The fair trade coffees are already enjoying an almost nation-wide distribution. This means that further growth will have to come from higher sales in the existing outlets. The following factors were identified as constraints to the Transfair market:
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! The public awareness of the Transfair label stands at 40 percent and there is a lack of cohesive approaches and promotional funds available to disseminate this message. The national labels in both Germany and Belgium have not succeeded in their attempts to sell fair trade coffees under their labels; successful marketing of this label in the Netherlands presents some consumer confusion since it is confused with other brands.
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!! The absence of the market leaders and their popular brands (Jacobs and Eduscho) in the fair trade segment and the relative weakness of the existing brands that participate.
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! Present fair trade prices are relatively high and the trading margins small. This is aggravated by heavy supermarket price promotion of coffees as highly visible loss leaders or ecke-produkten.
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! The gap between good intentions and the actual purchasing decision in the shop may
Figure 11.12 Sustainable coffee market share in Germany
reflect the inability of fair trade to find affinities with current lifestyle and consumer preferences.
The following factors were identified as constraints to the organic market:
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! The number of certification bodies and their logos that causes confusion to the public (although the introduction of the Bio-Siegel may help to resolve this problem).
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! Despite the introduction of the EU regulations, the lack of unified standards concerning the organic certification of coffee among different certifiers still causes confusion and inefficiencies in the trade making it a source of conflict.
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! The risk of increasingly bureaucratic solutions for certification that would make the entry-barriers higher and add to the cost of the products, especially since any measures have to be coordinated between and with governments and a large number of stakeholders.
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!! The lack of credible statistics on the size and growth of the organic markets, and the limited interest of most certification bodies to generate this data.
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! The difference in scale and price-levels between the traditional organic suppliers and
12 1 12 1 12 1 12 1 12 1
the mainstream roasters, that make it difficult for the first to enter the mainstream retail market and take full benefit of the strength of their brands. This problem is aggravated by the likely need to abandon the high margins errand in some of the traditional organic food stores.
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! There appears to be a lack of interest among the major coffee roasters to enter the organic market and even Jacobs seems to be producing organic coffee for the Danish market, but not for the German.
Key factors for growth
Members of the industry were asked to, “Rate the importance or value of the following factors for expanding your sustainable coffee business.”
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! Consistent and reliable supply
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! Price relative to conventional coffee
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! Clarity between different types of certifications, criteria, and labels
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!! Awareness of consumers about these coffees If the industry does not fulfill these factors it is likely that its future growth will be constrained.
Respondents were offered 4 choices ranging from
“not at all important” to “very important”. The results are shown in the following figure (11.13).
The German industry gave the highest importance to quality, closely followed by customer awareness. Price, as compared to conventional coffees was given the lowest importance, with 35 percent of respondents considering this factor not very important.
This is somewhat surprising, given that the German coffee market is generally considered to be very price-oriented, and leading coffee brands are often offered by supermarkets at low prices to generate traffic. Apparently, sustainable coffees are viewed as being somewhat price-inelastic.
More than half of the respondents also mentioned other factors influencing the expansion of sustainable coffees. The most common of these was the absence of adequate information about these coffees, especially for consumers.
Figure 11.13 Key factors for the expansion of sustainable coffees
Sorting coffee beans
12 3 12 312 3 12 312 3 Source: European Coffee Federation, 2002.
Figure 12.1 Total Italian coffee consumption (Metric tons green)
The overall market context
In 2001 the Italian coffee market imported 364,678 tons of green coffee, an increase of approximately 3.4 percent over the previous year. Although Brazilian Naturals and Robusta constitute 75 percent of the market, an increasing market share is going to Brazilian coffees that lend themselves well to the needs of espresso roasters. Over the last five years Robusta demand has edged downward by about one share point but the Milds have dropped considerably, from approximately 30 percent down to a 25 percent market share. Most of the recent import growth was an opportunistic increase in the stocks due to low prices rather than a significant increase in consumption.
12. Sustainable C offee in Italy
T he St at e of Sust ainable C offee T he St at e of Sust ainable C offeeT he St at e of Sust ainable C offee T he St at e of Sust ainable C offeeT he St at e of Sust ainable C offee
12 4 12 4 12 4 12 4 12 4
Source: European Coffee Federation, 2002.
An average growth rate over the last five years might better reflect demand in the processing sector and that number would be 2.3 percent per annum. Although per capita consumption has shown only modest growth at 1.1 percent for 2001 (figure 12.1), Italy’s processed exports continued to grow significantly (at 11 percent) and the country easily holds the world’s number two position in this category. Although per capita consumption has remained stable at about 5.5 kg over the last 3 years (figure 12.2), it is much higher now than the 1990 level of 4.4 kg.