Coffee in Argentina: A market seeking value added
The coffee market in Argentina is unique. Its singular characteristics make it a sector that offers an interesting business opportunity for new players with room for continued development and consolidation.
On average, Argentines consume a kilo of coffee per year per person, which is equivalent to one cup of coffee every two days. This level of consumption is low compared to the Netherlands, where the Dutch consume almost 2.5 cups a day per person, according to a study by the research firm Euromonitor. However, consumption in Argentina is slowly showing signs of new growth thanks to the help of the various marketing strategies applied by companies in the local market.
In first place, one of the market’s characteristics worth highlighting is that large volumes of roasted ground coffee are sold in the wholesale market, which makes Argentina a net importer of raw material. Brazil is the main supplier. In this case, there are several large companies operating in the local market. They include brands like Bonafide, Cabrales, La Virginia, Nestle, among others. They import raw material and modify it, package it and sell it to supermarkets and other retail outlets.
The second important channel of consumption is generated in bars, coffee shops, hotels, companies, restaurants and diverse meeting points for Argentines, who are known for their sociability. This is the segment with the highest level of value-added. As such, it is a segment worth developing for exporters who plan an income strategy with a finished product to position their brand in Argentina.
Something special occurs in this area, Argentine companies have been able to exploit the channel of bars and coffee shops adding value to coffee and developing an alternative business mode. So much so that there are several retail chain franchises offering alfajores (a traditional South America confection), chocolates, cakes, and other pastries to accompany the coffee and offer consumers a pleasant atmosphere to enjoy their coffee. This business model is practiced by several companies that do not operate only in Argentina. They have also managed to export this concept from other places of the world, mainly to Latin American and European countries. The best-known examples of Argentine coffee store chains that have expanded internationally are Havanna and Café Martínez.
Companies that supply bars, coffee shops, restaurants, hotels, companies, universities, public entities, among others, include El Bohio S.A., La Bolsa de Café S.A., Cabrales S.A., El Continente S. A., Oyambre S.A., Cía. Asturian and Intercafe S. A.. One of the largest is Caxambu, which supplies different types of coffee, tea, sugar and sweeteners to bars, cafes and coffee shops, in Buenos Aires and some important cities in the interior of the country.
It is also important to mention the fairly recent arrival of the mega-chain Starbucks, which has achieved worldwide success in this business segment, thanks to what the company calls “the Starbucks experience,” which they try to sell, as well as coffee, a pleasant and comfortable atmosphere with service from knowledgeable personnel trained as baristas.
The third and final segment for consumption is households. The main competitor is mate, a traditional South American caffeine-rich infused drink. Made from the leaves of yerba mate, it is a hot infusion drunk from a recipient, which could be wooden, a pumpkin gorge or glass sucked through a straw. It is a beverage with a strong national identity throughout the entire country. It is consumed throughout the day, often starting with lunch and then continued all day long. Argentines will often use mate as an excuse to “get together,” which includes getting together to talk, relax and drink mate of course.
All the same, in places like the large cities where the pace of life does not always allow for the consumption of mate, which requires a certain amount of preparation and equipment (the special mate recipient, straw, yerba mate and a thermos of hot water). Coffee, whether a cup in a coffee shop or a cup-to-go is increasingly viewed as a better and more accessible alternative. This is also representing an upward trend in consumption with an interesting projection because consumers appreciate quality coffee throughout the day.
In Argentina, the main companies that sell ground coffee and coffee beans are: La Virginia, Cabrales, Padilla S.A, under its brand La Morenita; Bonafide S.A., under Franja Blanca; J. Llorente S.A., under El Cafetal; Bagley S.A. and Los 5 Hispanos.
In the segment of instant coffees, companies include Nestle S. A., with Dolça and Nescafe brands; General Foods Corporation with Arlistan; and Bessone S. A., with its brand of the same name.
In some segments of Argentine society, coffee and its intake has received some bad press. There are people who believe that consumption in excess (more than one cup per day) leads to sleeplessness, increased anxiety, intensification of heart palpitations and discoloring of teeth, which damages and dampens coffee consumption. For this reason, raising awareness about these health issues is a recurrent challenge and something that Caribbean exporters inevitably need to address in order to demystify certain erroneous myths surrounding coffee consumption.
Meanwhile, the Argentina Chamber of Coffee (CAC) is the entity that brings together importers of coffee beans, ground coffee, toasted coffee and soluble coffee, sweetener, transport companies, coffee machine manufacturers. CAC carries out many actions related to the coffee sector, including statistics, studies and reports.
For Caribbean exporters interested in exploring the opportunities in Argentina, on November 8-10, 2017, at the fair grounds of Technopolis in the city of Buenos Aires, Aliment.AR, (www.expoalimentar.com.ar) a trade show and exposition created for Latin America’s B2B food and beverage sector. In this context, there will also be a business roundtable event that can help Caribbean exporters entering the Argentine market with new food products, such as coffee, among others in the field of food and beverages.
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