By Carlo Odello

We speak about the Spanish coffee market with Emilio Baqué Delás. Baqué is one of the greatest experts of this market. Indeed, apart from being the vice-president of the Spanish Association of Coffee Roasters, his is managing director of Grupo Café Dromedario – Cafés La Brasileña (approximately €24m turnover with a production of 3000 tons of roasted coffee per year). He is, in addition, president of the Comercial de Materia Primas, the second biggest green coffee importer in Spain, owner of 13 roasters in the country.

Can you describe the Spanish coffee market?

In Spain there are approximately 250-300 coffee roasters of which 130 are members of the Spanish Association of Coffee Roasters and of the Spanish Federation for Coffee. Over the last decade the process of concentration of companies has accelerated and this will carry on in future years. There will be a significant reduction of the number of companies for several reasons: many are family run businesses with the related succession problems, the greater difficulties at an operational commercial level (coffee machines, funding for shops and so on), the fact that some companies are after volume and that some others lack professionalism.

If we want to identify the major brands, we should distinguish between those that operate in the market for both consumption at home and horeca and those that focus on horeca only. The home market is in the hands of three multinationals – Nestlé, Kraft and Sara Lee – and some brands of big distribution chains such as Carrefour, Mercadona, Eroski and others. The multinationals and big distribution chains account for 90% of the market. Then there a  number of roasters that operate at a regional level, however, they are no more than 30. The latter, alongside many other roasters, are present also on the horeca market in which no brand goes any higher than a 10% market share. The regional or local brand is fine for the horeca market.

How about consumers?

The Spanish consumers do not have a real culture of coffee. It is not their fault: the coffee sector in general, from the roasters to the machines manufacturers, has never had a culture of coffee. The explanation for this lack of knowledge is to be found in the history of our country. Till 1977, the State strictly controlled coffee trade. The State was the exporter of green coffee and defined the sale price to the roasters and the price of the roasted product of which there were only three categories: Superior, Corriente, Popular. The criterion applied by the State had more to do with volumes and the price to the end consumer rather than with quality. The roasters roasted what they were given by the State and had no access to the wondrous world of species, origins and blends.

After the liberalisation, at the end of the ‘70s, the change process has been difficult and slow: the roasters learned little by little thank to the generational change in the companies, some of them started to invest in training of the sellers and of the consumers and coffee shops started becoming popular.

Still today, however, many consumers see coffee as simple food and believe that all the coffee comes from Columbia on the back of Juan Valdez’s mule. These are the consumers of coffee with milk served in a crystal glass, those who defend the torrefacto, the coffee roasted with sugar added to it, these are the consumers who still believe in old clichés. In other words, they are those from the past.

There is an increasing number of consumers who have grater knowledge and want to chose, who look for a specific origin or for a blend of coffee with a majority percentage of Arabica, who abandon the torrefacto for naturally roasted coffees, which is to say, simply roasted without adding any sugar. Nonetheless, there is still a long way to come.

Let’s talk about the barista: what is their level of professionalism?

In Spain, there has been a time when the most experienced person at the bar automatically became the barista. This was the person in charge of the coffee machine, of its maintenance and of taking care of it. All this is history which dates back to decades ago. In the years of the economic crisis many sought refuge in the horeca and the average level of professionalism of the barista dropped. Luckily enough the specialised schools have been able to make up in part for this gap over the last few years. The level of professionalism improves as long as the roasters cooperate in the training activity in these schools.

The new problem of the Spanish horeca is that nowadays the country has an unprecedented life style and the horeca workers tend to leave to go in more comfortable sectors. This is the reason why there are increasingly high numbers of immigrants doing this job with very little training and with very high turn-over. Curiously enough, this is happening in a time when the Forum Cultural del Café, a non-profit organisation founded to promote the culture of coffee in Spain, and the member roasters are launching more and more competitions between baristas, training courses and events dedicated to them. The last two winners of the barista championship organised by the Forum Cultural del Café come from Peru and from Morocco. This shows that focusing on training for the barista, despite being difficult, is fruitful.

To conclude: in your view, what is the future of the Spanish market?

Spain is a country which must still come a long way in order to improve its cup of coffee. This is an effort that the sector must make in the next few years. The average coffee consumption in our country is of 4 kg of green per head per year, which means that we are the tail ender in Europe. If we keep working on training consumers, if we keep promoting the culture of the barista in the horeca too, if we keep caring about the offer of the product to the consumer – with more coffee shops, with more specialised shops, with a broader product range – if we do not let go on this and if we do not start looking for a short-term benefit, then we might as well take this market up to higher numbers. This is the incentive for those who do my job.

by Carlo Odello

We met Gennaro Pelliccia, Production Technical Manager at Costa, he makes sure that the quality of the coffee they produce is good value-for-money. He started off with Costa as a barista in December 1991, then he joined Gino Amasanti at the Roastery in 1997 after his studies in Mechanical Engineering.

First of all, let’s find out something more about Costa: its history and what it is today.
Costa was set up in London in 1971 by two Italian brothers, Sergio and Bruno Costa. The two of them noticed that there was some demand for good-quality, blended coffee so they started supplying such a product to catering services and specialised Italian coffee shops in the UK. In 1978, the Costa brothers opened up their first store in London. This was the beginning of their expansion with two new selling points being opened every year. In 1988, they moved to a bigger site, in the Old Paradise Street, in the Lambeth area, south of London. In 1995, Costa was acquired by the Whitbread Group: at the time it had 41 stores all around the country. Today it is the leader in its sector and it is also the operator growing at the fastest pace: at present, it has 600 stores in the UK and 222 abroad.

What does the coffee market in the UK look like?
According to April 2007 figures, there are approximately 9.300 stores which comprise branded coffee shops, independent and unspecialised operators. It is assumed that there will by a growth by 4.2% per annum which will lead to having 11.000 stores in 2010. As for branded coffee shops, the big chains market, from 2001 to 2006, there was a 10% growth per annum. At present, there are 2.973 stores of this type in the UK: the market share of the branded chains accounts for 32% of the global British market; this percentage should get up to 37% by 2010.

Do you believe that there is still margin for growth for Costa?
Yes, undoubtedly. Twelve years ago we carried out an investigation that made it clear that the market was open to the creation of places, not dominated by males, as is often the case with pubs, where people could meet. This was the ground on which the further development of Costa was built. There has been a positive growth trend for coffee shops also due to a major change in eating habits in the UK over time. Today people do not eat at home most of the time and tend to prefer quick snacks. This is the reason why the coffee shop is the ideal solution.

Let’s speak about quality in the UK.
No doubts that over the last 10 years espressos and cappuccinos are much better in our country. This is also thanks to the clients. Over the last five years, our most evolved clients – those that, after having been to Italy, asked us to offer products which were to a greater extent Italian-style. In addition, the attitude to the product is different: once upon a time, the espresso was chosen because it was probably the cheapest option on the menu. At the beginning there was also a certain linguistic concern triggered by words the pronunciation of which was deemed to be difficult, e.g. ‘caffè espresso’ or ‘latte macchiato’. Actually, nowadays, it is a real choice, part and parcel of the life-style.

How about the future?
This looking for Italian-style products and for better quality will not cease: whoever will not be able to meet this need will have no chances in the market. The next step will actually be the choice of the coffee shop depending on the quality. Costa has already prepared itself for picking up this challenge in an effective way. We measure ourselves against the parameters set by the Italian Espresso National Institute and we use machines and grinder-dispensers that are certified by the Institute. However, the monitoring is not just downstream, at the coffee shop, it starts well in advance on the entire production cycle.

Back to British consumers, do they tend to be loyal to brands?
They are, first of all, loyal to the experience of taking an espresso or a cappuccino in a certain type of place. For example, several clients of Costa are professionals who stop at the same coffee shop on their way to work or when returning home. Our baristas know their tastes and make them feel as if they were at home by offering a tailor-made service. So the clients are loyal because of that atmosphere and that place which looks familiar to them. The very wide product range gives them satisfaction and plays a role in making them loyal.

What is your view on single-dose coffee pods, and, more in general, on any solution that makes the espresso experience possible without a coffee shop?
In the UK there is for sure a developing market for consumption at home of this type of products, though we must not forget that most of the coffee drank at home is instant coffee. The single-dose coffee pods, or other solutions of this sort, are still not too common neither at home nor at the office. In the UK they are becoming increasingly popular at places that are not specialised in coffee, e.g. pub restaurants, where at the end of a meal some clients simply like to have a cup of coffee. In these places, the low sales volume and the high frequency in staff turnover make it difficult to afford having the proper complete machinery and the blend in the form of beans. This is the reason why they opt for the professional espresso machine with filter-holders for single-dose coffee cartridges. Also in the Costa stores we use this sort of solutions for the decaffeinated and Fair Trade products in order to be able to serve a product which is always fresh.

What is the policy of Costa Coffee on the international stage?
Currently, we have more than 200 stores all over the world: Ireland, Eastern Europe, Middle East, India and Pakistan. For the moment being, we have got no plans to enter Italy where there are already independent and well-rooted suppliers that provide an excellent product to the country. In general, in Italy, branding policies are not too strong yet.