Sales of upmarket filtered coffee have increased substantially in recent years, while sales of cheap granules have fallen, according to global sales figures compiled by market research company Mintel, earlier this year.
According to a global sales report that was made public earlier this year by the market research company, Mintel, the global sales of filtered coffee have increased by 49 per cent over the last five years, while regular instant coffee sales fell by 36 per cent in the same period.
I was curious to find out how South Africa was doing in terms of coffee sales, and which sector –filter or instant –was making more money. So I approached Ciro (manufacturer of filter coffees) and Kraft Foods South Africa (importer of instant coffee).
I spoke to Paul Hanlon, supply executive at Ciro, at its office in Paulshof.
JJ: How well is the coffee sector doing after the global recession?
PH: Yes we are caught in a little slump at the moment, but things are getting better. Coffee is after all the second largest trading commodity in the world and it is not known as the “black gold” in the industry for no reason.
JJ: In your opinion, which type of coffee is doing better –instant or filter?
PH: We do not use the word ‘instant’ at Ciro. But there is a definite notable progression in the coffee market in South Africa. For example 90 per cent of the drinks that you buy at coffee shops are espresso-based.
JJ: What sets Ciro apart with its blends of filter coffee?
PH: We are currently working with 14 different bean origins and we import all our coffee beans straight from the various countries around the world and our beans will never go via Europe at all. Our beans will arrive in SA fresh and depending on the dealer or the brand, at Ciro we will do all the roasting of the various beans and packaging in-house for our buyers.
JJ: Tell me more about the buzz around ‘relationship coffee’ at Ciro
PH: We aim to always trade above board at Ciro and that is why we established the term, “
‘relationship coffee’. It is a form of social development that is on the rise in the global coffee industry and relates to assisting the farmers and their farming communities, who are at the beginning of the production cycle. The initiative aims to ensure all that all resources involved in the coffee production process are benefited.
JJ: How do the farming communities benefit in this relationship?
PH: We have undertaken three development programmes, which will help select farming communities to improve both their living and working environments.
The first programme is the upgrading of living conditions on the Machare farm in Tanzania. Ciro has contributed to building safe fire places with extraction chimneys to remove smoke and fumes from the fires. Previously, farm workers would make brick fires, which are fundamental to their daily living, in the middle of their huts and without proper ventilation this created a health risk due to the smoke inhalation as well as the risk, having an open fire, posed to the resident children. Ciro has also helped to supply basic amenities to this community through the development of hydro systems to power electricity.
The second programme Ciro is contributing towards is Revival Pulpery in Uganda, which is situated high on the slopes of Mount Elgon and is used by all the local pickers and farmers to process their coffee.’
The third development programme is to facilitate the workers in drying the coffee. The high rainfall in Uganda makes it easy for over-fermentation to occur, so coffee is processed through a semi-washed method with the aim to get the coffee dried as quickly as possible and delivered to the broker. In order to facilitate this hand pulpers are a necessity at Revival and Ciro has stepped in to provide capital to the pulpery to increase the number of hand pulpers available and therefore boost production and improve the economic returns for the community.’
Instant coffee has not seem to have fallen from favour
I couldn’t neglect the instant coffee sector and headed over to Kraft Foods SA and spoke to Stuart Knott, senior brand manager for the beverages division. Knott explained that the sales figures at Kraft shows that instant coffee is still considered to be the height of sophistication, and it appears to grow in fashion with its consumers.
JJ: How is the instant coffee sector doing in SA?
SK: Despite rising coffee prices and tough economic conditions the coffee sector in South Africa is doing relatively well with growth of 5% 12 month moving. This is helped by the growing coffee culture in South Africa where consumers are increasingly demanding better quality coffee as they become increasingly acclimatised to drinking speciality coffees like cappuccinos in restaurants.
JJ: Is Kraft experiencing notable growth or a decline after the recession in South Africa?
SK: Jacobs Krönung, the flagship brand at Kraft, is experiencing excellent growth that is well ahead of the market. The recession made consumers consider what they were buying and they began to question a lot of the purchase decisions that had become automatic. Coffee is one of these purchases that people tend to make each month without really considering are they getting value for their money? Is the brand they have been buying for the last 10 years still as good? Coffee is expensive so shouldn’t you be drinking a great coffee instead of just an acceptable one?
Consumers have rapidly switched onto the superior aroma and taste of Jacobs. Jacobs now holds a third of the soluble coffee market up from just 8% 5 years ago.
JJ: Seeing that coffee is the second largest commodity in the world, what division is doing better at the moment in terms of sales?
SK: Globally, roast and ground coffee markets are experiencing difficult times as the product becomes more and more commoditised. However here in South Africa we still have a huge chicory market which is a mixture of pure coffee and chicory, so there is still a long way to go to convert people onto real instant soluble coffee consumers.’
JJ: Where do the growth opportunities lie for SA?
SK: Growth lies in continuing to introduce South Africans to the taste and quality of Jacobs Krönung we tend to find that once you taste it you struggle to go back to your regular brand. The opportunity is really that simple; give consumers a better quality coffee.
JJ: What new products can we anticipate from Kraft?
SK: We have just introduced Carte Noire to the market – a 100% arabica freeze dried coffee that is crafted according to the finest French coffee traditions. It is a super premium coffee that offers what we see as the finest soluble coffee experience available to the South African consumer.
JJ: Tell me more about Kraft’s collaboration with Ghana
SK: Kraft Foods SA recently received Fairtrade accreditation for our Cadbury Dairy Milk chocolate brand. The Fairtrade accreditation means that the cocoa used in the making of our leading chocolate brand will be sourced from certified Fairtrade producers. It demonstrates our commitment to Fairtrade practices and to the sustainability of cocoa farmers and their communities. We are very proud to be the first major business to achieve this certification in South Africa.
JJ: How do the farming communities benefit where Kraft is sourcing coffee beans from its suppliers?
SK: Besides the Fairtrade accreditation, we have a long-held heritage of ethical supply sourcing and social regard for workers and their communities. We have been working in West Africa for a number of years through our partner, the Sustainable Tree Crops Program (STCP), and through the International Cocoa Initiative (ICI). In 2008, we announced our Cadbury Cocoa Partnership through which we have committed to invest £45 million in West Africa, South East Asia, India and the Caribbean over a ten-year period.
