Issue link: https://read.dmtmag.com/i/491368
34 STiR tea & coffee industry international Robusta production was estimated at 12.3 million bags, a projected gain of 13.5%. Robusta is grown mainly in Espírito Santo state where rainfall is normal. The Coffee Export Council (Conselho dos Exportadores de Café do Brasil – CE- CAFÉ) expects exports to remain at last year's levels with trade in instant coffee and natural cherries up 61.2% in 2014, compared to the same period last year. The United States remains the biggest buyer of Brazilian coffee. During the first third of the year (ending April, 2014), America imported 2.3 million bags, an increase of 17.6% compared to 2013. Germany imports almost as much as the U.S and more than double what the Italians purchase. Belgium, Japan, the Eastern Eu- ropean countries, and Russia, follow in that order. The latter mainly purchase Ro- busta. Arabica prices have climbed by 77% since last year. Source: CECAFÉ Big players Brazil's internal coffee market is dominated by 3 Corações Group, the largest buyer of domestic coffee, according to ABIC, the Brazilian Coffee Industry Association. Master Blends (Sara Lee) is next followed by Maratá, Melitta and Companhia, Cacique de Café Solúvel. Together they roast and sell most of processed coffee in the country. Founded in 1959 in Rio Grande do Norte, the 3 Corações Group is a joint ven- ture between São Miguel Holding and Israel's Strauss coffee company. Annual sales top $1 billion. The company markets eight coffee brands including Café 3 Corações, Santa Clara, Pimpinela, Kimimo, Fort, Letícia and Fino Grão. It was the pioneer and has remained the market leader for more than 20 years. New lines include Cappuc- cino 3 Corações and Cappuccino #PRONTO, a ready to drink iced coffee and newly launched TRES (monodoses) singles. The company also sells filters, coffee drippers, instant coffee, and powdered drinks Frisco and Tornado as well as Chocolate powder Claralate and Achocolatto. Dynamic market In the 25 years since the end of dictatorships Brazil's economy has welcomed outside investment. The middle class has grown rapidly with an estimated 42 million house- holds now earning $10,000 per year. The upper class has prospered as well. Members are defined as the 5% of Brazil's population that earn at least $5,350 a month or 18 times the minimum salary, which is currently BRL678 ($297) per month. Euromonitor International estimates the coffee segment will grow 120% in the next five years. Coffee sales nationally increased from $12 million in 2008 to $103 million in 2012. The growth has fueled marketing campaigns and a range of new products that are priced affordably. While most still prefer their coffee strong and black, convenience is valued. The market for sachets and singles is growing at 30% annually compared to conventional coffee growth of 3% per year. There is greater interest in gourmet coffee according to ABIC which adopted the slogan: Café: não basta ser puro, tem que ser de qualidade (Coffee: it's not enough to be pure, it must be of high quality) – a view shared by 93% of Brazilian consumers. Single serve Nespresso (Nestlé's single-serve espresso brand) sold exclusively in the market for a decade but the expiration of patents in 2013 led Brazilian companies to introduce com- peting brands. TRES from 3 Corações Group was the first to market a multi-beverage coffee maker. "We are investing $70 million in this project and we plan to open a capsule factory here in Brazil in the second half of 2015," said Jefferson Deywis, an executive with 3 Corações Group. The company teamed with Italian manufacturer Caffitaly to produce three single serve machines including one designed for food service. Capsules are filled with Brazilian coffee exclusively, which means transport to Italy where it is encapsu- lated and returned, making it more expensive and less sustainable. The situation points to a lack of infrastructure typical of the Brazilian coffee market and a big business op- portunity for investors. Despite these obstacles the segment has proven very profitable with revenue from recycling capsules to retailing coffee and machines for the home. Considering the continental expanse of Brazil, specialized logistics and transporta- tion for these kinds of products are also great ways to make money. Brazil has made massive investments in technology including specialized harvesting equipment, above, and extensive irrigation systems, below. Above photos courtesy Da Terra Brazil