Micro- Brands Seek Major Share
Gourmet Coffee Perks Up

All over the country, gourmet coffee roasters are producing some of the best home-grown java that Costa Ricans have ever had the ability to buy.

The cheap, mass-consumptions brands, with their mix of low- grade coffee, sugar and cornmeal, continue to dominate supermarket shelf space and domestics coffee pots. But the gourmet coffees, led by pioneer Café Britt and followed in recent years by scores of micro brands, are changing the way Costa Ricans view their national drink and the way foreigners abroad buy it.

The Costa Rican Coffee Institute (ICAFE), the industry regulator here, has registered 324 brands of domestics roasted coffees.

Many are available only in select markets or over the Internet.

"The trend toward better quality coffee began several years ago, when more importance was given the local market," explained Lilia Gallardo, of the Specialty Coffee Association of Costa Rica. "People today are aware of their options, and many of them now want to drink a good cup of coffee."

The association began this year urging local coffee growers, hit hard by the lowest international unroasted or "green" coffee prices in nearly eight years, to focus on quality over quantity, from plantation to export.

Some processing plants or beneficios are beginning to invest in specials equipment to process only the very best-coffee that is 100 percent ripe when sold to the plant. Plantation owners are paying pickers more for extra care during the harvest.

Earning Specialty Coffee Certificate

This caliber of beans, if processed with care, could earn a quality certification by the U.S. Specialty Coffee Association. Certified coffee fetches prices that are 30-50 percent higher on the international market.

" When international prices are as low as they are today, the incentive to produce better quality become huge, " Gallardo explained. "The quality concept has caught on among many growers and processors, because international buyers will pay just about anything for top-grade coffee."

A glut in world reserves has resulted in coffee prices of about $0.67/lb. on the international market in February, compared to $1.05/lb. the year before and $1.50/lb. in 1999, according to financial news wire Bridge News.

Gallardo admits that much of the recent "boom" in micro brands and gourmet coffees stems from growers' realizations that they can get a lot more for their product if they roast and market it themselves - a concept pioneered, beginning in 1986 by Steve Aronson of Café Britt.

" Some small roasters, like Café Monteverde have been doing this for years and are very good at it," said Aronson. It's a flourishing field, but of every 100 who try it, only about five or so will succeed"

When Britt began selling "gourmet" roasted coffee to the domestic Costa Rican and foreign markets it had to single handedly work witch ICAFE to rewrite a coffee industry rulebook then focused entirely on the export of green coffee.

Now at the head of the company that most newcomers seek to imitate, Aronson views the country's roasted coffee explosion pragmatically, from the top of a long - uphill stretch of lobbying efforts and intense marketing, both in Costa Rica and on the Internet, with Britt's popular "Coffee Lover's Club".

"We're basically seeing three categories of microbrands," he told Business Costa Rica this month. "First, you have the big traditional roasters and distributors who've expanded their product line to include a high-end product. For them, it's more a pride thing than a sale thing. Second, there are the individuals, growers or cooperatives who are roasting their own coffee or hiring companies like us to roast their coffee for them (to maximize their profits). And third there are "los aporvechadores" (the opportunists), who take advantage of the trend toward quality by packaging cheap coffee in pretty packages and selling it at high prices to tourists".

Aronson hailed the country's micro-entrepreneurs who care about the product and want to create something different and better than most offerings. He pointed to businesses like Sunburst Coffee, owned by Michael Pierpont. "Michael is a perfect example of someone who worked his way into the business," Aronson said. " He learned all he could and then went off on this own. Now, he's a real craftsman. Just like the microbreweries in the U.S., this is a very good thing".

From his home in the west San José suburb of Escazú, Pierpont has been roasting and marketing traditional and flavored coffees since 1997. But, without a large marketing budget and staff, his sales efforts are pinned to the Internet.

The World Wide Web brings in 85 percent of Pierpont's total sales. Of that, about 85 percent of orders are place outside Costa Rica, another 5 percent are Internet domestic orders and 10 percent comes form grocery store sales.

" I want to go after the highest end of the market, because the big roasters don't want it" Pierpont said. " Costa Rican tastes are very slow to change - they're not willing to pay the 50 percent more that they'd have to for Sunburst. It's much better for me to focus on the U.S. market, where I can be the high-quality, low-cost alternative, rather than be the high - price, high-quality alternative here and have to fight against traditional and big money".

Coffee Campaign

Costa Rican's loyalty to the cheap, lower-quality brands will soon be challenged by a ¢ 120 million ($375,000) ICAFE marketing campaign to increase domestic consumption of "pure" or unadulterated coffee.

ICAFE's media spokesman Ernesto Villalobos confirmed that the campaign will take shape in the coming weeks in the form of television and radio sports, as well as "point-of-purchase" promotions in supermarkets and pulperías, or small grocery stores, nation-wide.

Coffee analysts say if all coffee producing countries increased their domestic consumption, the world surplus would quickly dwindle and prices would quickly dwindle and prices would rise.

ICAFE has yet to analyze patterns of domestic consumption, but its own statistics show that in-country sales account for about 10 percent of this total yearly production - 230,000 bags per year- marking in the country's biggest market after the U.S. and Germany.

Domestic sales also include a vital "value added" benefit that exports to coffee wholesales abroad can't match. ICAFE figures show that Costa Rica earns $1 per pound $0.64 for each domestically sold pound. But the coffee that stays here provides jobs to roasters, marketers, transporters, packagers and others, boosting the end price.

"The average Tico doesn't know that coffee can be different," Aronson agreed. "But you have to bring about cultural change, and that's why ICAFE is spending all this money on the campaign.

When that change comes around, Britt will be one of the best positioned companies to take advantage of it. "Unlike other roasters we've always positioned ourselves as coffee experts-that's been our job, he said.

"Besides that, we're also proved that we're not too good for people - you can buy Britt in (stores and restaurants of all sizes and categories). "we started with one idea in 1986- to roast and pack Costa Rican's finest coffee, and that's what we're stuck to".