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

1. HOW TO INCREASE INTERNAL CONSUMPTION OF
COFFEE: BRAZIL´S SUCCESS STORY
Carlos Henrique Jorge Brando

2. BRAZIL IS SECOND LARGEST
CONSUMER IN THE WORLD

3. MORE QUALITY = MORE CONSUMPTION

4. BRAZIL’S
INTERNAL
CONSUMPTION
OF COFFEE

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. 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. 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. 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. 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. 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. 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. THE SECRET
DETERMINATION
AND
HARD WORK

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. 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. 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. 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. 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. 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. 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. DIVERSIFICATION OF PRODUCTS OFFERED TO
THE CONSUMER

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. 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. 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. 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. 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. 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. 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. Coffee and Health
Institute for Coffee Studies (ICS)
Vanderbilt University
Center of excellence: medicine, pharmacology and addiction

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. AND
THE
FUTURE

31. ONE COUNTRY,
MANY FLAVORS

34. 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

36. State Coffee Chamber
• Bring together the coffee chain
• Increase coffee businesses
• Improve coffee quality
• Increase coffee consumption

38. Quality Campaigns
• Producers
• Roasters
• C
Consumers

40. Quality Campaigns
• Good Practices for Quality
• Training growers and
employees
• Focusing on high quality
coffees
ff

41. Quality Campaigns
“Quality through the coffee chain”
AGRONOMISTS GROWERS COOPS ROASTERS RESTAURANTS
CUSTOMERS

42. Quality Campaigns
Phase 1 : Grower
• 6 regional meetings
• 70 agronomists
• 300 field visits to
fazendas
• 8,500
8 500 growers

47. Quality Campaigns
Phase 2 : Roasters
• Seminar “Coffee Quality in the Roasting
I d t ”
Industry”
• 140 attendees (roasters)
• Segmentation according to different
qualities

49. 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

50. Quality Campaigns
y p g
Phase 3 : Restaurants /
Consumers
• 16 fine restaurants
• 40 days of cupping activities
• 25,000 consumers
,

54. 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

57. Gourmet Coffee in Supermarkets
p
Superior Gourmet
12%
4%
Traditional
84%

58. BETTER QUALITY
=
HIGHER
CONSUMPTION