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STiR’s 10th Anniversary: Executive Forum Q&A. Part 1
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Marcus Clausen (Dethlefsen &Balk)
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William Murray (National Coffee Association)
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Ralf Torenz (Neuhaus Neotec)
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Dr. Monika Beutgen (Tea &Herbal Infusions Europe)
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Mansoor Akarbally (Akbar Brothers)
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Holger Preibisch (Deutscher Kaffeeverband e.V)
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Sunalini Menon (Coffeelab)
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Nicola Panzani (IMA Coffee)
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Cindi Bigelow (Bigelow Tea)
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Peter Goggi (Tea Association of the USA)
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Doug Bishop (BUNN)
Ten years goes by quite quickly, and that’s where we stand with STiR – realizing it’s the magazine’s 10th anniversary yet feeling like it wasn’t that long ago we completed all the exciting work to transform Tea & Coffee Asia magazine into the global STiR coffee and tea. Not the least of that work was coming up with a name which didn’t limit us to a region, didn’t sound like another magazine, and didn’t use the words “coffee” or “tea” used in virtually every other magazine covering our industries.
For a few seconds, we thought our 10th Anniversary would be a great time to go over our milestones, breakthrough reports, our growing base of subscribers and advertising support. But, instead, we decided a much better way to celebrate our 10th would be to hear you – our coffee and tea friends, readers, and supporters.
So, for STiR’s 10th anniversary we invited some industry leaders to give us their input. We asked them only three questions, but these were not very easy questions. For all our readers, we wanted to get these decision-makers’ input on 1) key events of the past 10 years, 2) what we have learned and adopted from the Covid-19 period, and 3) what the future holds.
We are quite thankful to have this incredible range of executives taking the time to give their thoughts and views. We have input from a wide variety of celebrated and leading coffee and tea industry manufacturers and suppliers, such as:
Mansoor Akarbally of Akbar Brothers, tea exporter from Sri Lanka;
Dr Monika Beutgen of Tea & Herbal Infusions Europe, industry tea association;
Cindi Bigelow of Bigelow Tea, tea blenders since 1942;
Doug Bishop of BUNN, world leader in dispensing equipment;
Marcus Clausen of Dethlefsen & Balk, supplying the wholesale specialty coffee and tea trade;
Peter Goggi of the Tea Association of the USA;
Sunalini Menon of Coffeelab, and ambassador of coffee from India;
William Murray of NCA, National Coffee Association of the US;
Nicola Panzani of IMA Coffee Petroncini, leader in coffee processing, packaging, and roasting;
Holger Preibisch of Deutscher Kaffeeverband e.V, the largest German coffee association; and
Ralf Torenz of Neuhaus Neotec, leading manufacturing of coffee processing equipment;
Without further ado. Let’s hear what they have to say...
Over the past 10 years or so, what developments would you underscore as having the most effect on the coffee and/or tea industries?
William Murray (National Coffee Association): Perhaps the biggest impact has been made along generational lines – primarily younger coffee drinkers. Ten years ago, most American coffee drinkers primarily purchased traditional coffee from traditional supermarkets. Over time, coffee’s solid consumer base, changing demographics, innovative products, and new delivery channels have really diversified that. Specialty coffee is increasingly popular, different retail channels attract more consumers, and even specific drinks have popped up on the radar.
For example, cold brew was considered a niche product just six years ago, and now it is the third most popular method of coffee preparation. Today, specialty single origin coffee, cold brew, and espresso-based drinks have begun to change that picture. One way to describe what’s happening on the specialty side is “premiumization”– meaning consumer tastes are becoming more varied and sophisticated.
More recently, independent scientific studies consistently show that drinking coffee can be part of a healthy diet and is associated with reduced risk of multiple cancers, chronic diseases, and even depression. The evidence is mounting: coffee drinkers live longer, health, happier lives.
Cindi Bigelow (Bigelow Tea): Over the last 25 years, a proliferation of university-based studies merged touting the naturally healthy aspects of tea and how that translates to the tea drinker. Today, more than ever, consumers look for products that are good for the body, and mind, and homing in on plant-based foods and beverages. Which means tea, being a beverage that is a product of the Camelia sinensis plant, is meeting a true consumer need.
As global warming and other environmental and social issues continue to cause concern, challenges around the availability, consistency, and quality of tea and other botanicals continues to be a major issue. This issue appears to be growing and getting more intense.
Holger Preibisch (Deutscher Kaffeeverband e.V): Sustainability must not be just a marketing tool, but a serious commitment that is urgently needed and that it even represents an opportunity. However, it has not been possible to fully secure a decent income for many coffee farmers. Increased demand [over the past 10 years] is gratifying to the industry and is also an agronomic challenge to grow even larger quantities of coffee on the same acreage in an increasingly demanding ecological manner.
Consumers are not only drinking more coffee, they are also drinking better quality. Specialty coffee is firmly established in Germany with classic filter coffee reducing its market share from 90% to 50%, and whole bean increasing accordingly. The fully automatic coffee machine is replacing the classic filter coffee machine.
Mansoor Akarbally (Akbar Brothers): The automation of Colombo tea auction from an initial outcry system – in place for over 100 years – drastically changed the way in which we procure our key material – tea – in Sri Lanka. The political instability of key markets in the Middle East is recurringly an issue, posing many challenges over the last 10 years. Also, the exchange rate fluctuations and depreciations in Sri Lanka may create short-term benefit to exporters but long-term uncertainty for the economy at large.
Dr. Monika Beutgen (Tea & Herbal Infusions Europe): The launch of the Sustainable Development Goals (SDGs) of the UN in 2015 brought sustainability issues to the fore in the tea industry. The tea business has always been a global trade carried by people who promoted the mutual understanding of tea growing countries and consumer markets. Nevertheless, existential threats like the climate change and environmental degradation have brought tea growers, traders, and industry closer together than ever before.
Sunalini Menon (Coffeelab): In India, we moved rapidly from just being a “filler coffee” to being a “coffee”, which is respected for quality, its basket of flavors, and the consistency of our varied types of coffee products. Farmers have also moved up the value chain in not just being a farmer, but also a reliable exporter, a café owner, and an owner promoting tourism through converting his home on the farm into a “home stay” educating the tourists and consumer along the way.
Coffee consumption in a tea drinking country has been transformational with cafés opening not only in urban areas, but in rural India also. Coffee which was only prepared at home on the traditional Indian filter consumed only by adults, is now brewed in various and innovative ways at the cafés, educating the younger consumer on the story behind the brewed coffee beans, the different methods of brewing coffee, and on the different taste nuances of the coffee cup.
Marcus Clausen (Dethlefsen & Balk): In the tea business, we see a rising importance of the packaging and marketing. Where previously the bulk packaged loose leaf tea was the main business, we now also have a broad range of packaged specialty teas on offer and continuously seek to develop individual products in close cooperation with our customers.
Coffee, on the other hand, experienced the emergence of a multitude of micro-roasters where consumers can often see the roasting of their beans live onsite. This is a result of the strive for maximum freshness which is also evident in the increased demand for whole bean coffee. Shorter supply chains and just-in-time roasting favor this trend.
Nicola Panzani (IMA Coffee): The last 10 years showed a tremendous growth in single-serve, with particular focus on coffee capsules – the leading consumption method in most homes developed countries. With the expiry of the patents on main platforms such as Nespresso Original and K-cup, many companies entered the market with compatible solutions. This trend increases the availability of products and reduces prices for consumers, allowing further growth of the market for both new entrants and incumbents.
In the last years, there’s a new wave of development driven by the focus on environmental impact, with many solutions introducing recyclable or composting materials and to ensure the implementation of correct end-of-life handling. Looking over the last 10 years, the coffee industry proves itself an excellent example of a fast-moving industry, more similar to high tech than the traditional food industry.
Peter Goggi (Tea Association of the USA): One of the key trends that I find very impactful is the reluctance by larger retailers to allow price increases for tea, or to recognize that the cost of goods increased in the tea supply chain. Many of these same companies talk about sustainability in their supply chains yet are hesitant to pay for it. Sustainability is not limited to ecological concerns. Economic and social sustainability must also be under consideration. By refusing to accept price increases, packers face being de-listed or reducing prices, which more often than not, means reduced quality. This also means that producers are not receiving their fair share of economic benefit.
Smallholders make up the majority of tea producers around the world. They depend heavily on the income they receive from harvesting quality tea leaves, which are then manufactured into finished tea. The large retailers must wake up to the misguided strategy of always keeping pricing low and should instead adopt a view of promoting and selling product value.
Ralf Torenz (Neuhaus Neotec): There has been a lot of movement within the buyer community for large coffee production plants through new partnerships and mergers of coffee producers. And the acquisition of more and more new consumer groups, especially in countries previously dominated by tea, leads to a continuous demand for new coffee roasting plants. This trend continues, so that despite more difficult conditions in green coffee cultivation due to climatic changes, a turnaround in capacity expansion is not yet in sight.
The significantly increased quality awareness among end consumers and the desire for constantly new coffee creations and taste experiences has created a new generation of young, small roasters with a focus on high-quality specialty coffees, similar to the craft beer scene before.
Doug Bishop (BUNN): The coffee consumer is more educated than ever in both taste profiles and preparation methods. Consumers are now looking to purchase specific types of beans or blends to fit the flavor profile they desire. In concert with that mindset, the method of preparation has evolved both in style and technology – speeding up the process in some cases and in others pinpointing the perfect time to extract the desired flavor. Innovation of coffee offerings has also helped enrich the industry. Iced coffee and frozen coffee beverages started the innovation boom when they came on to the scene early in the decade and that fostered the explosion of cold brew and nitro coffee which continue to gain a following and are leading to limitless flavor pairings.
Consumer knowledge also changed the landscape of tea for the better. Learning more about health benefits and flavor options with the different types of tea helps grow the industry by leaps and bounds. Much like coffee, tea is on the forefront of a period featuring innovation in both preparation and flavor pairings.
Read 'Q&A STiR 10th Anniversary Executive Forum: Question #2'...