INDUSTRY ANALYSIS PHILCOFFEE (1).docx

7/25/2019 INDUSTRY ANALYSIS PHILCOFFEE (1).docx

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INTRODUCTION

Background of the Industry

The Philippine cofee industry is one o the countrys major pillars in terms o

oreign exchange earnings in the 1880s. Howeer! its glory days only lasted

until 188" when cofee rust hits the countrys shores # decimated the

production to only 1$%tho its original amount. &lo'ally! (ofee is the second

largest in terms o alue and traded commodity just next to oil. )t is also the

most alua'le and widely traded tropical agricultural product in the world.

*eigh'oring countries )ndonesia +,th- and ietnam +/nd- are the major

producers in the 2* region in terms o production. The Philippines! 'eing

one o the top our country cofee producers 'eore is now only placing /,th in

the world. 3ne can 'lame this current status to production4related pro'lems!

the lac5 o support rom the goernment! ur'ani6ation and other actors

including 7uctuating world prices.The goernment and the priate sector are 'oth ma5ing eforts to increase

local cofee production! in order to reduce the reliance on imports. Howeer!

local production cannot still suce the Philippines demand or cofee. Thus!

the country is importing its remaining cofee re9uirements rom ietnam!

)ndonesia and other sian countries.)nterestingly! there is a growing local demand or (ofee as there is an

increasing acceptance towards cofee culture among young indiiduals in the

country. There is also prolieration o (ofee esta'lishments resulting rom

the rising middle class and :P3 industries. )n addition! the deeloping Health

and wellness trend that encourages the cofee industry to produce othercofee products li5e organic and decafeinated cofee ariants.)t was also seen that there might 'e more mar5eting actiities that will

highlight the 'ene;ts o cofee! as manuacturers attempt to counter any

negatie perception a'out the drin5. *eertheless! unless the wea5nesses


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and threats in the cofee industry are aced! the country can neer achiee

long4term sustaina'ility and ia'ility o the industry.)n a highly li'erali6ed glo'al enironment! innoation and creatiity in the

countrys cofee industry are needed or surial and reial. )n order or the

Philippines to 'e glo'ally and locally competitie! the country must exert all

eforts to increase cofee productiity and 9uality! lower the cost o

processing cofee 'eans and other cofee products! and deelop downstream

high4alue products through increased inestments in research! technical

assistance! expansion! reha'ilitation and rejuenation o cofee arms!

millers! and roasters! and through mar5eting and promotions o cofee or

domestic and export mar5ets.

KEY INDUSTRY STATISTICS & SU!Y"DE#AND ANA!YSIS

$or%d Coee 'roduct(on(ofee production is dispersed across many countries 'ut only our o them

produce the %0 per cent o the worlds cofee # :ra6il! ietnam! (olom'ia and

)ndonesia.


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:ra6il has long 'een 'y ar the

worlds largest cofee producer

which accounts or a'out 411. This is

ollowed 'y ietnam who

aerages 1.1 million tons per

year accounting or 1, percent

o the world cofee production!

(olom'ia with > percent

+=%0!000-! )ndonesia +>?-

+=%0!000-! 2thiopia +,00!000-! )ndia +/80!000-! @exico +/>0!000-! &uatemala

+/


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similar ashion. (ofee ra'ica which constitutes %=? o the world production

ta5es %4> years to ully mature and attain its ull potential yield! that is! i the

right growing condition is present.

(ofee is predominantly a smallholders crop grown 'y millions o resource4

limited armers aeraging 10 hectares land holding! mostly in deeloping

countries in the tropics according to the Cairtrade Coundation.

During the last ten years +/00

mostly due to production 'eing disrupted 'y aderse weather such as rost

or drought.

The Eorld (ofee

production is circling the

e9uator 5nown as the

F(ofee :elt. This is an

area where cofeeproducing countries are

located. (ofee is

produced in more than >0

deeloping countries!

while only ,= countries are responsi'le or oer "> per cent o world output.

The map shows the distri'ution o cofee growing areas across the tropics!

with the Gatin merica 'eing the 'iggest with %0?! ollowed 'y sias /=.=

?! and rica with 1/.%?.

)n /011! world (ofee exports increased 'y > per cent to a record high o %./

million tons! with a alue o /


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'y ietnam +1>?- +1 million-!

(olom'ia +"?- +,%,!000- and

)ndonesia +%?- +%!000-

$or%d Coee Consu1't(on

&lo'al cofee consumption has grown /8? or %.< @ Tons to 8.1 @ tons o

cofee during the last decade. (onsumption steadily grew 'y around /.=? a


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year 'rought a'out 'y the 1/ per cent increase demand in traditional

mar5ets such as Eestern 2urope! Iapan and the AJ => per cent in exporting

countries and 'y ,% per cent in emerging mar5ets such as 2astern 2urope

and sia +Ta'le-.

$or%d Coee De1and

(ofee is one o the worlds most popular 'eerages. &ross imports o all

types o cofee hae 9uadrupled rom


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h(%(''(ne Coee Industry

Industry 2(gh%(ghts

The Philippines is relatiely small cofee producer with output less than one

percent o &lo'al production. (ofee production in the last 1/ years +/0004

/01/- has decline 'y 1>.%1 percent due to some shits rom cofee arming to

other high alue crops li5e ru''er and 'ananas in @indanao. The country is

also a net cofee importer! importing 1.> @ 'ags in /01/. Production still

remains at oer hal o the total supply due to limited domestic production.

olu'le cofee imports which consist o 80? o total imports rose

tremendously during the last three years and is seen to increase due to the

strong domestic consumption.

h(%(''(ne Coee O3er3(e4

(ofee thries in the areas that hae relatiely sta'le climate with ample

rainall. The Philippines is one o the ew countries who can produce our +,-

commercial4ia'le cofee arieties due to its aora'le climatic and soil

conditions rom the lowlands to mountain regions. The commodity has a rich

history in the country. The ;rst seedling was ;rst 'rought to the Philippines

'y a Cranciscan mon5 in Gipa! :atangas the year 1>,0 and grew into a

thriing industry and 'ecame the ourth top world producer ollowing the

opening o the ue6 (anal +Phil(ofee:oard! /01/-. Howeer! at the end othe nineteenth century cofee rust diseasedecimated the production to just

1$%th o its original amount. The country is already let 'y its neigh'ors

ietnam and )ndonesia! and has 'een only producing less than 1 percent o

the world production.
http://www.espressocoffeeguide.com/all-about-coffee-2/coffee-plants/http://www.espressocoffeeguide.com/all-about-coffee-2/coffee-processing/wet-processing/http://www.espressocoffeeguide.com/all-about-coffee-2/coffee-processing/wet-processing/http://www.espressocoffeeguide.com/all-about-coffee-2/coffee-plants/


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K:)(J /1?

K3:ATJ >/?

2L(2GJ %? G):2K)(J 1?

There are seeral

arieties o cofee +cienti;c *ameB (ofea sp. G.- grown

in the Philippines. The most common are ra'ica!

Ko'usta! 2xcelsa and Gi'erica! large portion o the

production coming rom the region o 3(MKM&2*and Daao Kegion. @uch o the cofee produced in the

country is Ko'usta +>1?-! ollowed 'y ra'ica also

5nown as Kapeng tagalog +>?-! 2xcelsa +%?-! and

Gi'erica or Kapeng Barako+.%=?-

roduct(on

Philippines produce many cofee arieties 'ut production is ocused on our

+,- commercial ia'le cofees # Ko'usta! ra'ica! Gi'erica! and 2xcelsa.

During the last 1/ years! there is continuous downall o Philippine cofee

production. Crom years /0004/01/! production has dropped rom 10>!==> @T

to 88!",< @T per annum. This is e9ual to 1>.


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sel4sucient 'y /01= through esta'lishing plantations in @indanao!

reha'ilitation o existing cofee arms and rejuenating old trees.

3((KM&2* is the only region where production is increasing despite the

countrys downward production trend in (ofee. )t is also the largest producer

o higher 9uality and priced ra'ica cofee in the country comprising %/.%=?

o the total ra'ica production! with ultan Mudarat proince as the 'iggest

contri'utor.

/000/001/00//00/008/00"/010/011/01/0

/0!000

,0!000

%0!000

80!000

100!000

1/0!000

88!",

production just pea5ed in /001 ollowing the increase o world prices. year

ater! production 'ecame sluggish as growth per year is only # 1.>0 ?.

3((KM&2* is the largest producer o the Ko'usta cofee ollowed 'y the

Daao region in the same year. (om'ined they ma5e up ,%? o the total

production.

Ara)(ca


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1>!=00

18!000

18!=00

1"!000

1"!=00

/0!000

/0!=00

/1!000

/1!=00

18!>8 @T in /01/! respectiely. (om'ined! they only constitute

a'out >? o the total cofee production in the country. There is also a olume

downall in the last 1/ years. Production o 2xcelsa decreased as much as

,!000 @T since year /000 with a #


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110!000

11=!000

1/0!000

1/=!0001


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Ro)usta

8%!000

88!000

"0!000

"/!000

",!000

"%!000

"8!000

ROBUSTA AREA ,2A+0

)n /01/! Ko'usta comprises >=? o

the total land area deoted to cofee arming. This is signi;cantly higher than

>0? rom /000. Howeer! the land area deoted to Ko'usta cofee

production has 'een decreasing 'y 40.%? in the last 1/ years. )n year /000

the land area or Ko'usta is around "%!>1% hectares which slowly shrin5 to

just a'out "0!?

*3KTH2K* @)*D*3J 1/?

D3 K2&)3*J /1?

3((MK&2*J 1>?

(G:KO3*J 1/?

K@@J 11?

RE8IONA! AREA

Gargest region in terms o land

area is Daao region with 1"!11, hectares o arm ollowed 'y


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3((KM&2*! (G:KO3* and *orthern @indanao with 1=!>1,! 10!8,8

and 10!,=> hectares respectiely. (om'ined! the our regions represent

%/./? o the total area deoted to Ko'usta.

1>!000

18!000

1"!000

/0!000/1!000

//!000

/

/,!000

ARABICA AREA ,2A+0

Ara)(ca

3TH2KJ 1,?

E2.)J "?

D.3J 1"?3((MK&2*J ,,?

K@@J "?*3K.)J


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9uality than commercially grown cofees! growth per se is negatie 1.

is 3((KM&2* with 8!="< hectares comprising around ,, ? o the total

(ofee ra'ica plantation ollowed 'y the Daao region with %= hectares.

Coee E6ce%sa and !()er(ca

0

=00

1!000

1!=00/!000

/!=00

!IBERICA AREA ,2A+0

0/!000,!000%!0008!000

10!0001/!0001,!000

E7CE!SA AREA ,2A+0

2xcelsa and Gi'erica cofee represents

>? and 1.1? o the total land area committed to cofee arming. )n /01/

2xcelsa shran5 to only 8!"1% hectares rom 11!,%0 hectares o year /000

with a growth rate o # 1.8,? in the last 1/ years. *o region exhi'its growth

except K@@ which expanded rom >1< hectares in /000 to 1!=%0 hectares

in /01/. The largest region in terms o land deoted to 2xcelsa arming is


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(G:KO3* with /!,0% Hectares which also comprises />? o the total

2xcelsa production. 3ther 2xcelsa producing regions are Daao and K@@

which constitutes around ,/? o the total 2xcelsa planted area. Gi'erica

cofee on the other hand! also exhi'its negatie /.88 ? growth in the last 1/

years. Crom /08/ hectares in /000! total area planted with Gi'erica is merely

e9ual to 1


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0.00

/00.00

,00.00

%00.00

800.00

1!000.00

1!/00.00

Y(e%d er 2ectare (n K(%ogra1s

E6'ortat(on9 I1'ortat(on9 & Do1est(c Consu1't(on:roadly spea5ing! at the consumer leel cofee can 'e diided into three

commercial categories.

E6e1'%ary :ua%(tyB limited aaila'ility # ;ne to uni9ue taste

experience. re1(u1 :ua%(ty; moderate aaila'ility # good to ery good taste

experience.


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#a(nstrea1 :ua%(tyB ery widely aaila'le # accepta'le taste

experience.

Precise ;gures neither unaaila'le nor is the situation static! 'ut it is

generally accepted that 'etween 80? and "0? o all cofee consumed

worldwide is o mainstream 9uality +)T(! /011-.

Trade Structure(ofee is generally purchased rom the exporting countries 'y international

trade houses! dealers and traders. Cor the mainstream 9uality! roasters tend

to 'uy their cofee rom international trade houses or rom speciali6ed import

agents who represent speci;c exporters in producing countries.The international trade plays a ital role in the worldwide mar5eting and

distri'ution o cofee. (ofee is generally sold C3: +ree on 'oard-! 'ut manyroasters! especially in the Anited tates! preer to 'uy on an ex4doc5 'asis.

mall roasters oten preer to 'uy in small lots on a deliered in4store or ex4

store 'asis. This allows plenty o scope or the arious middlemen inoled in

the trade to operate and perorm useul unctions! although the increasing

concentration at the roasting end o the industry has led to a su'stantial

reduction in their num'er +)T(! /011-.

Philippine (ofee (onsumption and )mportation +1000 'ags-(alen

darNear

Producti

on

Domestic

(onsumption

urplus$De

;cit

2xportat

ion

)mportat

ion

/0010/0 1"".,> /" ,8=

/00=1/=/."

810,0 /1/."8


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/00% 1/,1 10%0 181 = 411/=. 10 1%%=

/01/10%

=/1>= 41111./= < 1>1=

ourceB :! )(3! Q )ndexmundi

There are many orms o cofee exported and imported rom and to other

countriesB the raw coee )eans! the roasted and ground coee and

So%u)%e coee+The solu'le cofee import or instant cofee accounts "=? in

the Philippines. The remaining olume is or raw cofee 'eans primarily

mar5eted to roasters and roasted and ground cofee

or specialty cofee shops.

The country used to 'e exporter o cofees 'eore 'ut

due to the supply de;cit and high domestic

consumption we 'ecame net importer. 2xportation is

ery minimal since 1""0s with the production limited

to less than hal o the domestic consumption. )n

/01/! only 1 @ 'ags in /01/. )mports are sourced

largely rom neigh'oring sian countries such as ietnam! )ndonesia and

@alaysia. ccording to the AD Coreign gricultural erices imports o

solu'le cofee and cofee concentrates grew more than dou'led rom 1"!/"0? o the total sales o consumer products including cofee

+Ei5ipedia.org! /01


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Howeer! upermar5ets li5e @! Ko'insons! Kustans! Puregold! and >4

eleen among others today play a much larger role in the retailing o cofee

than they eer did 'eore and supermar5et own 'rands now account or a

si6ea'le proportion o retail cofee sales. )t can 'e noted that 'ecause o the

changing shopping ha'its o Cilipinos! sari4sari stores retail share or cofee

might 'e lesser and lesser in the coming years. ccording to the results o a

surey conducted 'y international mar5et research ;rm *ielsen! local 'uying

ha'its or grocery items # especially cofee 4 are also changing rapidly

'ecause o the prolieration o supermar5et chains which are growing their

'ranch networ5s to coer areas preiously sered only 'y Rmom and popS

conenience stores.

@ore importantly! Cilipino shoppers now opt to shop re9uently with smaller'as5ets 'rought a'out 'y the close proximity o the supermar5ets to the

homes. Ehereas Cilipinos used to secure their day4to4day household item

needs rom neigh'orhood sari4sari stores! many hae now 'egun to moe to

supermar5et shopping or the supply o their essential items +*ielsen as cited

'y Philippine Daily )n9uirer! /01


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representing the change in consumption 'ehaior o Cilipino mar5et. The

mar5et or seala'le


26/43

onto the country rom the merican soldiers at the end o the / nd world war

+:ethge! /011-.)n the county! a multinational roaster! *estle Philippines with its 'rand

*escae monopoli6es 8=? o the countrys cofee mar5et. 3ther companies

li5e (ommonwealth Coods! &eneral @illing (ompany! Aniersal Ko'ina

(ompany or the tar'uc5s are only ni''ling on the outer edge o the

complete cofee ca5e mar5et. n )ndonesian company PT Tora'i5a 25a

emesta is also getting strong position in the < in 1 instant cofee segment

with its halal certi;ed Mopi5o 'rand.

Coee Sho's

(ofee shops or cas in the Philippines hae 'een gaining popularity 'ut ormore peaceul reasons. ccording to 2uromonitor )nternational! one o the

worlds leading independent proiders o 'usiness mar5et and industry

reports! specialty cofee shops outgrew other esta'lishments li5e 'ars and

restaurants in /00>! posting a dou'le4digit percentage increase.This! according to 2uromonitor! is partly due to the growing popularity o

cofee and its adertised health 'ene;ts! as well as the mushrooming

'usiness process outsourcing industry which has signi;cantly enhanced

cofee product sales. (as and specialty cofee shops hae also 'ecome a

status sym'ol or younger consumers! while the wor5ing elite ;nd these

esta'lishments conenient places to hold casual 'usiness meetings.Cilipinos hae 'ecome more discriminating cofee drin5ers moing rom

ready4to4drin5 'rands to more complex and traditional arieties. nd while

cofee remains to 'e the top product or these esta'lishments! new drin5s

li5e specialty teas as well as ood products hae also contri'uted to the rise

in cas.Crom 'ig oreign 'rands to local and independent esta'lishments! cas hae

'ecome a communitys watering hole! ofering more than just cofee and

ood! ma5ing cofee4drin5ing more than just a morning ritual. nd rom the

loo5s o it! the countrys 'rewing ca scene has yet to 'e ully experienced.


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The leading cofee shop in the country is tar'uc5s operated 'y the Kustans

groups o companies with /0% stores around the country. Due to its premium

signature cofee strategy and international appeal! tar'uc5s 'ecame more

o a status sym'ol among domestic consumers. tar'uc5s perormed 'etter

than international counterparts such as the (ofee :ean Q Tea Gea and

&loria Ieans due to the uni9ue experience it ofers consumers. Gocal players

are also signi;cant players in the specialty cofee shops mar5et. Cigaro

5nown or 5eeping up with their customers and more recently or their health

conscious mar5et has also 'een a signi;cant player with 1%0 stores. They are

a'le to 'e at par with other oreign cofee shop ranchises and maintain their

name as one o the respected cofee shops in the Philippines. nother cofee

shop! the :os (ofee (lu' is catering to the ery high end cofee mar5et that

has its serices and products tailored to suit the needs o high society cofee

drin5er.ccording to analysts! specialist cofee shops in the Philippines are expected

to continue growing in the coming years. pecialist cofee shops grew in

terms o num'er o outlets! transactions and alue sales. Eith international

cofee chains gaining popularity and other specialty cofee shops ollowing

suit! more such outlets are li5ely to appear. The strong growth is mainly

attri'uted to excellent consumer demand! as cofee drin5ing has 'ecome a

ery popular social actiity. (ofee shops hae 'ecome a status sym'ol or

younger consumers and Cilipinos! in general! hae started to 'e more

discriminating in their preerences or cofee. Kecogni6ing the continued

growth potential or cofee shops! many Cilipino companies and een growers

o locally produced cofee 'eans hae opened their own 'usinesses. The

support o the local goernment and agriculture sector to armers has also

helped to rejuenate the Philippine cofee industry.

5actors In


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)ncome is an important actor afecting the demand or cofee. )n many

ways this is not there is clear eidence that consumption is highly dependent

not only on a'solute income leels! 'ut also! and pro'a'ly more importantly!

on changes in real4income leels. )n the Philippines! due aora'le

macroeconomic condition! and 'ooming 'usiness 'rought a'out 'y the

@@2s! Tourism )ndustry! (onstruction! and :P3 industries! aerage Cilipinos

hae more disposa'le income to spend to 'asic commodities li5e (ofee.

-+ !(festy%e and d(et

(ofee is traditionally recogni6ed as an eeryday 'eerage that is

re9uently seen as a stimulant and an aid to alertness! 'ut also seen as a

social lu'ricant ul;lling a ery necessary unction ena'ling people to

sociali6e. FGets hae a cofee is a phrase oten used to coer a general

re9uest or an inormal get4together. )t is interesting to note that cofee is

more li5ely to 'e consumed at 'rea5ast! lunch or dinner i these are ta5en

as amily meals rather than eaten alone. Howeer! as meals are 'ecoming

less ormal and structured in the Philippines! outside consumption o cofee is

growing particularly in pecialty cofee shops and stores.

/+ Co1'et(ng dr(nks

(ompetition rom other 'eerages has also 'een an important actor

afecting the demand or cofee. )n the last years the cofee consumption in

the country has 'een increasing due emerging trend set 'y merican4style

cofee 'ars and perceied health 'ene;ts. There were also an increasing

trend in other 'eerage li5e 'ottled water and teaJ howeer! this hasnt

afected the consumption or cofee.

=a%ue add(t(on

Downstream processing is oten seen as a way o adding alue to a raw

product at origin. Anortunately! this is not as straightorward as it at ;rst


29/43

appears i it were! there would 'e a ar greater trade in processed cofee

products rom origin than there is today.)n /010 +calendar year- just >.%? o all cofee exports rom the country were

processed cofee. This is almost,0? higher than 10 years ago! 'ut gien the

low starting point this is still airly slow progress.

The consuming mar5et or cofee is dominated 'y a ew ery large

companies! mainly multinationals! which sell their product 'y promoting their

'rand name and image through large4scale adertising. *ormally adertising

expenditure is e9uialent to 'etween


30/43

decafeination and drying Decafeinated cofee is seen as haing to compete

with other specialty cofees and although consumers o decafeinated cofee

tend to 'e ery loyal to the product! cafeine no longer appears to 'e an

issue that most consumers are particularly concerned a'out. lthough there

is no aaila'le data or decafeinated cofee in the country it is estimated

that decafeinated cofee currently accounts or around 10? o all cofee

sales! howeer! this is decreasing. Asually! it commands only a small

premium oer non4decafeinated cofee and re9uently is sold or the same

price. (onse9uently the economics o the decafeination are tight.

Roasted CoeeThe mar5et or roasted cofee is somewhat less concentrated than that or

solu'le cofee. lthough mar5et concentration in the roast and ground +K&-

sector increased signi;cantly in ur'an areas particularly in greater manila

area +&@-! the deelopment o the specialty sector has slowed the trend. )t

is ery noticea'le that the K& is already penetrating other 'ooming cities.

Howeer! 'lends o roasted cofee rom diferent origins remain the most

predominant roasted cofee +i.e (a amadeo- product in the oerall mar5et

today and this ma5es it dicult or producers to enter the retail mar5et on

their own. )n terms o supplier! (onlins! a ull serice cofee company is theleading supplier or premium roasted cofee 'eans. )t also a distri'utor o

world class cofee machines li5e the wiss4made Iura! &erman4made E@C

espresso @achines and )talian4made Eega semi4automatic espresso

machines.

Ready to Dr(nk and Concentrates(anned! ready4to4drin5 +KTD- cofee was originally deeloped 'y the

Aeshima (ofee (ompany. )n /010! it accounted or close to /0? o total

consumption in Iapan! where it is sold mainly through ending machines.

KTD li9uid cofee in plastic 'ottles and in P2T pac5s is also ery popular and

is generally sold in supermar5ets. )t currently accounts or just ewer than

10? o all cofee consumption in Iapan. (anned cofee products are also

;nding a good mar5et in many emerging mar5ets in sia! particularly in


31/43

(hina! although the success o the product depends ery much on its

aaila'ility in ending machines. )n the Philippines! there is a growing cofee

ending machine 'usiness. )t can 'e seen in almost eery corner and

conenience store usually priced at =410 pesos$cup. How much these

deelopments do or cofee consumption or indeed cofee 9uality is

de'ata'le # the cofee content is usually not ery high and the cofee taste is

oten mas5ed 'y 7aoring +)T(! /011-. *eertheless! it is a new and growing

niche mar5et.S'ec(a%ty coee)t is oten neither ia'le nor possi'le to add alue to green cofee 'y

processing at origin. @any cofees are suita'le only or 'lending or

processing into neutral or anonymous end products! including solu'le. Cor

such cofees it is not possi'le to add monetary alue as prices are

determined solely 'y mar5et conditions. Howeer! relia'le and consistent

grading procedures! strict compliance with contractual o'ligations and

regular deliery will add alue in the sense that the product will 'e preerred

'y primary 'uyers oer those rom less consistent origins. (ertain growths o

cofee! on the other hand! may 'e highly pri6ed or their 7aor

characteristics and attract a suita'le premium. 2xamples include Iamaican

:lue @ountain! Hawaii Mona! Top Menya and &uatemalan ntiguas. ome

o these growths regularly attract extremely high premiums. Cor example! in

the early /000s Iamaican :lue @ountain attracted such a large premium that

the unit alue o cofee exported rom Iamaica was oer 1< times higher than

the aerage o all F3ther milds producers and more than 1% times higher

than the aerage achieed 'y all origins. The top Menyan grades regularly

achiee prices more than dou'le that achieed 'y other growths with some

small parcels selling in early /011 or as high as A /0$l'.s mentioned earlier the country is one o the countries who can grow ,

commercial cofees. @oreoer! in sia! there are only two countries that can

produce the (ofee Gi'erica also 5nown as Mapeng :ara5o. This species is

primarily grown in (ala'ar6on 'eoreJ howeer! the main o the production is

now in the Daao and K@@. The specialty cofee is primarily mar5eted to


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@iddle 2ast while the other species (ofea ra''ica rom :enguet high4end

mar5et in the Anited tates +P((KD! /00>-. There is indeed a 'right cofee

or special cofee arieties or the country. (ofee drin5ers around the world

hae 'een drin5ing more specialty or gourmet cofee in recent years. 2xport

o solu'le cofee to Iapan is also anticipated to prosper.

Organ(c Coee3rganic products hae come a long way since small groups o consumers

started 'uying organic ood directly rom arms or rom small health ood

shops! where 9uality was secondary as long as the products were organic.

:ut then in the early 1""0s supermar5et chains started paying systematic

attention to organic ood. Near ater year they hae ta5en oer mar5et share

rom the speciali6ed shops! to the point where they drie most o the growth

in the mar5et share o organic ood today +)T(! /011-. )n the Philippines!

organic products are mar5eted to niche mar5ets. Howeer! organic producers

hae diculty in setting their prices since the mar5et do not iew organic

products as premium. lthough Cilipinos are slowly catching up to the organic

trend! 'ig corporations hae already introduced organic cofees such *estle

3rganic cofee. Kecently! &reen :ean 3rganic (ofee (o. +&:3((- has just

landed in the Philippine with its signature 'lend called 2co :lend priced atonly P%=. &:3(( only produce 100? organic cofee and does not use re;ned

sugar +Turistatrail! /01


33/43

Howeer! that era is a long way 'ac5 or the Philippines! among the top ;e

cofee exporters in the world in the 1880s ater panish riars 'rought 'eans

with them to their colonial outpost. The Philippine (ofee :oard! an industry

group spearheading the reial attempt! 5nows the country cannot compete

with the li5es o current regional exporting giants )ndonesia and ietnam in

olume.o they are aiming or niche mar5ets and targeting the ast4growing num'er

o young Cilipinos who crowd caes across the country o "< million people.

The Philippines has a lot o exotic cofee that can capitali6e on. (ofee 'oard

co4chairwoman Pacita Iuan said the Philippines had long had a thriing

cofee4drin5ing culture with a populace that aored cofee oer tea! and this

was 'ecoming stronger as society moderni6ed. Cilipinos are drin5ing morecofee with the change in liestyles. :P3 industries as well as Hotels are

growing mar5et opportunities or 'etter cofee not just instant cofee.

#arket(ng and Cred(t Su''ortThe P(: is promoting WMape )sla!W which loosely translates to W)sland (ofeeW

and is a trademar5 to distinguish specialty cofees grown in the Philippines. )t

is also helping entrepreneurs set up small cofee shops across the country

where they can ofer their own regional 'lends. )n this way! they can

compete with the glo'al giants such as tar'uc5s! whose local outlets sell

specialty cofees generally only rom rica and outh merica.The gourmet cofee products that the Philippines are starting to ofer include

special Wpremium ra'icaW 'lends and the strong W:ara5oW 'ean that is

aored 'y Cilipinos. pecial arieties ound only in isolated areas are also

'eing deeloped! as is production o Wciet cofeeW 44 made rom 'eans eaten

and excreted 'y ciet cats.This mar5eting and promotion on specialty cofees are done 'ecause the

country cannot surely compete in terms o olume. )n contrast! other sian

countries produce 'eans on large plantations with adanced processing

technology. )n the country the num'er o cofee processing acility can 'e

only count 'y hand. (ofee armers oten complain a'out the lac5 o roasting

acilities in their area ma5ing them dependent to low prices o their raw


34/43

cofees. The P(: has already committed and hoping to regain cofee sel4

suciency in the country.nother support actiity rom the goernment is the allotment o P= @illion

to deelop the (A4*(KD2( to 'oost4up Kesearch and Deelopment or

cofee processing.@oreoer! *estle proides 'uying stations at strategic locations in the

country and it also ofers a guaranteed 7oor price o P,=$5g o green 'eans.

The Gand :an5 o the Philippines and the Deelopment :an5 o the

Philippines ofer production loan assistance to interested cofee armers. The

goernment also allotted


35/43

&rading and (lassi;cation

&reen cofee is graded and classi;ed or export with the ultimate aim oproducing the 'est cup 9uality and there'y securing the highest price.Howeer! there is no uniersal grading and classi;cation system # each

producing country has its own! which it may also use to set +minimum-standards or export.

ccording to analysts! specialist cofee shops in the Philippines are expectedto continue growing in the coming years. pecialist cofee shops grew interms o num'er o outlets! transactions and alue sales. Eith internationalcofee chains gaining popularity and other specialty cofee shops ollowingsuit! more such outlets are li5ely to appear. The strong growth is mainlyattri'uted to excellent consumer demand! as cofee drin5ing has 'ecome aery popular social actiity. (ofee shops hae 'ecome a status sym'ol or

younger consumers and Cilipinos! in general! hae started to 'e morediscriminating in their preerences or cofee.)n the Philippines! multinational chains dominate specialist cofee shops andhae experienced ro'ust growth since the late 1""0s. Popular oreignranchised specialist cofee shops include tar'uc5s! eattles :est! The(ofee :ean Q Tea Gea! &loria Ieans and A(( (ofee. )n addition! localcofee chains hae also experienced strong growth oer the past seeralyears. Kecogni6ing the continued growth potential or cofee shops! manyCilipino companies and een growers o locally produced cofee 'eans haeopened their own 'usinesses. The support o the local goernment andagriculture sector to armers has also helped to rejuenate the Philippine

cofee industry.

(3@P2T)T)2 G*D(P2

)n /011! Kustan (ofee (orp! the domestic operator o all tar'uc5soutlets in the Philippines! led cae$'ars sales with a alue share o =?.ome %? o cae$'ar transactions were made at tar'uc5s! with the chain'ene;ting rom the act that its 'rand name is recognised throughout thecountry. Due to its premium signature cofee strategy and internationalappeal! tar'uc5s 'ecame more o a status sym'ol among domesticconsumers. tar'uc5s perormed 'etter than international counterparts

such as the (ofee :ean Q Tea Gea and &loria Ieans due to the uni9ueexperience it ofers consumers.

TK2*D

The goernment and the priate sector are 'oth ma5ing eforts toincrease local cofee production! in order to reduce the reliance onimports. )n /01/! howeer! local production in the Philippines still did not


36/43

meet cofee demand in the country. The country imports the rest o itscofee re9uirements rom ietnam! )ndonesia and other sian countries. )n/01/! the 5ey player in the cofee industry! *estl Philippines )nc! openeda new cofee centre in :atangas (ity that will increase access to newcofee arming techni9ues in a 'id to increase the num'er o cofee

producers and production in the Philippines.

(3@P2T)T)2 G*D(P2

*estl Philippines )nc dominates cofee sales with a alue share nearly"0?! due to its strong positioning and leadership in the instant cofeesector. The companys *esca 'rand was one o the ;rst instant cofee'rands in the country and hence was a'le to esta'lish a large and loyalconsumer 'ase through efectie adertising! continuous innoation andthe good 9uality o its cofee products. )ts programmes to help deelop thedomestic cofee industry also gie the company an competitie edge.

PK3P2(T

The more widespread health and wellness trend in the orecast periodwill encourage arious 'rand manuacturers to produce organic anddecafeinated cofee ariants to preent a decline in the consumer 'aseand capture a greater share o health4conscious consumers. There might'e more mar5eting actiities that will highlight the 'ene;ts o cofee! asmanuacturers attempt to counter any negatie perception a'out thedrin5. The positie economic outloo5 in the orecast period will 'ene;t'oth the instant and resh cofee categories.

ourceB :! )ndex @undi! Q )(3


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#arket(ng

Domestic (ofee(onsumption +1000'ags-(alendar Near

olume

/00< 1!


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/011 /!8


39/43

0

=000

10000

1=000

/0000

/=000


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0.00

/00.00

,00.00

%00.00

800.00

1!000.00

1!/00.00

Y(e%d er 2ectare (n K(%ogra1s


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0.00

=.00

10.00

1=.00

/0.00

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42/43


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