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Volume 8, Number 6 June 2003
Coffee Reporter Moves to Electronic
Format
Seattle Espresso Tax Initiative
NCA to Pursue Greater Cohesion with
Domestic Coffee Associations
US Continues Studying ICO Membership
Coffee and Liver Disease Reviewed
National Coffee Drinking Trends 2003
World Bank and ICO Conduct Crisis
Round-Table
NCA Fall Education Conference Set
for October 16 & 17
Look for "Coffee on the
Hill" Information in July; Dates Sept. 16 & 17
LIFFE
Contemplates Arabica Futures Contract
Retail prices (all sizes/per pound)
The ICO composite average indicator
prices
Coffee Reporter Moves to Electronic Format
This is the first edition of
Coffee Reporter in its new electronic format, part of a program to
convert several NCA publications to e-format. In May, members received the
first all-electronic edition of the quarterly Media Analysis Report.
The use of e-publishing
allows members to distribute these publications to any or all appropriate
personnel in their organizations quickly, making information available where
needed more easily, and allowing increased coordination with members' own
internal communications.
Coffee Reporter will continue to present timely articles on the
issues that confront this industry, NCA activities and policies, and general
and business news about coffee from various sources. Wider distribution to the
150,000 American coffee industry workers can help to tap their potential as
grassroots ambassadors for the industry. NCA urges you to take a moment now to
set up an appropriate internal distribution for Coffee Reporter.
E-publishing also allows
easy storage, access and, when necessary, printout of these publications, as
well as a significant opportunity to redirect NCA financial resources to other
uses for members. A print version derived from the e-format will remain available,
upon request, for those members without e-capabilities.
Please let NCA staff know
what you think about the new electronic format Coffee Reporter, any of
the articles in it, or any suggestions for articles, by writing or calling NCA
or by emailing JSMolishever@ncausa.org.
Seattle Espresso Tax Initiative
Seattle's Ballot Initiative
77, the proposed 10 cent per cup tax on the sale of espresso-based drinks, is
on the ballot for Seattle primary elections scheduled for September.
The initiative, which failed
to satisfy Seattle ballot petition requirements in time for last fall's
elections, is opposed by a coalition of Seattle coffee shop, espresso stand,
and restaurant owners as well as local food industry and hotel/motel
associations in an ad hoc committee, JOLT (Joined to Oppose the Latte Tax). NCA
has supported that opposition.
NCA will shortly be sending
out letters to members and others informing them how they may contribute
directly to JOLT's efforts to educate and organize Seattle voters in opposition
to the initiative, and of a political education fund NCA is initiating on its
own to educate voters and policy makers about issues.
Proponents say the tax, to
be imposed on lattes, cappuccinos, café mochas and other espresso-based drinks
prepared and sold for immediate consumption, would be used to fund already
existing children's services in Seattle. The tax would also fund a new
government childcare services oversight committee.
But it has been pointed out
by opponents that this is bad public and tax policy, for several reasons.
Taxing one particular item, the first instance of this in Seattle, could set a
precedent for additional specialty taxes on other items -- what will they tax
next? Many Seattle residents also feel that funding for childcare programs is
too important to be dependent on the sale of espresso, which is completely
unrelated to childcare, and therefore funding generated could well vary in ways
that have no relationship to increased or decreased needs for funding.
"This is not only bad
public policy for Seattle, it sets a precedent for bad tax policy in every
community throughout America," said NCA President Robert Nelson."
Food and beverage retailers, in general, have historically been the target of
ill-thought out tax schemes that do more harm than good; this particular tax
will result in diminished economic activity at the same time that the community
is climbing out of an economic downturn. Voting against the Seattle espresso
tax initiative is not a vote against children’s services, it is a vote against
bad fiscal policy. "
It is expected that
organized labor may lend its support to the proponents' campaign in hopes that
they will be successful in unionizing childcare workers subsequent to the tax
scheme efforts. NCA has also learned that the proponents may be undertaking a
national fundraising campaign in hopes that they can garner support for not
only the Seattle initiative, but for future similar initiatives in other
communities.
Those wishing to assist the committee opposing this
initiative may contribute by mail direct to JOLT, at PO Box 21671, Seattle, WA
98111. The Federal Tax ID numberber is 04-3704984, though contributions are not tax
deductible.
NCA to Pursue Greater Cohesion with Domestic Coffee Associations
A major long-term strategy
of NCA is to strengthen the cohesion and coordination between the various
organizations representing the coffee industry in North America, thereby
avoiding duplication of efforts and increasing the industry’s effectiveness. At
its June meeting, the NCA Board of Directors voted to accept a plan proposed by
the Executive Committee to create a North American Coffee Council. The purpose
of the Council would be to identify common goals and interests between the
various North American coffee associations, and develop common positions where
possible. Under the plan, the Council would consist of the chief executive and
two Board members of each organization. Prospective members, in addition to
NCA, include the Green Coffee Association, the Coffee Association of Canada,
the Specialty Coffee Association and the Southern Coffee Association.
NCA President Robert Nelson
informed the Board that the Green Coffee Association has already proposed a
staff-level meeting to discuss how more synergy can be created between the two
organizations.
The Board authorized Mr.
Nelson to begin the process of communicating with these organizations to
determine their interest in developing the Council.
NCA Task Force Interim Report
The NCA Quality Task Force
made a preliminary report to the June Board of Directors meeting on the
planning and work it has completed to date.
The Task Force was
established by the Board in March to explore opportunities to support producer
quality objectives in a manner that preserves the widest array of consumer
choices. The Task Force was also charged with identifying and examining
approaches adopted by International Coffee Organization consuming member
countries with regard to ICO resolution 407, which prohibits the export of
green coffee above certain defect levels.
Regarding adopted
approaches, the Task Force reported that both Europe and Japan have voluntary
programs to report exports to them of coffee that is not compliant with
Resolution 407. These are administered through their respective national coffee
associations, the European Coffee Federation and the All Japan Coffee
Association. To date, two reports have been filed by the All Japan Coffee
Association with the Japanese government, which passed them on to the ICO.
The Task Force also reviewed
compliance efforts in producing nations. Some countries have adopted
administrative procedures and others have adjusted grading procedures as
approaches to complying with ICO Resolution 407. Some countries have taken
preliminary compliance steps but still need to implement legally binding
directives, and other counties are seeking technical or financial assistance to
implement compliance measures.
With regard to supporting producer quality objectives
in a manner that preserves the widest array of consumer choices, the Task Force
has been working to create a framework to accomplish this. It has identified a
preliminary list of options for further consideration and discussion as
possible approaches to this objective, and has organized these options
according to the area they each address, such as Education and Government
Policy.
Upon completing its
evaluation and prioritization of the identified options, the Task Force will
submit its final report and recommendations to the Board of Directors for its
review and input. Final approved options will be assigned to the suitable NCA
committee for further consideration and execution, where appropriate.
US Continues Studying ICO Membership
NCA President Robert Nelson;
Specialty Coffee Association of America (SCAA) Executive Director Ted Lingle;
and key coffee industry lobbyists from Kraft Foods, Sara Lee Coffee & Tea
Foodservice, Nestlé and Procter & Gamble met for a second series of
conferences on June 18 and 19 with senior Administration officials to present
industry viewpoints and answer questions on why it is essential for the U.S. to
rejoin the International Coffee Organization (ICO).
This is part of an ongoing
process of interagency meetings and communications among the various
Administration departments charged with evaluating the decision of the U.S.
rejoining ICO or not that have been taking place throughout June.
A May 30th article in The
Wall Street Journal implying that the U.S. had decided not to join the ICO
is incorrect. The fact is that no decision has been made and it is expected
that the process of reaching a final decision may go on throughout the summer.
In the meetings this month,
Mr. Nelson and the other coffee representatives met with an interagency group
including officials from the State Department, the U.S. Trade Representative's
office (USTR), the Department of Agriculture (USDA) and the National Security
Council (NSC). They also met separately with Ambassador Thomas Shannon, Special Assistant to the
President and NSC Senior Director for Western Hemisphere Affairs, and John
Sammis of the NSC. Two additional separate meetings were held with officials of
the U.S. Agency for International Development (USAID) Bureau for Africa, and
the USAID Bureau for Economic Growth, Agriculture and Trade. Meetings were also
held with key Congressional offices.
The coffee industry
representatives, along with ICO Executive Director, Nestor Osorio, and
Colombian Coffee Federation General
Manager, Dr. Gabriel Silva, previously met in April with Administration
officials to explain the need for the U.S. rejoining ICO, as reported in the
May issue of Coffee Reporter.
"What is needed is
coherent, cohesive global strategy that addresses rural development by focusing
on the current situation in the coffee sector, thereby ensuring the future
sustainability of the industry," said Mr. Nelson. “Such a cohesive
strategy will not be developed and executed without the authoritative
leadership of the United States, and NCA believes that ICO needs to be part of
that strategy. This is an extremely important decision with very important
consequences, for the health of the global coffee industry and for our
country's ability to influence the future of the industry.”
Coffee and Liver Disease Reviewed
There is increasing
scientific evidence to show that coffee may provide significant protection
against the development of liver disease.
In a
presentation at the International Coffee Organization-sponsored Positively
Coffee meeting at the Tea and Coffee Symposium, held in Rome earlier this
month, Professor Amleto D’Amicis, Head of the Nutrition Information Unit at
Istituto Nazionale di Ricerca per gli Alimenti e la Nutrizione (INRAN), in
Rome, highlighted how coffee drinking specifically may be protective against:
§
Cirrhosis of
the liver (a disease causing progressive damage and scarring of the liver
tissue and function)
§
Gallbladder
disease - by reducing the risk of gallstone formation.
§
An increase
of liver enzyme activity. A high liver enzyme activity is a recognized
indicator that there has been deterioration in the functioning of liver cells
and possible development of disease in the liver.
“Such
significant data shows us how drinking coffee could provide a real benefit to
our health”, said Prof D’Amicis. In his presentation, Professor D’Amicis
highlighted one study (Klatsky 1992) that showed that coffee drinking is
inversely related to alcoholic cirrhosis risk. This study, involving over
128,000 adults, showed that persons drinking four cups of coffee per day are at
one fifth the risk of cirrhosis of those of who did not drink any coffee.
More recent
studies (Corrao 2001) confirmed the findings that it is specifically coffee,
but not other beverages containing caffeine, that may be the key factor in
inhibiting the onset of both alcoholic and non-alcoholic cirrhosis of the
liver.
In another large
study (Leitzmann 1999), results showed that men who regularly drank two to
three cups of coffee per day – filtered, instant or espresso - had about a
30-40% reduction in risk of gallstone disease. For men who drank four cups per
day, the reduction was even more significant – the risk was cut in half. Other
study results (Leitzmann 2002) have demonstrated a similar positive effect in
women.
Full citations
for the articles referred to are:
1.
Klatsky AL,
Armstrong MA. Alcohol, smoking, coffee, and cirrhosis. Am J Epidemiol 1992 Nov
15;136 (10):1248-57
2.
Corrao G,
Zambon A, Bagnardi V, D'Amicis A, Klatsky A; Collaborative SIDECIR Group.
Coffee, caffeine, and the risk of liver cirrhosis. Ann Epidemiol 2001 Oct;11
(7):458-65
3.
Leitzmann MF,
Willett WC, Rimm EB, Stampfer MJ, Spiegelman D, Colditz GA, Giovannucci E. A prospective
study of coffee consumption and the risk of symptomatic gallstone disease in
men. JAMA 1999 Jun 9;281(22):2106-12
4.
Leitzmann
MF, Stampfer MJ, Willett WC, Spiegelman D, Colditz GA, Giovannucci EL.
Coffee intake is associated with lower risk of symptomatic gallstone disease in
women.
Gastroenterology 2002 Dec;123 (6):1823-30
Coffee Category Promotion
At
its June meeting, the NCA Board of Directors approved a plan proposed by the
NCA Public Relations Committee to conduct research as the first phase of a
campaign to increase consumption of coffee across the entire category. The
proposed research program is designed to identify:
- the most promising audiences -- i.e., those with
the greatest potential to increase their consumption;
- the issues and concerns of those audiences that
are most likely to influence their consumption;
- the messages that are most likely to positively
address those issues and concerns.
"NCA
has a long-time commitment to promoting awareness of scientific studies
examining the health and well-being implications of coffee, which will
continue," said Director of Communications Jay Molishever. "This
research will attempt to determine where to put additional resources, whether
into more health-science messages, or other areas."
"The
Public Relations Committee looked at this issue and realized that the
initiatives regarding health are driven by the very good news that exists about
coffee and health, but we have very little consumer point-of-view research
about whether that good news actually influences them. Do people who don't
drink, or who limit their coffee intake, because of their concerns about
health, actually respond to positive science, or are their minds made up?"
he explained.
The
Public Relations Committee’s program involves three phases: An in-depth
examination of the data NCA already has collected in National Coffee
Drinking Trends 2003, to determine the most promising audiences; focus
group studies with randomly recruited members of those audiences to determine
what issues and concerns would actually move them to change consumption
behavior for the better; and quantitative internet research among thousands of
respondents to test the messages discovered and developed during the focus
groups.
Based
on its findings, the Public Relations Committee will recommend implementation
options to the Board for its consideration.
The
NCA Public Relations Committee consists of communications and scientific
personnel from member companies.
National Coffee Drinking Trends 2003
While the number of American
adults who identify themselves as drinking coffee daily or at least
occasionally is the highest it has been in more than 5 years -- 166.6 million,
or 79 percent, up 5.4 million from last year -- the segments and dynamics of
this group are shifting, according to National Coffee Drinking Trends 2003
(NCDT), published this month.
How are a second straight
year of rising unemployment, changing cultural patterns, aging of generation
X-ers and other factors affecting American's coffee-drinking patterns?
The gains of recent years in
the resurgence of coffee appear to be holding at or close to the higher levels
achieved, the report finds, though continued growth appears to await an
economic upturn.
National Coffee Drinking
Trends, produced by NCA, surveys
consumption patterns in a wide variety of situations and categories, tracking
them for over five decades. It provides operation-critical information about
shifting consumption habits -- both traditional and gourmet coffee beverage --
which have never been more in flux than they are now.
"The trend data banks
available through National Coffee Drinking Trends 2003, and the high
reliability of the data due to the large sample size, have made it one of the
most valuable and eagerly anticipated studies in the coffee industry," NCA
Director of Membership Development and Marketing Steve Wolfe remarked.
According to NCDT 2003,
the increase in daily or occasional (within the past year) coffee drinkers is
matched by an increase in daily or fairly regular (within the past week)
drinkers, who grew by 3.7 million to 135.6 million, or 64 percent.
Within these two sets, 108.3
million, or 51 percent of Americans, drink coffee daily. This compares with 52
percent the year earlier, according to the study, paralleling a trend seen in
consumption of soft drinks (59 percent in 2002 vs. 58 percent in 2003) and
juices (43 percent in 2002 vs. 42 percent in 2003), which National Coffee
Drinking Trends 2003 tracks for comparison. In 1995, only 47.4 percent of
Americans said they drank coffee daily, according to the survey.
Ongoing relatively high
levels of unemployment seem to play a role in the current phenomenon, possibly
accounting for a sudden change in workplace consumption (16 percent in 2003
compared with 20 percent in 2002) after several years of fairly consistent
workplace share of daily cups. Also affected are the youngest drinkers, 18-24,
whose coffee drinking patterns were among the fast growing until the last two
years (7 percent in 2003 compared to 13 percent in 2002), and who have the
highest levels of unemployment (15.9 percent among 18-19 year olds, and 9.3 percent
among 20 - 24 year-olds at the time of the study, compared with 5.7 percent
overall).
Time of day, in-home versus
out-of-home, and place of purchase patterns are also shifting in ways that
perhaps reflect the specific economic fact that there are fewer workers around
the all-day workplace coffee station, the report found.
For additional information
on National Coffee Drinking Trends 2003, prices and ordering, visit the
NCA website (www.ncausa.org) or call (212) 766 4007.
World Bank and ICO Conduct Crisis Round-Table
An international high-level
Round-Table on the coffee crisis was held in London last month, organized by
the International Coffee Organization (ICO) and the World Bank.
The Round-Table brought
together over 250 delegates including producers from developing countries,
government officials, experts from international organizations, advocacy groups
and industry representatives to discuss alternatives such as diversification,
quality, added value and market development.
Participants urged the U.S.
Government to rejoin the ICO and called on wealthy consuming countries to
reduce their internal agricultural subsidies and tariffs in order to allow
potential diversification for those producers attempting to move to other
crops.
"The real solution is
not within the coffee industry, but with the co-operation of developed nations
to open up their highly protected agricultural markets to emerging
markets," the Financial Times (FT) quoted World Bank
Director of Agriculture and Rural Development Kevin Cleaver at the Round-Table.
According to FT, Mr.
Cleaver said opening up North American, European and Japanese agricultural
markets would be difficult. The developed world spends $300 billion a year on
subsidies to its farmers and in turn gives the developing world $8 billion a
year in agricultural aid, he noted.
International Coffee
Organization (ICO) Executive Director, Nestor Osorio, spoke to the Round Table
about the need to "pursue the promotion of consumption through various
means, including the improvement of quality, and to reduce dependence through
diversification," according to the ICO website. "We will need to
establish the capacity of international agencies and the private sector to work
on concrete actions in areas like credit and risk management, and what measures
can be taken to bring producers once again into the profit-zone. The ICO is
ready to coordinate the successful implementation of these ideas."
Others called on wealthy
countries to share the burden of the present coffee crisis that affects the
living standards of 125 million people mainly in small-holdings in developing
countries.
Participants agreed that a
long-term solution of the crisis needs to be part of an integral strategy for
the agricultural and rural sector.
"There is no simple
solution, there is no silver bullet," said World Bank's Mr. Cleaver.
"There is a consensus that an integrated package which includes
improvement in coffee quality, increase in consumption in non-traditional
markets, strengthening of the bargaining and marketing powers of producing
countries and support to diversification should be implemented."
Innovative solutions such as
the facilitation of access to price risk management products to groups of small
farmers in several Latin American and African countries, and new marketing
strategies for quality improvement and increase of consumption were also
showcased at the meeting.
NCA Fall Education Conference Set for October 16 & 17
This year's program for the
NCA Fall Education Conference, to be held October 16 and 17, at the
Metropolitan Hotel, in New York, is set.
There will be two distinct
educational tracks: one focusing on production, emphasizing quality from tree
to cup, and the other focusing on business, covering the latest trends and news
from the frontlines of coffee marketing. This year’s conference will feature
such topics as coffee and health, coffee in the new world of biosecurity
concerns, certified coffees, origin coffees, coffee and the internet, new
packaging options, corporate responsibility, specialty robusta opportunities,
the right water, and much more.
Registration materials will
be mailed in July. Or, call NCA at 212 766 4007 for further information. Check
the NCA website by mid-July for full information and online registration.
Look for "Coffee on the Hill" Information in July; Dates Sept. 16 & 17
Information
on how members can participate in NCA's "Coffee on the Hill" should
be arriving in your mail in the next few weeks. The event, in which coffee
industry professionals will visit Washington to let elected officials know
their views on the many critical issues now impacting the coffee industry, is
set for Sept. 16 & 17. Please plan to be there if possible. Your voice,
together with other members, can make a difference.
For
any questions, contact NCA at (212) 766-4007.
LIFFE
Contemplates Arabica Futures Contract
Coffee
brokers and traders reacted positively to a report this month that the London
International Futures and Options Exchange (LIFFE) is contemplating the
introduction of an arabica coffee futures contract, saying it would benefit
participants throughout the coffee market and should lead to a sharp increase
in the volume of coffee futures traded worldwide, according to a report by
OsterDowJones from London.
Malcolm
Wall Morris, LIFFE Business Development Manager for Commodity Products said the
Exchange is considering the introduction of an arabica coffee futures contract
to run alongside its existing robusta contract. At present, players wanting to
trade arabica coffee futures use the contract at New York's Coffee, Sugar and
Cocoa Exchange (CSCE), but many traders believe there is sufficient demand to
operate a separate arabica contract on LIFFE, ODJ reported.
The
proposed contract will be based on the delivery of washed and unwashed coffee
but the exact quality specifications have not yet been decided, Mr. Wall Morris
is reported to have said. Only washed coffee is currently delivered against the
arabica contract at New York's Coffee, Sugar and Cocoa Exchange. Mr. Wall
Morris said the LIFFE arabica contract "would run complementary to the
CSCE." He said the idea for an arabica contract arose from feedback from
users who have expressed a desire to be able to trade arabica coffee in London,
the report said.
The
report stated an arabica contract on LIFFE would be traded electronically
rather than on an open-outcry basis, a factor which should also help to cut out
floor brokerage fees. There is a broking fee of around $4 to $5 per lot to
trade on the CSCE floor, according to OsterDowJones, a cost that is not
incurred when trading electronically.
Another
possible benefit of two similar contracts in New York and London, the report
said, would be that it should be easier to trade the arbitrage -- the
simultaneous purchase and sale of coffee between the two markets to take
advantage of any price discrepancy -- between LIFFE and CSCE arabica contracts
than it currently is with a LIFFE robusta and CSCE arabica contract. This
should also allow traders to offset initial margins from one exchange against
the other, cutting down the size of the cash deposit. Currently, a deposit must
be made into margin accounts for both markets at the time an order is placed.
One
major barrier still to be overcome, the report noted, is an adequate grading
system. An industry analyst said the grading system currently in place for
LIFFE robusta coffee would not easily facilitate an arabica contract, and that
it would need to be redeveloped to accommodate what is expected to be a more widespread
list of grades compared to those used for robusta. Mr. Wall Morris said a
grading system is being investigated.
Retail
prices (all sizes/per pound)
Ground roast
|
|
April '03 |
March '03 |
April '02 |
March '02 |
|
U.S. Avg |
3.008 |
2.933 |
2.976 |
2.859 |
|
Northeast |
3.466 |
3.261 |
3.471 |
3.272 |
|
Midwest |
2.783 |
2.591 |
2.509 |
2.499 |
|
South |
2.761 |
2.724 |
2.680 |
2.757 |
|
West |
3.201 |
3.261 |
3.421 |
3.914 |
Source: U.S. Bureau of Labor Statistics
The ICO composite average indicator prices
|
|
Colombian Mild Arabicas |
"Other Mild" Arabicas |
Brazilian & Other Arabicas |
Robustas |
Composite Price |
|
December |
67.92 |
64.75 |
46.70 |
38.68 |
51.68 |
|
January |
69.68 |
65.22 |
49.14 |
42.75 |
54.04 |
|
February |
69.60 |
67.60 |
48.54 |
42.35 |
54.07 |
|
March |
61.82 |
61.66 |
43.77 |
38.26 |
49.61 |
|
April |
66.12 |
65.35 |
48.71 |
38.68 |
51.87 |
|
May |
67.56 |
66.47 |
51.06 |
38.90 |
53.19 |