SlideShare ist ein Scribd-Unternehmen logo
1 von 24
Downloaden Sie, um offline zu lesen
1


                                    Exploring the World of Coffee
                                    By: David Cyr S. Verano


  Abstract: Coffee is a stimulant beverage prepared from roasted seeds, commonly called coffee beans
  from the coffee plant is one of the most popular beverages worldwide being the second-most-traded
  physical commodity in the world, ranking second only to petroleum. This beverage was first consumed
  in the 9th century, when it was discovered in the highlands of Ethiopia and from there it spread to Egypt
  and Yemen, and by the 15th century had reached Azerbaijan, Persia, Turkey, and northern Africa. From
  the Muslim world, coffee spread to Italy, then to the rest of Europe, Indonesia and the Americas. Coffee
  berries, which contain the coffee bean, are produced by several species of small evergreen bush of the
  genus Coffea. The two most commonly grown species are Coffea canephora also known as Coffea
  robusta and Coffea arabica. These are cultivated in Latin America, Southeast Asia, and Africa. Once
  ripe, coffee berries are picked, processed, and dried. The seeds are then roasted, undergoing several
  physical and chemical changes. After which, they are roasted to varying degrees, depending on the
  desired flavor; Cooled then ground and brewed to create coffee. Today, coffee is no longer a typical hot
  served beverage but rather imaginatively concocted and presented in a variety of ways.

  Coffee has played an important role in many societies throughout modern history. In Africa and Yemen,
  it was used in religious ceremonies. As a result, the Ethiopian Church banned its consumption until the
  reign of Emperor Menelik II of Ethiopia. It was banned in Ottoman Turkey in the 17th century for political
  reasons, and was associated with rebellious political activities in Europe. In modern day business, it is
  not just a beverage for entertainment but also an important export commodity. In 2004, coffee was the
  top agricultural export for 12 countries, and in 2005, it was the world's seventh largest legal agricultural
  export by value. Some controversy is associated with coffee cultivation and its impact on the

I. Etymology and History

                     The English word coffee first came to be used in the early- to mid-
                    1600s, but early forms of the word date to the last decade of the
                    1500s. It comes from the Italian caffè. The term was introduced to
                    Europe via the Ottoman Turkish kahve which is in turn derived from
                    the Arabic: ‫ ,قهوة‬qahweh. The origin of the Arabic term is uncertain; it
                    is either derived from the name of the Kaffa region in western
Ethiopia, where coffee was cultivated, or by a truncation of qahwat al-būnn, meaning
"wine of the bean" in Arabic. In Eritrea, "būnn" (also meaning "wine of the bean" in
Tigrinya) is used. The Amharic and Afan Oromo name for coffee is bunna. Coffee use
can be traced at least to as early as the 9th century, when it appeared in the highlands
of Ethiopia. According to legend, Ethiopian shepherds were the first to observe the
influence of the caffeine in coffee beans when the goats appeared to "dance" and to
have an increased level of energy after consuming wild coffee berries. The legend
names the shepherd "Kaldi." From Ethiopia, coffee spread to Egypt and Yemen. It was
in Arabia that coffee beans were first roasted and brewed similarly as they are today. By
the 15th century, it had reached the rest of the Middle East, Persia, Turkey, and northern
Africa.

In 1583, Leonhard Rauwolf, a German physician, gave this description of coffee after
returning from a ten year trip to the Near East: “A beverage as black as ink, useful
against numerous illnesses, particularly those of the stomach. Its consumers take it in
the morning, quite frankly, in a porcelain cup that is passed around and from which each
one drinks a cupful. It is composed of water and the fruit from a bush called bunnu.”
2
 From the Muslim world, coffee spread to Italy. The thriving
trade between Venice and North Africa, Egypt, and the Middle
East brought many goods, including coffee, to the Venetian
port. From Venice, it was introduced to the rest of Europe.
Coffee became more widely accepted after it was deemed a
Christian beverage by Pope Clement VIII in 1600, despite
appeals to ban the "Muslim drink". The first European coffee
house opened in Italy in 1645. The Dutch were the first to
import coffee on a large scale, and they were among the first
to defy the Arab prohibition on the exportation of plants or un-
roasted seeds when Pieter van den Broeck smuggled
seedlings from Aden into Europe in 1616. The Dutch later grew the crop in Java and
Ceylon. The first exports of Indonesian coffee from Java to the Netherlands occurred in
1711. Through the efforts of the British East India Company, coffee became popular in
England as well. It was introduced in France in 1657, and in Austria and Poland after the
1683 Battle of Vienna, when coffee was captured from supplies of the defeated Turks.

When coffee reached North America during the colonial period, it was initially not as
successful as it had been in Europe. During the Revolutionary War, however, the
demand for coffee increased so much that dealers had to hoard their scarce supplies
and raise prices dramatically; this was partly due to the reduced availability of tea from
British merchants. After the War of 1812, during which Britain temporarily cut off access
to tea imports, the Americans' taste for coffee grew, and high demand during the
American Civil War together with advances in brewing technology secured the position
of coffee as an everyday commodity in the United States.

II. Biology and Cultivation

The Coffea plant is native to subtropical Africa and southern Asia. It belongs to a genus
                     of 10 species of flowering plants of the family Rubiaceae. It is an
                     evergreen shrub or small tree that may grow 5 meters (16 ft) tall
                     when un-pruned. The leaves are dark green and glossy, usually 10–
                     15 centimeters (3.9–5.9 in) long and 6.0 centimeters (2.4 in) wide. It
                     produces clusters of fragrant, white flowers that bloom
                     simultaneously. The fruit berry is oval, about 1.5 centimeters (0.6 in)
                     long, and green when immature, but ripens to yellow, then crimson,
                     becoming black on drying. Each berry usually contains two seeds,
                     but from 5 to 10 percent of the berries has only one; these are
called pea berries. Berries ripen in seven to nine months.

Coffee is usually propagated by seeds. The traditional method of planting coffee is to put
20 seeds in each hole at the beginning of the rainy season;
half are eliminated naturally. Coffee is often intercropped with
food crops, such as corn, beans, or rice, during the first few
years of cultivation. The two main cultivated species of the
coffee plant are Coffea canephora and Coffea arabica.
Arabica coffee (from C. Arabica) is considered more suitable
for drinking than Robusta coffee (from C. canephora); Robusta
tends to be bitter and have less flavor than Arabica. For this
reason, about three-quarters of coffee cultivated worldwide are C. arabica however, C.
canephora is less susceptible to disease than C. arabica and can be cultivated in
environments where C. arabica will not thrive. Robusta coffee also contains about 40–50
percent more caffeine than Arabica. For this reason, it is used as an inexpensive
substitute for Arabica in many commercial coffee blends. Good quality Robusta are used
in some espresso blends to provide a better foam head and to lower the ingredient cost.
3
Other cultivated species include Coffea liberica and Coffea esliaca, believed to be
indigenous to Liberia and southern Sudan, respectively.

                        Most Arabica coffee beans originate from either Latin America,
                        eastern Africa, Arabia, or Asia. Robusta coffee beans are grown
                        in western and central Africa, throughout Southeast Asia, and to
                        some extent in Brazil. Beans from different countries or regions
                        usually have distinctive characteristics such as flavor, aroma,
                        body, and acidity. These taste characteristics are dependent not
                        only on the coffee's growing region, but also on genetic
subspecies (varietals) and processing. Varietals are generally known by the region in
which they are grown, such as Colombian, Java, or Kona.

There are two main species of bean that thrive in equatorial regions: Arabica and
Robusta.

A. Robusta is grown at lower altitudes, 0 to 700 meters, and has a high yield per plant
and high caffeine content (1.7 to 4.0%). It accounts for about 30% of world production.
Robusta has a stronger flavor than Arabica with a full body and a woody aftertaste which
is useful in creating blends and especially useful in instant coffee which is mainly grown
in the following regions:

  •       Western and Central Africa (Ivory Coast, Cameroon, Uganda, Angola, etc.)
  •       Malaysia (Vietnam, Sri Lanka, Sumatra, Java, etc.)
  •       Brazil
  •       India

B. Arabica grows at higher altitudes, 1000 to 2000 meters, and while it has a lower yield
and less caffeine content (0.8 to 1.4%) it is widely recognized to be superior to Robusta.
Arabica accounts for about 70% of world production, although only about 10% of this
yields "grand cru" beans. Arabica has a delicate acidic flavor, a refined aroma and a
caramel aftertaste which is grown in the following regions:

      •    Central America (Mexico, Guatemala, El Salvador, Nicaragua, Costa Rica,
           Panama)
      •    South America (Venezuela, Colombia, Ecuador, Peru, Bolivia, Paraguay,
           Argentina)
      •    India
      •    Eastern Africa (Ethiopia, Kenya, Tanzania, Zambia, Mozambique)
      •    Papua New Guinea

Many of the cheaper blends have a higher proportion of Robusta compared to Arabica.
Some high quality blends use a small quantity of the very best Robusta beans to give
body and character to the blends, particularly in espresso blends.

III. Processing

Processing of coffee is the method converting the raw fruit of the into the coffee. The
cherry has the fruit or pulp removed leaving the seed or bean which is then dried. While
all green coffee is processed, the method that is used varies and can have a significant
effect on the flavor of roasted and brewed coffee.
4

A. Picking

                      A coffee plant usually starts to produce flowers 3–4 years after it is
                      planted and it is from these flowers that the fruits of the plant
                      (commonly known as coffee cherries) appear, with the first useful
                      harvest possible around 5 years after planting. The cherries ripen
                      around eight months after the emergence of the flower, by
                      changing color from green to red, and it is at this time that they
                      should be harvested. In most coffee-growing countries, there is
                      one major harvest a year; though in countries like Colombia, where
                      there are two flowerings a year, there is a main and secondary
                      crop.

In most countries, the coffee crop is picked by hand, a labor-intensive and difficult
process, though in places like Brazil, where the landscape is relatively flat and the coffee
fields immense, the process has been mechanized. Whether picked by hand or by
machine, all coffee is harvested in one of two ways:

  •   Strip Picked: The entire crop is harvested at one time. This can either be done by
      machine or by hand. In either case, all of the cherries are stripped off of the
      branch at one time.

  •   Selectively Picked: Only the ripe cherries are harvested and they are picked
      individually by hand. Pickers rotate among the trees every 8 – 10 days, choosing
      only the cherries which are at the peak of ripeness. Because this kind of harvest is
      labor intensive, and thus more costly, it is used primarily to harvest the finer
      Arabica beans.

The laborers who pick coffee by hand receive payment by the basketful. As of 2003,
payment per basket is between US$2.00 to $10 with the overwhelming majority of the
laborers receiving payment at the lower end. An experienced coffee picker can collect up
to 6-7 baskets a day. Depending on the grower, coffee pickers are sometimes
specifically instructed to not pick green coffee berries since the seeds in the berries are
not fully formed or mature. This discernment typically only occurs with growers who
harvest for higher end/specialty coffee where the pickers are paid better for their labor.
Mixes of green and red berries, or just green berries, are used to produce cheaper mass
consumer coffee beans, which are characterized by a displeasingly bitter/astringent
flavor and a sharp odor. Red berries, with their higher aromatic oil and lower organic
acid content, are more fragrant, smooth, and mellow. As such coffee picking is one of
the most important stages in coffee production.

B. Processing

(1) Wet process

In the Wet Process, the fruit covering the seeds/beans is removed before they are dried.
Coffee processed by the wet method is called wet processed or washed coffee. The wet
method requires the use of specific equipment and substantial quantities of water. The
coffee cherries are sorted by immersion in water. Bad or unripe fruit will float and the
good ripe fruit will sink. The skin of the cherry and some of the pulp is removed by
pressing the fruit by machine in water through a screen. The bean will still have a
significant amount of the pulp clinging to it that needs to be removed. This is done either
by the classic ferment-and-wash method or a newer procedure variously called machine-
assisted wet processing, aquapulping or mechanical demucilaging.
5

(a) Sorting coffee in water

Ferment-and-Wash Method: In the ferment and wash method of wet processing the
remainder of the pulp is removed by breaking down the cellulose by fermenting the
beans with microbes and then washing them with large amounts of water. Fermentation
can be done with extra water or, in "Dry Fermentation", in the fruit's own juices only.

The fermentation process has to be carefully monitored to ensure that the coffee doesn't
acquire undesirable, sour flavors. For most coffees, mucilage removal through
fermentation takes between 24 and 36 hours, depending on the temperature, thickness
of the mucilage layer and concentration of the enzymes. The end of the fermentation is
assessed by feel, as the parchment surrounding the beans loses its slimy texture and
acquires a rougher "pebbly" feel. When the fermentation is complete, the coffee is
thoroughly washed with clean water in tanks or in special washing machines.

Machine-assisted wet processing: In machine-assisted wet processing, fermentation
is not used to separate the bean from the remainder of the pulp; rather, this is done
through mechanical scrubbing. This process can cut down on water use and pollution
since ferment and wash water stinks. In addition, removing mucilage by machine is
easier and more predictable than removing it by fermenting and washing. However, by
eliminating the fermentation step and prematurely separating fruit and bean, mechanical
demucilaging can remove an important tool that mill operators have of influencing coffee
flavor. Furthermore, the ecological criticism of the ferment-and-wash method
increasingly has become moot, since a combination of low-water equipment plus settling
tanks allows conscientious mill operators to carry out fermentation with limited pollution.

Any wet processing of coffee produces coffee wastewater which and still unjustifiable
can be a pollutant. Around 130 liters of fresh water is required to process one kilogram
of quality coffee. After the pulp has been removed what is left is the bean surrounded by
two additional layers, the silver skin and the parchment. The beans must be dried to a
water content of about 10% before they are stable. Coffee beans can be dried in
the sun or by machine but in most cases it is dried in the sun to 12-13% moisture and
brought down to 10% by machine. Drying entirely by machine is normally only done
where space is at a premium or the humidity is too high for the beans to dry before
mildewing.

(2) Dry process

Dry process, also known as unwashed or natural coffee, is the oldest method of
processing coffee. The entire cherry after harvest is first cleaned and then placed in the
sun to dry on tables or in thin layers on patios:

Cleaning: The harvested cherries are usually sorted and cleaned, to separate the
unripe, overripe and damaged cherries and to remove dirt, soil, twigs and leaves. This
can be done by winnowing, which is commonly done by hand, using a large sieve. Any
unwanted cherries or other material not winnowed away can be picked out from the top
of the sieve. The ripe cherries can also be separated by flotation in washing channels
close to the drying areas.

Drying: The coffee cherries are spread out in the sun, either on large concrete or brick
patios or on matting raised to waist height on trestles. As the cherries dry, they are raked
or turned by hand to ensure even drying and prevent mildew. It may take up to 4 weeks
before the cherries are dried to the optimum moisture content, depending on the weather
conditions. On larger plantations, machine-drying is sometimes used to speed up the
process after the coffee has been pre-dried in the sun for a few days.
6

The drying operation is the most important stage of the process, since it affects the final
quality of the green coffee. A coffee that has been over dried will become brittle and
produce too many broken beans during hulling (broken beans are considered defective
beans). Coffee that has not been dried sufficiently will be too moist and prone to rapid
deterioration caused by the attack of fungi and bacteria.

The dried cherries are stored in bulk in special silos until they are sent to the mill where
hulling, sorting, grading and bagging take place. All the outer layers of the dried cherry
are removed in one step by the hulling machine.

The dry method is used for about 95% of the Arabica coffee produced in Brazil, most of
the coffees produced in Ethiopia, Haiti and Paraguay, as well as for some Arabicas
produced in India and Ecuador. Almost all Robustas are processed by this method. It is
not practical in very rainy regions, where the humidity of the atmosphere is too high or
where it rains frequently during harvesting.

Sun Drying: When dried in the sun coffee is most often spread out in rows on large
patios where it needs to be raked every six hours to promote even drying and prevent
the growth of mildew. Some coffee is dried on large raised tables where the coffee is
turned by hand. Drying coffee this way has the advantage of allowing air to circulate
better around the beans promoting more even drying but increases cost and labor
significantly.After the drying process (in the sun and/or through machines), the
parchment skin or pergamino is thoroughly dry and crumbly, and easily removed in the
Hulling process. Coffee occasionally is sold and shipped in parchment or en pergamino,
but most often a machine called a huller is used to crunch off the parchment skin before
the beans are shipped.

(3) Semi dry process

Semi dry is a hybrid process used in Indonesia and Brazil. In Indonesia, the process is
also called "wet hulled", "semi-washed" or "Giling Basah". Literally translated
from Indonesian, Giling Basah means "wet grinding". Most small-scale farmers
in Sumatra, Sulawesi, Flores and Papua use the giling basah process. In this process,
farmers remove the outer skin from the cherries mechanically, using locally built pulping
machines. The coffee beans, still coated with mucilage, are then stored for up to a day.
Following this waiting period, the mucilage is washed off and the parchment coffee is
partially dried in the sun before sale at 30% to 35% moisture content.

(C) Milling

The final steps in coffee processing involve removing the last layers of dry skin and
remaining fruit residue from the now dry coffee, and cleaning and sorting it. These steps
are often called dry milling to distinguish them from the steps that take place before
drying, which collectively are called wet milling.

(D) Hulling

The first step in dry milling is the removal of what is left of the fruit from the bean,
whether it is the crumbly parchment skin of wet-processed coffee, the parchment skin
and dried mucilage of semi-dry-processed coffee, or the entire dry, leathery fruit
covering of the dry-processed coffee. Semi-dry hulling at 30% to 35% moisture (Giling
Basah), as occurs in Indonesia, is thought to reduce acidity and increase body.Hulling is
done with the help of machines, which can range from simple millstones to sophisticated
machines that gently whack at the coffee.
7

(E) Polishing

This is an optional process in which any silver skin that remains on the beans after
hulling is removed in a polishing machine. This is done to improve the appearance of
green coffee beans and eliminate a byproduct of roasting called chaff. It is described by
some to be detrimental to the taste by raising the temperature of the bean through
friction which changes the chemical makeup of the bean.

(D) Cleaning and sorting

Sorting by Size and Density: Most fine coffee goes through a battery of machines that
sort the coffee by density of bean and by bean size, all the while removing sticks, rocks,
nails, and miscellaneous debris that may have become mixed with the coffee during
drying. First machines blow the beans into the air; those that fall into bins closest to the
air source are heaviest and biggest; the lightest (and likely defective) beans plus chaff
are blown in the farthest bin. Other machines shake the beans through a series of
sieves, sorting them by size. Finally, a machine called a gravity separator shakes the
sized beans on a tilted table, so that the heaviest, densest and best vibrate to one side
of the pulsating table, and the lightest to the other.

Sorting by Color: The final step in the cleaning and sorting procedure is called color
sorting, or separating defective beans from sound beans on the basis of color rather
than density or size. Color sorting is the trickiest and perhaps most important of all the
steps in sorting and cleaning. With most high-quality coffees color sorting is done in the
simplest possible way: by hand. Teams of workers pick discolored and other defective
beans from the sounds beans. The very best coffees may be hand-cleaned twice
(double picked) or even three times (triple picked). Coffee that has been cleaned by
hand is usually called European preparation; most specialty coffees have been cleaned
and sorted in this way.

Color sorting can also be done by machines. Streams of beans fall rapidly, one at a time,
past sensors that are set according to parameters that identify defective beans by value
(dark to light) or by color. A tiny, decisive puff of compressed air pops each defective
bean out of the stream of sound beans the instant the machine detects an anomaly.
However, these machines are currently not used widely in the coffee industry for two
reasons:

  •   First, the capital investment to install these delicate machines and the technical
      support to maintain them is daunting.
  •   Second, sorting coffee by hand supplies much-needed work for the small rural
      communities that often cluster around coffee mills.

Nevertheless, computerized color sorters are essential to coffee industries in regions
with relatively high standards of living and high wage demands.

(E) Grading

Grading is the process of categorizing coffee beans on the basis of various criteria such
as size of the bean, where and at what altitude it was grown, how it was prepared and
picked, and how good it tastes, or its cup quality. Coffees also may be graded by the
number of imperfections (defective and broken beans, pebbles, sticks, etc.) per sample.
For the finest coffees, origin of the beans (farm or estate, region, cooperative) is
especially important. Growers of premium estate or cooperative coffees may impose a
level of quality control that goes well beyond conventionally defined grading criteria,
8
because they want their coffee to command the higher price that goes with recognition
and consistent quality.

(F) Aging

                           All coffee, when it was introduced in Europe, came from the
                          port of Mocha in what is now modern day Yemen. To import
                          the beans to Europe the coffee was on boats for a long sea
                          voyage around the Horn of Africa. This long journey and the
                          exposure to the sea air changed the coffee's flavor. Later,
                          coffee spread to India and Indonesia but still required a long
                          sea voyage. Once the Suez Canal was opened the travel time
                          to Europe was greatly reduced and coffee whose flavor had
                          not changed due to a long sea voyage began arriving. To
                          some degree, this fresher coffee was rejected because
Europeans had developed a taste for the changes that were brought on by the long sea
voyage. To meet this desire, some coffee was aged in large open-sided warehouses at
port for six or more months in an attempt to simulate the effects of a long sea voyage
before it was shipped to Europe.

Although it is still widely debated, certain types of green coffee are believed to improve
with age; especially those that are valued for their low acidity, such as coffees from
Indonesia or India. Several of these coffee producers sell coffee beans that have been
aged for as long as 3 years, with some as long as 8 years. However, most coffee
experts agree that a green coffee peaks in flavor and freshness within one year of
harvest, because over-aged coffee beans will lose much of their essential oil content.

(G) Decaffeination

Decaffeination is the process of extracting caffeine from green coffee beans prior to
roasting. The most common decaffeination process used in the United
States is supercritical carbon dioxide (CO2) extraction. In this process, moistened green
coffee beans are contacted with large quantities of supercritical CO2 (CO2 maintained at
a pressure of about 4,000 pounds force per square inch (28 MPa) and temperatures
between 90 and 100 °C (194 and 212 °F)), which removes about 97% of the caffeine
from the beans. The caffeine is then recovered from the CO2, typically using an
activated carbon adsorption system.

Another commonly used method is solvent extraction, typically using oil (extracted from
roasted coffee) or ethyl acetate as a solvent. In this process, solvent is added to
moistened green coffee beans to extract most of the caffeine from the beans. After the
beans are removed from the solvent, they are steam-stripped to remove any residual
solvent. The caffeine is then recovered from the solvent, and the solvent is re-
used. Water extraction is also used for decaffeination. Decaffeinated coffee beans have
a residual caffeine content of about 0.1% on a dry basis. Not all facilities have
decaffeination operations, and decaffeinated green coffee beans are purchased by many
facilities that produce decaffeinated coffee.

(H) Storage

Green coffee is fairly stable (approx. up to 1 year) if stored correctly. Most often it is in a
Jute sack kept in a cool, clean, and dry place.
(I) Roasting

Although not considered part of the processing pipeline proper, nearly all coffee sold to
consumers throughout the world is sold as roasted coffee. Consumers can also elect to
9
buy non-roasted coffee to be roasted at home. Roasting coffee transforms the chemical
and physical properties of green coffee beans into roasted coffee products. The roasting
process is what produces the characteristic flavor of coffee by causing the green coffee
beans to expand and to change in color, taste, smell, and density. Non-roasted beans
contain similar acids, protein, and caffeine as those that have been roasted, but lack the
taste. It takes heat to speed up the Maillard and other chemical reactions that develop
and enhance the flavor.

As green coffee is more stable than roasted, the roasting process tends to take place
close to where it will be consumed. This reduces the time that roasted coffee spends in
distribution, helping to maximize its shelf life. The vast majority of coffee is roasted
commercially on a large scale, but some coffee drinkers roast coffee themselves in order
to have more control over the freshness and flavor profile of the beans.

(a) Process

The coffee roasting process consists essentially of sorting, roasting, cooling, and
packaging operations but can also include grinding in larger scale roasting houses. In
larger operations, bags of green coffee beans are hand or machine-opened, dumped
into a hopper, and screened to remove debris. The green beans are then weighed and
transferred by belt or pneumatic conveyor to storage hoppers. From the storage
hoppers, the green beans are conveyed to the roaster. Roasters typically operate at
temperatures between 370 and 540 °F (188 and 282 °C), and the beans are roasted for
a period of time ranging from 3 to 30 minutes. Roasters are typically horizontal rotating
drums that are heated from below and tumble the green coffee beans in a current of hot
gases. The heat source can be supplied by natural gas, liquefied petroleum gas (LPG),
electricity or even wood. These roasters can operate in either batch or continuous
modes and can be indirect or direct-fired.

  Those who roast coffee often prefer to follow a "recipe" or "roast profile" to highlight
certain flavor characteristics. Any number of factors may help a person determine the
best profile to use, such as the coffee's origin, varietals, processing method or desired
flavor characteristics. A roast profile can be presented as a graph showing time on one
axis and temperature on the other, which can be recorded manually or using computer
software and data loggers linked to temperature probes inside various parts of the
roaster.

Indirect-fired roasters are roasters in which the burner flame does not contact the coffee
beans, although the combustion gases from the burner do contact the beans. Direct-fired
roasters contact the beans with the burner flame and the combustion gases. At the end
of the roasting cycle, the roasted beans are cooled using a vacuum system. Roasted
coffee beans are also cooled using fine water mist, which is known as "quenching" and
is considered inferior to air cooling as the water soaks the fresh beans with moisture and
oxygen particles making it stale almost instantly. Following roasting, the beans are
cooled and stabilized. This stabilization process is called degassing. Following
degassing, the roasted beans are packaged, usually in light-resistant foil bags fitted with
small one-way aroma-lock valves to allow gasses to escape while protecting the beans
from moisture and oxygen. Roasted whole beans can be considered fresh for up to one
month. Once coffee is ground it is best used immediately.

(b) Darkness

As the bean absorbs heat, the color shifts to yellow and then to varying shades of brown.
During the later stages of roasting, oils appear on the surface of the bean, making it
shiny. The roast will continue to darken until it is removed from the heat source. At
10
lighter roasts, the bean will exhibit more of its "origin flavor" - the flavors created in the
bean by the soil and weather conditions in the location where it was grown.

Coffee beans from famous regions like Java, Kenya, Hawaiian Kona, and Jamaican
Blue Mountain are usually roasted lightly so their signature characteristics dominate the
flavor. As the beans darken to a deep brown, the origin flavors of the bean are eclipsed
by the flavors created by the roasting process itself. At darker roasts, the "roast flavor" is
so dominant that it can be difficult to distinguish the origin of the beans used in the roast.
Below, roast levels and their respective flavors are described. These are qualitative
descriptions, and thus subjective. As a rule of thumb, the "shinier" the bean is, the
more dominant the roasting flavors are.

                    Roast level            Notes             Surface             Flavor
                                         After several
                                         minutes the
                                       beans “pop” or                        Lighter-bodied,
                                          "crack" and                        higher acidity,
                     Cinnamon          visibly expand           Dry            no obvious
     Light         roast, half city,     in size. This                         roast flavor
                    New England        stage is called
                                           first crack.
                                            American
                                        mass-market
                                             roasters
                                        typically stop
                                               here.
                                          After a few                         Sweeter than
                       Full city,       short minutes                          light roast;
                      American,            the beans                           more body
   Medium              regular,            reach this           Dry          exhibiting more
                      breakfast,         roast, which                        balance in acid,
                        brown           U.S. specialty                         aroma, and
                                       sellers tend to                         complexity
                                              prefer.
                                          After a few                            Somewhat
                                        more minutes                                 spicy;
                   High, Viennese,         the beans                            complexity is
  Full Roast            Italian        begin popping       Slightly shiny         traded for
                      Espresso,        again, and oils                              heavier
                     Continental           rise to the                          body/mouth-
                                       surface. This is                         feel. Aromas
                                        called second                          and flavors of
                                              crack.                           roast become
                                                                              clearly evident.
                                          After a few                         Smokey-sweet;
                                        more minutes                         light bodied, but
                                       or so the beans                         quite intense.
Double Roast           French          begin to smoke.       Very oily           None of the
                                          The bean                            inherent flavors
                                       sugars begin to                        of the bean are
                                          carbonize.                           recognizable.

(C) Packaging

Extending the useful life of roasted coffee relies on maintaining an optimum environment
for the beans. The first large scale preservation technique was vacuum packing.
11
However, because coffee emits CO2 after roasting, coffee to be vacuum packed must
be allowed to degas for several days before it is sealed. To allow more immediate
packaging, pressurized canisters or foil-lined bags with pressure-relief valves can be
used.

(D) Home Roasting

Home roasting is the process of roasting small batches of green coffee beans for
personal consumption. Roasting coffee in the home is something that has been
practiced for centuries, and has included methods such as heating over fire coals,
roasting in cast iron pans, and rotating iron drums over a fire or coal bed. Computerized
drum roasters are available which simplify home roasting and some home roasters
simply roast in an oven or in air popcorn poppers.

Up until the 20th century, it was more common for at-home coffee drinkers to roast their
coffee in their residence than it was to buy roasted coffee. During the 20th century,
home roasting faded in popularity with the rise of the commercial coffee roasting
companies. In recent years home roasting of coffee has seen a revival. In some cases
there is an economic advantage, but primarily it is a means to achieve finer control over
the quality and characteristics of the finished product.

(E) Emissions and Control

Particulate matter (PM), volatile organic compounds (VOC), organic acids, and
combustion products are the principal emissions from coffee processing. Several
operations are sources of PM emissions, including the cleaning and de-stoning
equipment, roaster, cooler, and instant coffee drying equipment. The roaster is the main
source     of    gaseous pollutants,   including alcohols, aldehydes,  organic     acids,
and nitrogen and sulfur compounds. Because roasters are typically natural gas-fired,
carbon monoxide (CO) and carbon dioxide (CO2) emissions result from fuel combustion.
Decaffeination and instant coffee extraction and drying operations may also be sources
of small amounts of VOC. Emissions from the grinding and packaging operations
typically are not vented to the atmosphere.

Particulate matter emissions from the roasting and cooling operations are typically
ducted to cyclones before being emitted to the atmosphere. Gaseous emissions from
roasting operations are typically ducted to a thermal oxidizer or thermal catalytic oxidizer
following PM removal by a cyclone. Some facilities use the burners that heat the roaster
as thermal oxidizers. However, separate thermal oxidizers are more efficient because
the desired operating temperature is typically between 650°C and 816°C (1200°F and
1500°F), which is 93°C to 260°C (200°F to 500°F) more than the maximum temperature
of most roasters. Some facilities use thermal catalytic oxidizers, which require lower
operating temperatures to achieve control efficiencies that are equivalent to standard
thermal oxidizers. Catalysts are also used to improve the control efficiency of systems in
which the roaster exhaust is ducted to the burners that heat the roaster. Emissions
from spray dryers are typically controlled by a cyclone followed by a wet scrubber.

IV. Economics

Noted as one of the world’s largest, most valuable, legally traded commodities after oil,
coffee has become a vital cash crop for many Third World countries. Over one hundred
million people in developing countries have become dependent on coffee as the primary
source of income. Coffee has become the primary export and backbone for African
countries like Uganda, Burundi, Rwanda, and Ethiopia as well as many Central American
countries. Brazil remains the largest coffee exporting nation, but in recent years Vietnam
has become a major producer of Robusta beans. Indonesia is the third exporter and the
12
largest producer of washed Arabica coffee. Robusta coffees, traded in London at much
lower prices than New York's Arabica, are preferred by large industrial clients, such as
multinational roasters and instant coffee producers, because of the lower cost. Four
single roaster companies buy more than 50 percent of all of the annual production: Kraft,
Nestlé, Procter & Gamble, and Sara Lee. The preference of the "Big Four" coffee
companies for cheap Robusta is believed by many to have been a major contributing
factor to the crash in coffee prices, and the demand for high-quality Arabica beans is
only slowly recovering.

Many experts believe the giant influx of cheap green coffee after the collapse of the
International Coffee Agreement of 1975–1989 led to the prolonged price crisis from 1989
to 2004. In 1997 the price of coffee in New York broke US$3.00/lb, but by late 2001 it
had fallen to US$0.43/lb. In 2007, wholesale coffee was about US$1/lb (e.g. 69 cents in
London in March to 134 cents in New York in October), with Robusta being about 70%
of the price of Arabica. Retail prices varied from an average of $3 in Poland to $3.50 in
the US to $17 in the UK.

The concept of fair trade labeling, which guarantees coffee growers
a negotiated pre-harvest price, began with the Max Havelaar
Foundation's labeling program in the Netherlands. In 2004, 24,222
metric tons out of 7,050,000 produced worldwide were fair trade; in
2005, 33,991 metric tons out of 6,685,000 were fair trade, an
increase from 0.34 percent to 0.51 percent. A number of studies
have shown that fair trade coffee has a positive impact on the
communities that grow it. A study in 2002 found that fair trade
strengthened producer organizations, improved returns to small
producers, and positively affected their quality of life.


                                         TABLE 1
         Top ten green coffee producers — 11 June 2008 Country Production (Tons)

                                     Brazil                 17,000,000
                                   Vietnam                 15,580,000 *
                                   Colombia                 9,400,000 F
                                   Indonesia                2,770,554 *
                                   Ethiopia                 1,705,446 *
                                   Mexico                     962,000 F
                                   India                      954,000 F
                                     Peru                      677,000
                                   Guatemala                  568,000 F
                                   Honduras                   370,000 F
                                   World                    7,742,675 A

     Legend: No symbol = official figure, P = official figure, F = FAO estimate, * = Unofficial/Semi-
                                           official/mirror data,
        C = Calculated figure, A = Aggregate (may include official, semi-official or estimates)


  Source: Food And Agricultural Organization of United Nations: Economic And Social Department:



A 2003 study concluded that fair trade has "greatly improved the well-being of small-
scale coffee farmers and their families" by providing access to credit and external
development funding and greater access to training, giving them the ability to improve
the quality of their coffee. The families of fair trade producers were also more stable than
those who were not involved in fair trade, and their children had better access to
education. A 2005 study of Bolivian coffee producers concluded that Fair-trade
13
certification has had a positive impact on local coffee prices, economically benefiting all
coffee producers, Fair-trade certified or not.

The production and consumption of "Fair Trade Coffee" has grown in recent years as
some local and national coffee chains have started to offer fair trade alternatives. Coffee
is also bought and sold by investors and price speculators as a tradable commodity.
Coffee futures contracts are traded on the New York Mercantile Exchange (NYMEX)
under ticker symbol KT with contract deliveries occurring every year in March, May, July,
September, and December.

V. Social Aspects

                      Coffee was initially used for spiritual reasons. At least 1,000 years
                      ago, traders brought coffee across the Red Sea into Arabia
                      (modern day Yemen), where Muslim monks began cultivating the
                      shrub in their gardens. At first, the Arabians made wine from the
                      pulp of the fermented coffee berries. This beverage was known as
                      qishr (kisher in modern usage) and was used during religious
                      ceremonies.

Coffee became the substitute beverage in place of wine in spiritual practices where wine
was forbidden. Coffee drinking was briefly prohibited to Muslims as haraam in the early
years of the 16th century, but this was quickly overturned. Use in religious rites among
the Sufi branch of Islam led to coffee's being put on trial in Mecca: it was accused of
being a heretic substance, and its production and consumption were briefly repressed. It
was later prohibited in Ottoman Turkey under an edict by the Sultan Murad IV. Coffee,
regarded as a Muslim drink, was prohibited to Ethiopian Orthodox Christians until as late
as 1889; it is now considered a national drink of Ethiopia for people of all faiths. Its early
association in Europe with rebellious political activities led to its banning in England,
among other places.

A contemporary example of coffee prohibition can be found in The Church of Jesus
Christ of Latter-day Saints. The organization claims that it is both physically and
spiritually unhealthy to consume coffee. This comes from the Mormon doctrine of health,
given in 1833 by Mormon founder Joseph Smith, in a revelation called the Word of
Wisdom. It does not identify coffee by name, but includes the statement that "hot drinks
are not for the belly", which has been interpreted to forbid both coffee and tea.

Quite a number of members of the Seventh-day Adventist Church also avoid caffeinated
drinks. In its teachings the church requires members to avoid tea and coffee and other
stimulants. Studies conducted on Adventists have shown a small but statistically
significant association between coffee consumption and mortality from ischemic heart
disease, other cardiovascular disease, all cardiovascular diseases combined, and all
causes of death.

VI. Pharmacology
                    Coffee ingestion on average is about a third of that of tap water in
                    North America and Europe. Worldwide, 6.7 million metric tons of
                    coffee were produced annually in 1998–2000, and the forecast is a
                    rise to 7 million metric tons annually by 2010. Scientific studies have
                    examined the relationship between coffee consumption and an array
                    of medical conditions. Findings are contradictory as to whether coffee
                    has any specific health benefits, and results are similarly conflicting
                    regarding negative effects of coffee consumption.
14
Coffee consumption has been linked to breast size reduction and taking regular hits of
caffeine reduces the risk of breast cancer. Coffee appears to reduce the risk of
Alzheimer's disease, Parkinson's disease, heart disease, diabetes mellitus type 2,
cirrhosis of the liver, and gout. It increases the risk of acid reflux and associated
diseases. Some health effects of coffee are due to its caffeine content, as the benefits
are only observed in those who drink caffeinated coffee, while others appear to be due
to other components. For example, the antioxidants in coffee prevent free radicals from
causing cell damage.

Over 1,000 chemicals have been reported in roasted coffee: more than half of those
tested (19/28) are rodent carcinogens. Coffee's negative health effects are often blamed
on its caffeine content. Research suggests that drinking caffeinated coffee can cause a
temporary increase in the stiffening of arterial walls. Coffee is no longer thought to be a
risk factor for coronary heart disease. Some studies suggest that it may have a mixed
effect on short-term memory, by improving it when the information to be recalled is
related to the current train of thought, but making it more difficult to recall unrelated
information. About 10% of people with a moderate daily intake (235 mg per day)
reported increased depression and anxiety when caffeine was withdrawn, and about
15% of the general population report having stopped caffeine use completely, citing
concern about health and unpleasant side effects.

VII. Ecological

                    Originally, coffee farming was done in the shade of trees, which
                    provided habitat for many animals and insects. This method is
                    commonly referred to as the traditional shaded method. Many farmers
                    (but not all) have decided to modernize their production methods and
                    switch to a method where farmers would now use sun cultivation, in
                    which coffee is grown in rows under full sun with little or no forest
                    canopy. This causes berries to ripen more rapidly and bushes to
                    produce higher yields but requires the clearing of trees and increased
use of fertilizer and pesticides. Traditional coffee production, on the other hand, caused
berries to ripen more slowly and it produced lower yields compared to the modernized
method but the quality of the coffee is allegedly superior. In addition, the traditional
shaded method is environmentally friendly and serves as a habitat for many species.
Opponents of sun cultivation say environmental problems such as deforestation;
pesticide pollution, habitat destruction, and soil and water degradation are the side
effects of these practices. The American Birding Association has led a campaign for
"shade-grown" and organic coffees, which it says are sustainable harvested. However,
while certain types of shaded coffee cultivation systems show greater biodiversity than
full-sun systems, they still compare poorly to native forest in terms of habitat value.

Another issue concerning coffee is its use of water. According to New Scientist, it takes
about 140 liters of water to grow the coffee beans needed to produce one cup of coffee,
and the coffee is often grown in countries where there is a water shortage, like Ethiopia.

VIII. Coffee in the Philippines

                  The production and export of coffee was once a major industry in the
                  Philippines, which 200 years ago was the fourth largest coffee
                  producing nation. Today, however, the Philippines produces only .012%
                  of the world's coffee supply. Efforts are being undertaken to revive the
                  industry however, with the majority of coffee produced in the mountain
                  areas of Batangas, Bukidnon, Benguet, Cavite, Kalinga Apayao,
                  Davao, and Claveria.
15
The Philippines is one of the few countries that produces the four varieties of
commercially-viable coffee: Arabica, Liberica (Barako), Excelsa and Robusta.
Climatic and soil conditions in the Philippines – from the lowland to mountain regions –
make the country suitable for all four varieties.

In the Philippines, coffee has a history as rich as its flavor. The first coffee tree was
introduced in Lipa, Batangas in 1740 by a Spanish Franciscan monk. From there, coffee
growing spread to other parts of Batangas like Ibaan, Lemery, San Jose, Taal, and
Tanauan. Batangas owed much of its wealth to the coffee plantations in these areas and
Lipa eventually became the coffee capital of the Philippines.

By the 1860s, Batangas was exporting coffee to America through San Francisco. When
the Suez Canal was opened, a new market started in Europe as well. Seeing the
success of the Batangeños, Cavite followed suit by growing the first coffee seedlings in
1876 in Amadeo. In spite of this, Lipa still reigned as the center for coffee production in
the Philippines and Batangas barako was commanding five times the price of other
Asian coffee beans. In 1880, the Philippines was the fourth largest exporter of coffee
beans, and when the coffee rust hit Brazil, Africa, and Java, it became the only source of
coffee beans worldwide.

The glory days of the Philippine coffee industry lasted until 1889 when coffee rust hit the
Philippine shores. That, coupled with an insect infestation, destroyed virtually all the
coffee trees in Batangas. Since Batangas was a major producer of coffee, this greatly
affected national coffee production. In two years, coffee production was reduced to 1/6th
its original amount. By then, Brazil had regained its position as the world’s leading
producer of coffee. A few of the surviving coffee seedlings were transferred from
Batangas to Cavite, where they flourished. This was not the end of the Philippines’
coffee growing days, but there was less area allotted to coffee because many farmers
had shifted to other crops.

During the 1950s, the Philippine government, with the help of the Americans, brought in
a more resistant variety of coffee. It was also then that instant coffee was being
produced commercially, thus increasing the demand for beans. Because of favorable
market conditions, many farmers went back to growing coffee in the 1960s. But the
sudden proliferation of coffee farms resulted in a surplus of beans around the world, and
for a while importation of coffee was banned in order to protect local coffee producers.
When Brazil was hit by a frost in the 1970’s, world market coffee prices soared. The
Philippines became a member of the International Coffee Organization (ICO) in 1980.
Today, the Philippines produces 30,000 metric tons of coffee a year, up from 23,000
metric tons just three years ago.

IX. Philippine Coffee Board

The Philippine Coffee Board is a private sector-led group established in May 2002 as the
National Coffee Development Board. The goal of the Coffee Board is to develop and
promote the Philippine coffee industry through technical assistance and credit programs
for coffee farms; and through marketing and promotions of coffee for domestic and
export markets.

Research / training, certification and credit programs are carried out in partnership with
Cavite State University (CavSU), Department of Trade and Industry – International
Coffee Organization Certifying Agency (DTI-ICOCA) and Quedan & Rural Credit
Guarantee Corporation (Quedancor).
16
Aside from rehabilitation, certification, and credit programs, the Coffee Board also
conducts a marketing and promotional program for Philippine coffee called Kape Isla.
Kape Isla is intended for the use of the industry as a Philippine coffee quality seal.

The Coffee Board conducts several events a year, including coffee farming courses,
coffee shop seminars, trade shows, farm tours, and its annual Coffee Break festival.
The Coffee Board is composed of members from the growers, millers, roasters, retailers,
local governments, and agriculture credit sectors.

X. CURRENT TRENDS IN THE NEWS

(1) The Philippines' taste for Civet Coffee
By Sarah Toms
BBC News, Manila
11 April 2006

The Philippines has recently discovered it produces one of the world's most expensive
and coveted kinds of coffee but it comes from an unusual source - the droppings of a
nocturnal, cat-like animal called the Palm Civet.

Civets, related to the mongoose, are usually seen as pests in the Philippines and hunted
for their meat. But their droppings are worth their weight in gold. Known locally as
alamid, civets are carnivorous but they also have a taste for the sweet, red coffee
cherries that contain the beans. The beans pass through the civet whole after fermenting
in the stomach and that's what gives the coffee its unique taste and aroma.

'Best-kept secret'

A group of professional coffee lovers followed the trail of the civet droppings high into the
Malarayat mountain range, south of Manila, in search of the exotic beans. One of them,
Antonio Reyes of the Philippine coffee certifying board, said civet coffee was one of the
Philippines' best-kept secrets. "I heard the old folks in the coffee farming areas have
been gathering this coffee for their own consumption. They never told people they had
this kind of coffee," he said. "It goes through some kind of natural processing which you
can see from the roasted beans. It's oilier, there's more aroma and it's such a good taste
that you can get value for money even if the cost is so high." Civet coffee is one of the
worlds most expensive. In the Philippines, only 500 kg are produced a year and the
roasted beans sell for more than $115 a kilogram.

Bean hunt

Lusina Montenegro, who collects the beans for a living, led the coffee experts to the
civet droppings. She climbs the mountain in her flip-flops, hunting for the beans in the
thick undergrowth. "Sometimes it's a big civet and then the droppings are also big, but
sometimes it's a small one and then the droppings are small," she said. Ms Montenegro
puts the droppings in two containers - for the old ones, which resemble chalky beans,
and for the fresh ones, which look like yellow beans in gravy. She rinses the beans in
forest streams and dries them on her patio before they are sold on to Bote Central, a
company that exports the beans to Japan.

Niche market

The developers of the brand are a husband and wife team, Vie and Basil Reyes. The
couple was involved in conservation work for the sugar palm and the civets that live
among the trees. They made organic vinegar from the palms and started selling the civet
17
coffee alongside it in small bazaars. Now the coffee has become so successful they are
hoping to start brewing up profits in Taiwan and North America.

Mr. Reyes of the coffee certifying agency also hopes the struggling local coffee industry
can mirror the success Indonesia and Vietnam have enjoyed with their brands of civet
coffee. "I never thought it was also available in the Philippines, so when I first heard of it
I thought this is one kind of coffee that we can look at and develop," he said. "If we have
the volume then it's good for the niche market."

'Dark chocolate'

Andrew Gross, an Australian roast master, climbed the mountain to find out for himself
what the attraction is of coffee that passes through the backside of a furry mammal. Just
like a wine connoisseur, he slowly slurped the brewed coffee, letting it travel across his
tongue for the first time. Mr. Gross said he was surprised at how much he liked it,
comparing the taste to fermented plum and dark chocolate with hazelnuts. "There's
obviously some substance to this in terms of what waves I am getting, but beyond the
difference in flavors a lot of it has to do with hype and a lot of it has to do with the fact
that it's fairly rare," he said. It may not be everyone's cup of tea. But experts here hope
coffee lovers will want to treat themselves to something special that might just help perk
up the Philippine coffee industry.

(2) Agri-Food Trade Service
The Brewing Business of the Philippine Specialty Coffee Shop Industry
By Ronald Mark G. Omaña - Center for Food and Agri Business
University of Asia and the Pacific 2006

In the past, people were used to drinking instant coffee. This was before the advent of
specialty coffee shops in the country. Today, coffee shops are a common sight
especially in the Manila metropolis. Specialty coffee refers to the highest-quality green
coffee beans roasted to their greatest flavor potential by true craftspeople and then
properly brewed to well-established standards (Specialty Coffee Association of America
(SCAA). The SCAA further explained that specialty coffee tastes better than instant or
mass-produced coffee because it is made from coffee beans grown only in ideal
climates and prepared according to exacting standards. Also, specialty coffee possesses
a richer and more balanced flavor.

HISTORY

Specialty coffee shops trace their roots from the coffee shops of Europe in the 16th and
17th century upon the introduction of coffee which became a popular drink. In the United
States, specialty coffee shops are said to have been popularized by Starbucks Coffee.

Starbucks Coffee was established in 1971 by Gordon Bowker, Jerry Baldwin, and Zev
Siegl originally to sell coffee beans only. The company's current business of retailing
coffee beverages came about when then marketing person Howard Schultz (currently
Chairman) got interested in selling espresso by the cup after visiting Italy. Initially, the
company tested the new business model in one of its outlets and became an instant hit.
Despite of this success, however, one of the owners opposed Schultz's idea of
expanding the concept to all of its stores.

In 1985, Schultz left Starbucks and opened his own specialty coffee shop called Il
Giornale. By 1987, the owners of Starbucks decided to sell the company to focus on a
1983 acquisition Peet's Coffee and & Tea, which was Starbuck's coffee bean supplier.
Schultz, together with other investors, purchased Starbucks for US$3.7 million. Schultz
eventually changed II Giornale's name to Starbucks Coffee Company.
18
Starbucks currently has more than 10,000 outlets worldwide, with 93 located in the
Philippines operated by its franchisee Rustan Coffee Corporation. In the Philippines,
even before Starbucks came in 1997, there were enterprising Filipinos who had the
foresight to put-up specialty coffee shops. The pioneers in the local industry are Figaro
Coffee Company and The Coffee Experience, both established in early 1993.

Figaro Coffee Company was set up by a group headed by Pacita Juan, the company's
president and chief executive officer. Its first outlet was a small kiosk located at the
Glorietta mall in Makati. The outlet was initially called the F store.

The Coffee Experience, meanwhile, started in the same mall in Makati, also under a
different name - Coffee X. It now has 24 outlets located mainly in Metro Manila.

PRODUCTS

The main product is specialty coffee. Differentiation is made through the various coffee
concoctions and variants. Companies also offer other beverages such as tea and juices,
complementing products such as breads, cakes, and pastries which are produced in the
operators' own commissary plant, supplied by an affiliate or purchased from third party
suppliers. Some even serve breakfast, lunch, and dinner.

MARKET AND PLAYERS

The market for specialty coffee shops was estimated to be at least P2.6 billion in 2004
(Figure 1). Foreign brands accounted for 69 percent of the market; the rest are local
brands.

                                        Figure1. Estimated Market Shares by Brand Type,
                                        2004

                                        Source: SEC, Interviews with Key Players, February-
                                        March 2006




As of February 2006, the Philippine specialty coffee shop industry consisted of at least
15 major players - 10 are foreign and five are local brands.

The foreign brands include Café Nescafe, The Coffee Bean & Tea Leaf, Dome Café,
Gloria Jean's Coffees, McCafe, San Francisco Coffee Co., Seattle's Best Coffee,
Segafredo Zanetti Espresso, Starbuck's Coffee and UCC Coffee (Table 1). Local
companies have managed to get the master franchise for the operation of these foreign
specialty coffee shops in the country. Some of the outlets are owned and operated by
other companies through sub-franchising offered by the master franchise holders.

The local brands, meanwhile, are Bo's Coffee Club, Figaro Coffee Company, Mocha
Blends, and The Coffee Beanery. Other local specialty coffee shops that have recently
sprouted in Metro Manila include Baang Coffee, Libreria, and Coffee Republic, with less
than five outlets each. Meanwhile, the total number of specialty coffee shop outlets or
branches has reached more than 300 as of February 2006. The outlets are located
mainly in Metro Manila and in key cities such as Baguio, Cebu, and Davao. The large
number of outlets is attributed mainly to the growing specialty coffee shop chains.
19




  Table 1. List of Key Players in the Philippine Specialty Coffee Shop Industry, 2006
                                               Year       Number         Affiliates
   Brand                Company
                                           Established of Outlets (Food Businesses)
                                        FOREIGN
 The Coffee
                The Coffee Bean & Tea
Bean & Tea                                     2003         10                -
                  Leaf Philippines Inc.
    Leaf
                    Specialty Beans
Gloria Jean's                                                         Chef Donatello /
                  Philippines Inc. and         2003         19
   Coffees                                                            Wetzel Pretzels
                   various companies
 Segafredo
   Zanetti       Liberty Ventures Inc.         2002          3                -
  Espresso
    Café
  Nescafe
                     La Barista Inc.           2001          5      Le Coure de France


               Coffee Partners Inc. /
San Francisco
              Hot Business Ventures           2001        6                -
 Coffee Co.
                       Inc.
                                                                    Kenny Rogers
Seattle's Best
                   Coffee Masters Inc.        2000       20      Roasters / Popeye's
   Coffee
                                                                 Chicken and Biscuits
                  Blue Mountain Coffee
                                                                 Sakae Sushi / Crepes
 UCC Coffee             Ventures              2000        7
                                                                     and Cream
                 Coffee Brewmasters Inc.
                  Dome Café Franchise
 Dome Cafe                                    1997        4                -
                       Corporation
                                                                   Hi-Lo Café / Bon
  Starbucks          Rustan Coffee
                                              1997       93       Appetit / Yum-Yum
   Coffee             Corporation
                                                                    Tree / Char-Q
                     Golden Arches
   McCafe            Development              NA          4           McDonald's
                      Corporation
                                           LOCAL
                  Mocha Blends
Mocha Blends Corporation and various          2002       39                -
                   companies
               Coffee Centrale The
 Bo's Coffee   Bean Co. Inc. / Bo's
                                              1996       23                -
    Club        Coffee Franchise
                   Corporation
Figaro Coffee
  Company     Figaro Coffee Co. Inc.
                                              1993       49*               -
              and various companies

 The Coffee
                 Cravings Food Svcs Inc.      1993        7      Cravings Restaurants
  Beanery
20
                    CX Food Enterprises
 The Coffee
                      Inc. and various              1993            24       Potato Corner Kiosks
 Experience
                         companies
Source: Securities and Exchange Commission (SEC) / Interviews with Key Players, February 2006
As of February 2006

NA = not available
* = excluding three outlets overseas

Gloria Jean's Coffees International explained that the specialty coffee shop industry is
moving to chains because of their advantages in purchasing power, focused advertising,
product innovations, management control systems, and specialized training.

Across brands, Starbucks Coffee accounted for nearly half of the market in 2004 (Figure
2). Local brand Figaro Coffee Company followed with 15 percent, then Mocha Blends
(9%), Gloria Jean's Coffees (7%), and UCC Coffee (4%). The others cornered the
remaining 16 percent of the market .Local and foreign key players estimated growth at
an average of 10 percent to 20 percent per year since 2002. The financial statements of
industry leader Starbucks Coffee even showed a higher growth of nearly 23 percent per
year over the same period.

Figure 2. Estimated Market Shares by Brand, 2004




Source: SEC; Interviews with Key Players, February-March 2006

PRICING

A comparison of retail prices of selected foreign and local brands for Café Latte revealed
that foreign brands generally charge higher prices compared to local brands (Table 2).
The cheapest Café Latte in small cup from foreign brands costs P7.00 higher than the
most expensive among local brands. The same price difference is observed in the
medium cup but increases to P11.00 on the large cup.

Table 2. Comparative Retail Prices of Café Latte from Selected Brands
                                            Price (In Php) / Size
           Product/Brand
                                      SMALL MEDIUM LARGE
Foreign
The Coffee Bean & Tea Leaf               85          100         115
Gloria Jean's Coffees                    85           95         110
Starbuck's Coffee                        85           95         110
Seattle's Best Coffee                    82           92         107
21
Local
Bo's Coffee Club                        75        85             na
Mocha Blends*                           70        85             na
Figaro Coffee                           69        na             89
The Coffee Beanery                      60        78             na
The Coffee Experience                   60        na             70
Source: Specialty Coffee Shop survey (April 2006)
Small = 8oz / medium = 12oz / large = 16oz
* medium size is 14oz
na = not applicable
PRICE SUBJECT TO CHANGE WITHOUT PRIOR NOTICE

SOURCES OF SUPPLY

The main raw materials used are coffee beans; espresso machines; fresh milk; whipped
cream; and packaging materials (Table 3).

                          Table 3. Sources of Main Inputs
     Brand          Beans (mainly Arabica type)        Espresso Machines Brand
                                FOREIGN BRANDS
                   100% from Nestle (from foreign    100% from Nestle (from foreign
  Café Nescafe
                             affiliates)                          affiliates)
  Gloria Jean's  100% from Gloria Jean's Coffees -
                                                    Astoria (Italy) from local distributor
     Coffees          International (Australia)
 Seattle's Best                                      Rafaello / Michaelangelo (Italy)
                  100% from Seattle's Best (Japan)
     Coffee                                                from local distributor
                                                      Granarcoso (Italy) from local
Starbucks Coffee 100% from Starbucks Coffee (USA)
                                                                  distributor
                                                       Not Applicable (Uses siphon
  UCC Coffee       100% from UCC Coffee (Japan)
                                                                  machine)

                                   LOCAL BRANDS
 Figaro Coffee           100% local / own farm     Astoria (Italy) from local distributor
                      90% Imported from Australia
 Mocha Blends                                         Elektra (Italy) from Australia
                       (Mocha Coffee); 10% local
   The Coffee                                      San Marino Expresso (Italy) from
                      100% local (1 supplier only)
    Beanery                                                   local distributor
   The Coffee                                           Unic (France) from local
                      100% local (1 supplier only)
   Experience                                                    distributor

                           Table 3. Sources of Main Inputs
    Brand             Fresh Milk         Whipped Cream           Packaging Materials
                                 FOREIGN BRANDS
Café Nescafe      100% from Nestle       100% from Nestle          Local suppliers
                                          Imported brand        Local suppliers / Gloria
 Gloria Jean's   Two farms in Laguna
                                             from local          Jean's International
   Coffees             province
                                            distributors              (Australia)
                                          Imported brand
Seattle's Best
                    Local supplier           from local           Seattle's Best (USA)
   Coffee
                                            distributors
                                          Imported brand
  Starbucks      One farm in Batangas
                                             from local               Local suppliers
   Coffee              province
                                            distributors
22
                                              Imported brand
                  Uses cream - 100% from
 UCC Coffee                                      from local           Local suppliers
                    UCC Coffee (Japan)
                                                distributors
                                        LOCAL BRANDS
                     Imported brand from      Imported brand
Figaro Coffee      local distributors / local    from local           Local suppliers
                           suppliers            distributors
                                              Imported brand
Mocha Blends             Local supplier          from local           Local suppliers
                                                distributors
                                              Imported brand
  The Coffee         Imported brand from
                                                 from local           Local suppliers
   Beanery             local distributors
                                                distributors
                                              Imported brand
  The Coffee
                         Local supplier          from local           Local suppliers
  Experience
                                                distributors
Source: Interviews with Key Players, February-March 2006

According to players foreign and local alike, it is easy to get suppliers for their major
inputs. The prevalence of suppliers - which normally cater to restaurants, hotels and
other institutional clients - has led to a situation wherein the suppliers themselves
approach the companies to offer their products. The critical factor among players is the
coffee bean roasting "formula" because it is at this stage where the coffee bean releases
its fullest flavor potential. Poorly roasted beans would yield poor-tasting coffee drink. As
such, every player treats his proprietary roasting techniques and recipe as highly
confidential.

Nearly all of the foreign brands interviewed say their coffee beans - prepared and
packed - are supplied by their parent company overseas, which does the purchasing and
roasting of beans bought from many popular coffee-growing areas like Indonesia, East
Africa, and Latin America. In terms of variety, the foreign brands mainly use the Arabica
coffee bean types. The local brands, meanwhile, are known to use mostly local coffee
beans including the famous Kapeng Barako (Liberica beans).

Because of this practice, the local players are seen as major supporters of the local
coffee industry. Further, their use of Kapeng Barako sets them apart from their foreign
counterparts because the beans are said to have the following characteristics: (a)
particularly strong taste, (b) powerful body, and (c) a distinctly pungent odor which the
popular Arabica beans do not have.

For espresso machines, majority of the foreign and local players use Italian brands
which they acquire through local distributors.

For fresh milk, the players buy from various sources. Many purchase from well-known
milk suppliers such as Alaska Milk Corporation, Consolidated Dairy and Frozen Food
Corporation, Nestle Philippines, New Zealand Milk (Philippines) Inc., and San Miguel
Corporation. However, players like Starbucks Coffee and Gloria Jean's Coffees have
opted to source from dairy farms in Batangas and Laguna. Both players provide
technical assistance to the farm-suppliers so that they could meet the quality standards
set by their parent companies.

For whipped cream, nearly all players use imported brands distributed by local
companies in the country.

Lastly, packaging materials are either sourced from affiliates overseas or from local
packaging companies. Interestingly, Starbucks Coffee being the industry leader requires
23
exclusivity from its suppliers. In other words, their suppliers are not allowed to cater to
other specialty coffee shops. They can, however, still service hotels, restaurants and
other foodservice outlets.

While the other players do not require their suppliers to be exclusive, they do not allow
them to sell to other specialty coffee shops exactly the same products (e.g. breads,
cakes, and pastries) as some of the recipes are proprietary.

INDUSTRY ASSOCIATIONS

Some of the major players meet and discuss as members of the private sector-led
National Coffee Development Board (NCDB), which aims to promote and save the local
coffee industry from declining production and area planted. The group incidentally
started as the government's National Task Force on Coffee Rehabilitation which was
sworn into office by President Gloria Macapagal-Arroyo in May 2002. One of NCDB's
programs is the Kape Isla Cooperative Marketing whose objective is to develop loyalty to
Philippine coffee, reduce imports, increase domestic production, and create new jobs.
The Program's Kape Isla seal is intended for the use of the different players in the
industry as a Philippine coffee quality seal.

The Program's members are specialty coffee retail shops such as Bo's Coffee Club,
Coffee Experience, The Coffee Beanery, Figaro Coffee Company, Mocha Blends,
Starbucks, and Seattle's Best Coffee, as well as coffee bean growers, millers, roasters,
local governments, and agriculture credit sectors.

Another organization is the Specialty Coffee Association of the Philippines (SCAP),
which was established in 1998 to promote and support the specialty coffee trade in the
country. SCAP's objectives are: (1) to advocate Philippine specialty coffee as world
class; encourage members to use Philippine specialty coffee in their coffee outlets; (2)
sponsor events and forums that showcase Philippine specialty coffee; provide programs
(3) to assist local coffee farmers; upgrade the quality of coffee; and (4) to promote
general awareness and appreciation of Philippine specialty coffee (F&B World,
November/December 2003).

PROSPECTS

The specialty coffee shop industry is seen to sustain its growth of 10 percent to 20
percent yearly for the next three to five years.

Players attribute this to the growing awareness of specialty coffee among consumers,
the improving image of coffee in general as something that is good for the health, and
the expanding family spending on eating-out.

On the growing adoption of coffee by other restaurants, players say their wide list of
coffee concoctions make them stand-out among other foodservice outlets. Their unique
ambiance is also a big come-on. Players also capitalize on what is popular such as the
availability of wireless internet or WIFI and the offering of potential product substitutes
such as tea, juices, shakes, chocolate drinks, and healthy products such as salads, low-
calorie versions of their best-selling drinks, pastries and the like. The offering of
customer loyalty programs also helps them push their sales targets.

Overall, the continuing focus on addressing key success factors such as product
development and innovation, brand and product promotion, and outlet expansion would
allow the industry to continue to enjoy a brewing business and at the same time, help the
development of the domestic coffee growing industry.
24
References:

   •   BusinessWorld, November 2000
   •   F&B World, November/December 2003.
   •   Interviews with Key Players, February-March 2006
   •   Securities and Exchange Commission
   •   Specialty Coffee Association of America
   •   www.starbucks.com

Resources:
   •   FAO Statistical Yearbook 2004 Vol. 1/1 Table C.10: Most important imports and exports of
       agricultural products (in value terms)(2004)" (PDF). FAO Statistics Division (2006).
   •   Pendergrast, Mark (1999). Uncommon Grounds: The History of Coffee and How It Transformed
       Our World. Basic Books. ISBN 0-465-05467-6.
   •   John K. Francis. "Coffea arabica L. RUBIACEAE". Factsheet of U.S. Department of Agriculture,
       Forest Service.
   •   Rickert, Eve (2005-12-15). "Environmental effects of the coffee crisis: a case study of land use and
       avian communities in Agua Buena, Costa Rica". M.Sc. Thesis, The Evergreen State College.
   •   Alex Scofield. "Vietnam: Silent Global Coffee Power".
   •   Coffee@ nationalgeographic.com. www.nationalgeographic.com/coffee
   •   Botanical Aspects". International Coffee Organization.
   •   James A. Duke. "Coffea arabica L.". Purdue University.
   •   Bakalar, Nicholas (2006-08-15). "Coffee as a Health Drink? Studies Find Some Benefits". New
       York Times. Retrieved on 2007-07-28.
   •   Johns Hopkins University School of Medicine (2003). "Use and Common Sources of Caffeine".
       Information about Caffeine Dependence. Retrieved on 2008-02-23.
   •   Wu JN, Ho SC, Zhou C, et al (August 2008). "Coffee consumption and risk of coronary heart
       diseases: A meta-analysis of 21 prospective cohort studies". Int. J. Cardiol..
       doi:10.1016/j.ijcard.2008.06.051. PMID 18707777.
   •   Murray D., Raynolds L. & Taylor P. (2003). One Cup at a time: Poverty Alleviation and Fair Trade
       coffee in Latin America. Colorado State University, p28
   •   Toms, Sarah. (2006). The Philippines' taste for civet coffee. news.bbc.co.uk/2/hi/asia-
       pacific/4896230.stm
   •   Omaña, Ronald Mark G. (2006). The Brewing Business of the Philippine Specialty Coffee Shop
       Industry.www.ats.agr.gc.ca/asean/4335_e.htm
   •   The Philippine Coffee Board Website. www.coffeeboard.com.ph
   •   Types Of Coffee. www.anothercoffee.co.uk/coffeeinfo/coffeetypes

Weitere ähnliche Inhalte

Was ist angesagt? (18)

Coffee
CoffeeCoffee
Coffee
 
Zdeňka králová prezentace informací
Zdeňka králová   prezentace informacíZdeňka králová   prezentace informací
Zdeňka králová prezentace informací
 
Black Gold-June2011 copy
Black Gold-June2011 copyBlack Gold-June2011 copy
Black Gold-June2011 copy
 
Coffee language
Coffee languageCoffee language
Coffee language
 
Non alcoholic beverages - COFFEE
Non alcoholic beverages - COFFEENon alcoholic beverages - COFFEE
Non alcoholic beverages - COFFEE
 
Coffee
CoffeeCoffee
Coffee
 
Coffee Project
Coffee ProjectCoffee Project
Coffee Project
 
Non alcoholic beverages
Non  alcoholic beveragesNon  alcoholic beverages
Non alcoholic beverages
 
Documentary Research
Documentary ResearchDocumentary Research
Documentary Research
 
Coffee and coffee break
Coffee and coffee breakCoffee and coffee break
Coffee and coffee break
 
All About Coffee
All About CoffeeAll About Coffee
All About Coffee
 
Engleza
EnglezaEngleza
Engleza
 
Instant coffee manufacturing (what you know about coffee)
Instant coffee manufacturing (what you know about coffee)Instant coffee manufacturing (what you know about coffee)
Instant coffee manufacturing (what you know about coffee)
 
Sample poster 1
Sample poster 1Sample poster 1
Sample poster 1
 
English project
English projectEnglish project
English project
 
Coffee Brewing History
Coffee   Brewing HistoryCoffee   Brewing History
Coffee Brewing History
 
Coffee
CoffeeCoffee
Coffee
 
Introduction to coffee
Introduction to coffeeIntroduction to coffee
Introduction to coffee
 

Andere mochten auch (8)

research on coffee
research on coffeeresearch on coffee
research on coffee
 
Coffee
CoffeeCoffee
Coffee
 
Vegetarianism presentation-ppt-251113
Vegetarianism presentation-ppt-251113Vegetarianism presentation-ppt-251113
Vegetarianism presentation-ppt-251113
 
Vegetarianism Presentation
Vegetarianism PresentationVegetarianism Presentation
Vegetarianism Presentation
 
Vegetarian
VegetarianVegetarian
Vegetarian
 
Final na final thesis
Final na final thesisFinal na final thesis
Final na final thesis
 
My thesis proposal
My thesis proposalMy thesis proposal
My thesis proposal
 
Thesis
ThesisThesis
Thesis
 

Ähnlich wie Exploring the world of coffee (20)

Coffee
CoffeeCoffee
Coffee
 
Coffee
CoffeeCoffee
Coffee
 
Coffe
CoffeCoffe
Coffe
 
Coffee-Cultivation & Processing.pptx
Coffee-Cultivation & Processing.pptxCoffee-Cultivation & Processing.pptx
Coffee-Cultivation & Processing.pptx
 
Engleza
EnglezaEngleza
Engleza
 
Coffee
CoffeeCoffee
Coffee
 
Maricica Stan Si Elena Caragea
Maricica Stan Si Elena CarageaMaricica Stan Si Elena Caragea
Maricica Stan Si Elena Caragea
 
Coffee
CoffeeCoffee
Coffee
 
Coffe
CoffeCoffe
Coffe
 
proiect
proiectproiect
proiect
 
INDIAN COFFEE INDUSTRY
INDIAN COFFEE INDUSTRYINDIAN COFFEE INDUSTRY
INDIAN COFFEE INDUSTRY
 
55_Manisha Dabral_coffee.pptx
55_Manisha Dabral_coffee.pptx55_Manisha Dabral_coffee.pptx
55_Manisha Dabral_coffee.pptx
 
Proiect Engleza
Proiect EnglezaProiect Engleza
Proiect Engleza
 
Presentation1
Presentation1Presentation1
Presentation1
 
Coffee- The Beautiful Journey from Seed to Cup.pptx
Coffee- The Beautiful Journey from Seed to Cup.pptxCoffee- The Beautiful Journey from Seed to Cup.pptx
Coffee- The Beautiful Journey from Seed to Cup.pptx
 
Coffee
CoffeeCoffee
Coffee
 
Coffee
CoffeeCoffee
Coffee
 
Coffee tourism p pt
Coffee tourism p ptCoffee tourism p pt
Coffee tourism p pt
 
Proiect engleza Ana Maria Dumitru
Proiect engleza Ana Maria DumitruProiect engleza Ana Maria Dumitru
Proiect engleza Ana Maria Dumitru
 
coffee
coffeecoffee
coffee
 

Exploring the world of coffee

  • 1. 1 Exploring the World of Coffee By: David Cyr S. Verano Abstract: Coffee is a stimulant beverage prepared from roasted seeds, commonly called coffee beans from the coffee plant is one of the most popular beverages worldwide being the second-most-traded physical commodity in the world, ranking second only to petroleum. This beverage was first consumed in the 9th century, when it was discovered in the highlands of Ethiopia and from there it spread to Egypt and Yemen, and by the 15th century had reached Azerbaijan, Persia, Turkey, and northern Africa. From the Muslim world, coffee spread to Italy, then to the rest of Europe, Indonesia and the Americas. Coffee berries, which contain the coffee bean, are produced by several species of small evergreen bush of the genus Coffea. The two most commonly grown species are Coffea canephora also known as Coffea robusta and Coffea arabica. These are cultivated in Latin America, Southeast Asia, and Africa. Once ripe, coffee berries are picked, processed, and dried. The seeds are then roasted, undergoing several physical and chemical changes. After which, they are roasted to varying degrees, depending on the desired flavor; Cooled then ground and brewed to create coffee. Today, coffee is no longer a typical hot served beverage but rather imaginatively concocted and presented in a variety of ways. Coffee has played an important role in many societies throughout modern history. In Africa and Yemen, it was used in religious ceremonies. As a result, the Ethiopian Church banned its consumption until the reign of Emperor Menelik II of Ethiopia. It was banned in Ottoman Turkey in the 17th century for political reasons, and was associated with rebellious political activities in Europe. In modern day business, it is not just a beverage for entertainment but also an important export commodity. In 2004, coffee was the top agricultural export for 12 countries, and in 2005, it was the world's seventh largest legal agricultural export by value. Some controversy is associated with coffee cultivation and its impact on the I. Etymology and History The English word coffee first came to be used in the early- to mid- 1600s, but early forms of the word date to the last decade of the 1500s. It comes from the Italian caffè. The term was introduced to Europe via the Ottoman Turkish kahve which is in turn derived from the Arabic: ‫ ,قهوة‬qahweh. The origin of the Arabic term is uncertain; it is either derived from the name of the Kaffa region in western Ethiopia, where coffee was cultivated, or by a truncation of qahwat al-būnn, meaning "wine of the bean" in Arabic. In Eritrea, "būnn" (also meaning "wine of the bean" in Tigrinya) is used. The Amharic and Afan Oromo name for coffee is bunna. Coffee use can be traced at least to as early as the 9th century, when it appeared in the highlands of Ethiopia. According to legend, Ethiopian shepherds were the first to observe the influence of the caffeine in coffee beans when the goats appeared to "dance" and to have an increased level of energy after consuming wild coffee berries. The legend names the shepherd "Kaldi." From Ethiopia, coffee spread to Egypt and Yemen. It was in Arabia that coffee beans were first roasted and brewed similarly as they are today. By the 15th century, it had reached the rest of the Middle East, Persia, Turkey, and northern Africa. In 1583, Leonhard Rauwolf, a German physician, gave this description of coffee after returning from a ten year trip to the Near East: “A beverage as black as ink, useful against numerous illnesses, particularly those of the stomach. Its consumers take it in the morning, quite frankly, in a porcelain cup that is passed around and from which each one drinks a cupful. It is composed of water and the fruit from a bush called bunnu.”
  • 2. 2 From the Muslim world, coffee spread to Italy. The thriving trade between Venice and North Africa, Egypt, and the Middle East brought many goods, including coffee, to the Venetian port. From Venice, it was introduced to the rest of Europe. Coffee became more widely accepted after it was deemed a Christian beverage by Pope Clement VIII in 1600, despite appeals to ban the "Muslim drink". The first European coffee house opened in Italy in 1645. The Dutch were the first to import coffee on a large scale, and they were among the first to defy the Arab prohibition on the exportation of plants or un- roasted seeds when Pieter van den Broeck smuggled seedlings from Aden into Europe in 1616. The Dutch later grew the crop in Java and Ceylon. The first exports of Indonesian coffee from Java to the Netherlands occurred in 1711. Through the efforts of the British East India Company, coffee became popular in England as well. It was introduced in France in 1657, and in Austria and Poland after the 1683 Battle of Vienna, when coffee was captured from supplies of the defeated Turks. When coffee reached North America during the colonial period, it was initially not as successful as it had been in Europe. During the Revolutionary War, however, the demand for coffee increased so much that dealers had to hoard their scarce supplies and raise prices dramatically; this was partly due to the reduced availability of tea from British merchants. After the War of 1812, during which Britain temporarily cut off access to tea imports, the Americans' taste for coffee grew, and high demand during the American Civil War together with advances in brewing technology secured the position of coffee as an everyday commodity in the United States. II. Biology and Cultivation The Coffea plant is native to subtropical Africa and southern Asia. It belongs to a genus of 10 species of flowering plants of the family Rubiaceae. It is an evergreen shrub or small tree that may grow 5 meters (16 ft) tall when un-pruned. The leaves are dark green and glossy, usually 10– 15 centimeters (3.9–5.9 in) long and 6.0 centimeters (2.4 in) wide. It produces clusters of fragrant, white flowers that bloom simultaneously. The fruit berry is oval, about 1.5 centimeters (0.6 in) long, and green when immature, but ripens to yellow, then crimson, becoming black on drying. Each berry usually contains two seeds, but from 5 to 10 percent of the berries has only one; these are called pea berries. Berries ripen in seven to nine months. Coffee is usually propagated by seeds. The traditional method of planting coffee is to put 20 seeds in each hole at the beginning of the rainy season; half are eliminated naturally. Coffee is often intercropped with food crops, such as corn, beans, or rice, during the first few years of cultivation. The two main cultivated species of the coffee plant are Coffea canephora and Coffea arabica. Arabica coffee (from C. Arabica) is considered more suitable for drinking than Robusta coffee (from C. canephora); Robusta tends to be bitter and have less flavor than Arabica. For this reason, about three-quarters of coffee cultivated worldwide are C. arabica however, C. canephora is less susceptible to disease than C. arabica and can be cultivated in environments where C. arabica will not thrive. Robusta coffee also contains about 40–50 percent more caffeine than Arabica. For this reason, it is used as an inexpensive substitute for Arabica in many commercial coffee blends. Good quality Robusta are used in some espresso blends to provide a better foam head and to lower the ingredient cost.
  • 3. 3 Other cultivated species include Coffea liberica and Coffea esliaca, believed to be indigenous to Liberia and southern Sudan, respectively. Most Arabica coffee beans originate from either Latin America, eastern Africa, Arabia, or Asia. Robusta coffee beans are grown in western and central Africa, throughout Southeast Asia, and to some extent in Brazil. Beans from different countries or regions usually have distinctive characteristics such as flavor, aroma, body, and acidity. These taste characteristics are dependent not only on the coffee's growing region, but also on genetic subspecies (varietals) and processing. Varietals are generally known by the region in which they are grown, such as Colombian, Java, or Kona. There are two main species of bean that thrive in equatorial regions: Arabica and Robusta. A. Robusta is grown at lower altitudes, 0 to 700 meters, and has a high yield per plant and high caffeine content (1.7 to 4.0%). It accounts for about 30% of world production. Robusta has a stronger flavor than Arabica with a full body and a woody aftertaste which is useful in creating blends and especially useful in instant coffee which is mainly grown in the following regions: • Western and Central Africa (Ivory Coast, Cameroon, Uganda, Angola, etc.) • Malaysia (Vietnam, Sri Lanka, Sumatra, Java, etc.) • Brazil • India B. Arabica grows at higher altitudes, 1000 to 2000 meters, and while it has a lower yield and less caffeine content (0.8 to 1.4%) it is widely recognized to be superior to Robusta. Arabica accounts for about 70% of world production, although only about 10% of this yields "grand cru" beans. Arabica has a delicate acidic flavor, a refined aroma and a caramel aftertaste which is grown in the following regions: • Central America (Mexico, Guatemala, El Salvador, Nicaragua, Costa Rica, Panama) • South America (Venezuela, Colombia, Ecuador, Peru, Bolivia, Paraguay, Argentina) • India • Eastern Africa (Ethiopia, Kenya, Tanzania, Zambia, Mozambique) • Papua New Guinea Many of the cheaper blends have a higher proportion of Robusta compared to Arabica. Some high quality blends use a small quantity of the very best Robusta beans to give body and character to the blends, particularly in espresso blends. III. Processing Processing of coffee is the method converting the raw fruit of the into the coffee. The cherry has the fruit or pulp removed leaving the seed or bean which is then dried. While all green coffee is processed, the method that is used varies and can have a significant effect on the flavor of roasted and brewed coffee.
  • 4. 4 A. Picking A coffee plant usually starts to produce flowers 3–4 years after it is planted and it is from these flowers that the fruits of the plant (commonly known as coffee cherries) appear, with the first useful harvest possible around 5 years after planting. The cherries ripen around eight months after the emergence of the flower, by changing color from green to red, and it is at this time that they should be harvested. In most coffee-growing countries, there is one major harvest a year; though in countries like Colombia, where there are two flowerings a year, there is a main and secondary crop. In most countries, the coffee crop is picked by hand, a labor-intensive and difficult process, though in places like Brazil, where the landscape is relatively flat and the coffee fields immense, the process has been mechanized. Whether picked by hand or by machine, all coffee is harvested in one of two ways: • Strip Picked: The entire crop is harvested at one time. This can either be done by machine or by hand. In either case, all of the cherries are stripped off of the branch at one time. • Selectively Picked: Only the ripe cherries are harvested and they are picked individually by hand. Pickers rotate among the trees every 8 – 10 days, choosing only the cherries which are at the peak of ripeness. Because this kind of harvest is labor intensive, and thus more costly, it is used primarily to harvest the finer Arabica beans. The laborers who pick coffee by hand receive payment by the basketful. As of 2003, payment per basket is between US$2.00 to $10 with the overwhelming majority of the laborers receiving payment at the lower end. An experienced coffee picker can collect up to 6-7 baskets a day. Depending on the grower, coffee pickers are sometimes specifically instructed to not pick green coffee berries since the seeds in the berries are not fully formed or mature. This discernment typically only occurs with growers who harvest for higher end/specialty coffee where the pickers are paid better for their labor. Mixes of green and red berries, or just green berries, are used to produce cheaper mass consumer coffee beans, which are characterized by a displeasingly bitter/astringent flavor and a sharp odor. Red berries, with their higher aromatic oil and lower organic acid content, are more fragrant, smooth, and mellow. As such coffee picking is one of the most important stages in coffee production. B. Processing (1) Wet process In the Wet Process, the fruit covering the seeds/beans is removed before they are dried. Coffee processed by the wet method is called wet processed or washed coffee. The wet method requires the use of specific equipment and substantial quantities of water. The coffee cherries are sorted by immersion in water. Bad or unripe fruit will float and the good ripe fruit will sink. The skin of the cherry and some of the pulp is removed by pressing the fruit by machine in water through a screen. The bean will still have a significant amount of the pulp clinging to it that needs to be removed. This is done either by the classic ferment-and-wash method or a newer procedure variously called machine- assisted wet processing, aquapulping or mechanical demucilaging.
  • 5. 5 (a) Sorting coffee in water Ferment-and-Wash Method: In the ferment and wash method of wet processing the remainder of the pulp is removed by breaking down the cellulose by fermenting the beans with microbes and then washing them with large amounts of water. Fermentation can be done with extra water or, in "Dry Fermentation", in the fruit's own juices only. The fermentation process has to be carefully monitored to ensure that the coffee doesn't acquire undesirable, sour flavors. For most coffees, mucilage removal through fermentation takes between 24 and 36 hours, depending on the temperature, thickness of the mucilage layer and concentration of the enzymes. The end of the fermentation is assessed by feel, as the parchment surrounding the beans loses its slimy texture and acquires a rougher "pebbly" feel. When the fermentation is complete, the coffee is thoroughly washed with clean water in tanks or in special washing machines. Machine-assisted wet processing: In machine-assisted wet processing, fermentation is not used to separate the bean from the remainder of the pulp; rather, this is done through mechanical scrubbing. This process can cut down on water use and pollution since ferment and wash water stinks. In addition, removing mucilage by machine is easier and more predictable than removing it by fermenting and washing. However, by eliminating the fermentation step and prematurely separating fruit and bean, mechanical demucilaging can remove an important tool that mill operators have of influencing coffee flavor. Furthermore, the ecological criticism of the ferment-and-wash method increasingly has become moot, since a combination of low-water equipment plus settling tanks allows conscientious mill operators to carry out fermentation with limited pollution. Any wet processing of coffee produces coffee wastewater which and still unjustifiable can be a pollutant. Around 130 liters of fresh water is required to process one kilogram of quality coffee. After the pulp has been removed what is left is the bean surrounded by two additional layers, the silver skin and the parchment. The beans must be dried to a water content of about 10% before they are stable. Coffee beans can be dried in the sun or by machine but in most cases it is dried in the sun to 12-13% moisture and brought down to 10% by machine. Drying entirely by machine is normally only done where space is at a premium or the humidity is too high for the beans to dry before mildewing. (2) Dry process Dry process, also known as unwashed or natural coffee, is the oldest method of processing coffee. The entire cherry after harvest is first cleaned and then placed in the sun to dry on tables or in thin layers on patios: Cleaning: The harvested cherries are usually sorted and cleaned, to separate the unripe, overripe and damaged cherries and to remove dirt, soil, twigs and leaves. This can be done by winnowing, which is commonly done by hand, using a large sieve. Any unwanted cherries or other material not winnowed away can be picked out from the top of the sieve. The ripe cherries can also be separated by flotation in washing channels close to the drying areas. Drying: The coffee cherries are spread out in the sun, either on large concrete or brick patios or on matting raised to waist height on trestles. As the cherries dry, they are raked or turned by hand to ensure even drying and prevent mildew. It may take up to 4 weeks before the cherries are dried to the optimum moisture content, depending on the weather conditions. On larger plantations, machine-drying is sometimes used to speed up the process after the coffee has been pre-dried in the sun for a few days.
  • 6. 6 The drying operation is the most important stage of the process, since it affects the final quality of the green coffee. A coffee that has been over dried will become brittle and produce too many broken beans during hulling (broken beans are considered defective beans). Coffee that has not been dried sufficiently will be too moist and prone to rapid deterioration caused by the attack of fungi and bacteria. The dried cherries are stored in bulk in special silos until they are sent to the mill where hulling, sorting, grading and bagging take place. All the outer layers of the dried cherry are removed in one step by the hulling machine. The dry method is used for about 95% of the Arabica coffee produced in Brazil, most of the coffees produced in Ethiopia, Haiti and Paraguay, as well as for some Arabicas produced in India and Ecuador. Almost all Robustas are processed by this method. It is not practical in very rainy regions, where the humidity of the atmosphere is too high or where it rains frequently during harvesting. Sun Drying: When dried in the sun coffee is most often spread out in rows on large patios where it needs to be raked every six hours to promote even drying and prevent the growth of mildew. Some coffee is dried on large raised tables where the coffee is turned by hand. Drying coffee this way has the advantage of allowing air to circulate better around the beans promoting more even drying but increases cost and labor significantly.After the drying process (in the sun and/or through machines), the parchment skin or pergamino is thoroughly dry and crumbly, and easily removed in the Hulling process. Coffee occasionally is sold and shipped in parchment or en pergamino, but most often a machine called a huller is used to crunch off the parchment skin before the beans are shipped. (3) Semi dry process Semi dry is a hybrid process used in Indonesia and Brazil. In Indonesia, the process is also called "wet hulled", "semi-washed" or "Giling Basah". Literally translated from Indonesian, Giling Basah means "wet grinding". Most small-scale farmers in Sumatra, Sulawesi, Flores and Papua use the giling basah process. In this process, farmers remove the outer skin from the cherries mechanically, using locally built pulping machines. The coffee beans, still coated with mucilage, are then stored for up to a day. Following this waiting period, the mucilage is washed off and the parchment coffee is partially dried in the sun before sale at 30% to 35% moisture content. (C) Milling The final steps in coffee processing involve removing the last layers of dry skin and remaining fruit residue from the now dry coffee, and cleaning and sorting it. These steps are often called dry milling to distinguish them from the steps that take place before drying, which collectively are called wet milling. (D) Hulling The first step in dry milling is the removal of what is left of the fruit from the bean, whether it is the crumbly parchment skin of wet-processed coffee, the parchment skin and dried mucilage of semi-dry-processed coffee, or the entire dry, leathery fruit covering of the dry-processed coffee. Semi-dry hulling at 30% to 35% moisture (Giling Basah), as occurs in Indonesia, is thought to reduce acidity and increase body.Hulling is done with the help of machines, which can range from simple millstones to sophisticated machines that gently whack at the coffee.
  • 7. 7 (E) Polishing This is an optional process in which any silver skin that remains on the beans after hulling is removed in a polishing machine. This is done to improve the appearance of green coffee beans and eliminate a byproduct of roasting called chaff. It is described by some to be detrimental to the taste by raising the temperature of the bean through friction which changes the chemical makeup of the bean. (D) Cleaning and sorting Sorting by Size and Density: Most fine coffee goes through a battery of machines that sort the coffee by density of bean and by bean size, all the while removing sticks, rocks, nails, and miscellaneous debris that may have become mixed with the coffee during drying. First machines blow the beans into the air; those that fall into bins closest to the air source are heaviest and biggest; the lightest (and likely defective) beans plus chaff are blown in the farthest bin. Other machines shake the beans through a series of sieves, sorting them by size. Finally, a machine called a gravity separator shakes the sized beans on a tilted table, so that the heaviest, densest and best vibrate to one side of the pulsating table, and the lightest to the other. Sorting by Color: The final step in the cleaning and sorting procedure is called color sorting, or separating defective beans from sound beans on the basis of color rather than density or size. Color sorting is the trickiest and perhaps most important of all the steps in sorting and cleaning. With most high-quality coffees color sorting is done in the simplest possible way: by hand. Teams of workers pick discolored and other defective beans from the sounds beans. The very best coffees may be hand-cleaned twice (double picked) or even three times (triple picked). Coffee that has been cleaned by hand is usually called European preparation; most specialty coffees have been cleaned and sorted in this way. Color sorting can also be done by machines. Streams of beans fall rapidly, one at a time, past sensors that are set according to parameters that identify defective beans by value (dark to light) or by color. A tiny, decisive puff of compressed air pops each defective bean out of the stream of sound beans the instant the machine detects an anomaly. However, these machines are currently not used widely in the coffee industry for two reasons: • First, the capital investment to install these delicate machines and the technical support to maintain them is daunting. • Second, sorting coffee by hand supplies much-needed work for the small rural communities that often cluster around coffee mills. Nevertheless, computerized color sorters are essential to coffee industries in regions with relatively high standards of living and high wage demands. (E) Grading Grading is the process of categorizing coffee beans on the basis of various criteria such as size of the bean, where and at what altitude it was grown, how it was prepared and picked, and how good it tastes, or its cup quality. Coffees also may be graded by the number of imperfections (defective and broken beans, pebbles, sticks, etc.) per sample. For the finest coffees, origin of the beans (farm or estate, region, cooperative) is especially important. Growers of premium estate or cooperative coffees may impose a level of quality control that goes well beyond conventionally defined grading criteria,
  • 8. 8 because they want their coffee to command the higher price that goes with recognition and consistent quality. (F) Aging All coffee, when it was introduced in Europe, came from the port of Mocha in what is now modern day Yemen. To import the beans to Europe the coffee was on boats for a long sea voyage around the Horn of Africa. This long journey and the exposure to the sea air changed the coffee's flavor. Later, coffee spread to India and Indonesia but still required a long sea voyage. Once the Suez Canal was opened the travel time to Europe was greatly reduced and coffee whose flavor had not changed due to a long sea voyage began arriving. To some degree, this fresher coffee was rejected because Europeans had developed a taste for the changes that were brought on by the long sea voyage. To meet this desire, some coffee was aged in large open-sided warehouses at port for six or more months in an attempt to simulate the effects of a long sea voyage before it was shipped to Europe. Although it is still widely debated, certain types of green coffee are believed to improve with age; especially those that are valued for their low acidity, such as coffees from Indonesia or India. Several of these coffee producers sell coffee beans that have been aged for as long as 3 years, with some as long as 8 years. However, most coffee experts agree that a green coffee peaks in flavor and freshness within one year of harvest, because over-aged coffee beans will lose much of their essential oil content. (G) Decaffeination Decaffeination is the process of extracting caffeine from green coffee beans prior to roasting. The most common decaffeination process used in the United States is supercritical carbon dioxide (CO2) extraction. In this process, moistened green coffee beans are contacted with large quantities of supercritical CO2 (CO2 maintained at a pressure of about 4,000 pounds force per square inch (28 MPa) and temperatures between 90 and 100 °C (194 and 212 °F)), which removes about 97% of the caffeine from the beans. The caffeine is then recovered from the CO2, typically using an activated carbon adsorption system. Another commonly used method is solvent extraction, typically using oil (extracted from roasted coffee) or ethyl acetate as a solvent. In this process, solvent is added to moistened green coffee beans to extract most of the caffeine from the beans. After the beans are removed from the solvent, they are steam-stripped to remove any residual solvent. The caffeine is then recovered from the solvent, and the solvent is re- used. Water extraction is also used for decaffeination. Decaffeinated coffee beans have a residual caffeine content of about 0.1% on a dry basis. Not all facilities have decaffeination operations, and decaffeinated green coffee beans are purchased by many facilities that produce decaffeinated coffee. (H) Storage Green coffee is fairly stable (approx. up to 1 year) if stored correctly. Most often it is in a Jute sack kept in a cool, clean, and dry place. (I) Roasting Although not considered part of the processing pipeline proper, nearly all coffee sold to consumers throughout the world is sold as roasted coffee. Consumers can also elect to
  • 9. 9 buy non-roasted coffee to be roasted at home. Roasting coffee transforms the chemical and physical properties of green coffee beans into roasted coffee products. The roasting process is what produces the characteristic flavor of coffee by causing the green coffee beans to expand and to change in color, taste, smell, and density. Non-roasted beans contain similar acids, protein, and caffeine as those that have been roasted, but lack the taste. It takes heat to speed up the Maillard and other chemical reactions that develop and enhance the flavor. As green coffee is more stable than roasted, the roasting process tends to take place close to where it will be consumed. This reduces the time that roasted coffee spends in distribution, helping to maximize its shelf life. The vast majority of coffee is roasted commercially on a large scale, but some coffee drinkers roast coffee themselves in order to have more control over the freshness and flavor profile of the beans. (a) Process The coffee roasting process consists essentially of sorting, roasting, cooling, and packaging operations but can also include grinding in larger scale roasting houses. In larger operations, bags of green coffee beans are hand or machine-opened, dumped into a hopper, and screened to remove debris. The green beans are then weighed and transferred by belt or pneumatic conveyor to storage hoppers. From the storage hoppers, the green beans are conveyed to the roaster. Roasters typically operate at temperatures between 370 and 540 °F (188 and 282 °C), and the beans are roasted for a period of time ranging from 3 to 30 minutes. Roasters are typically horizontal rotating drums that are heated from below and tumble the green coffee beans in a current of hot gases. The heat source can be supplied by natural gas, liquefied petroleum gas (LPG), electricity or even wood. These roasters can operate in either batch or continuous modes and can be indirect or direct-fired. Those who roast coffee often prefer to follow a "recipe" or "roast profile" to highlight certain flavor characteristics. Any number of factors may help a person determine the best profile to use, such as the coffee's origin, varietals, processing method or desired flavor characteristics. A roast profile can be presented as a graph showing time on one axis and temperature on the other, which can be recorded manually or using computer software and data loggers linked to temperature probes inside various parts of the roaster. Indirect-fired roasters are roasters in which the burner flame does not contact the coffee beans, although the combustion gases from the burner do contact the beans. Direct-fired roasters contact the beans with the burner flame and the combustion gases. At the end of the roasting cycle, the roasted beans are cooled using a vacuum system. Roasted coffee beans are also cooled using fine water mist, which is known as "quenching" and is considered inferior to air cooling as the water soaks the fresh beans with moisture and oxygen particles making it stale almost instantly. Following roasting, the beans are cooled and stabilized. This stabilization process is called degassing. Following degassing, the roasted beans are packaged, usually in light-resistant foil bags fitted with small one-way aroma-lock valves to allow gasses to escape while protecting the beans from moisture and oxygen. Roasted whole beans can be considered fresh for up to one month. Once coffee is ground it is best used immediately. (b) Darkness As the bean absorbs heat, the color shifts to yellow and then to varying shades of brown. During the later stages of roasting, oils appear on the surface of the bean, making it shiny. The roast will continue to darken until it is removed from the heat source. At
  • 10. 10 lighter roasts, the bean will exhibit more of its "origin flavor" - the flavors created in the bean by the soil and weather conditions in the location where it was grown. Coffee beans from famous regions like Java, Kenya, Hawaiian Kona, and Jamaican Blue Mountain are usually roasted lightly so their signature characteristics dominate the flavor. As the beans darken to a deep brown, the origin flavors of the bean are eclipsed by the flavors created by the roasting process itself. At darker roasts, the "roast flavor" is so dominant that it can be difficult to distinguish the origin of the beans used in the roast. Below, roast levels and their respective flavors are described. These are qualitative descriptions, and thus subjective. As a rule of thumb, the "shinier" the bean is, the more dominant the roasting flavors are. Roast level Notes Surface Flavor After several minutes the beans “pop” or Lighter-bodied, "crack" and higher acidity, Cinnamon visibly expand Dry no obvious Light roast, half city, in size. This roast flavor New England stage is called first crack. American mass-market roasters typically stop here. After a few Sweeter than Full city, short minutes light roast; American, the beans more body Medium regular, reach this Dry exhibiting more breakfast, roast, which balance in acid, brown U.S. specialty aroma, and sellers tend to complexity prefer. After a few Somewhat more minutes spicy; High, Viennese, the beans complexity is Full Roast Italian begin popping Slightly shiny traded for Espresso, again, and oils heavier Continental rise to the body/mouth- surface. This is feel. Aromas called second and flavors of crack. roast become clearly evident. After a few Smokey-sweet; more minutes light bodied, but or so the beans quite intense. Double Roast French begin to smoke. Very oily None of the The bean inherent flavors sugars begin to of the bean are carbonize. recognizable. (C) Packaging Extending the useful life of roasted coffee relies on maintaining an optimum environment for the beans. The first large scale preservation technique was vacuum packing.
  • 11. 11 However, because coffee emits CO2 after roasting, coffee to be vacuum packed must be allowed to degas for several days before it is sealed. To allow more immediate packaging, pressurized canisters or foil-lined bags with pressure-relief valves can be used. (D) Home Roasting Home roasting is the process of roasting small batches of green coffee beans for personal consumption. Roasting coffee in the home is something that has been practiced for centuries, and has included methods such as heating over fire coals, roasting in cast iron pans, and rotating iron drums over a fire or coal bed. Computerized drum roasters are available which simplify home roasting and some home roasters simply roast in an oven or in air popcorn poppers. Up until the 20th century, it was more common for at-home coffee drinkers to roast their coffee in their residence than it was to buy roasted coffee. During the 20th century, home roasting faded in popularity with the rise of the commercial coffee roasting companies. In recent years home roasting of coffee has seen a revival. In some cases there is an economic advantage, but primarily it is a means to achieve finer control over the quality and characteristics of the finished product. (E) Emissions and Control Particulate matter (PM), volatile organic compounds (VOC), organic acids, and combustion products are the principal emissions from coffee processing. Several operations are sources of PM emissions, including the cleaning and de-stoning equipment, roaster, cooler, and instant coffee drying equipment. The roaster is the main source of gaseous pollutants, including alcohols, aldehydes, organic acids, and nitrogen and sulfur compounds. Because roasters are typically natural gas-fired, carbon monoxide (CO) and carbon dioxide (CO2) emissions result from fuel combustion. Decaffeination and instant coffee extraction and drying operations may also be sources of small amounts of VOC. Emissions from the grinding and packaging operations typically are not vented to the atmosphere. Particulate matter emissions from the roasting and cooling operations are typically ducted to cyclones before being emitted to the atmosphere. Gaseous emissions from roasting operations are typically ducted to a thermal oxidizer or thermal catalytic oxidizer following PM removal by a cyclone. Some facilities use the burners that heat the roaster as thermal oxidizers. However, separate thermal oxidizers are more efficient because the desired operating temperature is typically between 650°C and 816°C (1200°F and 1500°F), which is 93°C to 260°C (200°F to 500°F) more than the maximum temperature of most roasters. Some facilities use thermal catalytic oxidizers, which require lower operating temperatures to achieve control efficiencies that are equivalent to standard thermal oxidizers. Catalysts are also used to improve the control efficiency of systems in which the roaster exhaust is ducted to the burners that heat the roaster. Emissions from spray dryers are typically controlled by a cyclone followed by a wet scrubber. IV. Economics Noted as one of the world’s largest, most valuable, legally traded commodities after oil, coffee has become a vital cash crop for many Third World countries. Over one hundred million people in developing countries have become dependent on coffee as the primary source of income. Coffee has become the primary export and backbone for African countries like Uganda, Burundi, Rwanda, and Ethiopia as well as many Central American countries. Brazil remains the largest coffee exporting nation, but in recent years Vietnam has become a major producer of Robusta beans. Indonesia is the third exporter and the
  • 12. 12 largest producer of washed Arabica coffee. Robusta coffees, traded in London at much lower prices than New York's Arabica, are preferred by large industrial clients, such as multinational roasters and instant coffee producers, because of the lower cost. Four single roaster companies buy more than 50 percent of all of the annual production: Kraft, Nestlé, Procter & Gamble, and Sara Lee. The preference of the "Big Four" coffee companies for cheap Robusta is believed by many to have been a major contributing factor to the crash in coffee prices, and the demand for high-quality Arabica beans is only slowly recovering. Many experts believe the giant influx of cheap green coffee after the collapse of the International Coffee Agreement of 1975–1989 led to the prolonged price crisis from 1989 to 2004. In 1997 the price of coffee in New York broke US$3.00/lb, but by late 2001 it had fallen to US$0.43/lb. In 2007, wholesale coffee was about US$1/lb (e.g. 69 cents in London in March to 134 cents in New York in October), with Robusta being about 70% of the price of Arabica. Retail prices varied from an average of $3 in Poland to $3.50 in the US to $17 in the UK. The concept of fair trade labeling, which guarantees coffee growers a negotiated pre-harvest price, began with the Max Havelaar Foundation's labeling program in the Netherlands. In 2004, 24,222 metric tons out of 7,050,000 produced worldwide were fair trade; in 2005, 33,991 metric tons out of 6,685,000 were fair trade, an increase from 0.34 percent to 0.51 percent. A number of studies have shown that fair trade coffee has a positive impact on the communities that grow it. A study in 2002 found that fair trade strengthened producer organizations, improved returns to small producers, and positively affected their quality of life. TABLE 1 Top ten green coffee producers — 11 June 2008 Country Production (Tons) Brazil 17,000,000 Vietnam 15,580,000 * Colombia 9,400,000 F Indonesia 2,770,554 * Ethiopia 1,705,446 * Mexico 962,000 F India 954,000 F Peru 677,000 Guatemala 568,000 F Honduras 370,000 F World 7,742,675 A Legend: No symbol = official figure, P = official figure, F = FAO estimate, * = Unofficial/Semi- official/mirror data, C = Calculated figure, A = Aggregate (may include official, semi-official or estimates) Source: Food And Agricultural Organization of United Nations: Economic And Social Department: A 2003 study concluded that fair trade has "greatly improved the well-being of small- scale coffee farmers and their families" by providing access to credit and external development funding and greater access to training, giving them the ability to improve the quality of their coffee. The families of fair trade producers were also more stable than those who were not involved in fair trade, and their children had better access to education. A 2005 study of Bolivian coffee producers concluded that Fair-trade
  • 13. 13 certification has had a positive impact on local coffee prices, economically benefiting all coffee producers, Fair-trade certified or not. The production and consumption of "Fair Trade Coffee" has grown in recent years as some local and national coffee chains have started to offer fair trade alternatives. Coffee is also bought and sold by investors and price speculators as a tradable commodity. Coffee futures contracts are traded on the New York Mercantile Exchange (NYMEX) under ticker symbol KT with contract deliveries occurring every year in March, May, July, September, and December. V. Social Aspects Coffee was initially used for spiritual reasons. At least 1,000 years ago, traders brought coffee across the Red Sea into Arabia (modern day Yemen), where Muslim monks began cultivating the shrub in their gardens. At first, the Arabians made wine from the pulp of the fermented coffee berries. This beverage was known as qishr (kisher in modern usage) and was used during religious ceremonies. Coffee became the substitute beverage in place of wine in spiritual practices where wine was forbidden. Coffee drinking was briefly prohibited to Muslims as haraam in the early years of the 16th century, but this was quickly overturned. Use in religious rites among the Sufi branch of Islam led to coffee's being put on trial in Mecca: it was accused of being a heretic substance, and its production and consumption were briefly repressed. It was later prohibited in Ottoman Turkey under an edict by the Sultan Murad IV. Coffee, regarded as a Muslim drink, was prohibited to Ethiopian Orthodox Christians until as late as 1889; it is now considered a national drink of Ethiopia for people of all faiths. Its early association in Europe with rebellious political activities led to its banning in England, among other places. A contemporary example of coffee prohibition can be found in The Church of Jesus Christ of Latter-day Saints. The organization claims that it is both physically and spiritually unhealthy to consume coffee. This comes from the Mormon doctrine of health, given in 1833 by Mormon founder Joseph Smith, in a revelation called the Word of Wisdom. It does not identify coffee by name, but includes the statement that "hot drinks are not for the belly", which has been interpreted to forbid both coffee and tea. Quite a number of members of the Seventh-day Adventist Church also avoid caffeinated drinks. In its teachings the church requires members to avoid tea and coffee and other stimulants. Studies conducted on Adventists have shown a small but statistically significant association between coffee consumption and mortality from ischemic heart disease, other cardiovascular disease, all cardiovascular diseases combined, and all causes of death. VI. Pharmacology Coffee ingestion on average is about a third of that of tap water in North America and Europe. Worldwide, 6.7 million metric tons of coffee were produced annually in 1998–2000, and the forecast is a rise to 7 million metric tons annually by 2010. Scientific studies have examined the relationship between coffee consumption and an array of medical conditions. Findings are contradictory as to whether coffee has any specific health benefits, and results are similarly conflicting regarding negative effects of coffee consumption.
  • 14. 14 Coffee consumption has been linked to breast size reduction and taking regular hits of caffeine reduces the risk of breast cancer. Coffee appears to reduce the risk of Alzheimer's disease, Parkinson's disease, heart disease, diabetes mellitus type 2, cirrhosis of the liver, and gout. It increases the risk of acid reflux and associated diseases. Some health effects of coffee are due to its caffeine content, as the benefits are only observed in those who drink caffeinated coffee, while others appear to be due to other components. For example, the antioxidants in coffee prevent free radicals from causing cell damage. Over 1,000 chemicals have been reported in roasted coffee: more than half of those tested (19/28) are rodent carcinogens. Coffee's negative health effects are often blamed on its caffeine content. Research suggests that drinking caffeinated coffee can cause a temporary increase in the stiffening of arterial walls. Coffee is no longer thought to be a risk factor for coronary heart disease. Some studies suggest that it may have a mixed effect on short-term memory, by improving it when the information to be recalled is related to the current train of thought, but making it more difficult to recall unrelated information. About 10% of people with a moderate daily intake (235 mg per day) reported increased depression and anxiety when caffeine was withdrawn, and about 15% of the general population report having stopped caffeine use completely, citing concern about health and unpleasant side effects. VII. Ecological Originally, coffee farming was done in the shade of trees, which provided habitat for many animals and insects. This method is commonly referred to as the traditional shaded method. Many farmers (but not all) have decided to modernize their production methods and switch to a method where farmers would now use sun cultivation, in which coffee is grown in rows under full sun with little or no forest canopy. This causes berries to ripen more rapidly and bushes to produce higher yields but requires the clearing of trees and increased use of fertilizer and pesticides. Traditional coffee production, on the other hand, caused berries to ripen more slowly and it produced lower yields compared to the modernized method but the quality of the coffee is allegedly superior. In addition, the traditional shaded method is environmentally friendly and serves as a habitat for many species. Opponents of sun cultivation say environmental problems such as deforestation; pesticide pollution, habitat destruction, and soil and water degradation are the side effects of these practices. The American Birding Association has led a campaign for "shade-grown" and organic coffees, which it says are sustainable harvested. However, while certain types of shaded coffee cultivation systems show greater biodiversity than full-sun systems, they still compare poorly to native forest in terms of habitat value. Another issue concerning coffee is its use of water. According to New Scientist, it takes about 140 liters of water to grow the coffee beans needed to produce one cup of coffee, and the coffee is often grown in countries where there is a water shortage, like Ethiopia. VIII. Coffee in the Philippines The production and export of coffee was once a major industry in the Philippines, which 200 years ago was the fourth largest coffee producing nation. Today, however, the Philippines produces only .012% of the world's coffee supply. Efforts are being undertaken to revive the industry however, with the majority of coffee produced in the mountain areas of Batangas, Bukidnon, Benguet, Cavite, Kalinga Apayao, Davao, and Claveria.
  • 15. 15 The Philippines is one of the few countries that produces the four varieties of commercially-viable coffee: Arabica, Liberica (Barako), Excelsa and Robusta. Climatic and soil conditions in the Philippines – from the lowland to mountain regions – make the country suitable for all four varieties. In the Philippines, coffee has a history as rich as its flavor. The first coffee tree was introduced in Lipa, Batangas in 1740 by a Spanish Franciscan monk. From there, coffee growing spread to other parts of Batangas like Ibaan, Lemery, San Jose, Taal, and Tanauan. Batangas owed much of its wealth to the coffee plantations in these areas and Lipa eventually became the coffee capital of the Philippines. By the 1860s, Batangas was exporting coffee to America through San Francisco. When the Suez Canal was opened, a new market started in Europe as well. Seeing the success of the Batangeños, Cavite followed suit by growing the first coffee seedlings in 1876 in Amadeo. In spite of this, Lipa still reigned as the center for coffee production in the Philippines and Batangas barako was commanding five times the price of other Asian coffee beans. In 1880, the Philippines was the fourth largest exporter of coffee beans, and when the coffee rust hit Brazil, Africa, and Java, it became the only source of coffee beans worldwide. The glory days of the Philippine coffee industry lasted until 1889 when coffee rust hit the Philippine shores. That, coupled with an insect infestation, destroyed virtually all the coffee trees in Batangas. Since Batangas was a major producer of coffee, this greatly affected national coffee production. In two years, coffee production was reduced to 1/6th its original amount. By then, Brazil had regained its position as the world’s leading producer of coffee. A few of the surviving coffee seedlings were transferred from Batangas to Cavite, where they flourished. This was not the end of the Philippines’ coffee growing days, but there was less area allotted to coffee because many farmers had shifted to other crops. During the 1950s, the Philippine government, with the help of the Americans, brought in a more resistant variety of coffee. It was also then that instant coffee was being produced commercially, thus increasing the demand for beans. Because of favorable market conditions, many farmers went back to growing coffee in the 1960s. But the sudden proliferation of coffee farms resulted in a surplus of beans around the world, and for a while importation of coffee was banned in order to protect local coffee producers. When Brazil was hit by a frost in the 1970’s, world market coffee prices soared. The Philippines became a member of the International Coffee Organization (ICO) in 1980. Today, the Philippines produces 30,000 metric tons of coffee a year, up from 23,000 metric tons just three years ago. IX. Philippine Coffee Board The Philippine Coffee Board is a private sector-led group established in May 2002 as the National Coffee Development Board. The goal of the Coffee Board is to develop and promote the Philippine coffee industry through technical assistance and credit programs for coffee farms; and through marketing and promotions of coffee for domestic and export markets. Research / training, certification and credit programs are carried out in partnership with Cavite State University (CavSU), Department of Trade and Industry – International Coffee Organization Certifying Agency (DTI-ICOCA) and Quedan & Rural Credit Guarantee Corporation (Quedancor).
  • 16. 16 Aside from rehabilitation, certification, and credit programs, the Coffee Board also conducts a marketing and promotional program for Philippine coffee called Kape Isla. Kape Isla is intended for the use of the industry as a Philippine coffee quality seal. The Coffee Board conducts several events a year, including coffee farming courses, coffee shop seminars, trade shows, farm tours, and its annual Coffee Break festival. The Coffee Board is composed of members from the growers, millers, roasters, retailers, local governments, and agriculture credit sectors. X. CURRENT TRENDS IN THE NEWS (1) The Philippines' taste for Civet Coffee By Sarah Toms BBC News, Manila 11 April 2006 The Philippines has recently discovered it produces one of the world's most expensive and coveted kinds of coffee but it comes from an unusual source - the droppings of a nocturnal, cat-like animal called the Palm Civet. Civets, related to the mongoose, are usually seen as pests in the Philippines and hunted for their meat. But their droppings are worth their weight in gold. Known locally as alamid, civets are carnivorous but they also have a taste for the sweet, red coffee cherries that contain the beans. The beans pass through the civet whole after fermenting in the stomach and that's what gives the coffee its unique taste and aroma. 'Best-kept secret' A group of professional coffee lovers followed the trail of the civet droppings high into the Malarayat mountain range, south of Manila, in search of the exotic beans. One of them, Antonio Reyes of the Philippine coffee certifying board, said civet coffee was one of the Philippines' best-kept secrets. "I heard the old folks in the coffee farming areas have been gathering this coffee for their own consumption. They never told people they had this kind of coffee," he said. "It goes through some kind of natural processing which you can see from the roasted beans. It's oilier, there's more aroma and it's such a good taste that you can get value for money even if the cost is so high." Civet coffee is one of the worlds most expensive. In the Philippines, only 500 kg are produced a year and the roasted beans sell for more than $115 a kilogram. Bean hunt Lusina Montenegro, who collects the beans for a living, led the coffee experts to the civet droppings. She climbs the mountain in her flip-flops, hunting for the beans in the thick undergrowth. "Sometimes it's a big civet and then the droppings are also big, but sometimes it's a small one and then the droppings are small," she said. Ms Montenegro puts the droppings in two containers - for the old ones, which resemble chalky beans, and for the fresh ones, which look like yellow beans in gravy. She rinses the beans in forest streams and dries them on her patio before they are sold on to Bote Central, a company that exports the beans to Japan. Niche market The developers of the brand are a husband and wife team, Vie and Basil Reyes. The couple was involved in conservation work for the sugar palm and the civets that live among the trees. They made organic vinegar from the palms and started selling the civet
  • 17. 17 coffee alongside it in small bazaars. Now the coffee has become so successful they are hoping to start brewing up profits in Taiwan and North America. Mr. Reyes of the coffee certifying agency also hopes the struggling local coffee industry can mirror the success Indonesia and Vietnam have enjoyed with their brands of civet coffee. "I never thought it was also available in the Philippines, so when I first heard of it I thought this is one kind of coffee that we can look at and develop," he said. "If we have the volume then it's good for the niche market." 'Dark chocolate' Andrew Gross, an Australian roast master, climbed the mountain to find out for himself what the attraction is of coffee that passes through the backside of a furry mammal. Just like a wine connoisseur, he slowly slurped the brewed coffee, letting it travel across his tongue for the first time. Mr. Gross said he was surprised at how much he liked it, comparing the taste to fermented plum and dark chocolate with hazelnuts. "There's obviously some substance to this in terms of what waves I am getting, but beyond the difference in flavors a lot of it has to do with hype and a lot of it has to do with the fact that it's fairly rare," he said. It may not be everyone's cup of tea. But experts here hope coffee lovers will want to treat themselves to something special that might just help perk up the Philippine coffee industry. (2) Agri-Food Trade Service The Brewing Business of the Philippine Specialty Coffee Shop Industry By Ronald Mark G. Omaña - Center for Food and Agri Business University of Asia and the Pacific 2006 In the past, people were used to drinking instant coffee. This was before the advent of specialty coffee shops in the country. Today, coffee shops are a common sight especially in the Manila metropolis. Specialty coffee refers to the highest-quality green coffee beans roasted to their greatest flavor potential by true craftspeople and then properly brewed to well-established standards (Specialty Coffee Association of America (SCAA). The SCAA further explained that specialty coffee tastes better than instant or mass-produced coffee because it is made from coffee beans grown only in ideal climates and prepared according to exacting standards. Also, specialty coffee possesses a richer and more balanced flavor. HISTORY Specialty coffee shops trace their roots from the coffee shops of Europe in the 16th and 17th century upon the introduction of coffee which became a popular drink. In the United States, specialty coffee shops are said to have been popularized by Starbucks Coffee. Starbucks Coffee was established in 1971 by Gordon Bowker, Jerry Baldwin, and Zev Siegl originally to sell coffee beans only. The company's current business of retailing coffee beverages came about when then marketing person Howard Schultz (currently Chairman) got interested in selling espresso by the cup after visiting Italy. Initially, the company tested the new business model in one of its outlets and became an instant hit. Despite of this success, however, one of the owners opposed Schultz's idea of expanding the concept to all of its stores. In 1985, Schultz left Starbucks and opened his own specialty coffee shop called Il Giornale. By 1987, the owners of Starbucks decided to sell the company to focus on a 1983 acquisition Peet's Coffee and & Tea, which was Starbuck's coffee bean supplier. Schultz, together with other investors, purchased Starbucks for US$3.7 million. Schultz eventually changed II Giornale's name to Starbucks Coffee Company.
  • 18. 18 Starbucks currently has more than 10,000 outlets worldwide, with 93 located in the Philippines operated by its franchisee Rustan Coffee Corporation. In the Philippines, even before Starbucks came in 1997, there were enterprising Filipinos who had the foresight to put-up specialty coffee shops. The pioneers in the local industry are Figaro Coffee Company and The Coffee Experience, both established in early 1993. Figaro Coffee Company was set up by a group headed by Pacita Juan, the company's president and chief executive officer. Its first outlet was a small kiosk located at the Glorietta mall in Makati. The outlet was initially called the F store. The Coffee Experience, meanwhile, started in the same mall in Makati, also under a different name - Coffee X. It now has 24 outlets located mainly in Metro Manila. PRODUCTS The main product is specialty coffee. Differentiation is made through the various coffee concoctions and variants. Companies also offer other beverages such as tea and juices, complementing products such as breads, cakes, and pastries which are produced in the operators' own commissary plant, supplied by an affiliate or purchased from third party suppliers. Some even serve breakfast, lunch, and dinner. MARKET AND PLAYERS The market for specialty coffee shops was estimated to be at least P2.6 billion in 2004 (Figure 1). Foreign brands accounted for 69 percent of the market; the rest are local brands. Figure1. Estimated Market Shares by Brand Type, 2004 Source: SEC, Interviews with Key Players, February- March 2006 As of February 2006, the Philippine specialty coffee shop industry consisted of at least 15 major players - 10 are foreign and five are local brands. The foreign brands include Café Nescafe, The Coffee Bean & Tea Leaf, Dome Café, Gloria Jean's Coffees, McCafe, San Francisco Coffee Co., Seattle's Best Coffee, Segafredo Zanetti Espresso, Starbuck's Coffee and UCC Coffee (Table 1). Local companies have managed to get the master franchise for the operation of these foreign specialty coffee shops in the country. Some of the outlets are owned and operated by other companies through sub-franchising offered by the master franchise holders. The local brands, meanwhile, are Bo's Coffee Club, Figaro Coffee Company, Mocha Blends, and The Coffee Beanery. Other local specialty coffee shops that have recently sprouted in Metro Manila include Baang Coffee, Libreria, and Coffee Republic, with less than five outlets each. Meanwhile, the total number of specialty coffee shop outlets or branches has reached more than 300 as of February 2006. The outlets are located mainly in Metro Manila and in key cities such as Baguio, Cebu, and Davao. The large number of outlets is attributed mainly to the growing specialty coffee shop chains.
  • 19. 19 Table 1. List of Key Players in the Philippine Specialty Coffee Shop Industry, 2006 Year Number Affiliates Brand Company Established of Outlets (Food Businesses) FOREIGN The Coffee The Coffee Bean & Tea Bean & Tea 2003 10 - Leaf Philippines Inc. Leaf Specialty Beans Gloria Jean's Chef Donatello / Philippines Inc. and 2003 19 Coffees Wetzel Pretzels various companies Segafredo Zanetti Liberty Ventures Inc. 2002 3 - Espresso Café Nescafe La Barista Inc. 2001 5 Le Coure de France Coffee Partners Inc. / San Francisco Hot Business Ventures 2001 6 - Coffee Co. Inc. Kenny Rogers Seattle's Best Coffee Masters Inc. 2000 20 Roasters / Popeye's Coffee Chicken and Biscuits Blue Mountain Coffee Sakae Sushi / Crepes UCC Coffee Ventures 2000 7 and Cream Coffee Brewmasters Inc. Dome Café Franchise Dome Cafe 1997 4 - Corporation Hi-Lo Café / Bon Starbucks Rustan Coffee 1997 93 Appetit / Yum-Yum Coffee Corporation Tree / Char-Q Golden Arches McCafe Development NA 4 McDonald's Corporation LOCAL Mocha Blends Mocha Blends Corporation and various 2002 39 - companies Coffee Centrale The Bo's Coffee Bean Co. Inc. / Bo's 1996 23 - Club Coffee Franchise Corporation Figaro Coffee Company Figaro Coffee Co. Inc. 1993 49* - and various companies The Coffee Cravings Food Svcs Inc. 1993 7 Cravings Restaurants Beanery
  • 20. 20 CX Food Enterprises The Coffee Inc. and various 1993 24 Potato Corner Kiosks Experience companies Source: Securities and Exchange Commission (SEC) / Interviews with Key Players, February 2006 As of February 2006 NA = not available * = excluding three outlets overseas Gloria Jean's Coffees International explained that the specialty coffee shop industry is moving to chains because of their advantages in purchasing power, focused advertising, product innovations, management control systems, and specialized training. Across brands, Starbucks Coffee accounted for nearly half of the market in 2004 (Figure 2). Local brand Figaro Coffee Company followed with 15 percent, then Mocha Blends (9%), Gloria Jean's Coffees (7%), and UCC Coffee (4%). The others cornered the remaining 16 percent of the market .Local and foreign key players estimated growth at an average of 10 percent to 20 percent per year since 2002. The financial statements of industry leader Starbucks Coffee even showed a higher growth of nearly 23 percent per year over the same period. Figure 2. Estimated Market Shares by Brand, 2004 Source: SEC; Interviews with Key Players, February-March 2006 PRICING A comparison of retail prices of selected foreign and local brands for Café Latte revealed that foreign brands generally charge higher prices compared to local brands (Table 2). The cheapest Café Latte in small cup from foreign brands costs P7.00 higher than the most expensive among local brands. The same price difference is observed in the medium cup but increases to P11.00 on the large cup. Table 2. Comparative Retail Prices of Café Latte from Selected Brands Price (In Php) / Size Product/Brand SMALL MEDIUM LARGE Foreign The Coffee Bean & Tea Leaf 85 100 115 Gloria Jean's Coffees 85 95 110 Starbuck's Coffee 85 95 110 Seattle's Best Coffee 82 92 107
  • 21. 21 Local Bo's Coffee Club 75 85 na Mocha Blends* 70 85 na Figaro Coffee 69 na 89 The Coffee Beanery 60 78 na The Coffee Experience 60 na 70 Source: Specialty Coffee Shop survey (April 2006) Small = 8oz / medium = 12oz / large = 16oz * medium size is 14oz na = not applicable PRICE SUBJECT TO CHANGE WITHOUT PRIOR NOTICE SOURCES OF SUPPLY The main raw materials used are coffee beans; espresso machines; fresh milk; whipped cream; and packaging materials (Table 3). Table 3. Sources of Main Inputs Brand Beans (mainly Arabica type) Espresso Machines Brand FOREIGN BRANDS 100% from Nestle (from foreign 100% from Nestle (from foreign Café Nescafe affiliates) affiliates) Gloria Jean's 100% from Gloria Jean's Coffees - Astoria (Italy) from local distributor Coffees International (Australia) Seattle's Best Rafaello / Michaelangelo (Italy) 100% from Seattle's Best (Japan) Coffee from local distributor Granarcoso (Italy) from local Starbucks Coffee 100% from Starbucks Coffee (USA) distributor Not Applicable (Uses siphon UCC Coffee 100% from UCC Coffee (Japan) machine) LOCAL BRANDS Figaro Coffee 100% local / own farm Astoria (Italy) from local distributor 90% Imported from Australia Mocha Blends Elektra (Italy) from Australia (Mocha Coffee); 10% local The Coffee San Marino Expresso (Italy) from 100% local (1 supplier only) Beanery local distributor The Coffee Unic (France) from local 100% local (1 supplier only) Experience distributor Table 3. Sources of Main Inputs Brand Fresh Milk Whipped Cream Packaging Materials FOREIGN BRANDS Café Nescafe 100% from Nestle 100% from Nestle Local suppliers Imported brand Local suppliers / Gloria Gloria Jean's Two farms in Laguna from local Jean's International Coffees province distributors (Australia) Imported brand Seattle's Best Local supplier from local Seattle's Best (USA) Coffee distributors Imported brand Starbucks One farm in Batangas from local Local suppliers Coffee province distributors
  • 22. 22 Imported brand Uses cream - 100% from UCC Coffee from local Local suppliers UCC Coffee (Japan) distributors LOCAL BRANDS Imported brand from Imported brand Figaro Coffee local distributors / local from local Local suppliers suppliers distributors Imported brand Mocha Blends Local supplier from local Local suppliers distributors Imported brand The Coffee Imported brand from from local Local suppliers Beanery local distributors distributors Imported brand The Coffee Local supplier from local Local suppliers Experience distributors Source: Interviews with Key Players, February-March 2006 According to players foreign and local alike, it is easy to get suppliers for their major inputs. The prevalence of suppliers - which normally cater to restaurants, hotels and other institutional clients - has led to a situation wherein the suppliers themselves approach the companies to offer their products. The critical factor among players is the coffee bean roasting "formula" because it is at this stage where the coffee bean releases its fullest flavor potential. Poorly roasted beans would yield poor-tasting coffee drink. As such, every player treats his proprietary roasting techniques and recipe as highly confidential. Nearly all of the foreign brands interviewed say their coffee beans - prepared and packed - are supplied by their parent company overseas, which does the purchasing and roasting of beans bought from many popular coffee-growing areas like Indonesia, East Africa, and Latin America. In terms of variety, the foreign brands mainly use the Arabica coffee bean types. The local brands, meanwhile, are known to use mostly local coffee beans including the famous Kapeng Barako (Liberica beans). Because of this practice, the local players are seen as major supporters of the local coffee industry. Further, their use of Kapeng Barako sets them apart from their foreign counterparts because the beans are said to have the following characteristics: (a) particularly strong taste, (b) powerful body, and (c) a distinctly pungent odor which the popular Arabica beans do not have. For espresso machines, majority of the foreign and local players use Italian brands which they acquire through local distributors. For fresh milk, the players buy from various sources. Many purchase from well-known milk suppliers such as Alaska Milk Corporation, Consolidated Dairy and Frozen Food Corporation, Nestle Philippines, New Zealand Milk (Philippines) Inc., and San Miguel Corporation. However, players like Starbucks Coffee and Gloria Jean's Coffees have opted to source from dairy farms in Batangas and Laguna. Both players provide technical assistance to the farm-suppliers so that they could meet the quality standards set by their parent companies. For whipped cream, nearly all players use imported brands distributed by local companies in the country. Lastly, packaging materials are either sourced from affiliates overseas or from local packaging companies. Interestingly, Starbucks Coffee being the industry leader requires
  • 23. 23 exclusivity from its suppliers. In other words, their suppliers are not allowed to cater to other specialty coffee shops. They can, however, still service hotels, restaurants and other foodservice outlets. While the other players do not require their suppliers to be exclusive, they do not allow them to sell to other specialty coffee shops exactly the same products (e.g. breads, cakes, and pastries) as some of the recipes are proprietary. INDUSTRY ASSOCIATIONS Some of the major players meet and discuss as members of the private sector-led National Coffee Development Board (NCDB), which aims to promote and save the local coffee industry from declining production and area planted. The group incidentally started as the government's National Task Force on Coffee Rehabilitation which was sworn into office by President Gloria Macapagal-Arroyo in May 2002. One of NCDB's programs is the Kape Isla Cooperative Marketing whose objective is to develop loyalty to Philippine coffee, reduce imports, increase domestic production, and create new jobs. The Program's Kape Isla seal is intended for the use of the different players in the industry as a Philippine coffee quality seal. The Program's members are specialty coffee retail shops such as Bo's Coffee Club, Coffee Experience, The Coffee Beanery, Figaro Coffee Company, Mocha Blends, Starbucks, and Seattle's Best Coffee, as well as coffee bean growers, millers, roasters, local governments, and agriculture credit sectors. Another organization is the Specialty Coffee Association of the Philippines (SCAP), which was established in 1998 to promote and support the specialty coffee trade in the country. SCAP's objectives are: (1) to advocate Philippine specialty coffee as world class; encourage members to use Philippine specialty coffee in their coffee outlets; (2) sponsor events and forums that showcase Philippine specialty coffee; provide programs (3) to assist local coffee farmers; upgrade the quality of coffee; and (4) to promote general awareness and appreciation of Philippine specialty coffee (F&B World, November/December 2003). PROSPECTS The specialty coffee shop industry is seen to sustain its growth of 10 percent to 20 percent yearly for the next three to five years. Players attribute this to the growing awareness of specialty coffee among consumers, the improving image of coffee in general as something that is good for the health, and the expanding family spending on eating-out. On the growing adoption of coffee by other restaurants, players say their wide list of coffee concoctions make them stand-out among other foodservice outlets. Their unique ambiance is also a big come-on. Players also capitalize on what is popular such as the availability of wireless internet or WIFI and the offering of potential product substitutes such as tea, juices, shakes, chocolate drinks, and healthy products such as salads, low- calorie versions of their best-selling drinks, pastries and the like. The offering of customer loyalty programs also helps them push their sales targets. Overall, the continuing focus on addressing key success factors such as product development and innovation, brand and product promotion, and outlet expansion would allow the industry to continue to enjoy a brewing business and at the same time, help the development of the domestic coffee growing industry.
  • 24. 24 References: • BusinessWorld, November 2000 • F&B World, November/December 2003. • Interviews with Key Players, February-March 2006 • Securities and Exchange Commission • Specialty Coffee Association of America • www.starbucks.com Resources: • FAO Statistical Yearbook 2004 Vol. 1/1 Table C.10: Most important imports and exports of agricultural products (in value terms)(2004)" (PDF). FAO Statistics Division (2006). • Pendergrast, Mark (1999). Uncommon Grounds: The History of Coffee and How It Transformed Our World. Basic Books. ISBN 0-465-05467-6. • John K. Francis. "Coffea arabica L. RUBIACEAE". Factsheet of U.S. Department of Agriculture, Forest Service. • Rickert, Eve (2005-12-15). "Environmental effects of the coffee crisis: a case study of land use and avian communities in Agua Buena, Costa Rica". M.Sc. Thesis, The Evergreen State College. • Alex Scofield. "Vietnam: Silent Global Coffee Power". • Coffee@ nationalgeographic.com. www.nationalgeographic.com/coffee • Botanical Aspects". International Coffee Organization. • James A. Duke. "Coffea arabica L.". Purdue University. • Bakalar, Nicholas (2006-08-15). "Coffee as a Health Drink? Studies Find Some Benefits". New York Times. Retrieved on 2007-07-28. • Johns Hopkins University School of Medicine (2003). "Use and Common Sources of Caffeine". Information about Caffeine Dependence. Retrieved on 2008-02-23. • Wu JN, Ho SC, Zhou C, et al (August 2008). "Coffee consumption and risk of coronary heart diseases: A meta-analysis of 21 prospective cohort studies". Int. J. Cardiol.. doi:10.1016/j.ijcard.2008.06.051. PMID 18707777. • Murray D., Raynolds L. & Taylor P. (2003). One Cup at a time: Poverty Alleviation and Fair Trade coffee in Latin America. Colorado State University, p28 • Toms, Sarah. (2006). The Philippines' taste for civet coffee. news.bbc.co.uk/2/hi/asia- pacific/4896230.stm • Omaña, Ronald Mark G. (2006). The Brewing Business of the Philippine Specialty Coffee Shop Industry.www.ats.agr.gc.ca/asean/4335_e.htm • The Philippine Coffee Board Website. www.coffeeboard.com.ph • Types Of Coffee. www.anothercoffee.co.uk/coffeeinfo/coffeetypes