Turning into a caffeine nation

By IRENE CHAPPLE

The new cafe on Queen St is awash with sweet scents - vanilla, caramel, chocolate. On this Wednesday afternoon it is bustling. A corporate couple sip long blacks while poring over paperwork; teens scrape foam from the sides of their plastic cups.

The Brazilian waiter - a part-time model, naturally - is working the street, dipping under a passing woman's umbrella to entice her into a taste of Gloria Jean's vanilla flavoured coffee.

New Zealand managing director of Gloria Jean's, Australian Paul Ewing, watches and laughs. He is pleased with the store's progress since it opened a few weeks ago.

Customer numbers have been higher than forecast: 3000 transactions a week rather than the 2000 or so Ewing expected.

"We have got very quick uptake in New Zealand," he says.

But while Ewing is confident, the local coffee business isn't exactly quaking at the prospect of another American mega-chain moving into the market.

Over the last two decades New Zealand has bred a strong coffee culture and local operators are confident that Gloria Jean's will add to their market, rather than challenge it.

For Gloria Jean's, the point of difference is flavoured coffee. The company expects its offerings - delights such as butter toffee, mudslide and emerald - will attract youngish customers, teens weaning themselves off Coca-Cola.

Many in the business see Starbucks as having had a similar impact, introducing younger drinkers to coffee, particularly with its range of frappuccinos.

Gloria Jean's imports its roast beans from Australia, triggering scorn from local roasters who pride themselves on the freshness of their coffee.

"That's PR bullshit," snorts Ewing. Gloria Jean's coffee, he says, takes just a few hours to get here from Australia.

But the new boy on the block is impressed with New Zealand's "advanced" coffee culture.

We have, he reckons, "hard core" tastes.

Optimistic as he is, Ewing doesn't expect to be stealing customers from local outlets.

"You can't put a good operator out of business," he says.

Unlike Starbucks, Gloria Jean's won't be venturing into the cafe haven of Ponsonby Rd. "Up there," says Ewing, "there are more idealistic people ... they have hooked into a certain style."

New Zealand's coffee culture does, indeed, have a certain style.

Over the last 20 years we've graduated from afternoon teas that featured - let's take a guess - lamingtons and instant coffee, or gumboot tea.

Now it's brunch with a good coffee: two shots espresso, no sugar thanks.

That seachange can be credited largely to local roasters.

Many in the industry see Robert Harris as the pioneer. He set up a shop in 1972, importing, roasting and grinding the beans.

Harris died in 1979 but his brand, now owned by Cerebos Greggs, continued and dominates the retail roasted coffee market.

Cerebos Greggs says it is the only multinational that still roasts its beans here.

From the mid-80s the boutique roasters boomed. Craig Miller, of Miller's Coffee, was one of the first. Others included Allpress, Atomic, Burton Hollis, Altura, Atlas and Wellington-based L'Affare and Havana.

That explosion took the industry from just a couple of roasters in the late 1970s to around 70 today.

Instant coffee still far outsells roasted, but its growth has slowed compared with fresh coffee.

ACNielsen figures show supermarket sales of fresh roasted coffee reached 882,638kg in the 12 months to the end of April, up from 723,726kg five years ago.

Instant coffee sales hit 2.25 million kg over the same period, compared with 1.9 million five years ago.

Spending on coffee reached more than $100 million - and that's just from supermarkets. About two-thirds of fresh coffee is drunk outside the home, and that's much harder to put a figure on.

John Burton, New Zealand's largest importer of green beans and brother of Burton Hollis' David Burton, estimates 175 million cups would have been drunk outside the home over the last year.

At an average $3 a cup, that's around $525 million a year.

Statistics NZ figures show the amount of coffee beans imported last year was lower than it was a decade earlier, albeit by just 134,000 tonnes, at 6.7 million tonnes.

But multinationals, Burton points out, have taken their roasting overseas in that time.

And the value of current imports has risen by around $6 million over the last 10 years, reflecting a rise in quality beans used for fresh roasting.

The Burton brothers, who set up specialist coffee cafe Columbus in Auckland's High St back in 1995, have followed the industry's evolution with fascination.

John Burton believes the cottage roasting industry was triggered by deregulation of importing in the early 80s.

He says a society that is increasingly intolerant of drink-driving has also contributed as people turn to socialising over a coffee rather than a few beers.

Craig Miller offers another reason: ease of access. You didn't need a tertiary education to get into the coffee business, and people who loved food, wine and coffee - and perhaps wanted a break from a tough career - could start a cafe.

"We haven't come from a structured background," says Miller. "We have created a lot of individual style."

Atomic Coffee Roaster's David Thomas points out New Zealanders have long enjoyed picnics and BBQs, and outdoor cafe dining was a natural extension.

A nation of travellers, we picked up coffee influences from around the world. We then added a special Downunder touch - the silky milk, in deference to the country's agricultural backbone.

Australia, on the other hand, was heavily influenced by its Italian immigrants. In Europe, sugary, thick coffee was popular while Americans loved the flavoured version.

The flat white was invented in either Australian or New Zealand - it depends who you talk to.

New Zealanders quickly tired of the over-fluffed faux glamour of the cappuccino and turned to coffee thickened with well-steamed milk.

"We were looking for the flavour, we enjoyed the flavour," says Burton. "And we weren't afraid to drink [it with] milk."

Burton says the industry has evolved around quality products: "The roasters were coming to me and asking for quality. They were not interested in price and if they hadn't asked for [quality] the industry might have evolved in a different way."

Burton buys his coffee beans from around the world - Papua New Guinea, Colombia, Costa Rica, Guatemala - at prices based on the New York Board of Trade's coffee futures exchange.

He will pay premium for some products, and negotiate others down. He sells the green beans to roasters at around $5 to $8 a kg and they, in turn, wholesale the roasted beans for upwards of $22 a kg.

Each $3 cup sold through the cafes needs around 10 grams of coffee. Add milk, water, the cost of the cup and you're still short of 80c - that kilo of coffee is looking like a big money spinner for the roaster and the cafe.

Burton and the roasters, many of whom have owned or still own cafes, say those simple maths are misleading. Don't forget, they say, the 20 per cent weight loss that takes place during the roasting process. And roasters point to the money they sink into training people to make good coffee.

Thomas - a former partner in Ponsonby Rd's Atomic Cafe - says: "Where it costs you is having to employ baristas, trainers and technical staff ... those are huge overheads."

Rent and wages also chew up a large whack of cafes' incomes.

The roasters and importers are facing pressure from Oxfam, which has highlighted the poverty of some coffee farmers and is pushing for support of its Fair Trade coffee.

Burton says the issue is more about instant coffee, which uses lower grade beans. Anyone selling higher grade coffees can demand more and he argues that the price paid is fair.

Others are keener to engage with Oxfam's campaign. Cerebos Greggs, for example, will bring out a Robert Harris Fair Trade coffee later this year.

Burton sees organics and Fair Trade and decaffeinated becoming more popular in the future, alongside the flavoured coffees.

WHEN IT'S A CUPPA IT'S USUALLY COFFEE

* Seven out of 10 people drink instant coffee at least once a month. Five out of 10 drink fresh. 33 per cent buy coffee from a cafe at least once a week. 20 per cent never do.

Source: February 2004 survey by research company TNS, commissioned by Cerebos Greggs.

* Instant coffee accounts for 26 per cent of all drinks consumed - hot or cold. Fresh coffee: 6 per cent. Tea: 14 per cent.

Source: TNS survey.

* 28 per cent of people drink instant coffee only. 5 per cent drink fresh only. 21 per cent of people don't drink any kind of coffee.

Source: TNS survey.

* Supermarkets sold 882,638kg of fresh coffee - value $23.5 million - in the 12 months to the end of April. They sold 2.25 million kg of instant - value $79.2 million. Annual supermarket sales of fresh and instant were enough to make 448 million cups.

Source: ACNielsen.

* Last year, New Zealand had 5792 cafes and restaurants. In 1997: 4327.

Source: Statistics NZ

* Price of green coffee beans: Around $2.50 a kg. Retail price of roasted beans: $27 to $40 a kg.

* How much coffee does it take to make a cup? About 10g - 27c to 40c worth at retail prices.

* World coffee exports last year: 5.1 million tonnes.

Source: International Coffee Organisation