Specialty Coffee Industry Looks at Sustainability Issues

The Specialty Coffee Association of America (SCAA), the world’s largest coffee trade association, is taking an in-depth look at sustainability topics in the specialty coffee industry. At its upcoming 20th Annual Conference & Exhibition, May 2 5 in Minneapolis, Minn., the association and a high-profile panel of coffee industry experts will present on key issues, such as the business challenges of greening a business; the effect of global warming on coffee growing in Central America; how a coffee business can become more carbon neutral; sustainable trade; and the impact of certifications on the farmer and the environment. “As the specialty coffee industrys premier association, our mission is to educate members and the industry at large on best practices in the coffee sector while assisting farmers in implementing sustainable business practices and increasing yields in an environmentally sensitive manner,” said Ric Rhinehart, SCAA executive director.

The Sustainability Track at SCAAs conference and exhibition features a wide-range of educational topics, such as:

  • Greening Your Business: Roasters and Retailers
  • Certification Highlights and Successes at Origin
  • Millennium Development Goals: Overview and Implementation
  • Global Warming: The Impact of Global Coffee
  • Taking Your Business to the Next Step in Sustainability: Become Carbon Neutral
  • Roots and Relationships: Case Studies in Pros & Cons of Direct Relationship Models
  • The Finance Alliance for Sustainable Trade: Building Businesses and Livelihoods
  • Specialty Coffee, Water and Small Holder Prosperity
  • Grower Perspective: California Sustainable Wine Growing Experience
  • Gender, Equality and Sustainability: The Role Women Play In the Future of the Coffee Industry
  • Processor Perspective – The California Sustainable Winegrowing Experience

Presenters in SCAAs Sustainability Track represent many well-known coffee organizations and others that are working to promote sustainability in the industry, including Anacafé, Batdorf & Bronson Coffee Roasters, CABI Commodities, Café Imports, California Sustainable Winegrowing Alliance, CATIE, Coffee Quality Institute, Deans Beans, Finca Selva Negra, Green Mountain Coffee Roasters, Grounds for Health, Intelligentsia Coffee & Tea; International Institute for Sustainable Development, International Institute for Sustainable Development, Sustainable Markets and Responsible Trade, International, Womens Coffee Alliance, Peace Coffee, Rabobank; Rainforest Alliance, Root Capital, Signature Coffee, Smithsonian Migratory Bird Center, SOPPEXCA (Union of Agricultural Cooperatives), Sustainable Harvest at Origin, Taylor Maid Farms, Thanksgiving Coffee Company, TransFair USA, Trees for the Future, Utz Certified North America and ViewCraft.

The Sustainability Track is just one of the many educational highlights at SCAAs 20th Annual Conference & Exhibition. As the industrys premier coffee event, the conference features in-depth educational sessions covering a variety of specialty coffee topics, hundreds of exhibit booths, a keynote presentation from Michael Shuman, author of The Small-Mart Revolution, the United States Barista Championship and the Coffee of the Year Competition.

In accord with SCAAs mission of promoting sustainability in the specialty coffee industry, the association has created a carbon neutrality program to help offset emissions related to conference travel, lodging and energy consumption. All conference attendees are required to participate in the program. The funds collected will be donated to non-profit organization, Trees for the Future for the purchasing and planting of new trees.

Complete details for SCAAs 20th Annual Conference & Exhibition are available at http://conference.scaa.org/. For a copy of the conference brochure, call 562-624-4100 or e-mail coffee@scaa.org.

About the SCAA

Celebrating 26 years of success, SCAA is the world’s largest coffee trade association. SCAA members are located in more than 40 countries and represent every segment of the specialty coffee industry, from coffee growers to coffee roasters and retailers. The SCAA’s mission is to be the recognized authority on specialty coffee, providing a common forum for the development and promotion of coffee excellence and sustainability.

The SCAA’s dedication to excellence in coffee is realized through the setting of quality standards for the industry; conducting research on coffee, equipment and perfection of craft; and providing education, training, resources and business services for members. The SCAA’s annual conference is held in a different U.S. city each year and is the coffee industry’s largest gathering and exhibition.

Note to Editor: Interviews with Sustainability Track session instructors before, during and after SCAAs 2008 Conference & Exhibition are available upon request. Press registration is online at: http://conference.scaa.org/.


Supporting the coffee farmers

MIDDLESBROUGH mother and son Baristas Necita and Chris Pounder marked the start of Fairtrade fortnight by helping boost donations to the charity Coffee Kids.

As part of the expanding franchise of Esquires Coffee Houses, a proportion of takings from their two town centre bars will support projects that help coffee farmers and their communities.

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Coffee hits 10-year high

Arabica coffee trading on ICE Futures U.S. tapped a fresh 10-year high as funds continued to buy the market, while cocoa flirted with a 24-year high in quiet dealings, traders said.

“There’s general commodities buying these days,” one coffee trader said about the continued fund interest.

On the screen, ICE’s key May coffee contract was up 0.70 cent at $1.631 at 9:21 am, trading from $1.616 to $1.6635, a high dating back to February 1998 for the second month. The rest ranged from 0.50 to 2.15 cents stronger.

Bean counters raise coffee price

MELBOURNE’S coffee connoisseurs should brace themselves for a $4 cuppa as world bean prices soar.

Cafe owners warn that rising coffee prices coupled with higher overheads will force them to charge more.

Melburnians pay between $2.80 and $3.50 for their coffee fix, but not for much longer, industry experts say.

Even the instant version will cost more at the supermarket.

The global price of arabica beans, used in most espresso coffee shops, has jumped to the highest point in a decade.

Tolly Avgerinos, owner of Atomica cafe in Fitzroy, said that the bean cost was just part of the retail price of a flat white or cafe latte.

Cafe owners and operators said the coffee increase followed rises in the cost of rent, milk and staff.

Mr Avgerinos said customers also were becoming more coffee-savvy and wanted a premium brew, which cost more.

“People are starting to understand what goes into a good coffee,” he said. “And sometimes you have to pay for it, like you would do for good wine.”

Angelo Augello, managing director of the Bean Alliance roasting company in Reservoir, said investment speculators in world commodity markets had driven prices to an 11-year high.

Mr Augello, who is also on the Australian Coffee Traders Association, said arabica bean prices had jumped by up to 30 per cent in the past four months.

“We might be able to hold prices for a couple of weeks,” he said.

But he said coffee was a relatively small part of the cost of a cup and talk of a $1 rise was exaggerated.

Consumers had become more demanding and expected a quality product properly prepared by trained professionals.

Fresh brewed coffee makes up about 20 per cent of Australia’s $1 billion-a-year market.

P&G sees earnings goal hit even without coffee business

Procter & Gamble Co (PG.N: Quote, Profile, Research) expects core earnings per share to grow in double digits on a percentage basis, in line with the company’s long-term goals, despite expected dilution from divesting its Folgers coffee business, company executives said on Thursday. The company announced plans to divest its coffee business to shareholders on Jan. 31. Chief Financial Officer Clayton Daley confirmed on Thursday the divestiture would likely be accomplished in a transaction that would cut P&G earnings by 3 cents to 5 cents a share annually, starting in fiscal year 2009, which begins in July.

“Our goal is to deliver double-digit core earnings-per- share growth even without the coffee business,” Daley said.

The world’s largest household and personal-care products maker also said it has not seen signs of consumers leaving its brands — which include Tide laundry detergent, Pampers diapers and Gillette razors — for lower-cost alternatives, despite the sluggish U.S. economy.

“We have not seen trade down to private label or lower- priced products,” Daley, P&G’s chief financial officer, said during a presentation to the Consumer Analyst Group of New York conference, held in Florida.

“The products we sell are simply not seen by consumers as discretionary,” Daley said.

Private-label products are either seeing flat or shrinking market share in P&G’s top 10 categories, while P&G is gaining market share in two-thirds or its business, Daley and Chief Executive A.G. Lafley said.

Like most consumer products companies, P&G has been raising prices across a host of products to help offset rising costs for oil and other commodities.

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Coffee prices rise on output jitters

The price of robusta coffee beans reached a 11-year high of 33,200 VND per kg last week in the Central Highland province of Dak Lak, the country’s coffee hub.

Van Thanh Huy, chairman of the Viet Nam Cocoa and Coffee Association (Vicofa), said the price hike was caused by a sharper-than-expected fall in output in Viet Nam , the world’s biggest producer of robusta. Bad weather has been blamed for the low output.

The forecast had been for a harvest of 1-1.1 million tonnes but the actual yield was only 850,000 tonnes, he said. “Dak Lak’s output fell from 435,000 tonnes to 350,000 tonnes.”

Industry experts in the province also predicted that the price would continue to rise beyond 35,000 VND.

Globally, there is likely to be a shortage of 80,000-112,000 tonnes of robusta beans. Huy said as a result the price of robusta coffee on the London market had risen to 2,250 USD per tonne in the last few days, and to between 2,150 and 2,200 USD in HCM City.

Le Duc Thong, director of the Dak Lak-based 2/9 Import and Export Company, pointed out another reason for the price hike.

Many coffee growers wanted to hoard their harvest in the hope of realising even higher prices later, he said.

This had partly contributed to the short supply on the domestic and world markets, he said, adding, “My company has only managed to buy 70 percent of the volume of coffee it had bought by the same time last year.”

Know the commodity chain in Coffee industry?

Coffee is an extremely powerful commodity, reigning as the world’s most heavily traded product, behind petroleum, and the largest food import of the United States.

The global commodity chain for coffee involves a string of producers, middlemen, exporters, importers, roasters, and retailers before reaching the consumer.

Coffee is a vital source of export for many of the developing countries that grow it. Some 20 million families in 50 countries now work directly in the cultivation of coffee; an estimated 11 million hectares of the world’s farmland are dedicated to coffee cultivation. Arabica and Robusta are the two principle species of coffee harvested today. Approximately 70% of the world’s production is the Arabica bean, used for higher-grade and specialty coffees, and 80% of this bean comes from Latin America. Robusta is grown primarily in Africa and Asia.

Most small farmers sell directly to middlemen exporters who are commonly referred to as coyotes. These coyotes are known to take advantage of small farmers, paying them below market price for their harvests and keeping a high percentage for themselves. In contrast, large coffee estate owners usually process and export their own harvests that are sold at the prices set by the New York Coffee Exchange. However, extremely low wages ($2-3/day) and poor working conditions for farmworkers characterize coffee plantation jobs.

Importers purchase green coffee from established exporters and large plantation owners in producing countries. Only those importers in the specialty coffee segment buy directly from the small farmer cooperatives. Importers provide a crucial service to roasters who do not have the capital resources to obtain quality green coffee from around the world.

Importers bring in large container loads and hold inventory, selling gradually through numerous small orders. Since many roasters rely on this service, importers wield a great deal of influence over the types of green coffee that are sold in the US.

There are approximately 1200 roasters in the US today. Large roasters usually have one blend of recipes and sell to large retailers – the Big Three (Kraft, which owns Maxwell House and Sanka, owned by Philip Morris; Procter & Gamble, which owns Folgers and Millstone; and Nestle) maintain over 60% of total green bean volume. Microroasters, or those who roast up to 500 bags of coffee a year, offer the product we know as specialty coffee. Most roasters buy coffee from importers in small, frequent purchases. Roasters have the highest profit margin in the value chain, thus making them an important link in the commodity chain.

Retailers usually purchase packaged coffee from roasters, although an increasing number of retailers are also roasting their own beans for sale. The Specialty Coffee Association of America estimated that there are 10,000 cafes and 2,500 specialty stores selling coffee. Chains represent approximately 30% of all coffee retail stores.

However, supermarkets and traditional retail chains are still the primary channel for both specialty coffee and non-specialty coffee, and they hold about 60% of marketshare of total coffee sales. Around the globe, the annual consumption of coffee is 12 billion pounds and in the U.S. alone, over 130 million consumers are coffee drinkers.