The ICO Composite Indicator Price (I-CIP) averaged 154.53 US cents/lb in August, posting a median value of 152.10 US cents/lb and fluctuating between 148.79 and 163.62 US cents/lb.

The Colombian Milds-Other Milds decreased by 1.6% and 3.5%, to 187.55 and 186.73 US cents/lb, respectively, in August 2023. Accentuated by a greater falling rate, the Other Milds fell back below the Colombian Milds. The Brazilian Naturals-Robustas both contracted by 3.0% and 2.3%, reaching an average of 154.66 and 124.62 US cents/lb, respectively. ICE’s New York market fell by 1.9%, whilst the London Futures market shrank by 2.0 % to 156.56 and 111.34 US cents/lb, respectively.

The Colombian Milds-Other Milds differential pivoted from –2.91 to 0.82 US cents/lb, returning to the positive after an inverted differential in July 2023. On the one hand, the Colombian Milds-Brazilian Naturals differential grew 5.8% to 32.89 US cents/lb, whilst the Colombian Milds-Robustas differential contracted 0.1% from July to August 2023, averaging 62.93 US cents/lb. Meanwhile, the Other Milds-Brazilian Naturals, Other Milds-Robustas and Brazilian Naturals-Robustas differentials contracted by 5.7, 5.8 and 5.9%, reaching 32.07, 62.11 and 30.04 US cents/lb, respectively.

In August 2023, the Colombian Milds-Other Milds Arabica differential had been narrowing considerably and, after thirty-four business days of negative differentials, this trend was reversed on 10th August. The Colombian Milds-Other Milds Arabica differential closed August on a one-month high, though it has not reached such positive lows in four and a half years. In late July and August 2023, the Arabicas-Robusta price movements recoupled, moving once again in tandem. Since April 2023, the price movements of the Arabicas and Robusta were decoupled under price substitution-related pressure, where demand for higher-end qualities has waned in favour of more competitively-priced coffees. However, the recoupling appears to indicate that the price differentials are now sufficiently narrow, and relative price-driven changes in demand (Arabica versus Robusta) may have come to an end.

Arbitrage, as measured between the London and New York Futures markets, narrowed by 1.6% to 45.23 US cents/lb in August 2023. This marks the lowest point since June 2020, where arbitrage sat at 44.73 US cents/lb.

Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 7.0%, a 0.8 percentage point decrease between July and August 2023. The Other Milds presented the strongest volatility decrease, with a 3.7 percentage point drop, averaging 7.3% for the month of August. The Colombian Milds’ and Brazilian Naturals’ volatility also contracted to 7.5% and 8.8%. Meanwhile, the Robustas’ volatility dropped by 2.3 percentage points to 8.7% from July to August 2023, whilst the London futures market’s volatility increased by 0.2 to 9.4%. However, the New York futures market’s volatility moved in the opposite direction from London, retracting by 0.5 percentage points and reaching 8.6% for New York.

The New York and London certified stocks decreased in tandem by 3.0% and 34.6%, respectively, closing in at 0.57 million 60-kg bags, whilst certified stocks of Robusta coffee reached 0.58 million 60-kg bags, the lowest in over 20 years.

Downward pressure on prices could be attributed to the lack of aggressive buying of green coffee through the world. Indeed, for the current and previous coffee years (2021/22 and 2022/23), a combined underproduction of 14.4 million 60-kg bags is estimated. At present, there is an apparent decoupling between consumption and exports. There is little evidence of the former falling, while the latter for the current coffee year is down 5.7%. A plausible explanation could be the drawing down of stocks. During the Covid-19 pandemic, buyers, roasters and traders would have built up large stocks of coffee that must now be utilised before they perish. This may help to explain why exports are falling, coffee year on coffee year, thus applying negative pressure on the I-CIP. The broad drawdown of stocks is perhaps, further illustrated by the historic lows of the ICE stocks.

Exports by Coffee Groups – Green Beans
Global green bean exports in July 2023 totalled 9.31 million bags, as compared with 9.3 million bags in the same month of the previous year, up 0.1%. As a result, the cumulative total for 2022/23 to July is 93.56 million bags versus 99.2 million bags over the same period a year ago, down 5.7%.

Shipments of the Other Milds decreased by 13.7% in July 2023 to 2.20 million bags from 2.55 million bags in the same period last year. As a result, the cumulative volume of exports continued to fall, decreasing by 12.2% in the first 10 months of coffee year 2022/23 to 18.64 million bags versus 21.22 million bags over the same period in 2021/22.

Green bean exports of the Brazilian Naturals increased in July 2023, rising by 2.8% to 2.6 million bags. For the first 10 months of coffee year 2022/23, green bean exports of the Brazilian Naturals amounted to 28.4 million bags, down 9.7% from 31.45 million bags over the same period a year ago. Changes to the fortunes of the Brazilian Naturals are mainly due to changes in Brazil’s total green bean exports, the biggest producer and exporter of the Brazilian Naturals, which also increased in July 2023 (10.8%) to 2.7 million bags from 2.43 million bags in July 2022.

Exports of the Colombian Milds decreased by 8.1% to 0.93 million bags in July 2023 from 1.01 million bags in July 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were down 16.0% in July 2023. This is the thirteenth consecutive month of negative growth for the Colombian Milds and, as a result, the exports of this group of coffee for October 2022 to July 2023 were down 12.9%, at 9.11 million bags from 10.46 million bags in the first 10 months of coffee year 2021/22.

Green bean exports of the Robustas amounted to 3.59 million bags in July 2023, as compared with 3.22 million bags in July 2022, up 11.6%. This is the fourth consecutive month of positive growth for the Robustas and, as a result, the exports of this group of coffee for October 2022 to July 2023 were up 3.8%, at 37.45 million bags, as compared with 36.08 million bags in the first 10 months of coffee year 2021/22.

Exports by Regions – All Forms of Coffee
In July 2023, South America’s exports of all forms of coffee decreased by 2.2% to 4.16 million bags, mainly driven by Colombia and Peru, which saw their exports fall by 17.1% and 37.5%, respectively. For Colombia, the latest downturn is the thirteenth consecutive month of negative growth, the second longest since the 22-month long streak observed between July 2008 and March 2010. As a result, Colombia’s exports for the first 10 months of coffee year 2022/23 are down to 8.79 million bags, the lowest level over the same 10-month period since coffee year 2012/13, when 7.24 million bags of coffee were shipped from the origin. Issues with local production, caused by meteorological factors, were the reason behind the downturn in exports for much of the current coffee year.

However, since June 2023, price substitution appears to be the main driver of the downturn in exports, with demand switching between the Arabicas, away from the Colombian Milds, of which Colombia is the largest producer, to the Other Milds. In Peru, the weather also played a part in the sharp decrease in exports. The Peruvian National Institute of Statistics and Informatics (INEI) reported that increased rainfall was behind the 1.9% decrease in production in June 2023, which may have filtered through to exports as a reduced availability of supply. However, the magnitude of the decrease in July 2023 is a more reflection of the 64.7% increase in July 2022 – the largest volume of July exports in the last 10 years (0.4 million bags versus an average 0.34 million bags (2013-2022)).

Exports of all forms of coffee from Africa decreased by 1.1% to 1.37 million bags in July 2023 from 1.39 million bags in July 2022. For the first 10 months of the current coffee year, exports totalled 10.84 million bags as compared with 11.27 million bags in coffee year 2021/22, down 3.8%. Once again, however, the relatively shallow negative growth rate of the region masked the dynamic changes at the individual country level. Two origins experienced strong positive growth rates (Tanzania and Uganda), with a combined 23.6% increase in July 2023, while two others experienced sharp negative growth rates (Côte d’Ivoire and Ethiopia), with a combined 26.7% decrease. In Ethiopia, contract disputes arising out of a mismatch between the local purchasing prices and the global market prices continue to negatively impact the volume exports, with exporters withholding the coffee until the disputes are resolved. Uganda’s exports increased by 12.0% in July, which were driven by a good crop harvest in South-Western region, and exporters releasing their stocks.

In July 2023, exports of all forms of coffee from Mexico and Central America were up 9.4% to 1.66 million bags as compared with 1.51 million in July 2022. As a result, total exports are down 1.8% for October 2022-July 2023 at 13.46 million bags, as compared with 13.71 million bags in the same period a year ago. Honduras was the main driver of the positive growth in July 2023.

Exports of all forms of coffee from Asia and Oceania decreased by 6.2% to 3.01 million bags in July 2023 and but were up 2.7% to 38.57 million bags in the first 10 months of coffee year 2022/23. July’s downturn was due to the top four origins of the region, India (-3.5%), Indonesia (-9.7%), Papua New Guinea (-25.9%) and Vietnam (5.1%).

Exports of Coffee by Forms
Total exports of soluble coffee decreased by 16.6% in July 2023 to 0.84 million bags from 1.0 million bags in July 2022. In the first 10 months of coffee year 2022/23, a total of 9.58 million bags of soluble coffee were exported, representing a decrease of 5.7% from the 10.16 million bags exported in the same period during the previous coffee year. Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 9.2% in July 2023, which matched the year-ago period. Brazil is the largest exporter of soluble coffee, shipping 0.31 million bags in July 2023.

Exports of roasted beans were down 12.7% in July 2023 to 57,299 bags, as compared with 65,601 bags in July 2022. The cumulative total for coffee year 2022/23 to June 2023 was 0.6 million bags, as compared with 0.67 million bags in same period a year ago.

Production and Consumption
Under the current circumstances, the estimates and outlook of production and consumption for coffee years 2021/22 and 2022/23 remain the same. World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23.

Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23. The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year. Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%.

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand built up during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22.

Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22.

As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). For the full report, visit: icocoffee.org.

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Improving economic conditions are expected to accelerate this trend – over the next five years, Brazil is expected to generate two-thirds of total Latin American coffee consumption growth. Brazil is still recovering from its recent economic recession, which has affected parts of the specialty coffee market. But there is a positive outlook for the Brazilian economy which may stimulate the sector.

In terms of value, Brazil should see the largest increase of coffee sales in Latin America. From 2019 to 2024, retail value is expected to reach US$3.4bn, which represents 66% of total growth in Latin America.

“The specialty coffee market continues to show solid growth,” according to Rabobank data analyst, Guilherme Morya. “The steady stream of new product launches and innovations should help this segment to perform very well. At-home or out-of-home, Brazil has a good landscape for coffee consumption, especially for premium blends.

“We believe a recovering economy, increasing foreign coffee investment and growing consumer awareness/appreciation will all work together to grow the value of the Brazilian coffee market. As this virtuous cycle continues, it should attract even more investment into the consumer coffee industry in Brazil.”

Click here to download the report

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The $121 million design-build project added 150,000 square feet to the existing building, nearly doubling its original size to a new total of about 325,000 square feet.

Prompted by Starbucks growth and consumer demand, the expansion added six new whole bean roasters, allowing the facility to produce up to 146.8 million pounds of coffee per year at maximum capacity.

“Our biggest design improvement was implementing a unique flexibility layout and process that allows Starbucks to transfer product from any one of the plant’s unroasted coffee storage silos to roasted bean storage all the way through to any one of the plant’s packaging lines,” said Jason Goode, senior project engineer at Stellar, a design, engineering, construction and mechanical services firm who carried out the work.

Stellar also designed and installed provisions for two future packaging lines to accommodate continued growth.

The plant is the first company-owned facility in the world to produce Starbucks soluble products. The coffee roasted at the plant is used in Starbucks VIA Instant, as well as in the coffee base for Frappuccino blended beverages and many of the Starbucks bottled and canned beverages. The plant produces packaged coffee for Starbucks stores and retail locations in the Northeast and Southeast US.

“We were proud to once again partner with Starbucks and take this award-winning facility to the next level,” said Todd Allsup, vice president of sales for Stellar’s Food Group. “This is a state-of-the-art coffee plant unlike any other in the country, and it speaks to the Starbucks commitment to innovation, sustainability and delivering a high-quality product.”

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Previously most commonly found in shopping malls, Gloria Jean’s is reinvigorating its growth strategy by exploring a wider scope of real estate opportunities and pursuing middle America markets primed for specialty coffee.

“With a refreshed brand image and four decades of experience in the specialty coffee industry, Gloria Jean’s is in growth mode and uniquely positioned to own a larger share of the segment, especially in rising suburban markets like Northwest Indiana and Southern Chicago,” said Laina Sullivan, Gloria Jean’s Coffees’ director of franchise development.

“We’re thrilled to welcome passionate franchise partners like Raed to the Gloria Jean’s family during this exciting brand evolution. As we pursue strategic growth outside of malls and move into regions where customer demand for exceptional specialty coffee is high, we see tremendous opportunity to introduce Gloria Jean’s to new guests around the country.”

With a simple operations model and relatively low cost of entry, Gloria Jean’s Coffees presents an ideal franchise choice for both new and experienced franchisees who possess an entrepreneurial spirit, a creative local store marketing mindset, and a passion for serving an amazing cup of coffee. The flexibility of Gloria Jean’s Coffees store design allows franchisees to adapt their coffee houses to a broad range of formats and real estate parcels to suit each individual market. General store format options include kiosk locations, a variety of coffee house models and drive-thru stores.

“When searching for the perfect coffee concept to grow my franchise portfolio, Gloria Jean’s stood out in many ways including providing excellent franchise support, ongoing product innovation and creative consumer marketing,” said Naser. “The entire executive team was very hands-on during my onboarding process and worked closely with me to develop a plan that was tailored to my business goals. I’m confident that Gloria Jean’s and its unique products will do very well in Northwest Indiana where high-quality coffee experiences are lacking; and I’m especially excited to open our drive-thru location in early June.”

Gloria Jean’s currently has 58 locations in operation with several scheduled to open by year’s end.

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Investments in the coffee segment amounted to €21.8m ($24.4m), and included the purchase of coffee machines which were installed in loan or lease arrangements, as well as several acquisitions.

Acquisitions in 2018 included Denmark-based coffee-service company, Maas, in July, and in November acquired Norwegian company, Kaffebryggerriet, an Oslo-based coffee service operator which focuses on the office market. Kaffebryggerriet will be merged with Miko’s partner A:KAFFE where expected turneover will amount to €7m ($7.8m).

The group’s board of directors  experienced various changes in 2018. Flor Joosen took over the role of chairman of the board of directors in March, following Chris Van Doorslaer who passed away at the end of 2017. Inge Bruynooghe was appointed to the position of director. Ms Bruynooghe built a successful international career at Philips, and also has seats on the boards of directors of Flanders Make and Open Manufacturing Campus in Turnhout, Belgium.

“To illustrate our confidence in the future, we are again proposing a 10% dividend increase for 2018, a two-figure dividend growth which we have been achieving over many years. This is also confirmed by our budgeted investments amounting to €19.3m ($21.6),” said Frans Van Tilborg, Miko Group CEO.

—

About Miko

Miko has been active in coffee service for over 200 years and in plastic packaging for 45 years. Miko follows a “two-pillar strategy” in which its core activities – coffee service and plastic packaging – are practically independent entities with their own management, so that each activity can follow its own growth path. Miko is an international group with companies in Belgium, France, UK, the Netherlands, Germany, Denmark, Norway, Sweden, Poland, the Czech Republic, Slovakia, Indonesia and Australia.

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“The opening of Starbucks 30,000th store is a proud moment for all Starbucks partners,” said Kevin Johnson, president and CEO, Starbucks Coffee Company. “Over the past 48 years we have worked to build a different kind of company based on a mission grounded in the human experience, the world’s finest coffees, and a constant of pursuit of doing good. Starbucks now serves more than 100 million customer occasions across 78 markets around the world. It all started with our first store in Seattle, Washington, and today we celebrate the 30,000th store that just opened in Shenzhen, China.”

As an industry leader in global retail development, Starbucks drives net new store growth of 6% to 7% annually, including a variety of different formats that elevate the customer experience focused on high-quality Arabica coffee and handcrafted beverages, and meaningful community engagements.

A few notable new stores for Starbucks include:

• Three new Starbucks Reserve Roasteries that opened in Milan, New York and Tokyo
• The first-of-its-kind coffee sanctuary in Bali, Indonesia
• The opening of the second signing store globally that provides employment opportunities for deaf and hard of hearing people, located in Washington, DC
• The celebration of more than 50 military family stores across the United States
• The 12th community store located in Dallas, Texas

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Last year, PJ’s Coffee surpassed 100 storefronts, and the brand looks to continue suit by opening another 30 locations by the end of this year. It will also continue its initiative to further expand its locations nationwide through franchise development.

2018 resulted in 17 new store openings, one of which launched PJ’s Coffee’s presence in Maryland and now the coffee store is looking to expand further in the state, and explore developments in Texas and Florida. Internationally, PJ’s continued to expand its footprint in both the Vietnam and Kuwait markets.

“2018 was a momentous year for PJ’s Coffee as it marked our 40^th anniversary and the opening of the 100^th location,” said David Mesa, executive vice president and chief development officer of PJ’s Coffee. “With the coffee industry continually growing and changing, PJ’s Coffee is committed to offering its guests the highest quality coffee and customer service and this begins with our strategic partnerships with coffee farmers across the globe. We are committed to bettering our communities and creating great opportunities for our existing, and future farmers and franchisees alike. We look forward to continued advancement in 2019 as we build our notoriety and solidify our great name across the globe and further throughout America.”

Named one of Franchise Business Review’s Top 200 franchises of 2019, PJ’s coffee continues to drive business with its proven system that leads to year-over-year sales growth. In 2018 alone, franchisee sales grew by 66% a number that is projected to continue to rise.

About PJ’s Coffee

PJ’s Coffee of New Orleans was founded in 1978 by Phyllis Jordan. The coffeehouse was acquired by Ballard Brands in 2008 which was spearheaded by brothers Paul, Scott and Steve Ballard. The New Orleans-based coffeehouse demonstrates that better beans, superior roasting techniques, and pure passion for the art of coffee-making matter. The brand serves a wide variety of hot, iced and frozen coffee beverages using only the top one percent of Arabica beans, as well as organic tea and fresh breakfast pastries. As the company approaches its 40^th year as an established brand, it continues to remain an authentic coffeehouse with a New Orleans spirit.

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The monthly average of the ICO composite indicator fell by 8.2%, to 100.61 US cents/lb in December 2018. The daily composite indicator started at a high of 104.59 US cents/lb and fell to a low of 97.59 US cents/lb on 18 December. After the first week, the daily composite indicator hovered around 100 US cents/lb with a range of around 4 US cents/lb. Coffee year 2018-19 is expected to be in surplus, though smaller than the one in 2017-18, which continues to put pressure on prices.

Prices for all group indicators fell sharply in December 2018 compared to the previous month. The largest decreases occurred in the average price for Brazilian Naturals and Colombian Milds, which fell by 9.9%, to 102.10 US cents/lb and by 8.2%, to 127.86 US cents/lb, respectively. Other Milds decreased by 7.3%, to 127.10 US cents/lb, while Robusta fell by 7.1%, to 77.57 US cents/lb. As a result of the larger decrease in the monthly average for Colombia Milds compared to Other Milds, the differential fell by 64.8%, to just 0.76 US cents/lb. In the second half of 2018, Colombia’s currency experienced a greater depreciation against the USD than currencies from countries producing Other Milds, such as Honduras. This contributes significantly to the decline in the differential between Colombian Milds and Other Milds. The average arbitrage in December, as measured on the New York and London futures markets, declined by 13.5%, to 36.20 US cents/lb, which is the second consecutive month of decrease. Further, intra-day volatility of the ICO composite indicator price declined by 1.6 percentage points to 6.9% as the intra-day volatility of all group indicators decreased.

World coffee exports reached 9.88 million bags in November 2018, compared with 9.35 million in November 2017, an increase of 5.7%. Exports of all groups, except for Other Milds, increased in November 2018 compared to the same month one year ago. In the first two months of coffee year 2018-19, exports of Arabica increased 13.2%, to 13.84 million bags compared to the same period in 2017-18, with the largest increase in shipments of Brazilian Naturals, which rose by 24.8%, to 7.92 million bags. Colombian Milds grew 2%, to 2.52 million bags, while Other Milds fell by 0.4%, to 3.39 million bags. Exports of Robusta increased by 18.1%, to 7.1 million bags.

From October 2017 to September 2018, global coffee production has been revised upwards by 1.5 million bags to 164.99 million bags. World coffee output is preliminarily estimated at 167.47 million bags in coffee year 2018-19, an increase of 1.5% over coffee year 2017-18. Production of Arabica is estimated at 104.01 million bags, up 2.5%, while Robusta production is estimated at 63.5 million bags, down just 0.1% compared to 2017-18. Production in Africa and South America is expected to increase by 1.8%, to 17.8 million bags and 4.3%, to 79.94 million bags, respectively. Output in Asia & Oceania is estimated to fall by 2.1%, to 48.01 million bags, while production in Mexico & Central America is estimated to decrease by 0.5%, to 21.72 million bags. Brazil is to remain the world’s largest coffee producer with output estimated at 58.5 million bags for crop year (April-March) 2019-20. The Secretariat revised its estimate of Brazil’s production in 2018-19 up 1.2 million bags to 61.7 million bags in line with CONAB’s latest estimate. The estimate for global output in coffee year 2018-19 includes a portion of Brazil’s 2018-19 and 2019-20 crop year production. Its exports from April to November 2018 reached 23.39 million bags, 18% higher than the same period in 2017. This is the largest volume shipped in the first eight months of its crop year in the last ten years and supports the higher estimate of production.

Vietnam’s production is estimated down 3.4% at 29.5 million bags in 2018-19 as lower level of inputs and poor weather damaged yields. The lower yields are expected to be partially offset by expanded production in newer areas. Vietnam’s output in 2017-18 was revised up 1.04 million bags to 30.54 million bags due to the strong growth in exports in 2017-18. Shipments from Vietnam increased 28.64 million bags, 21.7% above the figure in the previous year. Exports in the first two months of 2018-19 amounted to 4.1 million bags, 32.7% higher than last year, though these shipments also include carryover stock from 2017-18.

Colombia’s production is estimated at 14.2 million bags for coffee year 2018-19 following a harvest of 13.82 million bags in 2017-18. Excessive rains and cloudy weather caused the downturn in Colombia’s 2017-18 output and may also have had an impact on the first three months of coffee year 2018-19, with production 6.6% lower at 3.67 million bags compared to the same period last year. However, beneficial weather for the mitaca crop could increase output in the latter half of the year. Colombia’s exports in the first two months of coffee year 2018-19 amounted to 2.3 million bags, which is little changed from 2.28 million bags one year ago. Its exports in November 2018 were 1.24 million bags, 6.7% higher compared to November 2017.

In crop year (April/March) 2018-19, Indonesia’s output is estimated at 10.2 million bags, 5.6% less than in 2017-18. Indonesia’s 2018-19 crop has already been harvested and much of its exportable production has reached the international market. Exports in the first eight months of its 2018-19 crop year (April to March) amounted to 3.36 million bags, 44.4% lower than 2017-18 and 25.2% lower than 2016-17. The rise in Indonesia’s domestic consumption has led to lower exports, but also indicates a reduction in its harvest.

Ethiopia’s output in 2018-19 is estimated at 7.5 million, up 0.6% from 2017-18. After declining in two consecutive seasons, 2011-12 and 2012-13, production in Ethiopia has grown steadily. Further growth is limited by poor management, ageing trees, erratic weather. Its exports the second month of coffee year 2018-19 were 17.6% lower than in November 2017, reaching 233,458 bags. However, this follows increased exports in October 2018, bringing total exports in the first two months of 2018-19 to 597,160, an increase of 6.6% compared to last year.

Production in Honduras is estimated 1.5% lower at 7.45 million bags, following four consecutive seasons of growth. Rising costs, particularly labour, and an environment of low prices has limited further growth in Honduras. In November 2018, shipments from Honduras were 31.2% lower at 113,896 bags compared to November 2017. Combined with October, total exports from Honduras in the first two months of 2018-19 were 214,950 bags, down 1.2% compared to 2017-18.

Excessive rains and flooding impacted India’s 2018-19 harvest, which is estimated down 10.5%, to 5.2 million bags. This reduction in its output is seen in shipment data for the first two months of 2018-19, which reached 0.82 million bags compared to 1.01 million bags in 2017-18. India’s November exports decreased 35.4%, to 365,163 bags compared to November 2017.

World consumption is estimated at 165.19 million bags in 2018-19, an increase of 2.1% compared to 2017-18. Domestic consumption in exporting countries is estimated to increase by 1.4%, to 50.3 million bags. Consumption in importing countries is estimated to rise by 2.5%, to 114.88 million bags. Demand from non-traditional importing countries continues to grow, accounting for around 18% of global consumption in 2018-19. Both African and Asia & Oceania are estimated to increase consumption by 4.1%, to 12.23 million bags and 36.25 million bags, respectively. These regions are seeing demand increase in some producing countries as well as in newer markets in importing countries. Demand in the more traditional markets in Europe and North America is estimated to grow by 1%, to 53.51 million bags and by 2.5%, to 30.73 million bags respectively. Consumption in South America is estimated to rise by 0.9%, to 27.22 million bags, while in Central America & Mexico, it is estimated to remain stable at 5.23 million bags.

Due to the revision to the 2017-18 production figures made by the Secretariat, since the October Coffee Market Report, the global surplus for 2017-18 has increased to 3.28 million bags. In 2018-19, world production is expected to exceed consumption by 2.29 million bags. Although the surplus is expected to decline in 2018-19, two years of surplus will weigh heavily on prices for the near future.

For more information, visit: www.ico.org.

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The new facility will implement state-of-the-art technologies to process 20,000 tons of green coffee per year. The site will use 100% renewable electrical energy and also treat and recirculate process water, recovering 100% of the coffee waste to produce energy.

Fausto Costa, CEO of Nestlé Mexico said: “We are very pleased to share joint objectives with Mexico’s President, Andrés Manuel López Obrador and his team. We both believe in supporting young people, where Nestlé has been a pioneer in the country. We also both believe in the strengthening of the Mexican countryside and the importance of accelerating the growth of the Southeast region.

“This new investment in Veracruz confirms our commitment to Mexico and its people; the country’s economic stability and competitiveness have been fundamental factors to strengthen us as Nestlé’s fifth largest market worldwide.

In the first phase, the center will generate 250 direct jobs and 2,500 indirect jobs with the potential to reach 1,200 direct jobs and 12,000 indirect jobs at the end of the three stages of its expansion, including the support for the training of young people through a dual training model.

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Revive offers an array of naturally fermented, organic, non-GMO, Fair Trade-certified, ethically sourced, raw bottled and on tap Kombucha. It maintains a strong presence in the United States, with a rapid national growth of over 168% percent versus a year ago (per Information Resources Inc MULO 52 weeks ended 4 November 2018). The latest financing by Peet’s will continue to scale the Revive brand, grow its brewery operations and broaden its distribution via the coffee company’s network, while assuring absolute product quality and superior taste.

“Building an evergreen ecosystem for the Revive brand has always been part of our mission,” says Sean J Lovett, founder and CEO of Revive Kombucha. “We are excited to further solidify our long-term partnership with Peet’s to fulfill our greater purpose of bringing our super tasty and good-for-you beverages to a larger audience.” Revive Kombucha launched at the Sonoma County Farmers Market in 2010.

Emeryville, California-based Peet’s expects to expand Revive Kombucha’s market reach in on-premise, grocery and Peet’s coffee bar locations. The inherent match of delivering Revive across consumer facing Peet’s channels will strengthen and accelerate the growth of its pioneering chilled beverage portfolio.

“Kombucha is a natural adjacency to ready-to-drink coffee and our consumers tend to love both,” says Eric Lauterbach, president of the consumer division at Peet’s Coffee. “Adapting our growth strategy to extend access and trial of superior beverage choices across channels in new and convenient locations is key. And knowing the ongoing consumer shift to better for you and functional beverages, our latest long-term investment in Revive reflects our belief in the future growth of the brand.”

Sean J Lovett and co-founder Rebekah Lovett will maintain their equity and leadership positions at Revive Kombucha, while also maintaining the brand’s innovative approach to batch brewing and natural fermentation methods.

For more information, visit www.peets.com or https://revivekombucha.com.

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After increasing 13.3% last month, the monthly average of the ICO composite indicator fell by 1.5%, to 109.59 US cents/lb in November 2018. The daily composite indicator declined over the first two weeks before levelling off in third week, and then fell by 3.26 US cents/lb on the last day of the month. While prices have decreased, the daily composite indicator remained above 100 US cents/lb throughout November 2018, ranging between 104.40 US cents/lb and 115.90 US cents/lb. Ample supplies on the market and a weakening of the Brazilian Real have contributed to the decrease.

Prices for all group indicators fell in November 2018 compared to the previous month. The largest decreases occurred in the average price for Robustas and Brazilian Naturals, which fell by 2.1%, to 83.52 US cents/lb and by 2.0%, to 113.27 US cents/lb, respectively. Colombian Milds declined by 1.1%, to 139.27 US cents/lb while Other Milds fell by 0.2%, to 137.11 US cents/lb. As a result of the larger decrease in the monthly average for Colombia Milds compared to Other Milds, the differential fell by 38.1%, to 2.16 US cents/lb. In 2018, the Colombian peso appreciated more sharply against the US dollar than the currencies of producers of Other Milds, allowing Colombian exporters to sell at a lower price. This has contributed to the decline in the differential between Colombian Milds and Other Milds. In November, the average arbitrage between Arabica and Robusta coffees, as measured on the New York and London futures markets, declined by 1.7%, to 41.83 US cents/lb, following a significant increase last month. However, intra-day volatility of the ICO composite indicator price rose by 1.3 percentage points to 8.5%, as the intra-day volatility of all Arabica indicators increased.

World coffee exports reached 10.41 million bags in October 2018, compared with 8.89 million in October 2017. This is an increase of 17% and is the largest volume on record shipped in October. In the twelve months ending October 2018, exports of Arabica totalled 77.56 million bags, compared to 75.74 million bags last year. Meanwhile, Robusta exports amounted to 45.95 million bags compared to 42.77 million bags.

Brazil’s exports in October 2018 increased by 29.1%, to 3.75 million bags, which is the largest volume on record for October shipments. This rise was driven by shipments of green coffee. In October 2018, Brazil exported 3.46 million bags of green coffee, which was the largest monthly volume of green coffee in crop year 2018-19. It was also the largest October shipment in the last five years. Shipments of green Robusta reached 364,715 bags in October 2018 and shipments for April 2018 to October 2018 amounted to 1.95 million bags, which compares to just 159,818 bags exported in the same period one year ago. This indicates that Brazil’s Robusta crop has recovered from drought in previous years. Exports of green Arabica reached 15.27 million bags in the first seven months of Brazil’s 2018-19 crop year, 4.1% higher than last year. However, this is lower than the 16.24 million bags shipped in April 2016 to October 2016, which is the previous on-year for Arabica production. Total coffee shipments in the 12 months ending October 2018 rose by 5.4%, to 33.18 million bags.

Vietnam’s exports are estimated at 2.1 million bags in October 2018 compared with 1.38 million bags in October 2017. Exports for the year ending October 2018 are estimated at 29.37 million bags, 28% higher than in the same period last year, reflecting the larger harvest in crop year 2017-18. Growing global demand for soluble coffee has greatly encouraged demand for Robusta and in turn, increased Vietnam’s exports as it is the largest producer of this type. While most Vietnam’s exports are unprocessed coffee, the share of soluble coffee has been increasing. In January to October 2013, Vietnam exported 175,460 bags of soluble coffee, accounting for 1% of its total exports during that period. In January to October 2018, Vietnam is estimated to have shipped 1.52 million bags of soluble coffee, representing 6.1% of total exports.

In October 2018, Colombia’s exports are estimated at one million bags, 11% lower than October 2017, due to the smaller volume of production this past year. In the year ending October 2018, Colombia exported 12.6 million bags, compared to 13.38 million bags one year ago. Colombia primarily exports unprocessed coffee; though soluble coffee has accounted for around 5.7% of shipments in the last five years. In January to September 2018, Colombia exported 605,263 bags. While still relatively small, exports of roasted coffee have also gained ground. In January to September 2013, Colombia exported 51,833 bags of roasted coffee, representing 0.8% of total exports while in January to September 2018, it shipped 118,775 bags, accounting for 1.3% of the total.

Global consumption for October 2017 to September 2018 is estimated at 161.93 million bags, 1.8% higher than last year. World production increased by 4.8%, to an estimated at 163.51 million bags, exceeding consumption by 1.59 million bags. This excess in supply and the strong pace of exports has put downward pressure on global coffee prices. Prices may remain low over the next few months as output from October to September harvests is coming to market at levels similar to or greater than last year. Output from the largest producing countries is anticipated to remain stable or increase in coffee year 2018-19. Global economic growth is not expected to surpass 2017, which could limit growth in global coffee consumption.

For more information, visit: www.ico.org.

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However, a new report from Fact.MR finds that ready-to-drink (bottled) tea consumption is growing globally — not just in the APEJ and US markets. According to the study, global consumption of bottled tea is expected to surpass 41 million liters, growing at a Year-over-Year of 3.4% in 2018 over 2017. Overall growth of the bottled tea market  can be attributed to:

• Increasing appetite for specialty teas and their easier availability;
• Health-conscious consumers preference for healthful tea beverages;
• Millennials’ developing palate for different RTD bottled tea flavours;
• Accessibility of bottled tea across various sales channels.

“The bottled tea marketplace is profoundly impacted by evolving consumer sentiments wherein vendor revenues dwindled half a decade ago on the back of a contagious low- or no-sugar beverage trend,” says Sanjeevani Dubey, a senior analyst at Fact.MR. “As manufacturers ramped up the production of no-sugar tea varieties, the bottled tea market surpassed USD $47 billion in 2017 and the status quo is highly likely to continue in 2018.”

The study reveals that the demand for still variety of bottled tea will witness over 35 million liters consumption globally in 2018. However, sparkling tea revenues are set to grow at a 6% Y-o-Y in 2018 over 2017. This expansion can be attributed to growing demand among millennials and Generation Z for sparkling iced tea. New varieties of sparkling iced tea (Sound Sparkling Organic Tea, Kombucha Wonder Drink Sparkling Fermented Tea, as well as Lipton Sparkling Tea) continue to hit the marketplace as manufacturers aim to meet this demand.

Conventional bottled tea has remained the primary choice among tea lovers until the arrival of organic teas. The study finds that the consumption of conventional variants will hold over 80% of the total bottled tea consumption in 2018. However, demand for organic variants is growing rapidly wherein consumption will increase over 4 million liters in 2018 over 2017. Brick and mortar retailers globally and online channels now offer a variety of organic bottled tea.

Black tea remains the overwhelming “leader” among RTD tea, with Fact.MR’s  study showing that 30% of bottled tea consumed in 2018 to be black tea. A rise in findings surrounding black tea’s potential health benefits are contributing to its continued popularity but green tea corners the market on perceived health benefits, aiding in its growth. The study estimated green tea occupied one-fourth of the global bottled tea consumption in 2017. Traditional recognition of green tea as a medicine and a higher concentration of antioxidants, particularly epigallocatechin gallate (EGCG) continue to encourage green tea consumption globally.

Food and beverage trends tend to start in the foodservice channel, and RTD tea is no exception. According to the study the HoReCa (Hospitality, Restaurants, Cafés) market continues to present a significant demand for bottled tea. Keeping pace with consumer preferences for eating outside the home and for ready-to-eat foods, RTD tea companies are significantly investing in HoReCa. (See “Restaurants & Foodservice: Please Consider Premium Freshly Brewed Iced Tea” in T&CTJ May 2018.)

RTD tea’s growth, according to study, will continue its upwards steady trend following increasing consumer preference for ready-to-drink and healthier-for-you beverages and innovations surrounding flavours (new tea varieties, exotic flavour and ingredient infusions), formats (new delivery methods beyond traditional bottles and cans) and styles (unsweetened, slightly sweetened, fresh brewed, all natural, organic, high in polyphenols, probiotics, or antioxidants, etc), and as manufacturers focus on expanding their global footprints. The Fact.MR report tracks the bottled tea market for the period 2018-2027. According to the report, the bottled tea market is projected to grow at nearly 4% CAGR through 2027.

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Scott Markham founded London-based Rokit Pods after realising there needed to be a simpler way of making healthy coffee-alternatives at both home and in the office. “Making my cup of matcha the traditional way every day was always a huge task,” he says. “It began by avoiding breathing too heavy whilst scooping the powder to not create the matcha cloud, and then I had to whisk like crazy. I thought there has to be an easier way…our Nespresso machine sitting there in the corner caught my eye, and I found the answer!”

That’s when Scott and his co-founder and wife, Bev, made it their mission to create an easy, good-for-you organic “cuppa something,” using existing coffee machines.

Rokit Pods’ current line up includes:

• Matcha Green Tea – This full-bodied, earthy, hearty and organic matcha green tea is made from high-quality, fine ground, powdered green tea to create a delicate fragrant drink.

• Yerba Mate – This organic, soft and distinctive tasting drink is made from the dried leaves of an evergreen holly native to South America. Sharing this drink from a traditional gourd is a sign of friendship and bonding and often becomes a social event.

• Ultimate Coffee – This warming and unique organic coffee blend is made using natural and organic extracts of Panax ginseng, Goji berry and Maca.

Since its inception, Rokit has made huge strides, and the packaging redesign is only step one of their long-term plans. The PepsiCo Nutrition Greenhouse program selected Rokit for the class of 2018. Each brand chosen receives a grant to accelerate the business and work alongside PepsiCo’s specialized mentors across all business development.

Markham notes that the redesign enhances the packaging’s visual presence across the board. “And now that we have the new branding, the PepsiCo programme is really supporting and helping us move forward and focus on obtaining sustainable growth with their resources, expertise, access and knowledge of the relevant marketplaces,” he says.

Looking toward a bright future, Markham anticipates introducing new flavours to Rokit’s current line up and making the pods more readily available in the UK market as well as globally. Rokit has also set its sights on transitioning to fully compostable pods in an effort to minimize its carbon footprint.

Rokit Pods are available at Whole Foods UK, boutiques around the greater London area and Amazon. MSRP for the Matcha Green Tea, Yerba Mate and Ultimate Coffee is £7.99 per 10-pack and £13.99 per 20-pack.

For more information, visit: https://rokitpods.com/

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The Sparrows Coffee, Tea & Newsstand was opened in 2007 in Grand Rapids by Lori Slager Wenzel as a café dedicated to providing an excellent coffee experience in an inviting, inclusive environment. It began roasting its own specialty coffee for the café, as well as local wholesale clients, in 2016. Slager Wenzel will continue to own and operate The Sparrows Coffee, Tea & Newsstand café independently, and will join the Schuil Coffee team as general manager of The Sparrows Coffee wholesale business.

Also joining Schuil Coffee are Cody Gallagher, Sparrows’ head roaster, and Tim Novak, Sparrows’ head of product development and quality assurance. Gallagher has a diverse set of coffee experiences spanning years and Novak has been a fixture in the specialty coffee industry for nearly 20 years, including an eight-year stint roasting at Portland’s Stumptown Coffee Roasters.

“Schuil Coffee is committed to all of its customers, so we need driven and genuinely passionate experts who can deliver authentic coffee concepts that serve the diverse tastes of today’s consumers,” says Tim Volkema, CEO of Schuil. “Lori, Cody and Tim have spent extensive time in Grand Rapids’ specialty coffee culture. They complement our legacy roasting team with deep knowledge and a capacity for innovation, consistency and adaptability, which can help us thrive in this competitive marketplace.”

Schuil has established a formidable green coffee network in the most celebrated coffee-growing regions around the world. With access to this product sourcing, the Sparrows team can produce a lineup of specialty coffee releases that celebrate the best farm to cup experiences.

“Joining the Schuil team is a natural fit. So far Cody, Tim and I have fulfilled orders for our Sparrows accounts with a super small roaster, but with access to Schuil’s green coffee sourcing partnerships and roasting technology, we can dramatically expand our reach and access new markets,” says Slager Wenzel. “By sharing our best practices and complementary areas of expertise, I think we can accelerate sales growth for Schuil as well.”

Schuil Coffee is West Michigan’s first specialty coffee roaster, and for nearly 40 years it has sourced, roasted and brewed specialty coffees. Offering more than 100 types of coffee made from beans sourced from the most celebrated coffee-growing regions around the world, Schuil supplies coffee, tea and brewing equipment to retailers, restaurants, coffee shops, offices, churches, hospitals and individual consumers.

For more information visit schuilcoffee.com.

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With health-conscious consumers representing a major segment of the beverage market, the industry continues to face a demand for additive-free, nutritious drinks. Specialty teas, coffees and other more natural drinks are growing exponentially in popularity as consumers gain awareness and take stake in the ingredients in their beverages. In this market climate, consumers are willing to pay a premium for beverages they feel will enhance or preserve their health.

This demand presents opportunities for smaller specialty beverage brands with foundations of natural ingredients and home-grown recipes to blossom. As smaller companies find their footing, co-packing can help take business from a local operation to a household name, but entering a co-packing partnership involves so much more than simply handing over the production reins. As tea and coffee manufacturers select a co-packer, it’s critical to consider all of the elements that may come into play, from capacity to reputation.

Benefits of Co-Packing

While it may be difficult for a beverage brand to relinquish part of the manufacturing process, forming a relationship with a co-packer can offer significant time-saving and cost-saving benefits, as well as greater flexibility. Signing on a co-packer means a brand can allocate more resources and funding to building brand presence and marketing initiatives. The decision to hand off production also eliminates the substantial financial burden required for purchasing equipment and the day-to-day risks associated with managing a facility, such as product quality, equipment maintenance and worker safety.

Co-packing also offers the perk of an easier transition if and when the decision is ever made to sell the brand to a large corporation. When selling the business is a brand’s ultimate goal, there is no need to take on in-house production. Larger corporations already have the resources and capabilities in place to handle the manufacturing of many products. Still, even if selling is not in a brand’s future, enlisting a co-packer can be an excellent way to gradually move from initial start-up growth toward in-house production. Co-packing can assist with expanding reach until a brand’s presence becomes more robust.

Market Shifts Impact Co-Packing

The rise of natural products in the beverage market is causing a shake-up in co-packing, according to PMMI’s 2018 Beverage Trends in Packaging and Processing Operations Report. Consumers demand tea made from actual tea leaves as opposed to concentrate, and these formulas require new equipment, different processes and more space that even the major co-packing players cannot always accommodate. As a result, co-packers receive a large portion of new beverage tea production, leading to not only new lines but entirely new facilities that operate around this growing need and can scale up as demand increases. Equipment for this type of tea, as well as for cold brew coffee and retort beverages, currently make up the largest demand for beverage production.

Selecting the Right Size 

Once a brand decides to source a co-packer, there are multiple aspects to look out for before signing a contract. These companies should focus on selecting a co-packer that matches the size of the brand, ensuring the co-packer is attentive to its needs without being too costly. Hunting for the perfect-sized co-packer can be tricky. Burgeoning brands may want to avoid larger co-packers if those companies have a track record of cutting smaller customers out of production when juggling higher-volume orders. Larger co-packers can also come with minimum requirements for runs that are above what a small- to mid-sized tea or coffee brands require. Smaller beverage companies also have difficulties getting good pricing on raw materials and packaging materials, as well as placement in the production schedule, according to PMMI. Ideally, a brand will select a co-packer similar in size and the two entities can grow together.

It is also important for brands to consider the characteristics of their product and required manufacturing processes. Before beginning their search, brands must establish a list of demands, whether it be just manufacturing or also sourcing ingredients and handling other steps. It’s critical for brands to ensure a co-packer is properly equipped to handle their needs, so touring the facility and understanding a co-packer’s current client roster are beneficial steps. Additionally, it’s worth assessing whether a potential co-packing partner is ready to handle busy seasons.

Identifying Special Product Needs

Before entering a contract, it’s imperative to lay out any additional needs or specifications of the product that the co-packer will be manufacturing. It’s paramount that co-packers be open to adding new SKUs to production and that their lines can accommodate this changeover. Certain products also may require special certification or capabilities. Tea made from real tea leaves, for example, requires specific extraction, agitation and steeping techniques. As additive-free beverages continue to gain popularity, filling lines must be adapted to the unique behaviours of these formulas, and not all co-packers will be prepared to meet these requirements.

Co-packers may also lack the packaging format a brand desires. According to PMMI, some companies have had to source co-packers outside the United States to get the packaging required for their products. This is a current issue for retort packaging, which many coffee and tea brands are utilizing for their products.

Transparency and Compatibility 

Ensuring a successful contract with a co-packer relies heavily on how compatible the co-packer is with the brand. Co-packers that make for easy partners are those that offer collaborative environments and are transparent with their brands about any issues or changes in production. Often, the best way to understand how a co-packer operates in a partnership is to examine its previous and existing clients and find out what their opinions are of the co-packer.

A co-packer’s quality is also evident in its response to a crisis. If a co-packer ever had a recall situation, the way it handled this issue can be revealing of its overall attitudes and commitment to product quality and consumer safety. It’s important to research these cases and to also check in on how a co-packer handles various procedures in general in order to understand its sanitary standards, quality testing methods and inspection schedules.

Pick a Co-Packer for the Future

Brands with successful co-packing partnerships have chosen companies that support their long-term growth and are able to adapt to new ideas and changing needs. Often co-packers will have research and development teams in house and can provide insight on packaging trends, graphics expertise and cost-saving methods that brands can utilize in production. Choosing a co-packer that holds these capabilities and is actively anticipating movement in the market can help a brand differentiate.

Ultimately, brands should go with their gut. If a co-packer checks all the boxes for capacity and capabilities and has a solid reputation, entering a partnership has the potential to grow a brand far beyond the collaborator’s imagination.

Sean Riley is senior director, media and industry communications, PMMI, The Association for Packaging and Processing Technologies. Tea and coffee companies seeking expert insight into co-packing and other manufacturing needs can find solutions at the second ProFood Tech, which will be held in Chicago, Illinois, 26-28 March 2019. The show will be organized by PMMI, which produces Pack Expo; Koelnmesse, which runs Anuga; and the International Dairy Foods Association (IDFA). For information on ProFood Tech, visit profoodtech.com.

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“We outgrew our last space in Boulder’s Gunbarrel neighbourhood in less than three years, both in terms of production and office space, as well as raw materials storage,” says Maria Uspenski, founder and CEO of The Tea Spot and author of Cancer Hates Tea. “The final impetus to move now was the addition of a big, beautiful piece of automated machinery from Japan’s Fuso International, which will be used by The Tea Spot to develop and co-pack custom pyramid tea sachets.”

Uspenski notes, “We had originally planned to locate the new machine at an industry partner’s facility in Colorado, but in the end, and given the timing of our significant growth in 2018, we chose to upgrade our space to accommodate our needs and the new tea sachet machine, as well.”

At any given time, The Tea Spot stores approximately 45,000 pounds of raw tea and herbals, sourced from tea gardens around the world, and another 10,000 pounds of finished/packaged tea products. The company has 20 full-time employees, four seasonal employees, and one remote part-time employee in China. The production and fulfillment team handcrafts tea in small batches, sources raw materials from around the world, coordinates shipping and receiving to and from its facility, and manages inventory and accounting. The Tea Spot’s teas are supplied to a variety of businesses, including restaurants, hotels, spas and retailers.

In addition to creating its own teas and Steepware tools that are available online, The Tea Spot develops private label and co-branded teas and tea wares for businesses and brands. Overall, the company’s core purpose is to promote wellness by empowering people to make tea a part of every day.

“This past year has been an exercise in managing growth and planning for the future,” said Uspenski. “We’ve experienced higher than anticipated growth in our e-commerce retail channel, which is very high-touch in terms of production, fulfillment and customer service. And we’ve had a year of substantial investment for the future in our wholesale and private label/custom channel. As a result, The Tea Spot today is a very different company than it was one year ago. With additional staff, resources and the new HQ, we’re now set-up to handle a larger business volume.”

The Tea Spot, Inc is a leading producer of handcrafted loose-leaf teas. Its vision to modernize the loose-leaf tea experience has held steadfast since the for-profit philanthropic company was founded by Maria Uspenski in 2004, a cancer survivor drawn to the health benefits of leaf tea during her recovery. The company’s model of social entrepreneurship incorporates its mission to foster health and wellness through loose leaf tea with its 10% Pledge. Ten percent of every sale made is donated in-kind to cancer and community wellness programs.

To learn more about The Tea Spot, visit https://theteaspot.com.

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World coffee consumption is provisionally estimated at 161.93 million bags in coffee year 2017-18, led by an increase of 3.1%, to 35.9 million bags in Asia and Oceania’s consumption. While coffee consumption is estimated 1.8% higher in coffee year 2017-18, coffee production exceeded this by 1.59 million bags. This surplus and the higher volume of shipments contributed to the low prices in 2017-18.

Coffee prices reversed their four-month downward trend as the monthly average of the ICO composite indicator increased to 111.21 US cents/lb in October 2018, 13.3% higher than in September 2018. While prices have increased, they remain below the average for January 2008 to September 2018 of 138.56 US cents/lb. In contrast to September 2018, the daily composite indicator remained above 100 US cents/lb throughout October 2018, ranging between 101.04 US cents/lb and 116.93 US cents/lb.

Prices for all group indicators rose significantly in October 2018 compared to the previous month. The largest increase occurred in the average price for Brazilian Naturals, which rose by 15.7% to 115.59 US cents/lb followed by a gain of 13.3% to 137.34 US cents/lb for Other Milds. Colombian Milds grew by 12% to 140.83 US cents/lb. As a result of the larger increase in the monthly average for Other Milds compared to Colombia Milds, the differential fell by 23.5% to 3.49 US cents/lb. Robusta prices increased by 8.62 US cents/lb in October 2018 to an average of 85.32 US cents/lb. The appreciation of the Brazilian real contributed to the rise in prices for Brazilian Natural coffee while tight supplies at the start of the new crop year for many producing countries have impacted the other indicators. The average arbitrage in October, as measured on the New York and London futures markets, grew by 22.3% to 42.57 US cents/lb, reversing three months of decrease. This compares with a monthly average of 59.87 US cents/lb in the last five years. Further, intra-day volatility of the ICO composite indicator price rose by 1.8 percentage points to 7.2% as the intra-day volatility of all group indicators increased.

World coffee exports amounted to 9.43 million bags in September 2018, compared with 8.75 million in September 2017. Exports in coffee year 2017-18 increased by 2%, to 121.86 million bags compared to 119.52 million bags in the last coffee year. In the twelve months ending September 2018, exports of green Arabica totalled 70.95 million bags compared to 70.51 million bags last year; whereas green Robusta exports amounted to 39.24 million bags compared to 38.87 million bags. In September 2018, Brazil and Colombia represented 60.4% of total green Arabica exports whereas Vietnam accounted for 60% of total green Robusta exports.

Total shipments of all forms of coffee increased in four out of the ten largest exporters for coffee year 2017-18. Brazil exported 32.34 million bags of coffee in 2017-18 compared to 31.93 million bags in 2016-17. However, Brazil’s coffee year production is split across two crop years so that 2017-18 shipments reflect both the smaller output produced in crop year April 2016 to March 2017 and the 14.7% increase in production for crop year 2017-18. Brazil’s exports for April to September 2018 reached 15.52 million bags, which is 11.2% greater than the volume shipped from April to September 2017.

Vietnam saw a 21.7% increase, shipping 28.64 million bags in coffee year 2017-18 compared to 23.54 million bags in 2016-17. This reflects the growth in production that benefited from favourable weather. In contrast, Colombia’s exports for coffee year 2017-18 decreased by 5.7%, to 12.72 million bags as decreased output limited the volume available for shipment.

After achieving a record of 7.29 million bags, exports from Honduras fell in 2017-18 to 7.14 million bags, due in part to a shortage of labour for harvesting. India was the fifth largest exporter in 2017-18, and its exports declined by 1.4% to 6.28 million bags. Indonesia saw the largest decrease in exports as shipments fell from 8.72 million bags in 2016-17 to 5.64 million bags in 2017-18. A shortfall in production coupled with increasing domestic demand led to this decline.

Like Honduras, Uganda’s exports decreased following a year of record exports. Uganda shipped 4.36 million bags in 2017-18 compared to 4.61 million bags in 2016-17. Peru’s exports remained stable at 3.96 million bags while exports from Ethiopia and Guatemala increased by 4.5%, to 3.65 million bags and 5.4% to 3.47 million bags, respectively.

In coffee year 2017-18, global coffee output is estimated 4.8% higher at 163.51 million bags compared with coffee year 2016-17. Arabica production increased by 1.7% to 101.23 million bags whereas Robusta grew by 10.5% to 62.28 million bags. While output expanded in all coffee-producing regions, Asia and Oceania experienced the most growth as production increased 8.3% to 47.95 million bags. This is followed by Mexico and Central America where output rose by 4.3% to 21.34 million bags. South America is the largest producing region, and its production grew by 3.3%, to 76.98 million bags while Africa’s increased by 3.4%, to 17.25 million bags.

World coffee consumption is provisionally estimated at 161.93 million bags in coffee year 2017-18, 1.8% higher than coffee year 2016-17. The fastest growing region is Asia and Oceania where consumption in coffee year 2017-18 is estimated at 35.9 million bags, up 3.1% from last year. This is followed by North America, which is estimated to grow 2.6%, to 30.34 million bags in coffee year 2017-18. Both Africa and Mexico and Central America are expected to reverse the declines in coffee consumption in 2016-17 to grow by 1.7%, to 11.08 million bags and 1.7%, to 5.3 million bags in coffee year 2017-18, respectively. Europe is provisionally estimated to maintain its growth rate of 0.5% with consumption estimated at 52.32 million bags in 2017-18. After increasing by 3.5%, in 2016-17, coffee consumption in South America is provisionally estimated to rise by 1.8%, to 26.97 million bags.

While coffee consumption is estimated 1.8% higher in coffee year 2017-18, coffee production exceeds this by 1.59 million bags. This surplus has contributed to the low prices this season, with the composite indicator averaging 111.51 US cents/lb for October 2017 to September 2018. In comparison, the average for the composite indicator in 2016-17 was 132.43 US cents/lb, reflecting the 3.1 million bag deficit that coffee year. Additionally, exports in coffee year 2017-18, have set a new record, which has put further pressure on prices as the market was well-supplied at the start of 2017-18 even with growing consumption. Inventories in September 2017 reached 25.8 million bags, which is the largest volume on record for September.

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The Mintel Group projects that the market will reach around $18 billion by 2023. Ready-to-drink (RTD) remains a fast-growing category due to continued innovation coming from a variety of brands and broad consumer appeal. In fact, 2017 saw the greatest number of RTD coffee launches, and over half of those RTD coffee launches were cold brew. Another plus for the coffee market, the London-based global intelligence firm finds that RTD is an “also” beverage. That is, it is not the first coffee beverage, it’s an “add on.”

Starbucks introduced bottled Frappuccinos in 1996 with Pepsico. “It was not the first RTD coffee product, but it was really the first mainstream one,” said Caleb Bryant, senior beverages analyst, Mintel, who presented during the National Coffee Association (US) webinar, “What’s Brewing in RTD Coffee 2018?” He noted that the market did not really start expanding until the mid-2000s, with an explosion in coffee innovation coming in the mid-2010s.

RTD coffee appeals to a wide range of consumers, which is contributing to its growth. There has been an increase in cold coffee consumption by Gen Xers, but the primary consumers are young people. Bryant said younger consumers enter the coffee market through cold, flavourful coffee drinks. Data shows Generation Z or the iGen is starting to drink coffee at a younger age — even younger than millennials. “Younger consumers’ coffee preferences will change as they grow older,” he explained, so, it’s important for brands to target these consumers early and establish brand loyalty but follow them through their coffee lifestyle.

On a side note, according to Mintel, foodservice-brand RTD coffees such as coffee shop RTDs (Peet’s Coffee, Starbucks, McCafé, Stumptown, etc) are the most frequently purchased.

The future for RTD coffee remains strong as there are occasions for RTD coffees to break into new whitespaces. “Consumers are primarily buying RTD coffees for refreshment and as a treat (cold so refreshing on a hot day, a treat because they’re flavoured),” said Bryant. “Marketers can try to position them as a snack and as hydration.”

Cold brew remains a key area of opportunity as Mintel reports that 16% of respondents prefer cold brew to other iced coffee beverages. Beverage blurring is affecting all categories, including coffee –especially cold brew – and these “hybrid” drinks satisfy unique occasions. “Most have lower caffeine content than regular RTD coffees and are often sparkling,” said Bryant offering Blue Island Coffee’s Organic Kombucha Maca Cold Brew Espresso as an example along with Keeper’s Citrus Sparkling Coffee, Rise Brewing Co’s Nitro Blood Orange Cold Brew, Stumptown’s Honey Lemon Cold Brew Coffee, and Upfruit’s Ginger Hibiscus Sparkling Coffee.

Of course, for consumers, taste is still the leading indicator of quality. RTD drinkers are interested in unique flavour experiences. “Vanilla, chocolate and hazelnut are still the most popular but there are opportunities to engage third-wave consumers,” said Bryant. He pointed to alcohol as a flavour noting that alcohol flavours are an alternative to overly sweet coffees. Examples include Starbucks Gin Barrel Aged Cold Brew and Dark Matter Coffee’s Barrel Aged Series. He added that coffee mocktails may also provide inspiration for flavour innovation.

Floral flavours are trending in alcoholic and non-alcoholic categories and can be used in coffee beverages as well, such as a rose or lavender latte.

Bryant shared that RTD coffee brands can also appeal to third-wave consumers through feel-good claims. RTD coffees that focus on sustainability, are environmentally friendly, engage in ethical sourcing, “give back,” are organic (Chameleon Organic Cold Brew Coffee with Organic Whole Milk is an example), are Fairtrade and/or Rainforest Alliance-certified or non-GMO, will attract third-wave coffee drinkers.

Functional RTD coffee is yet another opportunity for brands, which can differentiate themselves through health claims. Consumers are looking for coffees that offer a multitude of functional benefits such as anti-oxidants, anti-inflammatory, low sugar, added protein, added probiotics, promoting brain health, as well as low caffeine and high caffeine. “There is a disconnect as many consumers are interested in RTD coffees that help them relax but many also want high caffeine,” said Bryant. Examples include Stok Espresso Creamed Protein Coffee, High Brew Cold Brew + Protein Coffee, Coffee Blenders Lean Weight Wellness Cold Brew, and Wond’er Fuel Coconut Oil Cold Brew Coffee.

RTD coffee drinkers crave innovation and there are many new areas where RTD coffee brands can find inspiration and innovate — and innovation leads to increased consumption, and in turn, increased revenues and market growth.

The post Finding New Opportunities in RTD Coffee appeared first on Tea & Coffee Trade Journal.

BEAR has added to its existing outlets in Derby and Uttoxeter with the opening of the new Stone, Staffordshire location, creating new jobs for the local economy in the process. The new café-bar will provide customers with speciality coffee, fresh food, cocktails and craft beer in the former HSBC building.

The financing from HSBC UK has been used to design and fit-out the store, cover BEAR’s marketing budget for the launch and train new team members.

Commenting on the expansion, Craig Bunting, co-founder of Derby, England-based BEAR, said, “We opened our first BEAR in 2016, with the aim of serving great coffee in a warm and welcoming environment, but what really sets us apart is our love for coffee products and connecting with the community around us. The growth of BEAR so far has been an incredible and humbling journey and we look forward to delivering our strategy of being a UK Challenger Brand.”

“Here at BEAR, coffee is our world — all of our roasts are of a single origin and carefully selected from sustainable sources, so we can make sure that every cup we serve is delicious,” says Louise Cook, BEAR’s head of coffee. “We’re thrilled to have opened up a site in Stone and can’t wait to share our passion for coffee with the community.”

BEAR hopes to quickly become a cornerstone business on the High Street and connect with the local community in as many ways as possible. It differentiates itself from the rest of the market through its inviting atmosphere — getting to know each of its customers, ensuring all staff love what they do and deliver a mix of specialty coffee, simple and honest food, cocktails and craft beer.

BEAR is working to expand throughout the Midlands and beyond, with plans to open to 30 stores nationwide over the next five years.

The post BEAR Opens Third Location, Secures New Financing appeared first on Tea & Coffee Trade Journal.

The global packaging machinery market has a compounded annual growth rate (CAGR) of 2.8%. This translates to a value of $42.2 billion by 2021, up from $36.8 billion in 2016, per PMMI’s (the Association for Packaging and Processing Technologies) The Global Trends Impacting the Market for Packaging Machinery report. Beverages is the second largest sector at 30% — behind the food segment at 40% (all other industries account for the additional 30%). Packaging is also an industry that is always evolving, with its role changing with the times.

Packaging’s primary role, first and foremost, is functional — it must protect the product inside from inception to end user (that is, from factory to consumer), and in the case of consumables, packaging must also ensure freshness. But packaging plays a prominent role in a brand’s viability and success, perhaps more so today than ever before. Packaging is a product’s first line of defense on the shelf – or online – against a sea of competitors. Packaging is a brand’s initial, crucial strategy to advertise a product to a consumer. A product’s packaging is the first thing a consumer sees so it must be eye catching enough to entice the consumer for those precious few seconds they’re walking down the aisle, even less if they’re searching online, to give a product more than just a cursory glance.

Packaging must convey the right message to consumers. During the “Great Recession,” a well-known national beverage brand (not coffee or tea) in the United States spent millions of dollars redesigning their longstanding, easily recognized packaging to look more minimalist only to have it fail miserably. Consumers didn’t like the redesign, nor did they understand what message the brand was trying to communicate with the new packaging. The unfortunate result? The brand had to return to a slightly updated version of their original packaging.

Beverage brands are now attempting to connect with consumers in new ways as the story, “Packaging Gets Personal,” in our October issue details. Coffee and tea brands can take a cue from carbonated soft drinks and spirits brands like Coca-Cola (its “Share a Coke” campaign called consumers by their names) and Johnnie Walker (the limited edition “Jane Walker” specifically targeted women), which are aiming to resonate with consumers on deeper levels.

Consumers, most especially millennials and Generation Z, are fickle. As such, brands need to connect and resonate with consumers on new levels, getting personal is just one strategy. Today, many brands are using packaging to tell a story.

“The codes on the packaging enable you to see where the product is sourced, which shows credibility, but now brands are not just using packaging to sell a product, they are telling a story and selling an experience,” Jorge Izquierdo, vice president, market development, PMMI, told me during Pack Expo International, which took place in Chicago, Illinois, 14-17 October. He said the “track and trace” strategy started in the pharmaceutical industry but moved to food and beverages because of food safety. “Brands are moving beyond the safety aspect with ‘track and trace’ to the idea of selling a story to truly understand what the brand/company is about, both of which are highly important to younger consumers,” Izquierdo explained.

Given how important transparency and traceability, as well as sustainability, are with coffee and tea consumers, it will be interesting to see how packaging in these industries will evolve over the next few years.

The post The Power of Packaging appeared first on Tea & Coffee Trade Journal.