Edwin

The coffee market is highly competitive, especially in the mainstream segment. However, opportunities in the specialty market are growing, as an increasing number of European consumers is prepared to pay higher prices for high-quality coffees. Consumers in Europe are also increasingly demanding sustainably produced coffee. The industry has tried to meet this market demand by adopting various sustainability standards, in part through certification schemes. As such, especially in the mainstream market, certification has become a market entry requirement. Do note, however, that its importance is also growing in specific smaller markets, such as specialty coffee. The European market for specialty coffee is growing While the mainstream market grows with tighter margins and cheaper products, the consumption of high-quality and specialty coffees is also growing at a fast pace in Europe. The market for specialty coffee offers opportunities for suppliers offering high-quality coffees. This specialty segment is a small niche, which commands high quality and high value. All European markets have been showing growing demand for specialty coffee, although the size of the segment is most pronounced in North-Western Europe. This area is marked by higher income levels and consumer awareness, as well as a more developed coffee culture than the rest of Europe. As written above, the increasing interest in specialty coffee is reflected in the growing number of coffee bars and chains, small roasters, small local brands, and baristas. Due to the effects of the COVID-19 pandemic, many cafés had to temporarily stop their operations, leading to a 30% decline in coffee shop sales in 2020 throughout Europe. In general, the larger coffee chains and shops have proven to be more resilient to the crises, tapping into their resources to stay afloat, whereas smaller businesses proved to be especially vulnerable. As a result, despite numerous shop closures, the European branded coffee shop market still registered growth. The market grew by 0.9% to over 39 thousand outlets in 2020. Not all these branded coffee shops will serve specialty coffees, though several will work with coffees with cupping scores of 80 and above. When these branded shops have grown significantly in size, they may start sourcing their green beans directly from producers, often still leaning on their former supplier (which is usually an importer) for logistical services. Another effect of the global health crises is that especially coffees scoring less than 84 points registered an increase in sales over 2020, whereas the higher-quality coffees scoring 84 points and above registered a decline in sales. Despite the disruptive short-term impact of the crisis and the registered shift of buyers to lower-grade specialty coffees in 2020, it is expected that the European specialty market (also for the higher graded 84+ coffees) will show a positive outlook for the long term. This is especially so as there is a strong belief that consumers wanting to consume high-quality single origin coffees with unique taste profiles will continue to want those same coffees, despite the effects of COVID-19. Europe is the world’s largest market for certified coffees Europe is the most important market for certified coffee in the world. Certification schemes play a very important role as they mirror the growing consumer awareness and changing industry profile towards sustainability. The main independent certification schemes in the coffee consumer market are Fairtrade, organic and Rainforest Alliance/UTZ. Note that the importance of each certification scheme in Europe varies significantly from country to country. European markets for organic coffee The European organic market is the second-largest single organic market, only after the United States. European organic retail sales reached €45 billion in 2019. The interest in organic coffee follows the general organic market trend in a country. That means that interesting markets for organic coffee particularly include the largest organic markets in Europe: Germany (with a market share of 27% of the total European organic market in 2019), France (25%) and Italy (8.0%). Following the organic market trend, it is likely that the demand for organic coffee in Europe will continue to increase. After all, the entire European market for organic retail sales continues to increase, at an average annual increase of 11% between 2015 and 2019. The COVID-19 crisis has further driven up demand for organic food and beverages, as organics are considered healthier and safer than conventional products. Total green coffee imports by the European Union (EU27) in 2020 amounted to 3.1 million tonnes. Organic coffee imports by the EU that year reached 131 thousand tonnes, or 4.3% of total green coffee imports. This percentage shows that the organic coffee market is still a niche segment in Europe. Nevertheless, the market registers growth, as organic coffee imports by the EU increased by 6.7% between 2019 and 2020. Fairtrade-certified coffee The United Kingdom is the largest Fairtrade market, with overall Fairtrade retail sales of over €1.8 billion in 2018. The UK is also the leading market for Fairtrade-certified coffee. Sainsbury’s, Waitrose and Marks & Spencer are examples of British retailers that converted their entire private label coffee lines to 100% Fairtrade. Greggs, the largest bakery chain in the United Kingdom, drove up growth of Fairtrade coffee sales in the out-of-home segment in the UK. Germany is also a major Fairtrade market in Europe. About 5% of total German coffee sales were Fairtrade-certified in 2019. The total number of Fairtrade coffee products sold through retail channels and by the out-of-home segment in Germany reached about 350 products in 2019. Switzerland is also a relatively large market for Fairtrade products, with retail sales reaching €817 million in 2018. Overall Fairtrade sales in Switzerland grew by 13% between 2017 and 2018. The Fairtrade share of coffee products in Switzerland reached an estimated 11% of the total market, amounting to the use of 7.6 thousand tonnes of Fairtrade-certified green coffee in 2019. Switzerland also registered Europe’s highest per capita consumption of Fairtrade products, with over €95 per person spent in 2018. The fastest-growing markets for Fairtrade coffee are Ireland, Finland and Denmark, which grew at average annual rates of 36%, 35%

Eastern European countries show significant potential as markets for coffee exporters. Consumption in Eastern Europe is still well below Western Europe, but a shift in coffee consumption is noticeable. This is particularly the case in Poland, where the number of specialty coffee shops is on the rise. Specialty coffee is also gaining traction in other markets in the region, such as Russia, Romania and Bulgaria, which illustrates the growing interest of Eastern European consumers in coffee quality and variety. The region represents a relatively small share of total European coffee imports. The Eastern European countries Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Slovakia and Slovenia together sourced 6.5% of all European green coffee imports in 2020. Overall, Eastern European green coffee imports increased at an average annual rate of 3.3% between 2016 and 2020. Poland is the largest importer of green coffee in Eastern Europe, and Europe’s ninth largest. In 2020, Poland imported 3.6% of all European imports, amounting to 128 thousand tonnes of green coffee. Poland registered year-to-year growth of 5.7% between 2016 and 2020. In 2020, Poland imported 65% of its green coffee directly from origin. The largest suppliers to Poland were Vietnam (35%), Brazil (18%) and Uganda (2.6%). About 31% of Polish coffee imports came from Germany. The second-largest importer was Bulgaria, importing an estimated 30 thousand tonnes of green coffee in 2020, about 0.8% of total European imports. That year, about 79% of Bulgarian coffee imports was sourced directly from origin countries, mainly Vietnam (27%) and Brazil (22%). Note that, compared to Western Europe, several countries in Eastern Europe import proportionally less green coffee directly from producing countries. For instance, the Czech Republic only sourced 16% of its imports directly from origin. This is mainly so because of the strong infrastructure and importing facility in neighbouring ports, such as the Port of Hamburg. For small and medium-sized roasters in Eastern Europe, it is often less risky and more cost-effective to source from specialised importers that use these ports. In addition, the main players on the Eastern European market are large multinationals that usually import through one point, roast in large-scale facilities and distribute coffee throughout Europe. However, as roasters in Eastern Europe gain scale, it is expected that they may also gain autonomy in terms of sourcing directly from producing countries. In the long term, these countries may also develop further and upscale their infrastructure to be able to import directly. Eastern European countries that do source most of their green coffee imports directly from origin include Bulgaria (79% of total imports), Slovenia (97%) and Romania (78%). Vietnam is the main supplier to Bulgaria, illustrating the focus on Robusta to serve the country’s large demand for instant coffee. Most supplies to Romania were sourced from Brazil with a share of approximately 19% in 2020, followed by Vietnam with 16%. Slovenia sourced its largest supplies from Brazil with a share of approximately 51% in 2020, followed by India with an estimated 20% of supplies. Other interesting European destinations Spain, Switzerland and France are other interesting markets for exporters in Europe. They combine a large consumer market with a high share of Europe’s direct imports from producing countries: Spain has a share of 8.4% of total European direct imports in 2020, followed by Switzerland with 5.8% and France with 5.1%. Vietnam is the largest green coffee supplier to Spain, while Switzerland and France import their largest share from Brazil. In terms of per capita consumption, Finland, Sweden, Norway, Iceland and Denmark also have interesting potential, since they have the highest per capita consumption in Europe. Note, however, that absolute consumption is not necessarily very high, due to a relatively low number of inhabitants in these countries. In terms of quality, North-Western European markets have more penetration of high-quality coffee than Eastern and Southern Europe, where volumes are higher, but coffee quality is usually lower. The market for certified coffees also tends to be larger in North-Western European markets than in Eastern and Southern Europe.

Europe offers many opportunities to coffee exporters. The countries that offer the most opportunities show a mix of positive characteristics, including import volumes, of which a large share is sourced directly from producing countries, different suppliers, their role as distributor of green coffee beans and a growing market for specialty coffees. Germany, Italy and Belgium stand out as the most interesting markets for green coffee exporters. But markets such as France, Spain and the United Kingdom are also very attractive. Eastern European markets are smaller and show fewer direct links to producing countries, but are growing fast. Germany is Europe’s all-round most important coffee player Germany is the largest importer of green coffee beans in Europe. In 2020, Germany imported over 1.1 million tonnes of green coffee. Germany accounted for 35% of all European coffee imports sourced directly from producing countries. With 37% of total direct imports, Brazil is the largest supplier of green coffee to Germany, followed by Vietnam (22% of supplies) and Honduras (10%). On average, German green coffee import volumes remained fairly stable in the last years, with a slight decline of -0.7% between 2016 and 2020. Most green coffee beans enter Germany via the Port of Hamburg. The ports of Bremen and Bremerhaven are also important entry points for coffee. As the largest importer in Europe, Germany is a potential destination for exporters of various qualities and origins, which will either be roasted locally or re-exported to other markets. Germany plays a major role in green coffee re-exports in Europe, giving it an important role as a key coffee trade hub in Europe. About 36% of the total EU intra-trade exports were re-exported by Germany alone, amounting to 175 thousand tonnes in 2020. German intra-EU coffee exports increased on average by 1.0% between 2016 and 2020. The main destinations for Germany’s green coffee re-exports in 2020 were Poland (88 thousand tonnes), France (21 thousand tonnes), the Czech Republic (16 thousand tonnes) and the Netherlands (12 thousand tonnes). Germany has the largest coffee-roasting industry in Europe; roasted coffee is both destined for local demand as well as for export. Examples of some large-scale coffee roasters in Germany include Melitta and Tchibo. In 2020, Germany was the second-largest roasted coffee exporter in Europe (after Italy) with exports amounting to 235 thousand tonnes. The main destination markets for roasted coffee were Poland (34 thousand tonnes), the Netherlands (28 thousand tonnes) and France (20 thousand tonnes). German per capita coffee consumption is not among Europe’s highest, but at an average 5.5 kg per year it still sits above the European average of 5 kg. The market for specialty and high-quality coffee in Germany provides especially interesting opportunities for exporters that fit into this segment. Germany has the second-largest branded coffee-shop market in Europe, only after the United Kingdom, while it is Europe’s largest market for shops specifically focused on coffee. Besides, Germany is Europe’s largest market for organic produce, providing interesting opportunities for the export of organic-certified coffees. Note, however, that in Germany you will also find the most competitive organic coffee market in Europe. Italy has a strong coffee-roasting industry Italy is the second-largest importer of green coffee beans in Europe, only surpassed by Germany. In 2020, Italian green coffee bean imports reached a volume of 565 thousand tonnes. Italian imports declined slightly at an average annual rate of -0.3% between 2016 and 2020. About 98% of Italian imports are sourced directly from coffee producing countries. The main suppliers of green coffee to Italy are Brazil (166 thousand tonnes), followed by Vietnam (133 thousand tonnes) and Uganda (76 thousand tonnes). In general, Italy imports a relatively large share of Robusta varieties, which are used as a basis for espresso blends. Green coffee beans are mainly imported into Italy via the Port of Trieste and the Ports of Genoa. Almost all of Italy’s green coffee imports remain in the country and are used by the very strong Italian coffee-roasting industry. Large Italian roasters, such as Lavazza, Segafredo and Illy, export substantial amounts of Italian coffee blends to destinations all over Europe and the United States. This creates an important demand for green coffee from coffee producers worldwide. Italy was Europe’s largest roasted coffee exporter in 2020. Italy’s roasted coffee exports in 2020 amounted to 236 thousand tonnes. The country’s roasted coffee export volumes increased at an average annual rate of 5.0% between 2016 and 2020. Italy is also a large consumer market. Coffee is an integral part of culture in Italy, where each person consumes an average of 5.9 kg of coffee a year. The specialty coffee market in Italy is only slowly taking off, as Italy has only an estimated 100 specialty coffee shops (serving high-quality and unique coffees) compared to almost 150 thousand coffee bars. Despite being a small niche market, the fact that Italy is slowly welcoming more specialised coffee roasters and shops might bring interesting opportunities for high-quality coffees from special origins and with unique stories. Belgium as a trade hub for coffee in Europe Belgium is Europe’s third-largest green coffee importer. It accounted for 10% of all direct green coffee imports in Europe in 2020. A share of 96% of the country’s green coffee imports was sourced directly from producing countries in 2020, amounting to 301 thousand tonnes. Brazil was the largest supplier of green coffee to Belgium, with 84 thousand tonnes in 2020. Vietnam ranked as the second-largest supplier with supplies reaching 61 thousand tonnes, followed by Honduras with 38 thousand tonnes of green coffee. Overall direct green coffee imports by Belgium increased at an average annual rate of 1.0% in volume between 2016 and 2020. Belgium is one of the main trade hubs for coffee in Europe. Over 77% of its imports are re-exported, amounting to 243 thousand tonnes of green coffee re-exports in 2020. This makes Belgium the largest re-exporter of Europe, with a share of 33% of total European green coffee re-exports. The main export destinations of Belgium are its