Evolution or
revolution
impact of current
economic outlook
on coffee
Februari 15, 2013 – Kampala - Uganda
Jan Kempenaar
What shocks can we expect?
PROSPECT: “Impact of current of the economic shocks on the world coffee market”
PAST
PRESENT
FUTURE
2011: NY > $ 300
Sustainability
PRESENTATION: What’s the impact of current economic outlook on the coffee market?
Impact on the coffee market
SUPPLY
RETAIL
What’s the role of Ahold in coffee?
SUPPLY
1. World of Ahold
2. ACC Factory
3. ACC coffee chain
RETAIL
Ahold global retailer €32,8 billion sales
AHOLD GLOBAL
AHOLD STRATEGY
Coffee part of roots Ahold since 1895
LINK WITH ALBERT HEIJN
FACTORY ZAANDAM:
First shop
1887 in Zaandam
Employees
130 FTE
First factory
1911 in Zaandam
Sales volume
20.000 MT
Stores in NL
More than 850
Roasters
6 MT/hr
Stores in Belgium
12 (expansion)
Packaging
14 lines
Marketshare AH
33,7% in 2011
Types green coffee
40
Private label coffee
Perla 80 SKU’s
Finished products
150
Private label share
50%
Assortment
Roast and ground
Whole beans
Single portion pads
Private label sustainable coffee chain
Central America 19%
South America 36%
Africa 9%
Asia 36%
VISION AND MISSION
Sustainability is the way to grow our coffee business: private label coffee
Relevant trends in supply of coffee
SUPPLY
1. Supply and demand
2. Sustainable coffee
3. Global economics
RETAIL
Increasing global supply and demand
TRENDS IN ORIGINS
•
Competition other commodities
•
Lack of sufficient labor during vintage
•
Heritage problems father-son
•
New varietals takes 2-3 years before
first vintage
•
Balancing act supply – demand
•
Consequences climate change
•
Prosperity middle class increases
•
Growing demand certified coffees
•
Development differentials/premiums
certified coffees
Sustainable coffee becomes mainstream
MAIN DEVELOPMENTS
•
Sustainable coffee 2012-2015:


•
•
Available under Utz, Rainforest, 4C, Fairtrade, Organic, Starbucks
Committed to: Nestle, Kraft, DE, Tchibo,
Ahold en Walmart, Starbucks, McDonald
Sustainable coffee moves from niche
to mean stream
More sustainable coffee expected
based on commitment large retailers
COFFEE
WORLDWIDE
2011
Production
8 mln MT
Consumption
8 mln MT
SUSTAINABLE
COFFEE
Production
1,3 mln MT
16%
Sold
0,7 mln MT
9%
Macro economy has huge impact on coffee
GLOBAL TRENDS
•
Growing world population
•
Global effects of climate change
•
Economic development BRIC
countries
•
Increasing global middle-class
•
Impact of hedge funds and other
economic sectors on commodities
What do customers expect about coffee?
SUPPLY
RETAIL: EUROPE
1. Consumer trends
2. Relevance sustainability
3. Respons Ahold
Coffee is trendy but price is still important
Convenience
• Growth of quality portioned solutions: capsules, full automated machines,
espresso machine
Quality
• Increasingly focus on the taste and quality of the coffee
• Demand for a wide variety of coffee
• Customer experience, story behind the coffee: beans, the coffee roaster,
plantations.
• Indulgence out-of-home to in-home: more quality at home
Price
• Due to economic crisis customers are more price consciousness
Source: IGD, Euromonitor, Foodinspiration
Increasing awareness sustainability
GLOBAL TRENDS
• Consumers are conscious of
environmental issues but don’t want to
pay for it
• Some consumers are sensitive to
sustainability and intend to pay for
health and convenience
• Consumers expect that companies and
institutes take their responsibilities
• Overwhelming number of certification
programs causes uncertainty
MARKET SHARE FAIR-TRADE 2011
Production
8 mln MT
Available 0,4 mln MT
Sales 0,1 mln MT
Source: GFK, IGD, Bord Bia,
The Netherlands
Sales 3700 MT
market share 3%
Albert Heijn responds as retailer
WHAT HAS Albert Heijn DONE IN COFFEE:
•
Initiates Utz Kapeh coffee resulting in
foundation Utz Certified
•
Mainstream pricelevel of Utz coffees
•
All PL coffee is Utz Certified, in total 50% of
coffee sales at Albert Heijn is sustainable
WHAT WILL AH DO:
•
Albert Heijn listen and respond to consumer
requirements
•
Albert Heijn initiates and increases the
availability of sustainable products
•
AH sells every day more sustainable products
•
All Private label in 2015 sustainable
•
Consumers expect that Albert Heijn takes
responsibility
WHAT DO RETAILERS/CONSUMERS:
•
Follow market leader
•
Consumers not able or willing to pay more for
sustainable products
Will it be evolution or revolution in coffee?
What’s the impact of current economic outlook on the coffee market?
SUPPLY
• Ahold global player
focus on responsibility
• Coffee important for
Ahold and AH
• ACC sustainable in
coffee chain
• Growing supply and
demand of coffee
• Sustainable coffee will
be mainstream
• Unpredictable and
fast changes in world
RETAIL
• Coffee trendy but
price still important
• Sustainable coffee
growing in volume
and awareness
• AH has leading role in
sustainability
MESSAGE:
Be flexible to respond to market changes and
continue on the journey towards a sustainable coffee chain
by connecting worldwide and by enjoying coffee everywhere