

The DK27 model can be fitted with Tungsten carbide discs, which offer 18 times the lifetime of steel.

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PROFILE LaCimbali

AN ESPRESSO STEP BACK IN TIME

LACIMBALI IS WORKING WITH COFFEE HISTORIAN JONATHAN MORRIS TO EDUCATE THE PUBLIC ON THIS ITALIAN DRINK’S RICH PAST, IN THE LEAD UP TO THIS YEAR’S LONDON COFFEE FESTIVAL.

G

rowing up as a typical tea-drinking Brit, Jonathan Morris, Professor of Modern European History at the University of Hertfordshire in the United Kingdom, reflects that it seems rather unusual he adapted such a niche expertise in the history of coffee.

Having produced many publications on the subject, including the soon to be released Coffee: A Handbook, Morris today is a world-leading specialist on the history of coffee. So much so, that when LaCimbali was seeking a historian to work with in the development of their new coffee machine museum that opened last October in Milan, they turned to Morris. The company is now planning to feature Morris as a central speaker at The London Coffee Festival, where he’ll give daily presentations on the history of espresso machines for fortunate visitors.

Matthew Tuffee, UK Sales and Marketing Manager for LaCimbali, says that with the company celebrating its centennial, the festival is an opportunity to educate customers about how far espresso has come.

“We aren’t necessarily looking to sell the historical pedigree of the company, we feel that speaks for itself,” says Tuffee. “At this event, we thought we could add value by helping consumers

Professor Jonathan Morris specialises in the history of coffee.

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PROFILE LaCimbali

LaCimbali will feature its M100 machine to extract espresso along historical parameters at The London Coffee Festival

Matthew Tuffee, UK Sales and Marketing Manager for LaCimbali

understand the value of the espresso machine in the coffee-making process.”

As a coffee historian, Morris should come in handy in this regard. Morris explains that how a Brit came to be such an expert on coffee, and espresso in particular, has been a matter of circumstance. He started his career focusing on Italian history, a path that eventually brought him to live in his country of interest.

“As a true Brit, I drank a lot of tea back then, but in Italy, the tea isn’t like what you find in England,” he says. “So, being in Italy, I started drinking espresso.”

In the late 1990s, when espresso-based drinks started taking off in coffee chains in the UK, Morris’ interest was peaked beyond

his taste buds, and into the academic arena.

Developing an expertise in the history of espresso, and specifically espresso machines, has proved more challenging than Morris expected. He explains that little formal documentation on the development of espresso machine technology exists other than company archives, and in many cases those archives are not openly accessible. In many cases, Morris collected his information by interviewing various experts within each company.

Morris has worked extensively with Enrico Maltoni, a private collector who recently handed over his collection of espresso machines to the Milan museum.

The development of espresso machine technology has been a fascinating trajectory, Morris explains. While a few key individuals and companies can be credited with making major advances, LaCimbali being a central influence with 100 years in the business, Morris says political and economic context has helped mould the espresso machines we are familiar with today.

Dating back to the early 20th Century, Italy held a fascination with “American bars”, places where people would stand over the counter to get a drink. This generated the need to serve one coffee at a time in a relatively quick manner.

“This was a new concept at the time, where people would just be going in, and taking a drink over the counter while chatting to the bartender,” says Morris. “There was a need to fit coffee service into that.” The result was the first espresso machine released in 1905, using steam and water pressure to produce one cup of coffee in a relatively short time frame – just 45 seconds.

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“WE AREN’T NECESSARILY LOOKING TO SELL THE HISTORICAL PEDIGREE OF THE COMPANY, WE FEEL THAT SPEAKS FOR ITSELF. AT THIS EVENT, WE THOUGHT WE COULD ADD VALUE BY HELPING CONSUMERS UNDERSTAND THE VALUE OF THE ESPRESSO MACHINE IN THE COFFEE-MAKING PROCESS.” Matthew Tuffee

UK Sales and Marketing Manager for LaCimbali

For the first half of the 20th Century, Morris explains there weren’t many improvements on this original design. The machines were limited in their usage, thus their development, because they were expensive, and so was the coffee.

“Coffee drinking out of the home was really confined to a small class of people,” says Morris.

A major problem with these models was that the steam had a tendency to burn the coffee. The post-war era brought about the next breakthrough that helped solve this glitch, with the invention of the spring piston. The piston allowed bartenders to apply physical pressure to the coffee, eliminating the need to pump through so much steam.

The post Second Word War era, however, saw the most major advancements in espresso machines, both on the technological front and popularity. When industry took over from agriculture as Italy’s largest economic sector, a huge migration to the cities meant plenty of people away from home were looking for spots

LaCimbali recently celebrated its 100 year anniversary.

to socialise. The country was also connected to the electricity grid, which meant machines could take advantage of electric pumps.

From this period of innovations, Morris has observed that the next significant advancements didn’t come until the 1990s, with the automation of machines via microchip technology. These digital measurements and controls now allow operators to refine their settings, and work out the ideal delivery methods for individual coffees.

LaCimbali will exploit these digital controls to turn back the clock on visitors, at their stand during the upcoming London Coffee Festival. In addition to Morris’s public talks on the history of espresso, the M100 LaCimbali model will be set-up to brew coffee at parameters consistent with these different periods of history.

LaCimbali’s Tuffee says espresso machines are often taken for granted by general consumers, many of who wouldn’t notice the brand of the machine. He says that when you highlight a machine can cost “as much as a small family car”, consumers then start to pay attention.

With coffee only really taking off in the UK in the past 10 years, Tuffee says customers are starting to appreciate better tasting coffee, with less milk and more of the coffee flavour. As their education progresses, the company is hoping to guide that development along.

Other highlights at the LaCimbali booth will include a special blend developed by coffee creatives Dunne Frankowski, which will be sold at the booth with the money donated to The London Coffee Festival’s main charity, Project Waterfall, which helps deliver clean water projects in coffee-producing countries in Africa. The London Coffee Festival is the flagship event of the UK Coffee Week from 22 – 28 April. The 2013 program includes an extra industry day, new ‘Innovation Stand’ and an engaging Lab education program. GCR

Visit LaCimbali at The London Coffee Festival, 25 – 28 April 2013 at the Old Truman Brewery.

Industry professionals are invited to attend trade days on Thursday and Friday by using the industry registration code 1NDLCF for complimentary entry by booking online at londoncoffeefestival.com/ register

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///////////// GUEST COLUMNIST



Photo: Pham Thi Diep Giang

FOUR PRINCIPLES FOR DEVELOPING COFFEE GROWING NATIONS Đặng Lê Nguyên Vũ

Chairman of Trung Nguyen Group

AS THE LARGEST producer of Robusta coffee, it’s always seemed strange to me that Vietnam is less known around the world as a coffee powerhouse.

It might have something to do with the fact that our producers only receive between 7 to 10 per cent of the profits from their final product.

It’s a story that’s all too well known in the industry. Procurement standards in coffee trading and branding power have meant that producers have limited tools to increase their share of the profits.

Without the same access to advanced information technologies as developed countries, producers find themselves in ‘the coffee paradox’: they are the foundation of the entire coffee industry, yet are the most vulnerable link in the chain.

In the 2012 calendar year, Vietnam surged forward as the world’s largest exporter of coffee. I believe that this position makes us an ideal country to lead the process of resolving this paradox, evening out the wealth imbalance. With coffee one of the top five industries in the global economy, advancements in this front could have consequences on the sustainable development of the globe as a whole. To do this, I propose the following four principles for multilateral collaboration between coffee growing and consuming nations.

Equalising value for stakeholders across the value chain Recent events have highlighted that the current situation, where coffee farmers live on the fringe of poverty, is not only unfair from a social standpoint, but is unsustainable from a commercial perspective.

Although Vietnam is a top exporter of coffee around the world, our country’s revenue from coffee pales in comparison. Because our coffee is sold in raw form, we only receive a minimal reward for all this effort.

Brazil here can be used as a shining example of how producing countries can reverse this trend. By becoming a consuming nation, the value-added proportion of the equation can remain within a producing country’s borders. Because we certainly don’t want to deny consuming countries of coffee supplies, trade mechanisms need to be tightened to ensure fairer trade that shares more of the profits with farmers.

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One trade mechanism that needs to be carefully monitored is the fluctuating price of coffee on international markets. Financial mechanisms that motivate price drops – those that are removed from physical coffee – need to be addressed. The livelihoods of farmers should not be played with by Wall Street speculators.

Parties that are close to physical coffee need to invest in developing new technologies in cultivation, storage, and processing. They must also continue to support community development programs for farmers, and coffee-growing countries in general. These activities play a very important role in equalizing added-value along the coffee chain.

The sustainable development of green coffee Sadly, Vietnam is like many other coffee growing countries in lacking sustainable models for farming practices. Farming is often carried out with little consideration for maximising yield, conserving natural resources, or maintaining the traditional identities among local indigenous populations.

In looking inwards first, in Vietnam we propose the following improvements be made. The first is to take advantage of advanced technologies to protect natural resources, especially in the cultivating and processing stages. The second is to support mechanisms that ensure the stability of prices, which farmers can then use to invest in their crop. The third is to synchronise the application of new cultivation technologies with the preservation of cultural identities among indigenous coffee growers. The final improvement should be integrating industrial education at origin, alongside general education, healthcare, and the spiritual support of coffee farmers and workers. This helps create a positive association between farmers and the industry they work in.

Executing quality standards among exporting and consuming nations Vietnamese coffee is currently blocked at the low standard (R2). As a result, our farmers receive 10 – 20 per cent lower prices than other Robusta exporting countries, such as India, Indonesia and Malaysia.

Working closely with Vietnamese coffee, I can testify that this quality

“RECENT EVENTS HAVE HIGHLIGHTED THAT THE CURRENT SITUATION, WHERE COFFEE FARMERS LIVE ON THE FRIDGE OF POVERTY, IS NOT ONLY UNFAIR FROM A SOCIAL STANDPOINT, BUT IS UNSUSTAINABLE FROM A COMMERCIAL PERSPECTIVE.”

assessment across the board is simply unfair. When traders are only seeking a higher quantity of coffee, and not a higher quality, then this price situation can never be reversed. Long-term stakeholders in Vietnam’s coffee industry must collaborate to set out suitable standards directed at improving the quality recognition of the country’s coffee.

We have seen elsewhere that improving quality and yield is the best tool farmers have to increase their income.

To implement this principle, we believe that there must be collaboration between industry authorities and coffee traders/purchasers

in establishing quality standards for commercial coffee. This must be used to motivate farmers to improve their quality.

Vietnamese exporting standards must fall in line with those used on international commodities exchanges. Authorities play an important role here in helping farmers meet these quality standards.

Implementing business ethics An ethical business model should be used to discourage practices that encourage farmers to sell at a lower price than they are entitled to. I have witnessed traders consistently offer farmers lower than market value, justifying the undercutting based on the value of their coffee. Let’s be clear: even at market value, farmers are not getting enough for their coffee. Coffee roasters and traders need to understand that when they are getting a “bargain” on their coffee, it’s through the exploitation of the most vulnerable part of the value chain.

If we are able to advance these four principles, we can create a fairer platform between coffee-growing countries and coffee-consuming ones. As key stakeholders in the coffee chain, they should be freed from the vulnerable position they find themselves in today. GCR

Trung Nguyen Coffee is Vietnam’s largest domestic coffee company.

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DIARY Dashboard COFFEE AROUND THE GLOBE

WORLD COFFEE EVENTS THE LONDON COFFEE FESTIVAL

OLD TRUMAN BREWERY SCAA SYMPOSIUM AND EVENT

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

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

24 – 26 APRIL

Singapore will open its doors to the debut presentation of the International Coffee and Tea Industry Expo, a business-to-business 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 to gain in-depth insight of up-to-date market trends and developments. www.intlcoffeeteaexpo.com

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LONDON, UNITED KINGDOM

25 – 28 APRIL The London Coffee Festival is the flagship event of the 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 26 April with a Martini Espresso Launch Party from 5pm. www.londoncoffeefestival.com

GLOBAL COFFEE REVIEW LEADERS SYMPOSIUM

ZINC FEDERATION SQUARE

MELBOURNE, AUSTRALIA

22 MAY 2013 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/about

MELBOURNE INTERNATIONAL COFFEE EXPO

MELBOURNE SHOWGROUNDS,

MELBOURNE, AUSTRALIA

23 – 26 MAY

The Melbourne International Coffee Expo (MICE) will bring together the World Barista Championships, World Brewers Cup, the inaugural Global Coffee Review Leaders Symposium and Australia’s largest dedicated coffee trade show, for a once in a lifetime event. MICE2013 will demonstrate the culmination of hard work that has seen the Australasian industry develop into what is now being recognised as one of the strongest specialty coffee scenes in the world. www.internationalcoffeeexpo.com

KEEP A LOOK-OUT Caffe Culture 15 – 16 May London, United Kingdom caffecultureshow.com Coffee Fest 7 – 9 June Chicago, United States www.coffeefest.com SCAE World of Coffee 26 – 28 June Nice, France www.worldofcoffee-nice.com

UNITED COFFEE & TEA INDUSTRY SHOW RUSSIA

EXPOCENTRE, MOSCOW, RUSSIA

12 – 14 SEPT

Nordic Barista Cup 5 – 7 September Oslo, Norway nordicbaristacup.com Host Fieramilano 18 – 22 October www.host.fieramilano.it

The United Coffee & Tea Industry Show Russia (UCTIS) is an international, combined coffee and tea, conference and industrial exhibition. Its three-day schedule includes the established Moscow International Coffee Forum (MICF) and Moscow International Tea Symposium (MITS). Major exhibitors taking part in the show include coffee and tea raw materials suppliers, coffee and tea producers, exporters, importers, distributors, manufacturers of all types of equipment, packaging, various ingredients, and accessories for industries. The UCTIS Organising Committee expects more than 2500 visitors to attend – representatives of all the segments of the coffee and tea markets in Russia, Common Wealth of Independent States (CIS) and other countries. www.unitedcoffeetea.ru

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PRODUCTS Marketplace

MPE COMPLETE SYSTEM SOLUTIONSÂ FOR COFFEE Modern Process Equipment Corporation (MPE) features its innovative engineering resources and equipment manufacturing capabilities to handle complete coffee system requirements. Their powerful range of grinding equipment and reliable Chain-Vey conveyor offers superior solutions for coffee producers worldwide.

With grinding capacities from 200 to 20,000 pounds per hour, and grind styles from Turkish to soluble, MPE has the ideal coffee grinder for every application. Transfer coffee product with the MPE Chain-Vey, a gentle and efficient form of transportation offering maximum yields and zero degradation. With a dust-tight enclosed design, coffee products maintains aromatics and are protected from the surrounding environment. Additionally, its flexible design and compact footprint fit virtually any configuration. The MPE Chain-Vey also features Clean-In-Place (CIP) capabilities with automated wash cycles for sanitary conveying needs. For more information visit www.mpecoffee.com or contact MPE directly at solution@mpechicago.com.

WEGA SPHERA Released in January this year, the elegant and ergonomic lines distinguish the Sphera, a coffee machine of the highest quality that is designed with both reliability and functionality in mind. This is the newest product to be introduced to the market by the Italian company Wega Coffee Machines.

Sphera combines class and functionality. It comes in two colours, white and sand, and stands out for its vapour wands featuring lever taps, chromed porta-filter handles and the multi-functional, alphanumeric display on the electronic version.

Upon request it can be equipped with LED lighting displays for the work surface and an auto-steamer: a vapour wand that simultaneously heats and foams milk.

For details visit www.wega.it

PRO-FONDI Pro-Fondi is a patented, electrical device by Ambrodesign that speeds up the extraction of coffee grounds and optimises professional machine filter cleaning with the action of three rotating blades. Designed to be installed next to the espresso machine, when the filter is inserted, the engine starts rotating. Two blades clean the inside of the filter, adapting to different sizes and shapes. The third blade cleans the coffee grounds from the edges. When grounds are not properly removed, it can cause the imperfect closure of the brewing chamber with subsequent leakage and coffee granules ending in the cup, which alters the taste and quality of espresso. For more information visit www.pro-fondi.com.

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DITTING KED 640 GRINDER Ditting’s KED 640 grinder contains two bean containers, and two grinding gears. The design allows the use of a single machine when cafés, restaurants, and hotels serve two coffees at once, for instance a regular coffee and a decaf. The grindon-demand function allows freshly ground portion grinding with no loss of aroma or coffee. Portioning is electronically controlled, with single and double shot precision. The operation is automatic, starting automatically when inserting the port-afilter. For details visit www.dittingswiss.ch

ROK The ROK hand-powered coffee maker makes superb espresso because it functions so simply. The user just pours in hot water, lifts the handles, pushes down gently and watches as rich, pure espresso with crema pours into the cup. The ROK requires no power and has no cords or internal parts. It makes no stove or bench top mess and is easy to clean. The ROK is portable and recyclable. It uses just 1.2 watts or the energy required to boil a cup of water. To learn more about cordless coffee making, visit espressounplugged.com.au

BRAZEN BREW SYSTEM The innovation of the BraZen drip coffee maker was enough to impress the Specialty Coffee Association of America in 2012 as the winner of the Best New Product People’s Choice award. The BraZen Brew System allows users to set the brew temperature as well as pre-soak time, all with a high level of accuracy. This is thanks to a patent-pending onboard calibration which can be altitude adjusted for further accuracy. The water dispersion head features staggered water release into a professional style brew basket creating full, even coffee extraction.

For details visit www.behmor.com

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LASTWORD GCR Symposium

GCR LEADERS SYMPOSIUM –

A BROADER PERSPECTIVE MAY 2013 is set to be a milestone moment for Australia, and potentially the coffee industry as a whole.

The only country-continent is set to welcome an onslaught of coffee professionals from around the planet as it hosts the World Barista Championships and World Brewers Cup at the Melbourne International Coffee Expo (MICE) from 23 – 26 May 2013.

These competitions represent the elite of the specialty coffee industry, events that have helped raise quality coffee across the board. This in turn has seen coffee consumption increase around the world, and challenged growers and roasters to improve the quality of their offerings. Melbourne’s specialty coffee scene, regarded as one of the most sophisticated in the world, proved an appropriate setting to welcome this field.

However, these champion baristas and roasters continue to only represent a fraction of the global coffee industry. The small niche of coffee growers they purchase from are fortunate to benefit from the higher prices they pay.

Meanwhile, the vast majority of the world’s coffee growers continue to depend on market prices, with coffee traders and large roasters all involved in the same game of playing the market. With developing countries emerging as major coffee consumers as well as producers, supply concerns are coming into play, in a market operating on consecutive years of coffee deficit. Although the line between consuming and producing nations is becoming blurred, in a world seeking progress, many would argue that the poverty gap between poor and rich nations is showing limited signs of closing up.

In looking at the global industrial landscape from this perspective, Australia presents a rather interesting meeting ground. The country is a relatively short distance from neighbouring nations of Indonesia and Vietnam, two of the world’s leading Robusta producers. Papua New Guinea and East Timor, with their scatterings of coffee production, are two of Australia’s closest neighbours. China – the industry’s great frontier for potential growth – represents almost 30 per cent of Australia’s exports, as the country’s top trading partner.

It’s for these reasons and more that Australia proved such an attractive location to launch the inaugural Global Coffee Review Leaders Symposium.

Taking place on 22 May 2013, one day ahead of MICE, the event will be an opportunity for visitors to take a step back from the niche of specialty coffee, and review the happenings that are effecting the lives of the millions of people working at every level of the chain.

Our choice of topics has been carefully selected to suit this offering.

Beginning with Business in Asia, we’ll welcome industry leaders who will share their experiences. This will include a keynote address by Global Coffee Review columnist Dang Le Nguyen Vu, Chairman of Trung Nguyen, Vietnam’s largest coffee company. As one of the biggest players in the roast-and-ground and instant coffee market in Asia, Vu offers a compelling perspective, having developed a successful brand from a producing nation.

On the fundamentals side, we’ll be dedicating one session to an overview of

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supply and demand forecasts, and how this will affect the security of future supplies.

A separate session on coffee prices will feature a key address

by Albert Scalla, Executive Vice President INTL FCStone, a leading expert on implementing risk management strategies in commodity markets, coffee in particular.

Our session on research and development will welcome experts working on the ground in origin countries, who are leading the scientific advancements that will ensure a future supply of sustainable quality coffee. Our session on certification will continue this discussion about on-the-ground efforts, with a key address from Alain Poncelet, the past Vice President of Coffee & Tea Starbucks Switzerland, who has taken the reins on Ecom’s Sustainable Management Services Division.

On the consumption side, the advent of single-serve capsules is one that simply cannot be ignored. As the fastest growing segment of the coffee industry, singleserve machines are re-defining at-home consumption. This session will host industry leaders to discuss the broader implications of single-serve machines.

Since our first edition of Global Coffee Review more than two years ago, we have maintained our commitment to quality reporting of the events that are shaping the industry as a whole.

The Global Coffee Review Leaders Symposium is another step towards this goal, bringing to life the voices and ideas that are shaping the coffee industry.

The event presents an unprecedented professional development opportunity for those looking to gain insights into these breaking developments. GCR

BOOK NOW Book your space today for the Global Coffee Review Leaders Symposium, 22 May 2013 Melbourne, Australia.

Email Steve.Roberts@ primecreative.com.au. *Spaces are limited.

RELATIONSHIPS COUNT

I want a relationship with my machine, I want a machine made by someone who listens to baristas, I want to learn, I want to make better coffee

[ Gwilym Davies ] 2009 World Barista Champion

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