Bewley's Cafés and the crisis in the world coffee market

national | consumer issues | opinion/analysis

Friday October 29, 2004 12:09

by Michael Hennigan - Finfacts.com

'The Irish poet Brendan Kennelly once described Bewley's Café in Grafton Street as the 'heart and the hearth of Dublin'. Dublin, he said, would not be Dublin without Bewley's. These sentiments have been echoed by generations of Irish people since Joshua Bewley first introduced tea to the Irish public in 1835.

Bewley's is a name synonymous in the history of Dublin and more recently of Ireland as a whole. Bewley's itself has a rich history of growth and survival which has proved it to be one of the last bastions of tradition in a changing Ireland.'

The foregoing words are from the Campbell Bewley Group website and yesterday, the company announced that the landmark Bewley coffee shops in Dublin’s Grafton Street and Westmoreland Street are to close next month. The coffee shops have accumulated losses of over €4m despite investment of €12m since 1996. The Grafton Street shop is located on one of the most expensive streets in the world and inevitably will become another site for a global consumer brand.

It may surprise some coffee drinkers that the coffee plant originated in southern Arabia, in the area that is now known as Yemen. The green coffee bean, boiled and seasoned with cardamom spice, is a traditional beverage in the region. The other popular Arab beverages are Turkish coffee- ground roasted beans, served unfiltered and black tea in a glass, with lots of sugar.

The world's second biggest commodity has been big business in recent times at the consumer level but coffee growers have experienced many years of low prices.

In the early 1990s, earnings for coffee-producing countries were about US$10-12 billion and retail sales, mainly concentrated in industrialised countries amounted to US$30 billion, according to the International Coffee Organisation (ICA). Today, retail sales have more than doubled to $US70 billion, but earnings for the mainly poor producing countries have fallen by half, to about US$5.5 billion.

According to the ICA, prices in real terms, have been at their lowest in about a century. Prices which averaged US$1.20 per pound (0.45kg) in the early 1980s fell to lows of US50 cents and have recently recovered to around US75 cents on US markets.

The price collapse has been caused by a sharp rise in worldwide production. New plantations have been opened in Brazil, the world’s biggest producer and the rise of countries such as Vietnam, which is vying with Colombia for the number two spot, has created a glut. Worldwide production in 12 months to September is expected to have fallen 17.4% to about 100 million bags.

The Fair Trade model guarantees farmers a price of $1.26 per pound for coffee. This enables farmers to make a sustainable living and encourages them to invest in quality coffee crops. In The US TransFair USA certifies which products can carry a fair trade label and chains like Starbucks and Dunkin Donuts are now carrying Fair Trade coffee. Procter & Gamble, maker of the popular US coffee brand Folgers, in September began offering a fair trade certified Mountain Moonlight coffee under its premium Millstone brand.

“It’s still a very small percentage of the market, but something that people are starting to pay more attention to, and roasters are starting to view as a market niche worthy of servicing,” said Joseph DeRupo, of the US National Coffee Association.

However, the higher price provided by the Fair Trade model does not always filter down to the farmer who has no resources to change to production of the higher priced quality bean varieties.

-The world's most expensive streets' survey:

http://www.finfacts.ie/biz10/irelandworldexpensivestreets.htm