PRESENTED BY:

DIVYA BODDU-09020242007

SIIB_MBA-AB

COFFEE – AN INTRODUCTION

ORIGIN: Ethiopia in 800 A.D

INDIA: 400 yrs ago (around 1600 A.D)

at Chadragiri Hills (Karnataka) by

Saint Bababudan

COMMERCIAL SPECIES:

Coffea canephora (Robusta)

C. arabica (Arabica)

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COFFEE – INDUSTRY OUTLINE

Half-a-trillion cups consumed every year!!!

Espresso vs Regular

Commercial Coffee production: >50 countries

Brazil alone contributes ~30 % of world’s total coffee production- 3 billion coffee plants

The USA is the world's chief coffee consumer

Total Employment- World: 25 Mln

Harvesting of coffee is the least mechanized

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CULTIVATION REGIONS

•Traditional

•Non-Traditional

•North-Eastern

COFFEE-PRODUCTION PROCESSES

Bean Production

•Cultivation of Coffee Beans on Coffee plants

•Picking of Beans from plants

Bean Post-Production Process

•Processing

•Milling

•Ageing

•Storage

•Roasting

•Crushing

•Packaging

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COFFEE-BEAN PRODUCTION

Soil and water

conservation

Shade management

Weed control

Bush management

Pest management

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COFFEE-BEAN POST-PRODUCTION PROCESS

Processing:

Wet process

Ferment and wash method

Machine assisted wet process

Dry process

Cleaning

Drying

Semidrying

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COFFEE-BEAN POST-PRODUCTION PROCESS

Milling process

Hulling

Polishing

Cleaning and sorting

Grading

Aging

Decaffeination

Storage

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Structure of coffee berry and beans: 1: center cut 2:bean (endosperm)

3: silver skin (testa, epidermis), 4: parchment (hull, endocarp)

5: pectin layer 6: pulp (mesocarp) 7: outer skin (pericarp, exocarp)

COFFEE-BEAN POST-PRODUCTION PROCESS

Roasting Light

Medium

Full roast

Double roast

Grinding

Coarse grinding

Fine grinding

Packaging

Sacks- green bean

Vacuum packing

Pressurized cans

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COFFEE-WORLD PRODUCTION PATTERN

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0

20000

40000

60000

80000

100000

120000

140000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

‘00

0 b

ags o

f 6

0 k

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3800

4000

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4400

4600

4800

5000

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5400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

‘00

0 b

ags o

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0 k

gs

COFFEE- INDIA PRODUCTION PATTERN

COFFEE-STATE-WISE PRODUCTION: INDIA

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COFFEE-AREA UNDER CULTIVATION: INDIA

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COFFEE EXPORTS: WORLD

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75000

80000

85000

90000

95000

100000

105000

2000 2001 2002 2003 2004 2005 2006 2007 2008

‘00

0 6

0 k

gs b

ags

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COFFEE EXPORTS: INDIA

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

60

kgs b

ags

% SHARE OF INDIAN COFFEE EXPORT

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0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

2000 2001 2002 2003 2004 2005 2006 2007 2008

MAJOR COFFEE EXPORTERS : WORLD

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Sr. no Country 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1 Brazil 18 016 261 23 172 487 27 981 839 25 710 812 26 478 475 26 190 695 27 354 772 28 179 971 29 498 769 30 330 799

2 Vietnam 11 618 376 14 106 443 11 771 367 11 631 111 14 858 991 13 432 034 13 904 702 17 936 219 16 101 372 17 051 734

3 Colombia 9 176 661 9 943 630 10 273 425 10 244 392 10 194 315 10 871 247 10 944 853 11 300 421 11 085 170 7 893 915

4 Indonesia 5 357 599 5 243 405 4 285 830 4 794 720 5 455 599 6 744 094 5 280 435 4 149 410 5 740 673 6 518 559

5 Guatemala 4 851 592 4 110 378 3 491 328 3 820 800 3 309 581 3 465 793 3 312 109 3 726 167 3 777 590 3 492 822

6 India 4 228 788 3 729 701 3 550 130 3 707 066 3 647 337 2 828 932 3 578 275 3 319 406 3 376 669 3 107 840

7 Honduras 2 878 560 2 391 613 2 711 260 2 425 237 2 779 189 2 391 905 2 898 414 3 312 009 3 259 455 3 084 188

8 Peru 2 361 566 2 662 796 2 789 464 2 503 025 3 184 062 2 369 438 3 881 026 2 879 494 3 732 567 3 073 579

9 Uganda 2 513 272 3 059 763 3 357 847 2 522 128 2 627 011 2 368 692 2 172 889 2 693 187 3 310 650 3 019 667

10 Mexico 5 303 690 3 333 166 2 644 659 2 595 593 2 361 931 1 984 803 2 570 075 2 912 302 2 448 001 2 838 096

MAJOR COFFEE IMPORTERS: WORLD

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Sr.no Country 2000 2001 2002 2003 2004 2005 2006 2007 2008

1 USA 23 766 839 21 415 141 21 638 914 22 760 196 23 183 954 23 041 516 23 708 762 24 219 282 24 277 004

2 Germany 13 894 540 14 753 266 15 515 537 15 727 003 17 356 071 16 716 049 18 542 843 19 564 053 19 876 237

3 Italy 6 314 875 6 541 731 6 523 415 6 929 190 7 031 931 7 268 613 7 547 526 8 028 463 8 173 180

4 Japan 6 908 009 6 996 198 7 307 457 6 922 573 7 253 915 7 407 834 7 631 552 7 086 224 7 060 032

5 Belgium 3 490 616 3 208 627 3 792 173 3 817 614 3 968 305 4 063 225 4 604 684 4 013 653 6 792 087

6 France 6 520 009 6 752 744 6 925 100 6 651 824 5 940 129 5 714 009 6 190 532 6 420 270 6 255 972

7 Spain 3 768 202 4 057 629 4 026 116 4 135 617 4 173 474 4 356 082 4 538 360 4 874 749 4 863 768

8 United Kingdom 3 012 401 3 061 827 2 971 318 3 002 018 3 328 680 3 433 304 4 045 789 3 780 548 3 967 458

9 Netherlands 2 965 801 2 793 684 2 760 002 3 175 539 3 159 027 2 988 015 3 292 805 3 531 019 2 304 443

10 Switzerland 1 171 483 1 254 538 1 216 745 1 321 870 1 236 295 1 641 049 1 502 620 1 823 108 1 977 688

EXPORT DESTINATIONS OF INDIA

More than 50 destinations

Major importer- Italy

EU: 65-70%

African nations: 7-10 %

USA: 1.7 %

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% OF TOTAL EXPORTS FROM INDIA

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LOGISTICS…

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LOGISTICS-I

Consignments are sent by Sea route

Major importer –Italy

Shipments go to Hamburg (Germany)

Consignments are distributed to other EU

nations from Hamburg

Proper packaging in air tight containers.

General purpose 20 feet containers are used.

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LOGISTICS-II

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Moisture droplets

LOGISTICS-III

Shipments to Africa, USA and Other destinations

also go by Sea route.

Consignments for African Countries reach UAE

port, which is the trading point.

Legal documentation is required.

Air route is not used.

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LOGISTICS-IV

ECONOMICS OF COFFEE…

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Consider:

Area : 1 Acre

P2P spacing: 8ft * 8 ft

Avg. no. plants: 647

Avg. yield of cherries: 4.5-5 Tons

Avg. bean obtained: 2.6 Tons

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COST OF PRODUCTION-I

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COST OF PRODUCTION II

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COST OF PRODUCTION III

INTERNATIONAL PRICING I

Governed by ICO indicator

Futures price at New York Commodity Exchange

Prices expressed in US cents per lb

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INTERNATIONAL PRICING II

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INTERNATIONAL PRICING III

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INTERNATIONAL PRICING IV

TRADE POLICY REGULATIONS

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ITC (HS) CODE

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POLICIES & CLEARANCES REQUIRED

Export Registration & Issue Of Registration -Cum -

Membership Certificate (RCMC) – 5yrs

Issue Of Export Permits & Certificate Of Origin -

Rule 44(2) Coffee Act 1942

Furnishing Post-shipment Documents : 45 Days

Intimation Regarding Change In Constitution

QMS Or Logo Scheme

ICB Grading Standards

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CODEX ALIMENTARIUS I

Describes limits for various residues and

contaminants in food for human consumption.

Codex standards are established by

establishing Maximum Residue Limits (MRL) for

16 agrochemicals in coffee beans

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CODEX ALIMENTARIUS II

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SWOT- BRAZIL VS INDIA

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WHY BRAZIL???

Largest producer

Largest exporter

Price setter

Major economic activity

Maximum employment

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S.W.O.T- BRAZIL

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BRAZIL COFFEE

STRENGTH

•Suitable soil condition

•Large man power

•Industry support/ Technology

•Vast area of crop/ Mechanization

•Regulated market

WEAKNESS

• Reduced government support

•Depletion of resources

OPPORTUNITY

•Increasing awareness/technology

•Expanding market

THREAT

•Natural Calamity-freeze &

draught

S.W.O.T- INDIA

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INDIA COFFEE

STRENGTH

•Arabica and Robusta

•70% export of total produce

•Suitable agro-climatic zones

•Fair trade

•Low acid content

WEAKNESS

•Unregulated

•Domestic consumption

increasing at faster rate

•Less risk takers

•Orthodox techniques

OPPORTUNITY

•Advent of Technology

•Increasing awareness

• Eco-tourism

•Massive consumer base

THREATS

• Introduction of high yielding ,

low cost coffee intercrops like

pepper, cardamom, vanilla etc

COMPETITION WITHIN INDIA

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THE ROAD AHEAD….

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NEW MARKET OPPORTUNITIES

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Austria 612 846 908 886

Belgium 1537 1103 650 934

Bulgaria 420 364 445 409

Cyprus 55 69 77

Czech Republic 631 679 621 525

Denmark 822 774 695 719

Estonia 166 101 154 123

Finland 1046 1057 1115 1058

France 5277 5628 5152 5554

Germany 9150 8627 9535 8897

Greece 856 1015 978 974

Hungary 598 522 494 445

Ireland 202 244 115

Italy 5593 5821 5892 5835

Latvia 180 131 115 88

Lithuania 213 230 204 209

Luxembourg 120 129 204 111

2006 2007 2008 2009

Coffee Consumption of Importing Countries (‘000 bags of 60 kgs each)

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NEW MARKET OPPORTUNITIES

Malta 28 16 23 14

Netherlands 2128 2292 1324

Poland 1952 1531 1190 970

Portugal 671 723 736 721

Romania 835 824 807 775

Slovakia 280 356 341 213

Slovenia 175 195 194 198

Spain 3016 3198 3485 3352

Sweden 1315 1244 1272 1133

United Kingdom 3058 2824 3067 3221

Japan 7268 7282 7065

Norway 721 771 715 715

Switzerland 931 989 1149 966

USA 20667 21033 21652 21434

2006 2007 2008 2009

Coffee Consumption of Importing Countries (‘000 bags of 60 kgs each)

STRATEGIES FOR THE NEW MARKET

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