AVI rise in earnings ‘aided by good fortune’ and coffee

STRONG consumer demand for fashion brand Spitz and a little assistance from the competition in the coffee and creamer categories boosted AVI’s revenue in the six months to December, the company said yesterday.

AVI, which owns brands such as Five Roses, Bakers, Ellis Brown, Frisco and Willards, said coffee volumes were 14,3% higher, while creamer volumes were up 22,9% partly due to competitor supply problems. CEO Simon Crutchley said the company had been "aided by good fortune".

AVI attributed the higher revenue in the footwear and apparel category to the strong rand and an improved sales mix. "Footwear sales volumes increased 26% with the core Carvela, Lacoste, Kurt Geiger and Tosoni brands all performing well," the company said.

In the personal care category, Indigo’s revenue grew 12,3% to R470,3m the company said. SA Stock Brokers’ Ron Klipin said the top end of the market had been more resilient than the lower end. "Spitz being the aspirational brand has got the business model right, where it is all about brands, brands, brands.

"Consumer spending has not shot the lights out but the company has delivered a solid set of results. Both prices and volumes have been good," he said. The company said tea volumes were slightly lower than last year due to vigorous competition, but this was offset by higher prices realised. "Biscuit prices were increased in August which resulted in lower sales volumes in the first half," it said.

I&J’s revenue was hit hard by the stronger rand, but volumes were in line with the first half of last year, with an improved sales mix and slightly better export prices in foreign currencies, the company said. "The hake quota for the 2011 calendar year is up 10% which will give I&J extra volume opportunity in the second half of the financial year."

Mr Crutchley said the company had not seen a fundamental shift in consumer spending over the past two months. I&J’s results in the second half will remain depressed should weak prices for seafood products and the strong rand continue to prevail.

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Starbucks CEO eyes acquisition for consumer products: report

Looking for growth beyond its namesake cafes, the world's biggest coffee chain has made clear its intentions to strike deals in the fast-growing single-cup brewing segment. "We are building and investing in resources and people to build a significant consumer products business that over time will rival the size and scale of our retail company," Schultz told the Journal.

Schultz also told the daily that the company will not implement across-the-board price increases at this stage in spite of the volatility in coffee prices He said the company had locked in coffee prices for 2011 to offset high prices. Speaking about international expansion plans to the Journal, Schultz said there was "a large runway for growth and opportunity.

"We have an opportunity now to build thousands of stores in China. We're in a very good position to begin to look at India as the next market for Starbucks and we hope to get the first stores there open within 12 months," he told the paper.

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Brewing a fair deal from our coffee habit

Drinking fair trade coffee really does make a difference to the small producers who make up a major portion of the massive global coffee market, writes TOM HENNIGAN in Jinotega, Nicaragua

GIVEN THE amount consumed worldwide each day, there is a good chance you have a cup of coffee within reach as you read this article. After all, it is the world’s second most-consumed beverage – behind tea – and its caffeine hit is mankind’s legal stimulant of choice. If oil runs our machines, coffee increasingly runs us.

But while oil prices are a subject for the nightly news, the wild fluctuations in the coffee markets rarely grab our attention. However, ignorance about the economies of this bean is a rich-world privilege. In the developing world, the price of coffee is vital. There, only crude oil is a more important export commodity. But whereas oil is controlled by multinational and state oil companies, 70 per cent of global coffee production comes from small farmers, the highest share of any global commodity, making it a crop of crucial social importance.

Juan José Centeno Blandon, a 54-year-old smallholder in the verdant hill country around Nicaragua’s coffee capital of Jinotega, knows only too well the impact of coffee’s wild price swings. Asked what the record lows of a decade ago meant for his family and he is blunt: “Before, food was a problem.”

That collapse in prices was caused by a glut of coffee following Vietnam’s aggressive entry into the market. As a result, Nicaraguan coffee farmers let their beans – their only cash crop – rot in the field. It cost more to harvest than they could make at market. Families began to drift away from the land towards city slums where there were few jobs waiting for them.

But the crisis encouraged many who stayed to band together and find safety in the country’s burgeoning co-operative movement. Six years ago Blandon accepted the invitation of several compañeros and joined a co-op, one of 18 that make up a local co-op union.

Called Soppexcca, the union has won fair trade certification for the coffee grown by its 650 producers. Fair trade works on the principle that there is a growing number of consumers in rich countries who do in fact care about the price of coffee, or at least the price small coffee farmers earn for their crop.

According to fair trade rules these consumers and the companies that supply them are willing to pay a social premium on top of market prices for certified fair trade products, as well as guaranteeing a minimum price to help insulate producers from market shocks. This extra money is then reinvested in the farmers’ communities.

Soppexcca has taken the social premium it gets for its members’ coffee and invested it in numerous social projects including the building of two new rural schools, scholarship programmes for farmers’ children, and providing basic healthcare in some of Latin America’s poorest communities where the state’s presence is often feeble.

“The co-op members now have a sense of belonging and developing their own plans and seeing a future for themselves compared to 10 years ago when it was a complete crisis,” says Al Cunningham of Christian Aid Ireland, the charity owned by Ireland’s main protestant churches and one of the founders of the fair trade movement. Over the past decade, the charity has partnered with Soppexcca on many of its social projects.

Such benefits mean Soppexcca’s general manager Fátima Ismael Espinoza gives short shrift to critics of fair trade who claim its benefits are opaque and oversold. “Here a coffee drinker from Ireland can see and feel the impact of their investment when they drink a cup of fair trade coffee,” she says. “They can see it in our children, our women, our families.”

As one of Soppexcca’s biggest customers is Bewley’s, much of this social premium does indeed come from Irish coffee drinkers. Soppexcca’s beans are sold in Ireland under Bewley’s Explore Nicaragua fair trade brand. Just this week Bewley’s signed a deal with convenience retailer Mace to sell Soppexcca coffee in Mace’s 120 locations around the country.

But as he tastes Soppexcca’s latest harvest ahead of confirming his order for the year, Bewley’s master roaster and chief buyer Paul O’Toole is quick to point out, “This is not about charity. I wouldn’t be here if the coffee was not right.”

Seeking out the quality fair trade coffee his customers want has allowed O’Toole to bypass the industry’s middlemen and build relations directly with coffee growers, important considering that much of the world’s crop comes from regions prone to natural disaster or civil unrest. “In my business I want to be close to my producers and fair trade has given me that introduction,” he says.

Soppexcca is also keen to cut out middlemen. With help from Christian Aid Ireland among other donors, it now owns its own processing mills.

This means it no longer has to sell freshly harvested beans to third parties to process into the more valuable green beans that European roasters buy.

With local banks quoting loans with interest rates of more than 100 per cent for small producer co-ops, Soppexcca still needed foreign aid in order to make this climb up the value chain. Now Espinoza is hopeful that, in years to come they will see the union turn itself into a self-standing business, able to generate its own investment capital.

“But,” she quickly adds, “Without ever losing our social or environmental rationale.”

A taste of Nicaragua

When Bewley’s master roaster Paul O’Toole started buying coffee 30 years ago the only product available from Central America was a contract for a basket of disparate beans sold in New York as Central American Standard 1.

“I didn’t know whether it was coming from Nicaragua, El Salvador or Honduras,” says O’Toole. “I wouldn’t have known then that Honduran coffee has a more tropical taste and Nicaraguan a sweeter one or that Guatemalan has a smoother quality. Up until recently all that was lobbed into a big commercial standard that they could trade in New York where they didn’t know what they were talking about.”

But, as with wine, Irish coffee drinkers have become increasingly sophisticated in recent decades and European roasters such as O’Toole are now seeking out distinctive local producers across the tropics who can offer new varieties to more demanding palates back home. Broad and bland regional categories are no longer in flavour.

For small coffee farmers such as those in the Soppexcca co-op, this raises the hope that their ever more knowledgeable customers will one day arrive as tourists to visit the regions which produce the world’s top coffee, much as wine lovers descend on famous wineries. For coffee drinkers, it raises the prospect of waking up in Nicaragua’s lush mountains and drinking your favourite cup on the small farm that produced it.

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Gourmet Coffee Beans

A coffee bean is basically a seed from the coffee plant, whose primary component is a protein-rich and water-soluble tissue that contains anywhere from 0.8% to 2.5% caffeine. The stimulation from the psychoactive properties of caffeine is a major factor in the cultivation of the coffee plant, although some beans are decaffeinated prior to the roasting process. The classification of gourmet coffee beans takes caffeine content into account, along with the smell and taste of the liquid coffee produced from such beans.

Gourmet coffee beans are considered premium based on many attributes such as their size, density, colour, texture, and richness. Despite the brownish colour, coffee is sometimes referred to as green coffee.

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Are restaurants, coffee shops coming to your park-and-ride?

Lawmakers want to allow state-funded park-and-ride lots to contract with private vendors to provide services for commuters. A bill proposed Wednesday by Democratic Sen. Steve Hobbs of Lake Stevens would allow the Washington State Department of Transportation, or any local transit agency using state money for a park-and-ride, to contract with private vendors, such as restaurants or coffee shops, to lease part of the lot.

Hobbs said he is thinking "out of the box" by proposing this bill as a way to earn revenue for transit agencies and encourage public-private partnership.

Any revenue gained from the lease agreements with private vendors would go first to the local agency to help operate and maintain the lot. Money collected beyond that would be funneled into the state's multimodal transportation and motor-vehicle funds.

The bill's sponsors are still working out how to split the revenue, but preliminary ideas suggest money from lots operated by WSDOT would go to the motor-vehicle fund, while money from lots owned by local transit agencies would go to the multimodal fund.

"Some community transit agencies have cut service and some are also in the process of cutting service, due to the shortfall in the sales-tax collection," said community transit lobbyist Davor Gjorasic. "(This bill) is a creative way to add services to park-and-ride lots, so we support that."

WSDOT also supports the bill and feels the presence of vendors on lots will increase security for lot users.

Currently, there are approximately 336 park-and-ride lots in Washington, with 117 of them directly operated by WSDOT. The majority receive some form of state money, making them eligible for the new arrangement if the bill is passed.

The incentive for local transit agencies to contract with private vendors is that it frees up agency money that is currently spent on maintenance and operation for higher priorities, said Mark Eldridge, regional mobility program manager for WSDOT. Agencies will instead be able to direct the revenue from leases with vendors toward those costs.

That and increased security from having more pairs of eyes on site at the lots are the two main benefits from this bill, he said.

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Dunkin’ Donuts picks Keurig for single-cup brewing system

Dunkin’ Donuts will partner with Green Mountain Coffee Roasters Inc. to offer packets of its coffee for the Keurig single-cup brewing system. The news, released yesterday, comes a week after rival Starbucks Corp. said it would use a Keurig competitor.

Dunkin’, a Canton-based coffee-and-baked-goods chain, entered the single-serve home coffee business last year, with packets that can be used in single-serve machines made by Mr. Coffee, Cuisinart, Black & Decker, and others.

This summer, Dunkin’ will roll out its single-serve K-Cup portion packs from Keurig, a unit of Waterbury, Vt.-based Green Mountain that is the dominant player in the single-serve market. The packets will be available only at participating Dunkin’ Donuts restaurants, and not in grocery stores.

“Our goal is to give our customers more ways to enjoy Dunkin’ Donuts coffee,’’ said Dunkin’s president, Nigel Travis. Dunkin’s move comes after one of its biggest competitors chose another company for its single-serve offering, despite speculation it would partner with Green Mountain. On Feb. 15, Green Mountain shares fell 6 percent when Starbucks said it would team up with Courtesy Products, whose CV1 brewer is in about 500,000 US hotel rooms.

Still, speculation continues that if Starbucks wants to break into the home brewing market, it could reach a deal with Green Mountain once the Seattle coffee chain ends its exclusive arrangement with Kraft Food Inc. on March 1.

“The reality is that Keurig single-serve home brewers are becoming a major force in home coffee consumption,’’ said Scott Van Winkle, an analyst with Canaccord Genuity, an institutional investment bank. “If you’re not available in K-Cups, you’re going to lose market share.’’

Green Mountain Coffee’s chief executive, Lawrence J. Blanford, estimates that Keurigs are in 6 percent to 8 percent of the US homes that own coffee machines. Blanford declined to discuss Starbucks yesterday, but said the agreement with Dunkin’ is part of a strategy to align “with the strongest coffee brands.’’In a note to investors, a Janney Capital Markets food analyst, Mitchell Pinheiro, said that the Dunkin’ deal is a big score for Green Mountain.

“The Dunkin’ Donuts K-Cup agreement is a nice win for Keurig as it brings one of the strongest US coffee brands into its portfolio,’’ the analyst wrote. Janney owns Green Mountain shares. Pinheiro also indicated he does not expect the Dunkin’ deal to pressure Starbucks into joining Keurig. “The Dunkin’ coffee flavor profile is vastly different than Starbucks,’’ he said.

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The trend: Filter coffee

Ever since the first British coffeehouses opened in the 17th century, coffee society has been subject to changing fashions. The espresso bar boom in the 1950s, led by Soho’s Moka Bar and its newfangled Gaggia espresso machine, gave way to the rise of the cappuccino and the slew of coffee chains in the 1990s. And then came the recent craze for flat whites, exemplified by Australian-owned coffee bars in London such as Kaffeine on Great Titchfield Street, and adopted everywhere from Pret A Manger to Costa Coffee.

But now an unlikely fad is making its presence felt, with the cognoscenti extolling the humble cup of filter coffee. Jeremy Torz, co-founder of artisan coffee roasting company Union Hand-Roasted, has no doubt about its virtues. “Filter coffee offers a longer, purer expression of the coffee. It can be delicate, aromatic and smooth, as well as intense,” he says. “People always say they love strong coffee, but actually drink very milky coffee. What a black filter coffee offers is a chance to really appreciate the subtle flavours.”

Invented in Germany in 1908 by Melitta Bentz, who came up with the idea using a piece of her son’s blotting paper to strain coffee, filter coffee took off as a quick, simple way to prepare a dose of caffeine. Embraced by the catering industry as a cheap alternative to the espresso, its reputation has suffered because of the notoriously weak filter coffee made commercially and the bitter stuff left to stew for hours on hot plates.

Nowadays, however, well-made filter coffee has its champions. Respected coffee shops and cafés, including Monmouth Coffee Company and Taylor St Baristas, offer single-origin filter coffee in addition to espressos and cappuccinos, while Starbucks will soon be offering “slow drip” coffee. “We serve filter coffee at all our stores,” explains AJ Kinnell, coffee buyer for Monmouth Coffee Company. “We have done ever since we first opened, so that people could taste the coffee and select which beans they wanted to buy.”

Like Torz, Kinnell attributes filter coffee’s superiority to its clearly defined flavours. “The advantage is that it’s the least disruptive brewing method: what you have is a lot of clarity in the cup. When you make an espresso the process intensifies the flavour of the coffee; it’s like turning up an amp. You can taste the nuances of the flavours so clearly with filter coffee.”

So, how do you make it correctly? At the new Taylor St Baristas café in Mayfair, simply decorated with white walls and a dark wooden bar, I met Torz and Andrew Tolley, who, with his brother and sister, co-founded Taylor St Baristas. “You need a certain amount of diligence to make a good cup of filter coffee,” Tolley says, as the pair explain their methods. First, use the right coffee-to-water ratio (7g-9g to 100ml). Second, the coffee must be freshly roasted (two to 21 days old) and freshly ground (“If it was ground an hour ago, you might as well not bother,” says Tolley). Last, the water should be freshly drawn and filtered to remove any chlorine taint.

While espresso addicts have their gleaming machines, filter coffee fans, too, have their gear. Torz had assembled a range of kit to test, from the Clever Dripper – a lidded filter coffee maker complete with an ingenious shut-off valve – to the Technivorm automatic filter coffee maker. But we started with the basic ceramic filter cone, using a batch of Union’s Rwandan Cup of Excellence Kopakama. (“This has vibrancy, sweetness and a silky mouthfeel,” says Torz.)

First Tolley rinses the filter paper with hot water “to wash out the starch”, then adds coffee, very finely ground to slow down the water’s passage. A little hot water (92-96°C) is poured on to the coffee grounds for what is known as the “pre-wet” – “the idea is to saturate the grounds so that they give out flavour evenly”. He then pours hot water in a fine, constant stream over the grounds for two minutes. The coffee drips through, with the cup whisked away before the last overly bitter drops fall in. No milk is added – both Tolley and Torz drink their filter coffee black, to taste the full complement of flavours.

Next we try the Aeropress, a large, clear plastic syringe that “gives a stronger, more concentrated brew than the drip filter”. The liquid coffee is pressed through the filter resulting in a “stronger, more concentrated brew than the drip filter”. All the filter coffees we sample have depth of flavour without bitterness and a noticeable brightness. “This is what we’re looking for when we make coffee,” says Tolley. “People think acidity is negative but it’s what we want,” agrees Torz. “It’s not bitterness; it’s a brightness or citrus note that good coffee has.”

We finish with a gloriously Heath Robinson piece of kit – the Syphon, which comprises two glass flasks and a burner. A leaping flame heats up water in the lower flask, with the steam pressure forcing it up into the top flask where the coffee is mixed in. After one minute, the flame is removed and, as it cools, the coffee drips down through a filter into the flask below.

The spectacle is so entertaining that there are grins all around. “This is the one to impress your friends at a dinner party,” comments Torz. Those who thought filter coffee was boring need to think again.

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