Coffee market to stay hot in the next few years

Coffee prices have been at historically high levels for over a year, and the situation is expected to continue for some time. In addition to the fundamentals of supply and demand, coffee prices are increasingly sensitive to macroeconomic factors and speculative interest. Coffee consumption is growing fastest in developing countries such as Brazil and Indonesia and interest in sustainably certified coffees is increasing in developed markets. Finns are diversifying the ways they enjoy their coffee as capsule and espresso based-drinks gain popularity. Paulig is looking for growth in Russia and is expanding its product and service range.

Volcafe’s director for business development and sustainability, Mark Furniss, spoke today in Paulig’s coffee seminar. According to him, several factors influence the price development of coffee. 

“In 2011 – 2012 coffee production will fall by about 8 per cent, mostly due to the off-cycle in Brazilian production. With coffee stocks already at low levels, and combined with uncertainty surrounding the global economic situation, coffee prices will continue to be volatile.” said Mark Furniss at the coffee seminar. Swiss-based Volcafe is one of the world’s biggest coffee wholesalers.

With Brazil producing about 40% of the world’s coffee, the market is particularly vulnerable to changes in its output, especially with stocks at their current low levels. The supply of arabica coffee, which Finns are particularly fond of, is likely to be well below demand this year. Demand will continue to grow, especially in coffee-producing countries such as Brazil , Indonesia and India, as well as Russia and Eastern Europe.

“The worldwide market situation is affecting consumer prices also in Finland. However, coffee continues to interest consumers and the ways of consuming are becoming versatile. Paulig will continue to bring new and interesting options for coffee lovers”, said Elisa Markula, Paulig’s Managing Director for the Coffee Division.

Responsibility in the heart of coffee production

Responsibility/sustainability is becoming a more and more important factor in securing global coffee production.

“Small farmers produce over 70 per cent of the world coffee, and their know-how and wellbeing influence the future of the coffee industry. The growth of production can be influenced with good, simple farming methods, such as pruning and fertilisers, which have the ability to double yield in some situations. With the corresponding effect on farm incomes, these improvements are a vital part of improving sustainability in the coffee sector,” says Volcafe’s Mark Furniss.

Sustainable development can also be promoted through various certification schemes. Coffee with responsibility certification already accounts for roughly eight per cent of global consumption, and demand is growing sharply. The leading certification systems in the coffee sector are UTZ CERTIFIED, Fairtrade, Organic and Rainforest Alliance.

“Paulig’s aim is to ensure the responsibility of all our coffees throughout the production chain from bean to cup. Among the main ways of influencing this are to improve traceability and operations in the countries of origin and in the procurement chain. We are purposefully working on the traceability of all the coffee we buy in cooperation with our partners,” Elisa Markula says.

Paulig is investing in growth and new market segments

Finland’s leading coffee company Paulig is deploying dynamically in the Russian market and has recently opened a roastery of its own in Tver. Paulig is now one of the leading marketers of roasted coffee in Russia. In terms of sales value, Paulig is the market leader for genuine coffee there, and in terms of sales volume it places second (Nielsen Russia 12/10 - 07/11/2011, 12 cities).

“The wide market area offers considerable opportunities for growth, and local production permits even more competitive operations. In Russia, coffee is seen as a modern, up-to-the-minute product that is well suited to an urban lifestyle. Coffee is drunk there, but only about a tenth as much as Finnish consumers drink per year,” Elisa Markula comments.

In tandem with internationalisation, Paulig is innovatively revamping its range of products and services.

“Filter coffee, which has become a truly trendy beverage in Europe, is still the most popular type of coffee for us, but in addition to this, dark-roast espresso-based drinks and responsibility-certified coffee have grown markedly in popularity. Interest is also rising in top-quality premium coffees and beans. Increasingly often, cups of coffee are being enjoyed out of the home,” as Elisa Markula describes coffee trends.

This autumn Paulig staked out new territory with the launch of the Paulig Cupsolo coffee-maker for use in the home. The coffees and other beverages used in Cupsolo have been tailored by Paulig to match Finnish tastes. The range of responsibility-certified products is also making progress with the Fairtrade and Organic certification of Paulig Mundo. Something new is also in the offing this autumn for the premium product range.

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• In 2010 Finns had the highest consumption of green coffee in the world at 11.9 kg per person.
• The corresponding figure for Sweden was 7.4 kg, for Estonia 5.5 kg and Russia 1.3 kg.
•  In Finland, 94 per cent of the coffee sold is light-roast and the remaining six per cent is dark-roast coffee or speciality coffee.

 Source: International Coffee Organisation ICO

FURTHER INFORMATION:

Gustav Paulig Ltd

Managing Director, Elisa Markula, Tel. +358 50 5960 978,

Communications Manager, Leena Miettinen, Tel. +358 40 562 7302,

Volcafe Ltd.

Director Mark Furniss, Tel. +41 522 649 465,

Photos for media use can be found on the address http://paulig.materialbank.net/NiboWEB/Paulig/showCartPublicContent.do?uuid=2818642&random=211464&lang=en

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Paulig Group

The Paulig Group is a corporation noted for its high-quality brand products, focusing on seasonings, international food concepts and coffees, operating in 15 countries in Northern and Western Europe, the, Baltic region, and Russia and its neighbouring areas. Its net sales are almost 800 million euros and it has roughly 2,000 employees.

The Group’s coffee business is the responsibility of Gustav Paulig Ltd. The company is the market leader in Finland and the Baltic countries, and in Russia it is the second-largest supplier of roasted coffee. Paulig supplies its products and services to the retail trade, the Horeca sector and to workplaces. Coffee dispenser services are handled by Paulig in partnership with its subsidiary Vendor Group. In Finland, Paulig’s best-known brand products are Juhla Mokka, Presidentti, Brazil and Paulig Mundo as well as the cold coffee drink Frezza and the chocolate drink Tazza. In the Russian and Baltic markets, the most popular products are Paulig Classic and Paulig President coffee blends and Paulig espresso products. The company’s coffee roastery and head office are in the Vuosaari district of Helsinki. The roastery turns out some 100 million coffee packages or roughly 45 million kilos of coffee a year.

19 October 2011