Exporting Coffee to Canada: Innovations and Best Practices” 12 October 2017
What is TPSA? A Bilateral Trade and Investment Project between Canada and Indonesia • The Conference Board of Canada (CBoC ) is Canada’s foremost independent, not-for-profit research organization. • CBoC was awarded a CAD$12.05 million project in August 2014 to increase trade and investment between Canada and Indonesia, with emphasis on assistance to SMEs. • The project will also identify and work to overcome barriers to trade and investment between Canada and Indonesia. • The project has two years remaining, until August 2019.
Four Main Activity Streams 1. Improve Trade and Investment Information Flows 2. Enhance Private Sector Business Linkages 3. Strengthen Trade and Investment Analytical Skills 4. Improve Understanding of Regulatory Rules/Practices
Presenters: • Said Fauzan Baabud, TPSA Coffee Sector Coordinator • Iwannitosa Putra; Director of PT. Meukat Komuditi Gayo, speaking on behalf of TPSA Coffee producers
Canada: Consumers & Market Trends Overview
• Canada: where & what 6
The Canadian Population Atlantic 2.3 Million Small, concentrated population: Provinces: 8.1 Million Québec: 13.5 Million • Total population: 35.7 million (October Ontario: 5.3 Million Prairie Provinces: 2014 estimate) 4.5 Million British Columbia: 0.1 Million The Territories: • 10 % size of U.S. population • 62% of Canadians live in Ontario and Quebec • 80% of Canadians live within 160 km of The North British the U.S. border Columbi a • 81% of the population is urban The Prairies Ontari Québe o • 1 in 3 Canadians lives in one of c Atlantic Canada’s three largest cities (Toronto, Canada Montreal, and Vancouver) Source: Statistics Canada, Population estimates and projections (2013) 7
Market Comparison: Canada and USA per capita Canada USA 35.7 million 317 million Population $46,320 $50,140 GDP $14,680 $5,580 Exports $14,310 $8,290 Imports Values in $CAD estimates (2014) Source: Canadian & US Government Sources, ITC Trade Map 8
Canadian Imports on the Why Canada? Rise … $ 411 $ 380 $ 365 $ 347 $ 324 Significant volume of imports valued at $411 Billion (2014) 2010 2011 2012 2013 2014 • Imports represent 31% of GDP Excludes minerals (HS Codes 26-27 and 71-80) Source: Industry Canada, Trade Data Online (2014) • 5% average yearly growth in imports over the past 5 years Canadian Imports by • 11 th largest import market in the Region United States wor ld (54%) 8% Asia (23%) Latin Diversification of trade partners America 13% Europe (13%) Europe 54% • Canada is undertaking a major United Latin America 23% effort to diversity trade States (8%) Asia opportunities, including signing Middle East new Free Trade Agreements (0.5%) Source: Industry Canada, Trade Data Online (2014) Regional breakdown based on countries with imports valued over $500,000. Excludes $3.2 billion in re-imports to Canada.
Overview of trade from Indonesia to Canada • Imports into Canada from Indonesia totaled CA $1,392 M (excluding Canadian Imports from minerals) in 2014 and are growing at Indonesia a rate of 5% CAGR over the past 5 ($CAD millions, excluding years minerals) $ 1,392 $ 1,356 $ 1,281 • Indonesia ’s exports to Canada are $ 1,242 $ 1,115 primarily in 3 product categories: ➢ Rubber articles: $241 million or 23% ➢ Woven apparel: $164 million or 16% ➢ Knitted apparel: $ 151 million or 14% 5% growth over the past 5 years Source: TFO Canada Trade Data Analysis Tool 2010 2011 2012 2013 2014 10
Canadian coffee market • Tim Hortons Inc. is a Canadian multinational fast food restaurant known for its coffee and donuts. It is also Canada's largest quick service restaurant chain; as of December 31, 2016, it had a total of 4,613 restaurants in nine countries. • The company is expanding its business operation to Asia including Indonesia Tim Hortons is looking for business partner in Indonesia, please come and talk to us for those who interest. 11
Canadian coffee market
Canadian coffee market
Canadian coffee market • 2000-2010, Canadian market growth was much stronger (nearly averaging 7% annual growth). One of the strongest “traditional” importing market. • A few reasons: • Population growth • Sustained “good” quality market • Increased availability - more points of distribution - strong foodservice sector
Coffee and the Canadian Economy*: • 160,000+ jobs (in restaurants, manufacturing, franchising and support sectors) • $6.2 Billion Total Sales • $4.8 Billion Sales in Foodservice • $1.4 Billion Sales in Grocery / Retail • $325 Million Sales in the Office Coffee Sector * Coffee Association of Canada
Canadian coffee market Canadian Coffee Imports from the World and Indonesia by Volume and Value (2010-14)
Indonesia : 6 th largest source of green coffee • Indonesia is the 6 th largest coffee exporter in the Canadian import market, BUT Indonesian coffee is one of the highest price. • Indonesian coffee 37% higher priced compared to the average coffee import price • Ranks: (in millions of CAD$ 2014) 1. Colombia: 210 2. Brazil: 160 3. Guatemala: 100 4. Peru: 40 5. Guatemala: 35 6. Indonesia 30
The Importers • Coffee imports into Canada are highly concentrated in terms of the number of importers. • The top 12 major importers accounted for 79.02% of total imports in 2014. • These are listed on the next slide • Several importers are non-residents with addresses outside of Canada. • The top 9 major importers accounted for 78.43% of total coffee imports from Indonesia in 2014.
Some Importers Major Canadian Importers in 2014 Company Name (alphabetical order) City Province / State AMERICAN COFFEE CORPORATION Jersey City New Jersey ATLANTIC COCOA CO. New York New York COEX COFFEE INTERNATIONAL, INC Miami Florida COFFEE AMERICA (USA) CORPORATION New York New York ELAND INC. Mississauga Ontario KEN GABBAY COFFEE LTD Montréal Quebec N J DOUEK & FILS INC / N J DOUEK & SONS INC Montréal Quebec OLAM AMERICAS, INC White Plains New York RGC COFFEE INC. Westmount Quebec SWISS WATER DECAFFEINATED COFFEE INC. Burnaby BC VOLCAFE USA, L.L.C. Somerset New Jersey WALKER COFFEE TRADING, LP Houston Texas
Major market segments • Major market segments include : o grocery stores and supermarkets, o mass merchandisers - club stores, o drug stores and o industry exports. o cafes, restaurants
Canadian Consumer Behaviours • Coffee consumption remains central among adult men and women in Canada as it is the most popular hot beverage in the country with 14 billion cups consumed every year • 51% of Canadians consume coffee at home, which is largely due to coffee being an important beverage during breakfast time • Coffee shops and fast-food restaurants, is as important as supply into supermarkets or other forms of retail shops in Canada.
What to sell: Indonesia has a reputation • Canadian Buyers Interviews – Negative perceptions to overcome o Price; Consistency; Reliability; Quality; Safety; o Substitution potential (Sumatra vs. other sources).
What to sell: Indonesia has a reputation • Canadian Buyers Interviews • Main Positive outcomes: • Uniqueness, availability • Different from Latin America mainstream beans Coffee in Canada : rough guide 24
Key Notes • Canadian buyers look for good value and competitive pricing, reliability of product quality, continuous supply and delivery times. • There’s a niche for quality Indonesia coffee on the Canadian market • Build good relationship and regular communication with the potential buyers, Follow-up service, website and social media like Facebook and Linkedin, responsive email, • Recruit competent and experienced staff • Innovative products that are not currently in the Canadian market and might respond to market niches • Build your stories and share them • Organic certification is no guarantee of success, but for niche markets, it’s a prerequisite
Stories: many ways to communicate your edge Meet Aman Al, a member of the Permata Gayo coffee cooperative in Indonesia. Aman used to grow rice, but growing Fair Trade coffee has enabled him to send his son to university. Now, farmers come from all over Indonesia to learn how to farm coffee from him.
Brief Update of TPSA Coffee • Indonesia Coffee Associations visited Canada to meet with coffee business association in in Canada, September 2016 • Explored the potential coffee resources from Toraja dan Aceh Gayo Arabica coffee cluster in Indonesia • On the coffee environmental sustainability; TPSA provided training for extension workers from Aceh Tengah, Bener Meriah, Gayo Lues and South Sulawesi • Selected five coffee producers from Gayo, Aceh to participate in TPSA coffee trade project in 2017 and 2018. • Conducted workshops on “ How to Export Coffee to Canada” in Makassar and Takengon, Aceh Tengah • Participated in Specialty Coffee Association, Global Coffee Expo, Seattle 2017 to engage with potential buyer from Canada and Northern America • Buyer mission to Gayo, Aceh in August and November 2017 and facilitated one potential buyer to Toraja, South Sulawesi
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