Marketing   Programme

for the coffee consumption

Concept of the Coffee Fund

 -          Coffee Manufacturers from the coffee consuming countries contribute to the Coffee Fund US$
            1.- per 60kg bag of green coffee processed.

-          The Coffee Fund invests 50% of the contributions for projects in the coffee producing countries for enhanced environmental and social sustainability (agricultural coaching, business management practices for coffee farmers, water & soil management, renewable energies among other aspects) and measurements to increase quality of coffee beans. This part is treated under the “Origin Programme”.

-          The Coffee Fund uses 50 % of the contributions for promotion of coffee consumption. This “Marketing Programme” targets a renewed coffee culture through education of the public and professionals in the catering sector, tasting opportunities, dissemination of information about health related issues (in co-ordination with Positively Coffee) and about sustainability in the producing countries as well as advertising, where required. Promotion can apply to traditional and non-traditional coffee consuming countries or to coffee producing countries.

Objective of the Marketing Programme:

The target of this programme is to 

 We will achieve this through taking the coffee products closer to the consumers making it (again) a daily drink that most people from all social structures enjoy. We will promote customer knowledge about the coffee product, the types and brands, the forms of preparation and overall the appreciation of coffee. Publicly announcing the efforts and achievements under the origin programme of the coffee fund as well as further proclaiming health related issues (in co-ordination with positively coffee) will reduce the many prejudices that a significant number of consumers have towards coffee consumption today. Furthermore, depending on the country and market targeted, brandless advertising will reinforce these activities or may take a dominant role, which is depending on the country and market targeted.

Vision for the coffee market:

Coffee is a natural product with an exquisite taste. It is one of the few products that combine pleasure, a culture and a history on its own, a highly socialized form of consumption, environmental compatibility and economic interests in a global free market, each in its full extent.

In this sense, coffee is similar to wine, except that the broad public does not regard it as such.  It is therefore our vision to have coffee regarded as the distinguished product it is by a vast majority of the people. The lost habit of drinking coffee, the health and sustainability reserves claimed are the three main concerns we will focus on.

The good taste of coffee, the ideal combination with environmental conservation concerns and the possibility to have everybody in the supply chain benefit economically makes coffee a win-win product in every aspect. Increasing consumption will benefit the processing and distributions enterprises but also permit to reward the efforts made and successes achieved under our origin programme, notably the improvement in quality and conservation of nature. This marketing programme is tied into the origin programme through the quality of beans supplied, that ultimately will be perceived by the consumer.

Message to the public

At the heart of the message that we will relay to the public is the recognition of coffee as a superior product; a product that integrates taste, positive health related side effects, culture of mankind, nature, social justice and centuries of history. We will also point out that the coffee business cares about a sustainable development in the coffee producing countries. 

Unifying all these aspects in one campaign will project an absolutely positive image of coffee, including all the coffee related products and brands. It will hence correct the image of coffee it has acquired in certain markets over the last few years.

Structural approach

The Coffee Fund executes an inter-company function, which means it works across different roasting and soluble producing companies. The marketing activities can therefore be regarded as a support for the general coffee business.

Only through a beneficial collaboration between the industrial partners (i.e. the enterprises that contribute to the Coffee Fund) and the Coffee Fund extraordinary results can be achieved. This collaboration bases on the directive of the industrial partners for the selection of markets and the Coffee Fund’s execution of the respective activities.

Following table explains the fundamentals of this co-operation:

Description of the Marketing activities

1.      Quality

a.      Education of consumers and professionals in catering industry

At special events the participants will learn about origins and types of coffee, forms of processing, best serving practices and tastes. Participants of these events will be baristas, sales personnel in shops, waiters, business people, university students, people interested in coffee and the press. 

b.     Tasting

Providing the current and potential coffee consumers with the opportunity to taste a new brand (new to them) or style of coffee is an excellent form to allow them to discover a new coffee and foster the drinking habit. Many people have not yet discovered their favourite coffee style – mainly because they have not been given the opportunity yet. This will also include passing on the knowledge about appreciating a good coffee. Tasting will take place in public areas such as shopping centres and the street, but also at community centres and institutes of higher education.

c.      Quality

The activities offered by the Specialty Coffee Associations in the specialty coffee segment could be extended into the mainstream market. We plan to organize workshops with roasters, producers of coffee machines and their service people and with employees in restaurants in co-ordination with SCAE and SCAA.

d.     Market surveys

Knowing what exactly are the customers’ preferences and favourite tastes is mandatory for being a successful product design. Only neutral, professional market surveys can obtain reliable information from the market. As a (brand-) independent institution, the Coffee Fund can provide such market surveys.

e.      Business concepts

At the point of sales (restaurants / bars) there are many best practices. Spreading the good ideas to the places that lag behind is an effective mean to stimulate consumption. We plan to organize workshops and seminars in this respect.

We will also support innovative business concepts through prize awarding and technical assistance to new businesses. Both concepts will be co-ordinated with SCAA and SCAE.

2.      Information

a.      Information
It is one of the consumers’ concerns to purchase products that they can ideologically identify with. This trend has been identified by the fair trade market and by the gourmet sector. Through information on the activities of the Coffee Fund, i.e. that coffee is now being produced in a socially and environmental sustainable form many people will reduce their prejudices.

b.     Health related topics
In the coffee markets targeted, the Coffee Fund will collaborate with Positively Coffee and integrate the information about health issues available into the information campaigns.

These two information focuses are extremely strong marketing arguments.

3.      Promotion

a.      Advertising
Based on the target market, advertising of coffee consumption in general can
-          be the basic stimulating factor for people to initiate or increase coffee consumption
-          have the main objective to draw people’s attention on coffee drinking in view to support other activities going on, such as Education, Tasting and Information.

Integration of activities

The activities described above will not have a large effect if each is executed on its own. Based on the needs of the market and the targets of our industrial partners a set of activities will be chosen integrating smartly several of the activities. Furthermore, a careful chronological time planning is essential to achieve a long-term sustained effect.

Selection of activities 

Following matrix could be a proposal for selecting the activities based on the market targeted. The industry will make the final definition, case-by-case, and add further detail requirements.

Investment recovery

Since the concept of the Coffee Fund is based on a win-win situation, the companies contributing to the fund will recover their investment through the profits achieved from increased sales. To assure the recovery, the promotional activities will be executed in the markets of their choice, i.e. where their products are sold and where they can benefit from an increased consumption.

The minimal sales increase that has to be achieved to compensate a fund contribution is explained in the following table. It is based on a purchase volume of 1 Million bags that results in a fund contribution of US$ 1 Million.  

If the profit margin is at US$ 3,00 per kg roasted coffee, the equivalent of 7,000 bags of green coffee have to be sold more to reach compensation. Extended to the total estimated volume of 70 Million bags, this corresponds to a total sales increase of 490,000 bags. By reaching this increase the entire cost for the Coffee Fund will be born by the (new) consumers.

Market potential

The potential to attain these sales increases is clearly present in a number of countries around the globe. For instance, Germany, Great-Britain, Czech Republic, Hungary, Russia, China, Korea and many coffee producing countries. In a brief analysis of Korea, we would like to expose this potential:
 

As a reference, the Japanese Coffee consumption increased from 1.5 kg/head per year in 1978 to 3.1 kg/head in 2002.

The Korean per head consumption from 0.2 kg to 1.5 kg rose for the same time period.  

Assuming that Korea could reach the same level of the per head consumption as Japan in 25 years time, we can project the following steady growth, also taking into consideration the growth in population:

A gradual growth from 1,5 kg per head to 3,1 kg per head and a growth in population from currently 47 Million to 57 Million results in an increase of coffee consumption of 1,7 Million bags, that is from 1,2 Million to 2,9 Million bags. The first significant result can be expected during the first three years, namely an increase in annual consumption of 200,000 bags.

Conclusion

The Coffee Business has a clear potential for growth. Industry wide joint marketing is the most direct way to exploit this potential. However, this marketing needs to be well co-ordinated, in its activities but also through the direction of the roasting and soluble producing companies in order to attain the specific customers their products are destined for.  

The profits resulting from the increased sales cover by large the investments required, including those needed for financing the quality related and sustainable projects in the coffee producing countries.  

Running this marketing programme from coffee people for the coffee industry benefits the coffee consumers, and this under the least administrative effort, in a transparent and neutral manner. We are of the opinion that the coffee chain participants should act out of their own circle, also to keep the ownership of the programme and run it according to the needs of the worldwide coffee market.  

The Worldwide Sustainable Coffee Fund

Meggen, April 2005

Stand: 16. Dezember 2005