Entering the French coffee market

Source: ProFound

In France, supermarkets are the main sales channel for coffee. Supermarkets have a wide variety of coffee products, ranging from low-end to high-end products. The largest supermarkets in France are:

• E. Leclerc
• Carrefour
• Les Mousquetaires
• Système U
• Casino
• Auchan Retail

Low end: Coffees in the low-end segment are mainstream, low-quality and mainly blended coffees. These blends are characterised by high shares of Robusta beans. Besides some mainstream brands, also the lower-quality private label products from supermarkets belong to the low-end segment. In addition, most coffee pads and instant coffee belong to this low-end segment. Coffees in the low end of the market are mainly sold in supermarkets and through service channels, such as offices and universities.

Product and price examples in the low-end segment, based on Carrefour’s retail prices in 2021, include:

	Product		Retail price (€/kg)
Low end	Leroux (Whole beans, 520-gram package)		3.19
Carrefour Classic (Whole beans, 1000-gram package)		4.49
Grand’ Mère Familial (Whole beans, 1000-gram package)		7.45

Mid-range: Mid-range coffees are commercial coffees with a good and consistent quality profile, such as quality espresso. This segment typically consists of blends with a higher proportion of Arabica compared to the low-end segment. The mid-range segment represents a stable coffee market, in which sustainability certifications are important.

Mid-range coffees are often sold in supermarkets and by the food service industry. Premium private label ranges of retailers typically belong to the mid-range segment. Examples of mid-range products and prices, based on Carrefour’s retail prices in 2021, include:

	Product		Retail price (€/kg)
Mid-range	Malongo (Whole bean, 100% Arabica, Fairtrade-certified, 500-gram package)		13.90
Ethiquable, Origin Colombia (Whole bean, 100% Arabica, Organic and SPP-certified, 500-gram package)		15.90
Carrefour Selection, Origin Malawi (Whole bean, 100% Arabica, 200-gram package)		17.45

High and upper ends: High-quality coffee mainly consists of washed Arabicas. These coffees are often single origin and coffees with a special story. The upper end of this segment consists of specialty coffees of excellent quality, often from micro or nano lots that go through processing methods such as naturals and honeys. These are mainly fully traceable and single origin Arabica beans with a cupping score of 85 and above. The high and upper-end segments are a small but growing market.

Sustainability certifications are more uncommon in this segment. This is because sustainability practices are often commonplace among buyers. Long-term contracts between suppliers and buyers characterise the high and upper-end segment, as well as higher prices. In addition, buyer and supplier usually agree on projects for communities and distribution of money to farmers, a common characteristic of certifications aimed at social impact. The high and upper-end segments do see a growth in organic-certified coffees, however.

Coffees from this segment are mainly sold directly by specialty roasters, at their physical and web shops as well as at coffee events. An example of a coffee event in France is the Paris Coffee Festival. An example of a specialised French coffee web shop where you can find high and upper-end coffees is Cofféa. To find examples of French specialty roasters and cafés, refer to the European Coffee Trip website.

Examples of coffees in the high and upper-end market segments include:

	Product		Retail price (€/kg)
High and upper ends	Variety: Heirloom Blend Process: Natural Origin: Ethiopia, Province of Metu, Aba Kika Roaster: Brûlerie MÖKA Cupping score: 86.25 Package size: 250 grams		42.00
Variety: Caturra Process: Natural Origin: Panama, Santa Clara, Chiriqui, Finca Hartmann Roaster: Piha Roastery Cupping score: 87 Package size: 250 grams		49.20
Variety: Java Process: Washed Origin: Honduras, Moises Herrera Variety Garden, Caballero farm Roaster: Belleville Package size: 250 grams		103.60

Value distribution: As the above examples show, end market prices for coffee vary depending on the targeted market segment. Green coffee export prices typically amount to only 5% to 25% of the end-market prices, depending on the coffee quality, the size of the lot and the supplier’s relationship with the buyer. Figure 4 below shows the value distribution of wholesale mainstream coffee. Roasters often end up taking more than 80% of the wholesale coffee price. A coffee farmer takes about 10%.

Prices for specialty coffee may have a reference on the international London and New York market prices but will command differentials. In the specialty segment, the shares of added value for farmers tend to be much higher than in the mainstream coffee market as well.

The Specialty Coffee Association provides an illustrative example of how exporters should look into their value chain, in terms of different costs and margins. Also, refer to the Specialty Coffee Transaction Guide to get an idea of current market prices for specialty coffee. This guide quantifies anonymous contract and pricing data of importers and roasters, based on quality, quantity, and origin of purchased coffee.

Segmentation by type of consumption: In addition to the market segmentation by quality, the French coffee market can also be segmented into in-home and out-of-home consumption:

• In-home consumption: In most European countries, including France, retail sales for in-home consumption account for most of the overall market. Retailers accounted for 64% of total coffee sales in France in 2019. Nestlé, Jacob Douwe Egberts and Lavazza are the largest players on the French mainstream market for in-home coffee consumption.
• Out-of-home consumption: In France, there is a strong culture of eating and drinking out-of-home. In 2019, out-of-home consumption accounted for 36% of coffee sales. The out-of-home consumption segment for coffees mainly consisted of hotels, coffee bars and restaurants. Major players in this segment include Colombus Café & Co, Mon Café Italien and Café Richard.

Figure 5: French coffee market segmentation by in-home and out-of-home consumption

Source: ProFound

Through what channels does coffee reach the end market?

As an exporter, you can use different channels to bring your coffee onto the French market. The way of entering the market will vary according to the quality of your coffee and your supplying capacity. Bear in mind that shortened supply chains are a general trend in Europe. This means that retailers and coffee roasting companies are increasingly sourcing their green coffee directly. The figure below shows the most important market entry channels for your green coffee beans in France.

Figure 6: Market channels for green coffee in France

Source: ProFound

Importers

Importers play a vital role in the coffee market, functioning as supply chain managers. They maintain wide portfolios from various origins, pre-finance operations, perform quality control, manage price fluctuations and establish contact between producers and roasters. In most cases, importers have long-standing relationships with their suppliers and customers. In general, importers either sell the green beans to roasting companies in France or re-export them to other European roasters and/or traders.

Large-scale importers usually have minimum volume requirements starting at around 10 containers, covering a wide range of qualities, varieties and certifications. At the same time, they provide strong support regarding logistics, marketing and financial operations.

Imports of green coffee beans mainly enter France via the port of Le Havre, where most importers are located. Bordeaux is another important port for coffee imports. Examples of large-scale importers in France are Maison P Jobin & Cie (part of the Neumann Kaffee Gruppe), Olivier Langlois (part of Group Sopex), Volcafe France (part of ED&F Man) and Touton S.A. These supply coffee to large roasters and mainstream retailers in Europe.

Specialised importers are able to buy small and mid-sized volumes of high-quality and single origin coffees, from microlots to full container loads (FCL). An example of a specialised coffee importer in France is BELCO. France also has importers who specialise in ethical products, including coffee. Normally these focus on specific organic and fair trade markets. Examples of specialised French importers are Alter Eco and Ethiquable.

For whom is this an interesting entry channel? The most interesting channel for you will depend on the quality of your coffee and your supply capacity in terms of volume. If you are an exporter of green coffee beans and you can offer high volumes (10 containers or more), you should look into entering the French market through large importing companies. These companies usually have agents or representative offices in producing countries, which can be your first point of contact.

Specialised traders can be interesting if you have organic and/or fair trade-certified coffees, as well as evidence of high cupping scores of at least 80 or higher. Note that some buyers may require scores higher than 85, plus high transparency and traceability. Keep in mind that many specialised importers prefer to work directly with producers or cooperatives.

Large roasters

Most large roasters buy their own coffee beans from the country of origin, although they might also source through importers. Roasters usually perform analysis and cup testing to check the evenness of the roast and to identify any defects that can occur in post-harvest processes, such as fermentation, drying and storage. Large roasters usually blend different qualities of green coffees to safeguard quality consistency. The final product is distributed to retailers and the food service industry.

Roasters can operate under their own brands and/or private label. Large coffee roasters in France include Nestlé France, Jacobs Douwe Egberts, Lavazza, Segafredo Zanetti, Meo, Darboven and UCC Coffee France.

For whom is this an interesting entry channel? Supplying directly to large-scale roasters is only interesting if you are able to supply large volumes at consistent quality. If you work with bulk coffees, discuss minimum quality and other requirements, such as certification, with your potential buyer.

Medium-sized and small roasters

Although there is a growing number of small roasters which import green coffee directly from origin, the largest share of smaller roasters continues to buy their coffee via importers. This is the case as not all roasters can take on the additional responsibilities necessary to import directly from source. Importers help roasters with financial services, quality control and logistics. Nevertheless, small roasters often maintain a direct connection with their producers, as they need detailed information for storytelling to market the coffee to their clients (brands or consumers).

Small roasters are often specialised in single origins and the finest specialty coffees. Examples of small roasters in France include: Kawa Coffee, Verlet Paris, Oven Heaven, Placid Roasters and Substance Café. Refer to the website of European Coffee Trip to find more specialty coffee roasters in France.

Several medium-sized roasters in France specialise in ethical products, including coffee. These roasters usually focus on specific organic and fair trade markets. Examples of specialised French roasters are Lobodis, Maison Merling, Malongo and SATI Cafés.

For whom is this an interesting entry channel? Supplying to small roasters is interesting for producers and exporters that have high-quality coffees, micro lots, can guarantee traceability, and who are willing to engage in long-term partnerships. If you have very high-quality coffees and are currently working through an importer, for example, it would be interesting to explore direct trade possibilities to see whether you could connect directly with roasters. This requires you to have the financial means and technical know-how to organise export activities.

Supplying to medium-sized roasters may also be an interesting alternative if you have a consistent and reliable quality and volume. Most medium-sized roasters will also require one or more certifications for sustainable production. Be aware that many smaller roasters may not be importers, but that it is nevertheless important to interest them in your coffee. A logistic partner (importer) can then be found to ship your coffee to destination.

Intermediaries/agents

Agents act as intermediaries between you, coffee importers and roasters. These are actors with vast market knowledge and can help you assess and select interesting buyers. Some agents are independent, while others are hired to make purchases on behalf of a company. An example of an agent in Europe includes Eugen Atté (Germany).

For whom is this an interesting entry channel? If you have limited experience exporting to European countries, agents can play a very important role. Agents are also interesting if you have limited quantities of coffee or if you lack financial and logistical resources to carry out trade activities. Working with an agent is also useful if you need a trusted and reputable partner within the coffee sector. Be prepared to pay an extra commission for their work.

3. What competition do you face on the French coffee market?

In general, competition is higher for mainstream coffee with low added value. This segment is mainly dominated by major suppliers and cooperatives which are able to deliver large quantities so they can compete on price. It is difficult for small and medium-sized companies, for example those exporting a few containers per year, to compete in this segment.

In the specialty coffee market volumes are smaller, and the focus is more on quality, origin and sustainability. However, as demanded volumes are smaller, and more and more producers focus on this segment, competition can also be quite high. There are several competitions to identify the highest quality coffees produced worldwide, for instance the Cup of Excellence. These competitions might an interesting entry point for this segment but entering this segment may require large investments.

New entrants to the market will face competition from already successful coffee exporters, especially due to their already established long-term relationships with buyers. Entering the market as a newcomer requires you to have extensive knowledge of your product assortment, stable quality and volumes, and good communication skills to start building your own new relationships with buyers.  If the potential buyer is not yet operating in your country of origin, it might be more difficult to establish the first contact. You may be required to supply more extensive information about, amongst others, the producing regions, the producing communities and traceability.

Brazil: the world’s largest coffee producer

With almost 56,000 tonnes of green coffee, Brazil was the largest direct supplier of green coffee to France in 2020. Between 2016 and 2020, Brazilian supplies to France increased at an average annual growth rate of 2.1%.

Brazil is the world’s largest coffee producer, with production volumes amounting to 3.63 million tonnes between July 2019 and June 2020. Brazil produces both Arabica (75%) and Robusta (25%), but about 80% of exports are Arabica.

Brazil’s coffee-producing areas are relatively flat, which has intensified the use of mechanical pickers in the industry. This has drastically reduced labour costs in Brazil’s coffee production, but also resulted in lower quality, as machines do not distinguish between ripe and unripe cherries. Coffee prices in Brazil went down, especially in relation to other coffee producing countries. Brazil mostly produces natural and pulped natural coffees. Low-grade Brazilian Arabica is mostly used in blends.

Although the country is mainly known for exporting large volumes of standard quality, the country also has a strong reputation as a producer of specialty coffees. This is in part thanks to the Brazil Specialty Coffee Association, which aims to elevate the quality standards and enhance value in the production and marketing of Brazilian coffees. Examples of successful exporters of specialty coffees in Brazil are Burgeon and Bourbon Specialty Coffees. Large Brazilian exporter Costa Café has also started exporting specialty coffees in addition to its regular mainstream coffee exports.

Vietnam: the world’s largest Robusta producer

Vietnam is the world’s second-largest coffee producer, with production volumes reaching 1.878 million tonnes between October 2019 and September 2020. Approximately 96% of Vietnamese coffee production consisted of Robusta coffees. Direct imports to France amounted to almost 30,000 tonnes in 2020, about 13% of total French imports. French green coffee imports from Vietnam decreased at an average annual rate of -9.2% between 2016 and 2020.

In recent years, Vietnam’s Robusta exports have encountered strong competition from the Brazilian Conilon and Robusta beans from other countries, leading to slightly lower exports. Vietnam’s coffee production is strongly focused on creating large volumes of standard quality coffees, mostly directed to the instant coffee market. Examples of large Vietnamese coffee exporter groups include Simexco Daklak, Intimex Group, Tin Nghia Corporation and Mascopex.

It is likely that trade between the European Union and Vietnam will increase again in the near future, as the European Union-Vietnam Free Trade Agreement (EVFTA) entered into force in August 2020. This removed tariffs on all green, roasted and processed coffee from Vietnam.

To help boost increased coffee trade through the EVFTA, the Vietnamese government requested the country’s coffee industry players to apply advanced cultivation, processing and storage technologies, to increasingly meet buyer requirements from European importers.

In addition, government efforts have been more and more directed towards improving the quality of coffee beans. As there is an increasing interest in high-quality coffees on consumer markets, Vietnam’s specialty coffee industry is slowly developing. An example of a successful exporter of Vietnamese specialty coffee is Blue Son La.

As climate change poses a serious threat to the Vietnamese coffee sector, the country is also working hard to achieve greater coffee sustainability. In collaboration with many international actors, such as Bioversity and CIAT and IDH, private and public actors in Vietnam increasingly focus on making coffee production in the country a sustainable practice and source of income for smallholder farmers.

Honduras: large supplier of organic coffee

Honduras is the world’s sixth-largest coffee producer at 324,000 tonnes of Arabica coffee between October 2019 and September 2020. Honduras was the third-largest direct green coffee supplier to France with 22,000 tonnes in 2020. Between 2016 and 2020, supplies by Honduras increased at an average annual growth rate of 4.0%.

The Honduran Coffee Institute IHCAFE has been promoting the production of value-added coffees, either through certification or by actively improving coffee quality. The country has grouped coffee production and quality specifications into six different regions according to differences in microclimates and soil composition. Honduran exports of specialty organic coffees increased by 30% between 2016 and 2017 because of these efforts.

In addition to the growing reputation as a high-quality coffee supplier, a relatively large share of Honduras’ coffee supplies is organic. In 2019, about 24,000 hectares were dedicated to organic coffee farming in Honduras, approximately 5.4% of the total Honduran coffee area. This relatively low share underlines the existing growth potential of Honduras as an organic producer. Nevertheless, with 37,000 tonnes or 26% of European organic coffee imports in 2019, Honduras was already the second-largest supplier of organic coffees to the EU, only after Peru.

Examples of successful exporters in Honduras are Asoprosan, Cafico, Capiro Coffee Export and Aruco.

Peru: large supplier of sustainably produced coffees

In 2020, France imported about 12,000 tonnes of green coffee from Peru, accounting for 5.3% of total French imports. Between 2016 and 2020, green coffee imports by French increased at an average annual growth rate of 6.2%.

Peru is a large supplier of organic coffee and ranked as the world’s second-largest organic coffee producer in 2019, only after Ethiopia. The organic coffee area in Peru reached 103,000 hectares, which is about 23% of the total coffee area in the country. In 2019, Peru was the largest organic coffee supplier to the EU, with organic green coffee supplies reaching almost 46,000 tonnes. The production of organic coffees is actively promoted by local government agencies and non-governmental organisations (NGOs), which is done mainly as a strategy to increase farmers’ income.

The government of Peru has prioritised the international promotion of its coffees. Key focus areas of promotion are its unique origin, the sustainability of production and the high quality of coffees. Peru is regarded as the fourth-largest producer of coffees with sustainability certification, including Rainforest Alliance/UTZ and Fairtrade. Promotion is done by the Peruvian export promotion agency PromPeru. As part of the international promotion strategy, Peru recently introduced its own national coffee brand to the international market: Cafés del Peru.

Examples of Peruvian exporters reaching the European market include EcoAndino, CenfroCafé and Coop Norandino.

Ethiopia: producer of highly valued organic Arabica coffees

Ethiopia is the fifth-largest coffee producer in the world, with Arabica production volumes amounting to 447,000 tonnes between October 2019 and September 2020. In 2020, Ethiopia supplied 10,000 tonnes of green coffee to France.

Ethiopia is the world’s largest organic coffee producer with 160,000 hectares of organic coffee area in 2019, over 23% of the country’s total coffee production area. The Ethiopian government highly encourages the sector to adopt more sustainable growing techniques and to focus on producing high-quality Arabicas. Ethiopian producers rely on the uniqueness of Ethiopia as an origin, as it is considered by many to be the birthplace of coffee. Ethiopia’s coffees have high potential in the specialty market.

Almost all coffee in Ethiopia is traded on the Ethiopian Commodities Exchange (ECX). However, since 2017 exporters are allowed to sell directly to international buyers, due to recurring issues related to the lack of traceability of farm-specific or organic-certified coffees sold through ECX. The enactment of the Coffee sector reform in 2018/19 has addressed traceability and other main challenges facing the sector, such as improved services by ECX, and has strengthened research and development to breed high-producing coffee varieties.

Examples of Ethiopian coffee exporters include BunAroma, EthioGabana and Kerchanshe.

Colombia: the largest supplier of washed Arabicas

Colombia is the world’s third-largest coffee producer, with production volumes amounting to 846,000 tonnes between October 2019 and September 2020. France imported 9,100 tonnes of green coffee directly from Colombia in 2020. French imports from Colombia decreased slightly with a year-to-year decline of -1.4% between 2016 and 2020.

Colombia is the world’s largest producer of washed Arabica. The Colombian Coffee Growers Federation strategically promotes and markets Colombian coffee, solidifying the country’s established image and brand for high-quality coffees. The Café de Colombia trademark is a registered protected geographical indication (PGI) in Europe, which is unique among coffee-producing countries.

Colombia is an important producer of certified coffees worldwide. Colombia is the second-largest producer of Rainforest Alliance-certified coffees and the largest producer of Fairtrade-certified coffees. The wide availability of certified coffees has allowed green coffee exporters to access various markets and segments in Europe. Examples of successful Colombian cooperatives or private organisations exporting coffee to the international market include InConexus, Red Ecolsierra, La Maseta and Cadefihuila.

ProFound – Advisers In Development carried out this study on behalf of CBI.

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