Tea and coffee industries represent big business across the region and look to continue expanding, writes Daniel Creffield

While it’s difficult to put any figures against the coffee and tea industries’ continuing growth in Asia-Pacific, one thing’s for sure – there’s money to be made at every level of the business.

Tea is of course a perennial favourite, sales of which are now being enhanced by quality imports and flavour forays taking in new and imaginative fruit influences as well as emphasis on tradition Asian and Western blends from lapsang souchong to Earl Grey.

Coffee has been the real success story, however, with the big US chains buying up prime locations in almost all major Asian capitals. In June for example, Starbucks announced its intention to open 100 stores in Malaysia over the next four years.

Meanwhile Pacific Coffee Company, a US-style coffee shop group which actually originated in Hong Kong, now has outlets in China, Singapore and Malaysia.

Eric Daniel, managing director of Fine Aromas, a family owned coffee company supplying supermarkets, hotels, restaurants, offices, private clubs, coffee shops with coffee and coffee machines in Hong Kong, believes there are several reasons why the coffee market is “exploding” in Asia.

“For sure one reason is increasing incomes in the region and the rise of the middle class. Vietnam for example – which is a producing country as well as an emerging country – registered around 20% growth in coffee consumption in 2011. In the Philippines it was around 9%. Indonesia is also growing.

Daniel says that all the major coffee heavyweights are focusing on emerging markets, and they have the financial means to make their presence felt.

“Manufacturers such as Nescafé and chains like Starbucks show the way. Then the many copycats arrive. Once one company opens the market others will follow; once the market is mature all the others will come.
“The smaller coffee manufacturers – which are usually more quality oriented – could not spread to China or Hong Kong without the big players opening the market up first – giving away free samples … educating the market, generally spreading coffee culture.”

Daniel makes the point that while the smaller players cannot compete in terms of scale, they can on quality.

“Five years ago I would not have thought to bring in the brand I am bringing now – Cafés Richard – because the market was not mature enough to recognise and appreciate the quality of the product. Now Hong Kong is a really mature market and has the best coffees from all over the world. Before the market only wanted the big brands – this is no longer the case.”

Martin B Jones, vice president, F&B, Asia Pacific, Starwood Hotels & Resorts Worldwide says tea and coffee are “without a doubt as two of our highest consumables. There are very few people who don’t drink either or both. While we continue to offer these products at a competitive price range, we go extra miles by monitoring the most fundamental consuming habits including if it is consumed first thing in the morning or last thing at night or just any time during the day. The importance of experience is essential as we ensure all our hotel brands offer an array of premium products that suit everyone’s palate as well as value for money.”

Jones adds that a key strategy is to ensure consistency in quality across all Starwood hotels, resorts and restaurants.

“We have a coffee and tea manual with guideline and standards on how to prepare [them], which ensures that when a guest orders a beverage of their choice, no matter where they are in the world, they will have the same standard of brew. In addition we have partnered with quality brand coffee and teahouses to match the style and personality of our branded hotels.”

He adds that the group doesn’t partner with just one brand or blend across the Starwood properties worldwide, as this approach simply wouldn’t work.

“All of our brands have a unique DNA, with its own character, that differentiates to target different guests. In the same way, coffee is a personal choice and we like to offer our guests a range; which includes the popular to the unique one-offs. Above all, our decisions are quality based; there are always opportunities to work with lesser quality products at lower prices but this doesn’t follow our quality focus.”

Niche interest

Boncafé managing director, Christian W. Huber agrees there is a growing interest in niche cafes “where one can enjoy a good cup of coffee and experience the cafe culture growing in Southeast Asia.”

Huber says that with this comes a better appreciation of coffee culture and thus better awareness and appreciation for coffee drinking.

“This trend then becomes a lifestyle. As innovations are rare in this industry, the last real innovation remains to be the coffee capsule, so any new breakthroughs will be a variant of the coffee capsule that has entered the market over the last 20 years or so.”

Boncafé’s best selling products are its roasted and ground coffee, and Huber believes that with over 50 years of roasting and brewing excellence, trade customers and consumers have come to know the company as specialists.

“While we offer fine blends to match customers’/consumers’ specific taste profiles, we trust that our passion in delivering the best coffee has a loyal following in the trade.”

Boncafé sells mainly to the Horeca sector with a smaller percentage to retailers.

Tradition and passion

Another producer with a long tradition, Rancilio Group has been manufacturing quality espresso coffee machines since the 1920s.

Simona Sordelli, head of marketing at Rancilio, says that coffee is thriving in the region, mainly due to the presence of companies “that have given a strong boost to the diffusion of Italian coffee culture all over the world, thanks to their passion for the production of quality espresso coffee machines.”

Rancilio Group, which in Asia-Pacific sells its products in China, Korea, Hong Kong, Japan, India, Singapore, Taiwan, Thailand, Australia, New Zealand and Malaysia, says its wide portfolio of products is aimed to satisfy the needs of all its customers with one of its most popular items the fully automatic Egro One machine.

The company believes that in Asian there are still some markets, such as Bangladesh, Laos, Cambodia, Thailand and Vietnam, where “thanks to the recent opening of resorts and high level hotels, coffee culture will continue to grow rapidly.”

Franke Coffee Systems is one of the world’s leading suppliers of fully automatic coffee machines and is part of the Franke Group, which operates globally. The company comprises subsidiaries in Switzerland, Germany, the US and UK, with around 500 employees.

Franke’s VP sales and marketing APAC, Federico Paternò, says that in its range of fully automatic machines for professional use, the best selling products in Asia-Pacific countries are those of smaller capacity.

“The reason is that although appreciation for good, freshly brewed coffee has grown spectacularly in recent years, still the per capita consumption is limited compared to the western world, hence many of our customers do not require high output machines to satisfy demand. However we have also noted a strong growth at the top end of our range, driven by large chains getting very serious about their coffee offer.”
Paternò adds that across the region the pattern of sales is not the same everywhere, as different countries have different consumption levels and habits.

“In Asia, typical customers for our fully automatic machines are businesses that want to ensure a consistent output in time terms and across different locations, regardless of who is operating the machine: food chains, hotels, restaurants, convenience stores, corporate offices and other work places with self-service coffee, all fall in this category.”

In terms of trends or innovations he says the company sees a general move towards higher quality and greater convenience. In the consumer market this trend is underscored for example by the boom of coffee capsules.

In the business-to-business sector, Franke has taken the challenge to the next level with its new generation machines, boasting a user-friendly, iPad-like interface, as well as raising the bar in the industry when it comes to the milk foaming quality (hot and cold) as well as the flexibility of use, largely expanding the options of available drinks a machine can produce. The first representative of this new generation is the Franke FM800 machine.

Increasing appreciation

Carrie Shum, senior brand manager, Nespresso HK, says customers are increasingly appreciating, selecting and demanding quality coffees and coffee recipes both at home and in out-of-home venues.

“With this trend in coffee consumption habits, restaurants and hotels are increasingly demanding higher standards from the coffee they serve to their clientele combined with prompt service, consistent coffee quality and choice.”

Nespresso offers eight grand cru coffees ranging from mild and aromatic to full-bodied and intense. “This understanding of delivering only the highest quality coffee cup after cup, using state-of-the-art, smart and convenient machines is integral to Nespresso Business Solutions and has made it popular at upscale hotels and restaurants around the region.”

Tea for me

While the tea business clearly has a longer legacy in Asia than its more heavily caffeined counterpart, many within the industry feel there is still much room for growth.

Tony Dick, of Tea Concepts Ltd, believes there is a great opportunity for hotels and food service establishments to capitalise on this interest by providing a sophisticated tea experience with an Asian emphasis.

“A tea supplier should be able to advise how to set up a quality tea service, provide training to staff and even tea seminars for guests. A greater emphasis on the tea service will make a guest’s stay all the more memorable and provide an experience they can take away and share with their friends.”

And he adds that while coffee in hotels is now at a uniformly high standard, with coffee capsule machines often found in high-end hotel rooms, the tea service is not always at the same standard, “in part because hotels don’t realise the wealth of premium tea options now available to them.”

Dick, whose company’s range includes Tea Forté and Harney & Sons Fine Teas from the US, Victoria Premium Teas from Hong Kong, Four O’clock Organic Fair Trade Teas from Canada and Hampstead Teas of London, outlines what he thinks some of these options could be.

“Of course there are tea bags in various sizes and shapes, but the better ones contain full leaf premium grade teas in transparent bags so the guest can appreciate the quality.

“A new idea for rooms is individually packaged loose leaf tea coupled with individual cup serving systems.
“Also for rooms, there are now several coffee pod systems which include teas but, at the moment, they rarely produce an authentic tea experience.

“Tea isn’t just in the mini-bar, several hotels are now providing herbal tea as part of the turn-down service. Specially blended herbal teas can help your guests get a good night’s rest and so demonstrate a hotel’s commitment to making the guest experience all it can be.”