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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)
...continued from 'STiR’s 10th Anniversary: Executive Forum Q&A. Part 1...
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...
QUESTION #2: What lasting change(s) that developed during Covid-19 will there be to the industry in business operations, sales, consumption, etc.?
Dr. Monika Beutgen (Tea & Herbal Infusions Europe): Digitalization due to Covid-19 accelerates the implementation of modern agricultural technics in tea gardens and cultivation of herbal materials. This helps to ensure harvests and to further improve product quality.
Ralf Torenz (Neuhaus Neotec): Covid-19 [and travel restrictions] led to a strong digitalization in communication on both sides of the business partners. The technical prerequisites for online meetings were created to varying degrees in the companies before the pandemic. The mandatory need for this type of communication has led to a similarly high standard of quality worldwide, and uniform software tools for web conferencing are now indispensable in any meeting room. This allows business to continue successfully during the pandemic, although in a limited way. The future will show whether the personal conversation will return to the focus or whether digital exchanges will continue to dominate sales communication in the future.
Peter Goggi (Tea Association of the USA): We saw a huge growth in tea sales through traditional grocery and director marketing channels, to the tune of 18–20% growth year on year. This is in a category that historically experiences swings of plus or minus 1-2% per year on average.
A qualitative study that the Tea Association of the U.S.A., Inc. commissioned, highlighted that tea provided a way for consumers to de-stress, with 87% of respondents highlighting this effect. Tea was also seen as calming, centering, and relaxing by both millennials and gen x-ers. Additionally, a research paper was published in the middle of Covid-19 highlighting true tea’s immune boosting power, providing yet another reason to drink tea. (Arakelyan, Hayk S., Tokyo Medical University Hospital; 06/06/2020; Title: Green Tea and Immunity). Even more exciting was that consumers stated that they fully intended to continue to drink tea at this higher rate once Covid-19 ended.
Mansoor Akarbally (Akbar Brothers): The increasing importance of B2C channels and online direct-to-consumer sales. Many larger companies overlooked this segment prior to the pandemic but will now surely be determined to capitalize on this growing opportunity.
The focus on health and wellness is already emerging and likely to continue to grow. Tea companies can capitalize on this movement by focusing on functional and wellness inspired tea.
With increased costs and uncertainty regarding international travel, brand owners will have to become more adept with virtual exhibitions/forums and look beyond the traditional (pre-pandemic) means of generating new sales leads.
William Murray (National Coffee Association): The pandemic didn’t dent coffee’s status as America’s favorite beverage. In fact, the pandemic did not change how much coffee Americans drink (nearly 2 cups per day per person or 3 cups per day per coffee drinker) or how often (about 6 in 10 American adults drink coffee each day).
However, the pandemic did affect where Americans prepare and consume coffee and how they obtain it. Drinking coffee at home remained by far the most popular location – about 80% of coffee drinkers have at least one cup at home, the same as before the pandemic. However, out-of-home consumption dropped by about 20% from January-September 2020.
Pandemic restrictions cut away-from-home preparation by 30%. Delivery and app-based ordering sky-rocketed, increasing 13% and 63% respectively between January and September 2020 – a trend we expect to continue. Coffee drinkers also experimented with coffee at home: 27% tried to re-create a favorite coffee shop beverage at home, 23% purchased a new coffee machine, and 41% tried new types of coffee.
While happy to try new things, many coffee drinkers miss their pre-pandemic coffee routines and are eager to get back to normal: 35% say they miss their favorite coffee shops, and 48% are already returning to coffee shops or plan to in the next month.
Holger Preibisch (Deutscher Kaffeeverband e.V): Covid introduced the home office. Coffee consumption moved with us when we moved from the workplace to the home office, and coffee consumption increased during this time. The reduction in out-of-home was even overcompensated by high in-home consumption.
With now 168 liters of coffee consumed per capita annually, coffee could even extend its lead as the most consumed beverage in Germany. Covid-19 demonstrated that: 1) coffee helps people through the crisis; and 2) coffee is crisis-proof.
Nicola Panzani (IMA Coffee): The industry has gone through the collapse of HORECA and the spike in the retail and online segments. Although driven by the lockdowns around the world, this situation will be long lasting. The companies benefitting the most were those present in sales channels. The resilience of the coffee sector against the negatives is proven by the substantially stable demand of coffee. But to achieve this resilience it was fundamental to have an omni-channel strategy and coffee companies understand that they will focus more and more to go in that direction
Cindi Bigelow (Bigelow Tea): There has been an increase in consumption driven by an overall trend toward health and wellness. With the deluge of studies, and a desire to eat and live a healthier lifestyle, consumers have really come to appreciate tea as a healthy beverage, fueling your body with good-for-you ingredients while making your body stronger. This trend that is here to stay.
Increased costs across the entire supply chain will be “new norm”. This includes transportation, materials, and of course labor. There are pressures from price increases in almost every facet of the business, and this will continue. Despite our efforts to thwart and absorb those increases, some will – unfortunately be passed on to the consumer.
Sunalini Menon (Coffeelab): Many shipment constraints remain, such as high freight rates, lack of containers, and coffee prices spiraling, with lower demand for certain high quality coffees such as washed robustas. Sales of roasted and ground coffee digitally, through e-commerce, gathered momentum and the millennial, especially the IT professionals started purchasing their requirements through e-commerce learning how to brew of a good cup of coffee at home. The sale of varied brewing equipment has also begun to see the light of day. Home delivery also gathered tremendous importance today. With just one’s mobile phone, the coffee drinker is able to get a good cup of takeaway coffee, something almost unheard of before.