How to increase internal coffee consumption

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This presentation shows the brazilian experience on how to increase internal coffee consumption in producing countries by P&A Marketing International.

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How to increase internal coffee consumption

  1. 1. HOW TO INCREASE INTERNAL CONSUMPTION OF COFFEE: BRAZIL´S SUCCESS STORY Carlos Henrique Jorge Brando
  2. 2. BRAZIL IS SECOND LARGEST CONSUMER IN THE WORLD
  3. 3. MORE QUALITY = MORE CONSUMPTION
  4. 4. BRAZIL’S INTERNAL CONSUMPTION OF COFFEE
  5. 5. YEAR 2001 - 13.6 million bags of coffee - 40 % of average Brazilian green coffee production - 4.65 kg per capita/year - 1,500 working roasting concerns - 2,500 brands traded - Earnings : US$ 2,0 billion/year - Target: 15 million bags/year
  6. 6. SUMMARY HISTORY 1986/88 ROASTERS ROASTERS’ CONCERN ABOUT CONSTANT DECLINE IN INTERNAL CONSUMPTION 1965 1985 Consumption per capita 4.72 2.27 (kg / year) Volume Industrialized V l I d t i li d 8.15 6.45 (million bags / year) ABIC (THE BRAZILIAN COFFEE ROASTERS ASSOCIATION) POSITIONED ITSELF AS THE FORUM ) FOR DISCUSSION OF THE SECTOR’S PROBLEMS AND TO SEEK THEIR SOLUTIONS
  7. 7. 1988 VOX POPULI SURVEY “coffee is all the same” coffee same “all coffee is of bad quality” COFFEE HAD BECOME DISCREDITED DISCREDITED, BUT CONTINUED TO BE SEEN AS A SYMBOL OF SOCIABILITY AND WAS STILL AN INGRAINED HABIT IN PEOPLE S PEOPLE’S DAILY ROUTINE
  8. 8. 1988 1ST NATIONAL SAMPLE - 1988 30% OF BRANDS ANALYZED WERE BELOW STANDARD BECAUSE OF USE OF MIXTURES AND IMPURITIES 14º CONCAFÉ- RIO DE JANEIRO É APPROVED ESTABLISHMENT OF COFFEE SELF-REGULATION AND SELF REGULATION PURITY CONTROL PROGRAM
  9. 9. SELF-REGULATION AND PURITY CONTROL PROGRAM • Only 100% pure coffees can use label on packaging • Auditing program - independent company - random sampling d li - penalties • Introduction - campaign oriented to consumers - actions within roasting ABIC PURITY LABEL community
  10. 10. 1989 AUGUST LAUNCH OF ABIC PURITY LABEL - NATIONAL TV CAMPAIGN - SUPPORT OF PUBLIC RELATIONS FIRM AND ACTIONS AIMED AT DIFFERENT SEGMENTS OF THE PUBLIC: CONSUMER PROTECTION AGENCIES TRADE ASSOCIATIONS PUBLIC SECTOR DISTRIBUTION CHANNNELS PRESS INFLUENTIAL PERSONALITIES
  11. 11. BRANDS WITH PURITY STAMP ATTRACT INCREASING DEMAND FROM CONSUMERS, DISTRIBUTION CHANNELS AND THE PUBLIC SECTOR THE START OF THE RECOVERY OF COFFEE S COFFEE’S CREDIBILITY
  12. 12. THE SECRET DETERMINATION AND HARD WORK
  13. 13. ABIC PURITY LABEL THE UNION OF THE SECTOR LED TO A PROJECT WHICH IS CONSIDERED TO BE ONE OF THE FOOD & BEVERAGE SECTOR’S MAJOR SUCCESSES IN RECENT YEARS A FACT WITH WORLDWIDE REPERCUSSION: THE BRAZILIAN MARKET WAS THE FASTEST GROWING COFFEE MARKET IN THE WORLD IN THE LAST 5 YEARS
  14. 14. INITIATIVES 1989 TO 1998 National Electronic Media; Media Relations; Participation in Trade Fairs & Other Events. Research Studies: Market Health Technology Opening of Coffee Shops/Bars; Launch of Gourmet & Special Coffees; New Coffee-based Products (cold drinks, sachets, desse ts, ce c ea s, etc.); desserts, ice creams, etc );
  15. 15. TOTAL INVESTMENTS IN THE PROGRAM TO PROMOTE THE GROWTH OF THE INTERNAL MARKET TOTAL ABIC INVESTMENTS UP TO 1998:US$ 26.7 MILLION SAMPLING:US$ 5 5 MILLION , MARKETING:US$ 21 2 MILLION 5.5 21.2 MI US$ 4,1 3,9 4,5 3,5 4 3,5 1,1 0,6 2,5 , 2,5 25 0,7 3 2,4 2,2 Monitoring 1,9 2,0 2,5 0,3 1,7 0,4 04 Marketing M k ti 2 0,4 0,8 0,2 0,5 3,3 1,5 0,5 2,8 3,0 1 2,2 2,0 1,7 1,8 1,7 1,5 0,5 1,2 0 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 YEAR
  16. 16. INVESTMENT: • US$ 27 MILLION IN 10 YEARS RETURNS: • ADDITIONAL SALES OF 7 MILLION BAGS PER YEAR • US$ 1 BILLION PER YEAR IN SALES (average retail price basis) • SIZE OF INDUSTRY DOUBLED
  17. 17. RESULTS ACHIEVED 1988 - 30 % OF BRANDS CONTAINED IMPURITIES 988 O S CO U S 1998 - 5 % OF BRANDS CONTAINED IMPURITIES, CORRESPONDING TO LESS THAN 1 % OF ALL COFFEE CONSUMED IN BRAZIL
  18. 18. InterScience Surveys 91 vs. 97 WHAT DO PEOPLE THINK OF WHEN THEY ARE THIRSTY Soft drinks 86% 92% 77% Fruit Juice 62% Water 83% 57% Coffee 41% 19% Milk 39% 15% 22% 1997 Tea 11% 1991 Chocolate Ch l t 9% 11% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
  19. 19. InterScience Surveys 91 X 97 RESISTANCE TO BEVERAGES 24% Soft Drinks 18% 24% Coffee 33% 14% Tea 16% 11% Powdered Drinks 8% 10% Groselha 9% 9% Milk 21% 8% 1997 Fruit Juice 14% 1991 7% Chocolate 5% 0% 5% 10% 15% 20% 25% 30% 35%
  20. 20. DIVERSIFICATION OF PRODUCTS OFFERED TO THE CONSUMER
  21. 21. BRAZILIAN COFFEE CONSUMPTION REAL & PROJECTED Per Capita (Kg/year) Million bags 15,0 13,5 11,0 11,5 12,2 11 12 2 10,1 8,1 8,9 9,1 9,3 8,2 8,5 7,1 6,4 , 4,7 47 4,4 R+G 3,2 3,3 3,5 3,6 4,0 2,3 2,7 2,8 2,9 2,9 2,9 3,1 1965 1975 1985 1990 1991 1992 1993 4 1994 1995 1996 1997 1998 2001 5.9 2.8 3.4 3.5 3.6 3.6 3.7 3.9 4.2 4.3 4.5 4.9 GREEN
  22. 22. INTERNAL CONSUMPTION & EXPORTS (thousands of 60 Kg bags) YEAR CONSUMPTION EXPORTS 1985 6,450 19,100 1986 5,560 9,900 1987 5,900 18,500 1988 5,800 17,100 1989 6,400 6 400 18,300 18 300 1990 8,200 17,000 1991 8,500 21,100 1992 8,900 18,800 1993 9,100 17,800 1994 9 300 9,300 17.250 17 250 1995 10,100 14.500 1996 11,000 15.300 1997 11,500 16.700 1998 12,200 18.200
  23. 23. THE INTERNAL MARKET AND MAIN IMPORTING COUNTRIES IN 1998 ( COUNTRIES VOLUME In thousands of 2.825 bags) 60 kg USA % 11,6% GERMANY 2.597 10,7% ITALY 1.637 6,7% JAPAN 1.398 5,8% BELGIUM / LUX. 853 3,5% GREECE 585 2,4% SPAIN 571 2,4% 2 4% SLOVENIA 560 2,3% ARGENTINA 538 2,2% SWEDEN 510 2,1% BIGGEST IMPORTERS 12.074 49,7% BRAZIL 12.200 50,3% TOTAL 24.274 100,0%
  24. 24. THE INTERNAL MARKET AND MAIN IMPORTING COUNTRIES IN 1998 ( In thousands of 60 kg bags) 14.000 USA Germany 12.000 Italy Japan TERS 10.000 Belgium / Lux. Greece TOP 10 IMPORT 8.000 8 000 Spain RAZIL 6.000 Slovenia Argentina g BR 4.000 Sweden Biggest Imp. 2.000 Brazil 0
  25. 25. PER CAPITA CONSUMPTION:kg/person in 1998 12,00 10,00 10 00 8,00 10,56 9,55 6,00 8,46 8 46 8,24 8 24 6,59 4,00 5,00 4,53 4,52 4,09 2,79 5,41 2,00 0,00 n A pa n US L ai ly Ja ZI ce Sp Ita y A en an an R . ux B ay ed m Fr d /L er rw an Sw um G No nl Fi gi el B
  26. 26. PURITY LABEL / PURITY CONCEPT PURITY: INCREASED AWARENESS AND CREDIBILITY WITHIN THE SECTOR Since the beginning of the Program, Si h b i i f h P in 1989: • independent auditors • approximately 50,000 samples of coffee • all 27 Brazilian states • approximately 900 cities/year
  27. 27. COFFEE AND HEALTH • Comprehensive Program - Research - Dissemination of results • Dr. Darcy Lima / UFRJ - Brazilian Studies - Creation of Institute for Coffee Studies (ICS) - Positive effects of coffee (depression, (depression drug and acohol addiction) • Dissemination of results - Media - Public Relations POSITIVE COMMUNICATION ABOUT COFFEE
  28. 28. Coffee and Health Institute for Coffee Studies (ICS) Vanderbilt University Center of excellence: medicine, pharmacology and addiction
  29. 29. Coffee and Health Institute for Coffee Studies (ICS) • Vanderbilt University, Nashville, USA • Brazilian results and actions triggered its creation - Dr. Darcy Lima is co-director - Mr. David Nahum is chairperson of strategic planning committee • Articles in prestigious journals • Preliminary results are extremely promising • Contributions are welcome
  30. 30. AND THE FUTURE
  31. 31. ONE COUNTRY, MANY FLAVORS
  32. 32. São Paulo State Region R i Coffees C ff Mogiana (Northeast) Naturals and Pulped naturals p Center-West Naturals and Pulped naturals Average production A d ti = 3,5 il b 3 5 mil.bags Potencial production = 5,5 mil.bags
  33. 33. State Coffee Chamber • Bring together the coffee chain • Increase coffee businesses • Improve coffee quality • Increase coffee consumption
  34. 34. Quality Campaigns • Producers • Roasters • C Consumers
  35. 35. Quality Campaigns • Good Practices for Quality • Training growers and employees • Focusing on high quality coffees ff
  36. 36. Quality Campaigns “Quality through the coffee chain” AGRONOMISTS GROWERS COOPS ROASTERS RESTAURANTS CUSTOMERS
  37. 37. Quality Campaigns Phase 1 : Grower • 6 regional meetings • 70 agronomists • 300 field visits to fazendas • 8,500 8 500 growers
  38. 38. Quality Campaigns Phase 2 : Roasters • Seminar “Coffee Quality in the Roasting I d t ” Industry” • 140 attendees (roasters) • Segmentation according to different qualities
  39. 39. Segmentation Proposal R/G COFFEES Sensorial Evaluation 0 3,5 6,5 7,6 76 10 Not Traditional Superio Gourmet Recommended r 0 1 2 3 4 5 6 7 8 9 10 Mininum acceptable level
  40. 40. Quality Campaigns y p g Phase 3 : Restaurants / Consumers • 16 fine restaurants • 40 days of cupping activities • 25,000 consumers ,
  41. 41. Quality Campaigns “ THE FLAVOR OF THE COFFEE CROP” • 25,000 customers • U$ 30,000 total cost • U$ 700 000 media return 700,000 di t • 10 TV theme • 3 Radio theme • Newspapers and magazines
  42. 42. Gourmet Coffee in Supermarkets p Superior Gourmet 12% 4% Traditional 84%
  43. 43. BETTER QUALITY = HIGHER CONSUMPTION

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