Month: May 2022

Coffee brands: Mocha

One of the oldest established names in the coffee business is Mocha, a name found to this day in brands like Moca d’Or, where gold hints at excellence. There is also a type of chocolate called mocha that has some coffee in it.

Mocha is a port in Yemen, on the Arabian Peninsula. Yemen was the first country where Arabica coffee was brought from Ethiopia between 500 and 1,500. In Ethiopia it was, and is, a wild species, in Yemen it began to be cultivated and Mocha was the port from which the coffee was exported.

Yemen was invaded by the Ottoman Empire in 1517, which took control over coffee and banned its export. Dutch traders managed to obtain some plants that they took to a botanical garden in Holland in 1616, India and Sri Lanka in 1660, and Indonesia in 1690. At the beginning of the 18th century, the French brought coffee to the Caribbean and to the Island of Reunion, east of Madagascar. Reunion was called Bourbon back then, one of the varieties from Yemen. The other was Typica.

Coffee brands: Java

Java is one of the islands in the Indonesian archipelago, known as Dutch India in the days when the Dutch brought coffee to grow there. At first Arabica coffee, but when production was decimated by rust it was replaced by Robusta coffee from Congo in Central Africa and Liberica coffee from West Africa, which are more resistant to rust.

Some plantations continued to grow Arabica coffee in Java under conditions that allow the production of specialty coffee, which is the coffee known as Java. Since colonial times it was customary to make Java-Mocha blends.

Another inheritance from the colonial era is monsoon coffee, coffee that is left outdoors for up to 3 years, so that it develops a less acidic and mellow character, so that it resembles more the coffee that was drunk in Europe in the 17th and 18th centuries, when coffee took months or years to arrive by ship.

Some people used to call coffee in general Java, but nowadays it is not very common anymore. Java is now mostly associated with a computer language introduced in 1995, with a logo of a coffee-scented cup.

Coffee brands: Santos

The French who brought coffee to the Caribbean made Haiti the world’s leading coffee producer in the 18th century with plantations based on slave labour. When Haitian slaves rose up against the French in 1791 and made Haiti the first country freed from colonial power in the region, coffee production declined rapidly.

Other colonies in the Caribbean basin replaced Haiti as the main coffee-producing country. In 1830, the Caribbean produced 960 thousand bags, 38% of the world production of 2.5 million. By 1855 Brazil, where coffee arrived via the Dutch and French Guiana, assumed first place, never to leave it again. It produced an average of 2.7 million bags that year, 52% of the total. When at the end of the 19th century coffee production in Indonesia, India and Sri Lanka, the second largest region, collapsed due to coffee leaf rust, Brazil replaced that volume and came to produce 73% of the total of 17 million bags in 1900.

The main Brazilian port for export was and continues to be Santos. The plantations were in the interior of the country and in Santos were the commissioners, who were in charge of obtaining financing and clients and exporting the coffee. Because of the weight that Brazil had acquired in coffee, Brazil became synonymous with coffee and Santos the best-known brand, which to date is widely used for the different grades of coffee, such as Santos 2/3 screen 17/18 Fine Cup and Santos 3/4 screen 14–16 Good Cup.

After the “coffee crash” due to a large oversupply of Brazilian coffee in 1881, the Coffee Exchange of New York was founded in 1882, to facilitate the future trading of Brazilian coffee. The original contract was replaced by the Santos “S” contract. For mild coffees, the Mild “M” contract was added. In 1986 both contracts were replaced by the current “C” contract. In 1917 Brazil created its own futures market the Bolsa Oficial de Café (Official Coffee Exchange) in Santos, which was later established in the Palacio do Café, inaugurated in 1922, now a museum.

Coffee brands: Juan Valdez

Coffee production in the new world was in colonial times largely a plantation model, based on slave labour. A truly revolutionary change started at the beginning of the 20th century, when the Colombian government began to promote the cultivation of coffee by small producers. Producers struggled to sustain themselves in a market characterised by cyclical overproduction, high price volatility and the impact of the First World War. In order to organise themselves better, the Federación Nacional de Cafeteros (National Federation of Coffee Growers) FNC was founded in 1927, which soon received ample fiscal resources and formed the National Coffee Fund.

Another thing the Colombian government did was decree in 1932 that all exported coffee had to bear the legend Café de Colombia or Producto de Colombia, which became a brand, competing with the fame of Brazilian coffee and the Santos brand. In 1958, FNC went a step further with an advertising campaign to promote the image of Colombian coffee among consumers, through a fictional character representing the coffee producer: Juan Valdez, with his mule Conchita, carrying coffee. Juan Valdez was not a coffee producer, but a Cuban actor named José Duval, later personified by Colombian painter and actor Carlos Sánchez. It was not until 2006 that FNC selected a real coffee producer as the face of Juan Valdez: Carlos Castañeda.

It was the first time that coffee from a country of origin was positioned as a brand. The campaign was designed by the advertising agency Doyle Dane Bernbach of the United States, to convince the American consumer that Colombian coffee has unique characteristics: climate, soil, altitude, varietals, way of harvesting and processing that give the good taste and aroma to Colombian coffee. The campaign was very successful, gaining a lot of recognition among consumers, who have since identified Colombia and Juan Valdez with high-quality coffee. This recognition allows Colombian coffee to be sold at a premium and is the reason why it has a differential of +4 on the New York futures market, while the other mild coffee-producing countries sell at level or even at a discount.

It also created controversy among other coffee origins that dispute the unique character of Colombian coffee and claim to produce very high-quality coffee as well. The Costa Rican ambassador to the United States made the joke “Juan Valdez drinks coffee from Costa Rica”, taken up as a slogan on t-shirts by Café Britt, which led to a legal dispute.

The image and power of the Juan Valdez brand is also used for Juan Valdez Café, a chain of coffee shops launched in 2002 by FNC. By 2020 the chain had 335 coffee shops in Colombia and 133 in 33 other countries.

Coffee brands: Regions and denomination of origin

Juan Valdez is a country brand; others go further to differentiate the origin in more geographical detail. Guatemala has been the first country to differentiate coffee production areas into regions with different profiles such as Highland Huehue (Huehuetenango), Rainforest Coban, etc. The aim is to show the consumer what impact varietals, microclimates, growing conditions and other factors have on the cup profile, flavour and aroma of coffee.

The regional profiles, with a good promotional campaign, become brands with differentiated prices, that is, premiums according to the preferences of the buyers. Before, different regions were already distinguished by their cup quality, such as Antigua Guatemala or Tarrazu Costa Rica, but without defining the profile of each region, thus adding value to coffee from all over the country.

If there is no regionalisation of the cup profiles of the entire country, one can do it by way of denomination of origin in which the specific characteristics of the coffee are defined in detail, which makes it different from other coffees, as they do with wines and spirits (Champagne, Cognac) and other products. The denomination of origin seal is protected, a guarantee of origin and quality. Café de Veracruz, Mexico and Café Marcala, Honduras, are among the first denominations of origin in coffee. One limitation of the denomination of origin is that the mark can only be used for coffee from that single origin and not in blends.

To differentiate oneself from the rest, one can go into more geographical detail, even at the community or farm level (estate coffee), with particular conditions, and at the producer level, due to the varietals they have and the way they grow and process coffee. This is mostly done for micro lots of specialty coffees.

To differentiate oneself in the market with the use of brands, it is important that the image and identity coincide. If there is inconsistency between the two, that is, if the flag does not hold the load, it does not work and all the money and effort that has been invested in creating the brand is wasted.

1) It seems that the government was inspired by the example of England, which tried to protect itself against competition from the German industry with the obligation to mark its products with “made in Germany”, appealing to the patriotism of the English. It was counterproductive, because “made in Germany” became a very strong brand, a guarantee of quality.

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The history of Coffee in Germany

The history of coffee in Germany dates back to the 17th century. In 1679–80 the first coffee shop in Hamburg was opened by a merchant from England, where coffee had been introduced in 1852, after Holland. A century later coffee had become very popular in Germany and there were coffee shops everywhere. Merchants from England supplied the north of the country, while the south was supplied by traders from Italy.

Among the authorities there was discontent because of the large amount of money paid to foreign merchants for coffee, and the true German was raised on beer, not coffee. Initially they tried to stop the coffee business with fines and jail, only the rich could drink it with a special license and buying from the government at exorbitant prices. The poor had to take substitutes made from barley, chicory and other ingredients.

Gradually the restrictions were lifted and coffee became the most popular drink in Germany. Today coffee in Germany with an average consumption of 152 litres per year has the highest consumer preference, more than beer (102 litres) and water (150 litres). 88% of people consume coffee daily.

Hamburg, Bremen and the Coffee Trade

The main German ports for coffee are Hamburg and Bremen. Hamburg is the second most important port for coffee in Europe, after Antwerp, Belgium. In the colonial era of the 19th century, Germany had colonies where coffee was first grown (Cameroon, Tanzania and Papua New Guinea) and the relationship with German emigrants who became coffee growers in many other producing countries has strengthened the relationship.

The coffee merchants in Hamburg and Bremen became multinationals like Neumann and Rothfos, which have an important weight in world trade, although it partly moved to Switzerland, where large trading houses have established their headquarters, but they continue to depend on ports such as Hamburg and Bremen for physical coffee handling.

Historically, coffee was exported in parchment and processed in the ports of consuming countries. Consumers roasted coffee at home, but at the end of the 19th century there was a demand to industrialize the process to supply the workers of the nascent industry in the cities. That is why there is a lot of expertise in coffee processing in cities like Hamburg, where to date there is a plant for reprocessing. The technology of processing coffee was also brought to the producing countries and to date companies such as Probat continue to have much prestige in machinery for roasting coffee.

It was in Germany that the first process of decaffeinating coffee was invented by the Kaffee Handels Aktiengesellschaft, Kaffee HAG, established in 1906 in Bremen. HAG continues as a brand, which is owned by Jacobs Douwe Egberts JDE since 2015.

It was in Hamburg that the technology of steaming coffee was developed in 1933, originally to make the coffee smoother for the consumer, but more recently to give Robusta coffee some acidity to increase the percentage of Robusta in blends, as it is cheaper. In Germany some brands sell 100% Robusta coffee.

Coffee industry and consumption

The European Union is the world’s largest coffee market, where more than 41 million bags are consumed. Germany stands out with 8.7 million bags, the third consumer country after the United States and Brazil. Germany is the leader in Europe in industrializing coffee with 31% of the total, followed by Italy with 29%. Italy produces more roasted and Germany produces more soluble coffee.

Production has grown 15% between 2016 and 2020 to 11.2 million bags of roasted and soluble coffee, of which 5.5 million are exported, mostly within Europe. In 2020, 2.6 million bags were imported, 50% from Italy.

In Western Europe, coffee consumption fell 2.5% in 2020, due to the impact of COVID-19, against an average growth of 1% in years prior to the pandemic.

Germany was an exception, growing 1.5% in 2020 and 0.4% in 2021, according to the Deutscher Kaffeeverband (German Coffee Association). As in other countries, out of home coffee consumption fell, but it was more than offset by the increase in at home consumption. In Germany 88% of coffee is consumed at home.

Of the 28–29 thousand coffee shops in 2018, the vast majority (97%) were traditional and independent cafés, many of which were more of a mix of coffee shop with pastry or other food service. In the segment of more than 2,200 specialist coffee shops, multinational chained players dominate with 84%. Coffee shops suffered a 43% drop in sales in 2020, due to the pandemic.

There are regional differences in terms of culture and preferences of the German population. There are still differences in standard of living between the old eastern part and the western part, which is the most prosperous part. From north to south the differences are above all cultural, the same from the big cities to rural Germany.

For the purposes of consumption statistics, the country is divided into 4 regions: North, South, East and West. The differences are relative in terms of the percentage of preference for the type of coffee and the way it is prepared. For large roasters it is above all a matter of distribution of the different presentations, for small roasters it is a matter of specialising, according to local taste or according to the market segment.

Certain characteristics are general for the entire country, such as the importance of discount supermarkets, which expresses the awareness that the German consumer has in terms of prices, among others, of coffee. However, this is changing if we look at the trends in the big categories. The biggest growth is in the most expensive coffees: whole bean, capsules and extract blends for Ready To Drink.

They also indicate a change in culture, individual units (pods and capsules are put together in statistics) and RTD means a more individualized consumption, different from filter coffee where everyone drinks the same thing at the same time. However, coffee in pods represents only 14% in Germany, which is little compared to 32% in France, 31% in the Netherlands and 27% in Belgium, which led this market segment in the European Union in 2018, according to data. of the European Coffee Federation.

Differentiated coffee

The specialty coffee market is the fastest growing segment in the European and German market. The growing interest is shown above all in the growth of specialized local coffee shops and roasters, but the big roasted coffee merchants and brands are also increasingly making inroads into the world of “boutique coffee”, coffee of origin, etc.

All the big trade houses work with specialty coffees, often with a specialized company, others are independent, specializing in high-quality coffees. There are also companies specialised in certain origins and even linked to particular producers, such as EthioCo (Ethiopia and other countries), Santorkai Handel Papenhagen (Kenya), Jasaquntu (Colombia), PachaMama (Peru) and Méambar (Honduras).

12% of the coffee consumed in Germany is certified coffee. Germany was the first country to introduce organic certification in the 1960s with coffee from Finca Berlin from Mexico bearing the Demeter seal (biodynamic certification). Germany is now home to many organic certifiers and IFOAM Organics International, the umbrella organisation of the organic movement.

The organic produce market in Europe was €41 billion at retail level in 2018, 42% of the world total. The German market is the largest with €11 billion at retail level, 27% of the European total, 5.3% of those for food products. It is followed by France (€9.1 billion) and Italy (€3.5 billion). In percentage Denmark comes first, with 11.5%, followed by Switzerland (9.9%, Sweden (9.6%) and Austria (8.9%).

In Germany in 2019, sales of organic coffee grew 14% in volume and represented 4.3% of consumption. According to a 2019 study, about 26% of German consumers prefer organic over conventional coffee and 78% are willing to spend more for it. Apart from Peru and Honduras, which are the main suppliers, Germany also imports a lot of organic coffee from Ethiopia. The seal with the largest volume is that of Rainforest (merged with Utz Certified), it is estimated that half of the certified coffee in Germany, equivalent to about 600 thousand bags of green coffee, 6% of total consumption.

Germany is the second largest market for Fairtrade sales, after the United States. Fairtrade certified sales grew 42% between 2016 and 2020 to 550 thousand bags, of which 73% double certified Fairtrade and organic, according to data from FLOCERT. It represents 5% of coffee consumption in Germany. 34% of consumers say they consume organic and/or Fairtrade coffee daily and another 13% several times a week.

This means that the competition in this market segment is very strong and the premium that the consumer pays for certified coffee is limited.

Conclusions

It can be concluded that Germany plays an important role in the world of coffee and is the leading country in Europe in coffee trade, production and consumption, supplying many other countries in Europe with green, roasted and soluble coffee.

Coffee is the consumer’s preferred beverage in Germany, more than beer and water, and 88% of consumers drink it daily. Coffee is mostly consumed at home and discount supermarkets play an important role with their own brands. Consumers are very price conscious and margins are slim.

However, consumption habits are changing. Sales of premium coffees are growing in their market share: certified coffee, specialty coffees, specialised coffee shops, whole beans, capsules, RTD, all grow more than consumption in general. This opens up opportunities to improve sales conditions for suppliers whose coffee fits into these segments and there is a growing number of small roasters and coffee shops selling coffee at a high premium.

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