02-14-2011 Coffee - in - Spain

Coffee in Spain
Euromonitor International March 2010
Coffee
Spain
List of Contents and Tables

HOT DRINKS IN SPAIN : MARKET INSIGHT.......................................................................................1
Executive Summary ................................................................................................................................................ 1 Slight Recovery in 2009 ............................................................................................................................................ 1 On-trade Consumption Habits Change Due To the Current Economic Situation..................................................... 1 Private Label Sales Increase..................................................................................................................................... 1 Market Polarisation .................................................................................................................................................. 1 Slight Decrease Over the Forecast Period................................................................................................................ 1 Key Trends and Developments .............................................................................................................................. 1 Health and Wellness Driving Innovation .................................................................................................................. 2 Recession Changes Consumer Habits in the On-trade Channel ............................................................................... 3 Fair Trade Blossoming in Spain ............................................................................................................................... 3 Pod and Capsules Revolution ................................................................................................................................... 4 Market Polarisation .................................................................................................................................................. 5 Market Data ............................................................................................................................................................ 6 Table 1 Retail Vs Foodservice Sales of Hot Drinks: % Volume Breakdown 20042009................................................................................................................................... 6 Table 2 Retail Vs Foodservice Sales of Hot Drinks: % Volume Growth 2004-2009 ..................... 7 Table 3 Retail Sales of Hot Drinks by Sector: Volume 2004-2009 ................................................ 7 Table 4 Retail Sales of Hot Drinks by Sector: Value 2004-2009 ................................................... 7 Table 5 Retail Sales of Hot Drinks by Sector: % Volume Growth 2004-2009............................... 7 Table 6 Retail Sales of Hot Drinks by Sector: % Value Growth 2004-2009 .................................. 7 Table 7 Foodservice Sales of Hot Drinks by Sector: Volume 2004-2009 ...................................... 8 Table 8 Foodservice Sales of Hot Drinks by Sector: % Volume Growth 2004-2009..................... 8 Table 9 Total Sales of Hot Drinks by Sector: Total Volume 2004-2009........................................ 8 Table 10 Total Sales of Hot Drinks by Sector: % Total Volume Growth 2004-2009....................... 8 Table 11 Hot Drinks Company Shares by Value 2005-2009............................................................ 8 Table 12 Hot Drinks Brand Shares by Value 2006-2009 ................................................................. 9 Table 13 Penetration of Private Label by Sector 2005-2009 ............................................................ 9 Table 14 Sales of Hot Drinks by Distribution Format: % Analysis 2004-2009.............................. 10 Table 15 Sales of Hot Drinks by Sector and Distribution Format: % Analysis 2009 ..................... 10 Table 16 Forecast Retail Vs Foodservice Sales of Hot Drinks: % Volume Breakdown 2009-2014........................................................................................................................ 10 Table 17 Forecast Retail Vs Foodservice Sales of Hot Drinks: % Volume Growth 2009-2014........................................................................................................................ 11 Table 18 Forecast Retail Sales of Hot Drinks by Sector: Volume 2009-2014................................ 11 Table 19 Forecast Retail Sales of Hot Drinks by Sector: Value 2009-2014 ................................... 11 Table 20 Forecast Retail Sales of Hot Drinks by Sector: % Volume Growth 2009-2014 .............. 11 Table 21 Forecast Retail Sales of Hot Drinks by Sector: % Value Growth 2009-2014.................. 11 Table 22 Forecast Foodservice Sales of Hot Drinks by Sector: Volume 2009-2014...................... 12 Table 23 Forecast Foodservice Sales of Hot Drinks by Sector: % Volume Growth 2009-2014........................................................................................................................ 12 Table 24 Forecast Total Sales of Hot Drinks by Sector: Total Volume 2009-2014........................ 12 Table 25 Forecast Total Sales of Hot Drinks by Sector: % Total Volume Growth 2009-2014........................................................................................................................ 12 Appendix................................................................................................................................................................ 12 Production/import/export Data............................................................................................................................... 12
Euromonitor International
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Table 26
Imports/Exports of Coffee by category 2003-2008 ......................................................... 13
Definitions.............................................................................................................................................................. 13 Summary 1 Research Sources............................................................................................................. 13
LOCAL COMPANY PROFILES - SPAIN .............................................................................................15

Caf Candelas Sl ................................................................................................................................................... 15 Strategic Direction.................................................................................................................................................. 15 Key Facts ................................................................................................................................................................ 15 Summary 2 Cafs Candelas SL: Key Facts......................................................................................... 15 Summary 3 Cafs Candelas SL: Operational Indicators ..................................................................... 15 Company Background............................................................................................................................................. 15 Production .............................................................................................................................................................. 16 Summary 4 Cafs Candelas SL: Production Statistics 2008 ............................................................... 16 Competitive Positioning.......................................................................................................................................... 16 Cafento Norte Sl.................................................................................................................................................... 16 Strategic Direction.................................................................................................................................................. 16 Key Facts ................................................................................................................................................................ 16 Summary 5 Cafento Norte SL: Key Facts........................................................................................... 16 Summary 6 Cafento Norte SL: Operational Indicators ....................................................................... 17 Company Background............................................................................................................................................. 17 Competitive Positioning.......................................................................................................................................... 17 Cafs Baqu Sl....................................................................................................................................................... 17 Strategic Direction.................................................................................................................................................. 17 Key Facts ................................................................................................................................................................ 17 Summary 7 Cafs Baqu SL: Key Facts ............................................................................................. 17 Summary 8 Cafs Baqu SL: Operational Indicators.......................................................................... 18 Company Background............................................................................................................................................. 18 Production .............................................................................................................................................................. 18 Competitive Positioning.......................................................................................................................................... 18 Kraft Foods Iberia Sl ............................................................................................................................................ 18 Strategic Direction.................................................................................................................................................. 18 Key Facts ................................................................................................................................................................ 19 Summary 9 Kraft Foods Iberia SL: Key Facts .................................................................................... 19 Summary 10 Kraft Foods Iberia SL: Operational Indicators ................................................................ 19 Company Background............................................................................................................................................. 19 Production .............................................................................................................................................................. 20 Summary 11 Kraft Foods Iberia SL: Production Statistics 2008 .......................................................... 20 Competitive Positioning.......................................................................................................................................... 20 Summary 12 Kraft Foods Iberia SL: Competitive Position 2009.......................................................... 20 Nestl Espaa SA (Grupo).................................................................................................................................... 20 Strategic Direction.................................................................................................................................................. 20 Key Facts ................................................................................................................................................................ 21 Summary 13 Nestl Espaa SA (Grupo): Key Facts............................................................................. 21 Summary 14 Nestl Espaa SA (Grupo): Operational Indicators ......................................................... 21 Company Background............................................................................................................................................. 21 Production .............................................................................................................................................................. 21 Competitive Positioning.......................................................................................................................................... 22 Summary 15 Nestl Espaa SA: Competitive Position 2009................................................................ 22
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Nutrexpa SA .......................................................................................................................................................... 23 Strategic Direction.................................................................................................................................................. 23 Key Facts ................................................................................................................................................................ 23 Summary 16 Nutrexpa SA: Key Facts .................................................................................................. 23 Summary 17 Nutrexpa SA: Operational Indicators .............................................................................. 23 Company Background............................................................................................................................................. 23 Production .............................................................................................................................................................. 24 Summary 18 Nutrexpa SA: Production Statistics 2008 ........................................................................ 24 Competitive Positioning.......................................................................................................................................... 24 Summary 19 Nutrexpa SA: Competitive Position 2009........................................................................ 25 Sara Lee Southern Europe Sl............................................................................................................................... 25 Strategic Direction.................................................................................................................................................. 25 Key Facts ................................................................................................................................................................ 25 Summary 20 Sara Lee Southern Europe SL: Key Facts........................................................................ 25 Summary 21 Sara Lee Southern Europe SL: Operational Indicators .................................................... 26 Company Background............................................................................................................................................. 26 Production .............................................................................................................................................................. 26 Summary 22 Sara Lee Southern Europe SL: Production Statistics 2008 .............................................. 26 Competitive Positioning.......................................................................................................................................... 26 Summary 23 Sara Lee Southern Europe SL: Competitive Position 2009 ............................................. 27 Seda Solubles Sl..................................................................................................................................................... 27 Strategic Direction.................................................................................................................................................. 27 Key Facts ................................................................................................................................................................ 27 Summary 24 SEDA Solubles SL: Key Facts ........................................................................................ 28 Summary 25 SEDA Solubles SL: Operational Indicators..................................................................... 28 Company Background............................................................................................................................................. 28 Production .............................................................................................................................................................. 28 Competitive Positioning.......................................................................................................................................... 29
COFFEE IN SPAIN ...............................................................................................................................30

Headlines ............................................................................................................................................................... 30 Trends .................................................................................................................................................................... 30 Competitive Landscape ........................................................................................................................................ 30 Prospects ................................................................................................................................................................ 31 Category Data ....................................................................................................................................................... 32 Table 27 Retail Sales of Coffee by Type: Volume 2004-2009 ....................................................... 32 Table 28 Retail Sales of Coffee by Type: Value 2004-2009 .......................................................... 32 Table 29 Retail Sales of Coffee by Type: % Volume Growth 2004-2009...................................... 33 Table 30 Retail Sales of Coffee by Type: % Value Growth 2004-2009 ......................................... 33 Table 31 Standard Vs Coffee Pods 2004-2009............................................................................... 33 Table 32 Coffee Company Shares 2005-2009 ................................................................................ 33 Table 33 Coffee Brand Shares 2006-2009...................................................................................... 34 Table 34 Forecast Retail Sales of Coffee by Type: Volume 2009-2014......................................... 34 Table 35 Forecast Retail Sales of Coffee by Type: Value 2009-2014............................................ 34 Table 36 Forecast Retail Sales of Coffee by Type: % Volume Growth 2009-2014 ....................... 34 Table 37 Forecast Retail Sales of Coffee by Type: % Value Growth 2009-2014........................... 35 Table 38 Forecast Standard Vs Coffee Pods 2009-2014 ................................................................ 35 Table 39 Coffee Machine Sales: 2003-2008................................................................................... 35
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HOT DRINKS IN SPAIN : MARKET INSIGHT

EXECUTIVE SUMMARY
Slight Recovery in 2009
Despite the depth of the economic crisis, the Spanish hot drinks market grew in 2009 both through the on-trade and off-trade channels, propelled by increasing innovation in terms of health and wellness and mostly as a result of a very good performance within the on-trade channel after years of declining figures through HORECA retailers. Spanish consumers turned to hot drinks both at home and out of the home as a result of their low average unit price compared to alternatives, especially within the on-trade channel.
On-trade Consumption Habits Change Due To the Current Economic Situation

The financial crisis has changed Spaniards consumption habits, particularly through the on-trade channel. Despite the crisis, people are continuing to consume through the on-trade channel but have shifted their purchasing habits towards lower priced alternatives, benefiting cheap on-trade outlets such as fast food restaurants, buffets or traditional cafeterias rather than trendy restaurants. This benefited hot drinks, in particular coffee, which represents a good alternative to more expensive choices such as alcoholic drinks or even food, driving growth in on-trade coffee consumption in contrast with the decreases seen earlier in the review period. This was also a consequence of the deeply rooted tradition of on-trade consumption of food and drink among Spaniards, being quite resilient despite the crisis.
Private Label Sales Increase

Private label has seen a rise in share due to lower average prices and the current economic situation, which is characterised by limited disposable incomes and a strong contraction of private consumption. Private label products provide reasonable quality, low price and high availability, and these are the reasons for their growing popularity. The strategies of retailers, such as Mercadonas decision to remove leading brands from its shelves, benefited sales of private label further.
Market Polarisation
Hot drinks are being increasingly polarised. Consumers demand both no-frills products with low prices, as well as high-end products which include sophisticated value-added, luxury and premium offers. Hybrid consumers jump and oscillate from low prices to premium and luxury, consuming the premium products and services that they really want. It is for this reason that the review period saw many new product developments and the launch of value-added products (such as coffee pod systems or exotic and new flavoured teas) are taking place in the hot drinks market, while at the same time private label and economy brands are becoming more successful than in previous years. Both trends are occurring at the same time, while it is often the case that they are being driven by the same consumers, alternating between one and another.
Slight Decrease Over the Forecast Period

Over the forecast period hot drinks are expected to decrease slightly in volume terms. During the two first years, consumers are expected to continue increasing their hot drinks intake as they are seen as healthy and cheap drinks options, a welcome attribute in the current economic situation. After that, a slight contraction of demand is likely to take place as a result of the expected progressive upgrading of consumer preferences in favour of more expensive lines and top quality products. Unit price will be determined by two factors. In the first part of the forecast period, a decrease of unit price will take place, due to the increasing popularity of private label and economy brands with lower average unit prices. During the second part of the forecast period new launches of healthy and value-added products with higher unit prices and the switching of consumers from economy brands to higher quality and higher priced brands will see unit prices recover and increase gradually.
KEY TRENDS AND DEVELOPMENTS

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Health and Wellness Driving Innovation

During the review period, Spanish consumers have become more conscious about their health and increasingly concerned about beauty and physical appearance. People practice more sport, and society as a whole is more conscious of fitness, wellness and healthy lifestyles; consumers are searching for both a more beautiful image and a healthy lifestyle. According to Ipsos-Eco, around 20% of the Spanish population goes to the gym regularly, and this share is increasing. Further evidence of this trend is the growing popularity of Naturhouse (a Spanish company dedicated to diet reeducation), which has 1,659 establishments, and is expected to reach 2,000 in 2010, enjoying a very good image among Spaniards. Moreover, Spain is the leading European country in terms of the number of plastic surgery procedures undertaken annually, according to SECPRE (Sociedad Espaola de Ciruga Plstica, Reparadora y Esttica), illustrating how important physical appearance is becoming to Spanish consumers. Current Impact As a result of these concerns about health and beauty, demand for decaffeinated products and those which contain anti-oxidants is increasing, while a preference for less damaging ingredients and healthy formulations is growing. Coffee is perceived by consumers to be a natural product, with a high anti-oxidant content; new roasting methods are being developed to better preserve these properties, reassuring consumers about the associated benefits. Tea (in particular green tea) is also considered to have a very high anti-oxidant content, while fruit/herbal teas are seen to possess natural benefits (aiding relaxation, skin care, etc.), plus consumers (particularly women) tend to use them as healthy elements in diet programmes. As a consequence, leading manufacturers have been launching new products in line with this trend, such as Nestl SAs launch of Bonka Antiox (both in standard and decaffeinated ground coffee versions), while Industrias del Caf del Norte SA launched a decaffeinated fresh ground coffee under the Fortaleza brand in April 2009, with extracts of lime tea and lemon balm, called Descafeinado con Tila y Melisa. These new product launches are the result of substantial efforts in terms of innovation made by players to satisfy healthconscious consumers demand for good quality and healthy new products. Outlook According to AEP (Asociacin Espaola de Pedriatra) Spain is ranked second in Europe (behind Malta) in terms of the number of children suffering from obesity. Moreover, 22% of Spanish children have high levels of cholesterol in their blood, despite concerns among consumers and health campaigns promoting healthy lifestyles, including the NAOS strategy (awareness campaign focused on how important a healthy breakfast is for a correct nourishment), heavily promoted by the Spanish authorities. These facts will place even more pressure on the government to pay close attention to the health issue in the long term and make the population aware of the importance of a balanced diet, putting plans and awareness campaigns into motion (such as that carried out by the Spanish Ministry of Health, which in 2009 promoted nutrition workshops and healthy breakfast habits in many Spanish schools). These new habits are expected to continue to be put into practice over the forecast period. In addition, parents are expected to take a greater interest in their childrens diets and eating habits, transferring to them their healthconscious consumption preferences. Future Impact Hot drinks manufacturers are expected to continue to stress the important health benefits of coffee, tea and chocolate-based flavoured powder drinks during the forecast period.
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Tea will benefit from the health and wellness trend, growing at a CAGR of 4% in total volume terms over the forecast period. Green tea and fruit/herbal tea will post strong performances over the forecast period, growing at CAGRs of 7% and 3% respectively in off-trade volume terms. Demand for multi-infusions (functional teasblending will continue to grow due to their functionality and increasing variety of flavours, mixes and formats. Coffee will continue to be consumed mainly for its stimulant effect, however many consumers will switch preferences from coffee to tea or, at least, will alternate them as a means to compensate for the stimulating effect and downsides of coffee. Off-trade sales of coffee are expected to decline slightly, at an annual rate of 0.4% in total volume terms over the forecast period. Players will seek to limit the decline by adapting instant speciality coffee lines such as cappuccino or Viennese coffee to low calorie instants, to fit with consumer concerns about health and wellness.
Recession Changes Consumer Habits in the On-trade Channel

Despite the strength of the economic crisis, Spaniards appear quite reluctant to cut down on socialising. Being forced to cut back on non-essential expenditure, they instead managed to downgrade in terms of the type of products consumed and also the type of outlet visited. Hence, cheaper outlets (fast food chains, small cafeterias, and local bars) benefited to the detriment of restaurants, clubs, pubs and trendy outlets. In terms of products typically consumed, consumers opted for cheaper choices, benefiting sales of coffee and tea and eroding sales of food, and in particular alcoholic drinks in the on-trade channel. These consumer strategies to deal with recession led into an increase in sales of hot drinks especially through bars and specialist coffee shops. Current Impact In 2009, coffee and tea sales increased by 2% and 3% respectively in volume terms through the on-trade channel, in the case of coffee a reversal of the declines seen earlier in the review period. While tea consumption is growing from a much lower base, coffee, especially in the on-trade, can be considered to have reached maturity. Still, as a consequence of the economic crisis and limited spending power, consumers have changed their consumption habits in on-trade outlets, favouring cheap products and eschewing alcoholic drinks and food options. Thus tea and particularly coffee, being cheap products widely available in every single bar, were strong beneficiaries of the economic downturn, as Spanish consumers opted for more frugal out-of-home social activities throughout 2009. At company level it is important to highlight the deal between Sara Lee Southern Europe SL, the NBO for the coffee brand Marcilla, and Mahou SA (a leading Spanish beer company). Marcilla will benefit from the use of the extensive Mahou distribution network to HORECA outlets from 2010 onwards, ensuring the reach of its fresh coffee beans throughout Spain. Outlook As soon as consumers start to return to pre-crisis confidence levels, it is expected that they will revert to their previous habits, and in terms of out-of-home expenditure patterns, higher priced options such as alcoholic drinks and food will see growth to the detriment of cheap alternatives such as coffee. As a result, sales of hot drinks as a whole through the on-trade channel are expected to remain flat in volume terms over the forecast period, recording declines again during 2013 and 2014, according to Euromonitor International estimates. Future Impact Coffee consumption is a deep-rooted habit in the country. This fact will help to sustain coffee sales, which are expected to reach 70,870 tonnes in 2012 in the on-trade channel, recording positive growth rates during the first three years of the forecast period before starting to decline again at the end of the forecast period, as soon as the Spanish economy starts to grow again and consumer confidence levels start to recover. On-trade volume sales of tea, on the other side, should continue to see growth, driven by a higher penetration of these products in the offtrade.
Fair Trade Blossoming in Spain
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Spanish consumers are becoming increasingly concerned about ethical trade and sustainability. Demand for fair trade products increased by 40% in Spain in 2009 according to data from the Fairtrade organisation. This fact indicates that increasing numbers of consumers want to be sure about the wider social impact of their purchases. Worldwide, some fair trade products such as coffee or tea have increased their sales notably (by 112% and 14% respectively) from 2007 to 2008. These sales have benefited more than 1.5 million producers and workers, including 31 Spanish enterprises, according to the same source. This appeal for ethical products has also been evident across many other fast moving consumer goods categories, such as fruit/vegetable juice or chocolate confectionery. Current Impact Companies are making significant efforts to adopt social and ethical concerns, while consumers are paying more attention to corporate practices. For example, Starbucks Corp has announced that from March 2010 all coffee served at its establishments will have the Fairtrade certification. The company was the largest single purchaser of fair trade coffee in 2009, and in September launched a new fresh coffee beans line called Estima, which carries the Fairtrade hallmark. In Spain, almost all major players in the coffee category make some reference either to fair trade or to sustainable development. For example, Kraft Foods Iberia SL launched IN 2007 two varieties of coffee: Brazil and Colombia, which were certified by the NGO Rainforest Alliance in the same year. The company has also promised to increase current purchases of cocoa beans from Rainforest Alliance Certified farms, to reach 30,000 tonnes by the end of 2012. Outlook In the difficult economic situation, consumers have not forgotten about the importance they place upon fair trade, and have continued to opt for certified products. According to Fairtrade research, fair trade has a 15% natural share limit, corresponding to the concerned and responsible consumers rate, which while minor would allow for further growth. Considering this potential, and the limited share currently seen in the Spanish market, it is expected that fair trade will grow further over the forecast period. UTZ certification is one of the main coffee certification programs in the world focused on achieve distributional chains which provide sustainable farming goods fulfilling all growth needs and expectatives of farmers, agrifood industries and consumers equally. At a global level, Sara Lee Southern Europe SL announced in February 2010 its intention to sell more than 40,000 tonnes of coffee under UTZ certification an increase of 33% in volume terms compared with the sales level registered in 2009. Future Impact The trend of fair trade is important within hot drinks. Cocoa, coffee and tea are products imported mainly from developing countries and this is the reason why the demand for certified products is much higher than for products within other markets. The impact of this trend will continue to be felt into the forecast period. Since the end of 2008, for example, Socit cooprative ETHIQUABLE (the French cooperative specialised in fair trade) has offered the line Sabor tico in Spain, comprising more than 30 different certified products, including coffee. Other examples are Germn de Erausquin SA, Tupinamba SA and Azkoyen SA. Major players are expected to continue creating their own brands with ethical production positioning in order to become more involved in the ethical consumption trend, due to the increasing demand among Spanish consumers.
Pod and Capsules Revolution

According to INE (Instituto Nacional de Estadstica) the size of the average Spanish nuclear family is declining: the growth rate of new households is higher than the population growth rate. As a result, smaller families are increasing in number, and their needs are obviously different from the traditional large families of 20 years ago. According to INE one out of three Spaniards older than 16 is single. Of note is the spectacular rise in singleperson households: in Spain, they accounted for 13% of all households in 1996 and had reached 21% by 2007 according to UNED (Universidad Nacional de Educacion a Distancia).
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Despite the difficult economic situation potentially limiting this growth, single-person and DINK (double income no kids) households continue to grow in importance as a part of Spanish society, leading to a new type of consumer (single, professional, urban and usually quite demanding in terms of quality). Current Impact As a result, high quality coffee on demand is becoming popular among Spanish consumers. For this growing population group, it is more functional, convenient and useful to prepare just one cup of coffee instead of making a full jug with a coffee machine which could go stale during the day. Considering the convenience factor of these products in terms of time-saving, coffee pod machines are becoming the perfect complement to any single-person-household kitchen, with increasing numbers of manufacturers launching new systems within this concept. Moreover, pods are normally perceived to produce a higher quality product compared to traditional home-made coffee from a coffee machine, which is quite appealing for this demanding demographic segment. Illustrating this growing popularity, the main brands in this category, Nescaf Dolce Gusto and Nespresso, both from Nestl Espaa SA (Grupo), saw sales rise by 65% and 23% respectively in value terms in 2009, encouraging new players entry into the pod category. In March 2009 Sara Lee Southern Europe SL and Philips Ibrica SA launched Senseo, their pod system, while Kraft Foods Iberia SL and Bosch (BSH Electrodomsticos Espaa SA) launched Tassimo in September 2009. Tassimo allows the preparation not only of coffee but also tea and chocolate-based flavoured powder drinks. Other players to have announced systems to compete in this field are Lavazza Espaa SA (Espresso Point, Blue y A Modo Mio) and Illy Cafe Expresso Ibrica SA (iperEspresso), producing their own machines. Outlook As in other Western European countries such as the UK, the number of single-parent families is expected to increase over the forecast period. Spaniards will continue to marry later in life and the average number of children for each woman of childbearing age will continue to decrease. Therefore, increasingly smaller households will be the norm during the forecast period, reflecting the socio-demographic trends seen in Western European countries, the United States and Japan. Future Impact Private label will increasingly enter the coffee pod category, as seen with Hacendado (Mercadonas private label), which is providing more economic alternatives and slowing down previous growth rates in value terms. New flavours and speciality launches are likely to be the key means of differentiation within this category over the forecast period. The progressive maturation of the segment, with prices of coffee pod machines subsequently dropping, will encourage more consumers to purchase within this category, as they are currently still reluctant to use pods or capsules as these products are perceived to be expensive.
Market Polarisation
Around mid-2008, the global economic crisis hit Spain. As a result, the unemployment rate began to rise (becoming the highest in the Eurozone and expected to reach 20% of the total active population in 2010), with the construction and tourism industries (the two main engines in the Spanish economy) being seriously damaged. According to FRONTUR (Encuesta de Movimientos Tursticos en Frontera), the number of foreign tourists who visited Spain declined by approximately 10% in 2009. Construction activity was reduced by 20% in 2009, according to data from the Spanish government. As a result, Spaniards started to adopt different strategies to deal with their limited spending power. In this scenario, private label has been the most important beneficiary as Spaniards increased their preference for retailers own labels. This phenomenon of private label appeal started immediately before the economic crisis reached Spain, in mid-2008. While Mercadona and its well-known private label Hacendado was already flourishing before the crisis, the strength of the economic downturn propelled sales of both private label and economy products across the vast majority of fast moving consumer goods products. However, despite the common appeal of cheap products, premiumisation still plays an important role within fast moving consumer goods, with most new product launches placed within the premium segment and further scope
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for growth apparent despite the crisis. Consumers, although cutting back on non-essential purchases, appear to be compensating for this with affordable luxuries, as despite the economic downturn, the demand for top quality products has proved to be resilient. Current Impact Within hot drinks as a whole, private label gained more than two percentage points in terms of share of overall off-trade value sales compared to 2008, growing from 18% to 20% and reaching EUR185 million. The speed of retailers mimicking innovation from manufacturers labels, and the decision of some retailers to remove leading brands from their shelves (as seen with Mercadona), further boosted the growth of private label in 2009. At the same time, consumers embraced the coffee pod trend, with Nescaf Dolce Gusto and Nespresso, both from Nestl Espaa SA (Grupo), posting double-digit growth rates despite their higher unit prices. In line with the premiumisation of the industry, the coffee category witnessed the launch of new pod products such as the tdisc from Tassimo, featuring top quality brands from the tea category (Twinings from Bolton Cile Espaa SA), or hot chocolate (Milka) as a chocolate-based flavoured powder drink. Outlook It is expected that the unemployment rate could peak as high as 20% in 2010 and GDP could decline by 1% compared to 2009, according to the European Commission. Thus, the Spanish economy could start to see the green shoots of recovery at the beginning of 2011. This would be the most optimistic scenario, where GDP would start to rise again and unemployment rates would fall, as other sources have pointed out that Spain will take longer to recover from the crisis compared to other countries and at lower GDP growth rates than other Western economies, according to European authorities. In the light of this scenario, many consumer behaviour experts have been pointing out that consumer demand for private label products or more frugal approaches to consumption will be the norm even after economic recovery, as private label not only benefits from its average lower unit price but, from the reinforced idea in consumers minds that private label is also the most intelligent purchase in terms of value for money. Retailers own brands with a good quality image (such as Hacendado from Mercadona) will benefit from this perception and sales are likely to remain fairly stable across the forecast period. At the same time, innovation from branded manufacturers will be in the form of reasonable premiumisation; as consumers are more conscious than ever of the price/quality ratio, manufacturers will have to focus on communication in terms of convincing consumers of their products added value. Future Impact In this scenario of polarisation, leading manufacturers will continue to launch value-added products and formulas offering top quality, in order to boost their shares. However, the ability and speed of retailers to launch similar versions at lower unit prices will place top manufacturers under further pressure. The market of hot drinks is thus expected to remain relatively stable in terms of average unit price, as a result of divergent trends running concurrently.
MARKET DATA
Table 1 Retail Vs Foodservice Sales of Hot Drinks: % Volume Breakdown 2004-2009
% volume analysis 2004 Off-trade On-trade Total

Source:
2005 62.2 37.8 100.0
2006 62.3 37.7 100.0
2007 62.4 37.6 100.0
2008 61.4 38.6 100.0
2009 61.1 38.9 100.0
61.9 38.1 100.0
Official Statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates
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Table 2 % volume growth
Retail Vs Foodservice Sales of Hot Drinks: % Volume Growth 2004-2009
2008/09 Retail Foodservice Total

Source:
2004-09 CAGR 4.7 4.4 5.3
2004/09 TOTAL 25.5 22.7 28.2
4.7 5.4 5.7
Table 3 '000 tonnes
Retail Sales of Hot Drinks by Sector: Volume 2004-2009
2004 Coffee Tea Other Hot Drinks Hot Drinks

Source:
2005 71.1 3.3 56.6 131.0
2006 70.3 3.4 56.8 130.5
2007 69.3 3.6 57.2 130.1
2008 70.1 3.7 57.4 131.2
2009 70.3 3.8 57.5 131.7
70.6 3.1 56.5 130.2
Table 4 EUR million
Retail Sales of Hot Drinks by Sector: Value 2004-2009

Source:
2005 538.6 99.9 193.1 831.6
2006 550.9 107.6 194.6 853.2
2007 560.7 116.0 197.3 874.0
2008 588.0 124.5 199.4 911.9
2009 586.8 127.6 192.7 907.1
522.3 93.2 192.1 807.6
Retail Sales of Hot Drinks by Sector: % Volume Growth 2004-2009
2008/09 Coffee Tea Other Hot Drinks Hot Drinks

Source:
2004-09 CAGR -0.1 4.2 0.4 0.2
2004/09 TOTAL -0.4 22.8 1.9 1.2
0.3 3.9 0.2 0.3
Table 6
Retail Sales of Hot Drinks by Sector: % Value Growth 2004-2009
% current value growth 2008/09 Coffee Tea Other Hot Drinks Hot Drinks
Source:
2004-09 CAGR 2.4 6.5 0.1 2.4
2004/09 TOTAL 12.4 36.9 0.3 12.3
-0.2 2.5 -3.3 -0.5
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Table 7 tonnes
Foodservice Sales of Hot Drinks by Sector: Volume 2004-2009

Source:
2005 65,504.0 383.5 13,853.1 79,740.7
2006 64,843.3 392.0 13,863.3 79,098.5
2007 64,068.6 403.2 13,853.1 78,324.9
2008 68,415.1 416.1 13,775.2 82,606.4
2009 69,910.1 427.4 13,621.0 83,958.4
66,045.6 376.0 13,822.8 80,244.4
Foodservice Sales of Hot Drinks by Sector: % Volume Growth 2004-2009

Source:
2004-09 CAGR 1.1 2.6 -0.3 0.9
2004/09 TOTAL 5.9 13.7 -1.5 4.6
2.2 2.7 -1.1 1.6
Table 9 '000 tonnes
Total Sales of Hot Drinks by Sector: Total Volume 2004-2009

Source:
2005 136.6 3.6 70.4 210.7
2006 135.1 3.8 70.7 209.6
2007 133.4 4.0 71.1 208.5
2008 138.5 4.1 71.2 213.9
2009 140.2 4.3 71.2 215.6
136.7 3.5 70.3 210.4
Table 10
Total Sales of Hot Drinks by Sector: % Total Volume Growth 2004-2009
% total volume growth 2008/09 Coffee Tea Other Hot Drinks Hot Drinks
Source:
2004-09 CAGR 0.5 4.0 0.3 0.5
2004/09 TOTAL 2.6 21.8 1.3 2.5
1.2 3.7 0.0 0.8
Table 11 % retail value rsp Company
Hot Drinks Company Shares by Value 2005-2009
2005 23.6 16.0
2006 23.5 16.5
2007 23.5 16.7
2008 22.9 16.5
2009 22.8 16.2
Nestl Espaa SA (Grupo) Sara Lee Southern Europe SL
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Nutrexpa SA Kraft Foods Iberia SL Pompadour Ibrica SA Productos del Caf SA Bolton Cile Espaa SA Industrias del Caf del Norte SA Leroux SA Toscaf SA Infusiones Milford SL Kraft Foods Espaa SA Camilo Monzo SL Private Label Others Total
Source:
12.1 2.7 2.9 1.3 0.9 0.7 0.3 0.2 6.4 17.7 15.2 100.0
11.9 6.5 2.9 3.0 1.4 0.9 0.7 0.3 0.2 18.2 14.2 100.0
11.8 6.4 3.0 3.0 1.4 0.9 0.7 0.3 0.2 18.1 13.9 100.0
11.5 6.3 3.1 2.9 1.4 0.9 0.6 0.3 0.2 18.1 15.3 100.0
10.9 6.3 3.0 2.9 1.4 0.9 0.6 0.3 0.2 20.3 14.0 100.0
Trade associations, trade press, company research, trade interviews, Euromonitor International estimates
Table 12 % retail value rsp Brand Marcilla Cola Cao Nescaf Saimaza Bonka Nesquik Hornimans Pompadour Twinings Eko Fortaleza
Hot Drinks Brand Shares by Value 2006-2009
Company Sara Lee Southern Europe SL Nutrexpa SA Nestl Espaa SA (Grupo) Kraft Foods Iberia SL Nestl Espaa SA (Grupo) Nestl Espaa SA (Grupo) Sara Lee Southern Europe SL Pompadour Ibrica SA Bolton Cile Espaa SA Nestl Espaa SA (Grupo) Industrias del Caf del Norte SA Nestl Espaa SA (Grupo) Leroux SA Nestl Espaa SA (Grupo) Toscaf SA Infusiones Milford SL Nutrexpa SA Sara Lee Southern Europe SL Kraft Foods Espaa SA Camilo Monzo SL Kraft Foods Espaa SA Private Label
2006 12.0 11.7 11.0 6.5 5.8 5.3 4.4 2.9 1.4 1.2 0.9 0.7 0.2 0.3 0.2 0.2 0.1 18.2 17.2 100.0
2007 12.0 11.6 10.7 6.4 5.8 5.2 4.7 3.0 1.4 1.2 0.9 0.4 0.7 0.3 0.3 0.2 0.2 0.1 18.1 16.9 100.0
2008 11.7 11.3 10.3 6.3 5.6 4.9 4.7 3.1 1.4 1.2 0.9 0.5 0.6 0.4 0.3 0.2 0.2 0.1 18.1 18.2 100.0
2009 11.6 10.8 10.0 6.3 5.7 4.6 4.6 3.0 1.4 1.1 0.9 0.9 0.6 0.5 0.3 0.2 0.1 0.1 20.3 16.9 100.0
Nescaf Dolce Gusto Leroux Nespresso Toscaf Milford Granja San Francisco Soley Columba El Miguelete Saimaza Private label Others Total
Source:
Table 13 % retail value rsp
Penetration of Private Label by Sector 2005-2009
2005 Coffee Hot Drinks Other Hot Drinks Tea

Source:
2006 20.8 18.2 11.6 17.0
2007 20.7 18.1 11.7 16.9
2008 20.3 18.1 12.5 16.9
2009 22.2 20.3 13.8 21.7
20.0 17.7 11.4 16.9
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Table 14 % retail volume
Sales of Hot Drinks by Distribution Format: % Analysis 2004-2009
2004 Store-Based Retailing Grocery Retailers Supermarkets/Hypermarkets Discounters Small Grocery Retailers Convenience Stores Independent Small Grocers Forecourt Retailers Other Grocery Retailers Non-Grocery Retailers Non-Store Retailing Vending Homeshopping Internet Retailing Direct Selling Total
Source:
2005 100.0 100.0 82.8 10.0 1.4 0.7 0.6 5.8 0.0 0.0 0.0 100.0
2006 100.0 100.0 82.6 10.1 1.5 0.8 0.7 5.8 0.0 0.0 0.0 100.0
2007 100.0 100.0 82.5 10.1 1.5 0.9 0.7 5.8 0.0 0.0 0.0 100.0
2008 100.0 100.0 82.4 10.2 1.6 0.9 0.7 5.8 0.0 0.0 0.0 100.0
2009 100.0 100.0 82.5 10.4 1.4 0.8 0.6 5.6 0.0 0.0 0.0 100.0
100.0 100.0 82.8 9.9 1.2 0.6 0.6 6.0 0.0 0.0 0.0 100.0
Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates
Table 15 % retail volume
Sales of Hot Drinks by Sector and Distribution Format: % Analysis 2009
C Store-Based Retailing Grocery Retailers Supermarkets/Hypermarkets Discounters Small Grocery Retailers Convenience Stores Independent Small Grocers Forecourt Retailers Other Grocery Retailers Non-Grocery Retailers Non-Store Retailing Vending Homeshopping Internet Retailing Direct Selling Total
Source: Key:
T 99.9 99.9 77.2 8.8 4.1 1.8 2.3 0.0 9.9 0.0 0.0 0.0 0.0 0.0 0.0 100.0
OHD 100.0 100.0 87.0 9.6 0.7 0.3 0.3 0.0 2.6 0.0 0.0 0.0 0.0 0.0 0.0 100.0
99.9 99.9 79.1 11.0 1.9 1.2 0.7 0.0 7.9 0.0 0.1 0.0 0.0 0.0 0.0 100.0
Official statistics, trade associations, trade press, company research, store checks, trade interviews, Euromonitor International estimates C=Coffee; T=Tea; OHD=Other hot drinks
Table 16
Forecast Retail Vs Foodservice Sales of Hot Drinks: % Volume Breakdown 2009-2014
% volume analysis 2009 Off-trade On-trade Total

Source:
2010 60.9 39.1 100.0
2011 60.8 39.2 100.0
2012 60.7 39.3 100.0
2013 60.8 39.2 100.0
2014 60.9 39.1 100.0
61.1 38.9 100.0
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Forecast Retail Vs Foodservice Sales of Hot Drinks: % Volume Growth 2009-2014
2013/14 Retail Foodservice Total

Source:
2009-14 CAGR 3.2 2.3 3.5
2009/14 TOTAL 17.6 12.3 18.7
3.2 0.9 2.9
Table 18 '000 tonnes
Forecast Retail Sales of Hot Drinks by Sector: Volume 2009-2014

Source:
2010 69.9 4.0 57.7 131.6
2011 69.4 4.1 57.9 131.5
2012 68.8 4.3 58.2 131.3
2013 68.1 4.4 58.6 131.1
2014 67.4 4.6 59.0 131.0
70.3 3.8 57.5 131.7
Table 19 EUR million
Forecast Retail Sales of Hot Drinks by Sector: Value 2009-2014

Source:
2010 582.4 131.3 187.0 900.7
2011 579.5 136.9 181.6 898.0
2012 576.5 142.2 176.8 895.5
2013 575.6 147.6 172.5 895.7
2014 576.0 153.6 168.1 897.7
586.8 127.6 192.7 907.1
Forecast Retail Sales of Hot Drinks by Sector: % Volume Growth 2009-2014

Source:
2009-14 CAGR -0.8 3.7 0.5 -0.1
2009/14 TOTAL -4.1 19.8 2.5 -0.5
-1.1 3.6 0.7 -0.1
Table 21
Forecast Retail Sales of Hot Drinks by Sector: % Value Growth 2009-2014
% constant value growth 2009-14 CAGR Coffee Tea Other Hot Drinks Hot Drinks -0.4 3.8 -2.7 -0.2 2009/14 TOTAL -1.8 20.4 -12.8 -1.0
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Source:
Table 22 tonnes
Forecast Foodservice Sales of Hot Drinks by Sector: Volume 2009-2014

Source:
2010 70,546.5 438.6 13,559.5 84,544.6
2011 70,834.1 449.5 13,545.9 84,829.5
2012 70,870.8 459.9 13,552.7 84,883.4
2013 70,503.0 469.9 13,575.7 84,548.6
2014 69,976.7 479.5 13,602.8 84,059.0
69,910.1 427.4 13,621.0 83,958.4
Forecast Foodservice Sales of Hot Drinks by Sector: % Volume Growth 2009-2014

Source:
2009-14 CAGR 0.0 2.3 0.0 0.0
2009/14 TOTAL 0.1 12.2 -0.1 0.1
-0.7 2.0 0.2 -0.6
Table 24 '000 tonnes
Forecast Total Sales of Hot Drinks by Sector: Total Volume 2009-2014

Source:
2010 140.5 4.4 71.3 216.2
2011 140.2 4.6 71.5 216.3
2012 139.7 4.7 71.8 216.2
2013 138.6 4.9 72.1 215.7
2014 137.4 5.1 72.6 215.0
140.2 4.3 71.2 215.6
Table 25
Forecast Total Sales of Hot Drinks by Sector: % Total Volume Growth 2009-2014
% total volume growth 2013/14 Coffee Tea Other Hot Drinks Hot Drinks
Source:
2009-14 CAGR -0.4 3.5 0.4 -0.1
2009/14 TOTAL -2.0 19.0 2.0 -0.3
-0.9 3.5 0.6 -0.3
APPENDIX
Production/import/export Data
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Available data from refers to apparent consumption while Euromonitor International data refers to volume and value sales in the off-trade and on-trade channels.
Imports/Exports of Coffee by category 2003-2008
Table 26 Tonnes Imports Green Coffee Roast Coffee Instant Coffee Exports Green Coffee Roast Coffee Instant Coffee
Source:
2003 227,151 10,443 2,726 2003 18,095 6,710 20,829
2004 226,251 10,667 3,607 2004 20,791 5,586 21,787
2005 241,236 11,560 4,154 2005 22,737 9,225 21,011
2006 241,387 15,001 5,024 2006 15,697 9,186 24,145
2007 262,227 15,211 6,318 2007 14,668 12,548 24,178
2008 257,061 16,548 8,159 2008 17,251 10,048 22,621
Federacin Espaola del Caf
DEFINITIONS
This report analyses the market for hot drinks in Spain. For the purposes of the study, the market has been defined as follows: Coffee Tea Other hot drinks
Sources used during research include the following:

Summary 1 Official Sources Research Sources INE (Instituto Nacional de Estadistica) Ministerio de Agricultura, Pesca y Alimentacin (MAPA) Trade Associations ANEABE Asociacion Espaola de Fabricantes de Caf Soluble Asociacin Espaola de la Industria de Zumos y Concentrados de Frutos Citricos y sus productos derivados (AIZCE) Asociacion Espaola de Tostadores de Caf Asociacion Espaola Envasadores de Infusiones de Te y Herboristeria Asociacin Nacional de Fabricantes de Bebidas Refrescantes Analcoholicas (ANAFABRA) Asociacin Nacional de Fabricantes de Zumos (Asozumos) Federacin Espanola de Industrias de la Alimentacin y Bebidas (FIAB) Federacin Espaola del Caf UNESDA & CISDA Trade Press Actualidad Econmica Alimarket Aral
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Beverage Net Beverage World Distribucin Actualidad Distribucin y Consumo El Pas Expansin Novedades y Noticias Tecnifood
Source: Euromonitor International
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LOCAL COMPANY PROFILES - SPAIN

CAF CANDELAS SL
Strategic Direction
Cafs Candelas SL is mainly focused on supplying coffee products to the Spanish on-trade channel. Cafs Candelas holds a leading position in the north of Spain and an important presence in the centre and the east of the country. Together with Solac Espaa SA in 2008 Cafs Candelas launched Personal espresso, a coffee pod system that is cheaper than the other coffee pod machines present in the Spanish market. Through a national joint venture, Cafs Candelas SL, Cafs Baqu SL, Cafs Orus SA and Pere Cornell SA reached an agreement to produce coffee pods in a small factory located in Vitria -Gasteiz (northern Spain), as a result of the impressive growth recorded by these products in Spain.
Key Facts
Summary 2 Cafs Candelas SL: Key Facts Cafs Candelas SL Rua dos Transportes, 7 (Pol. Industrial de Ceao) Tel: Fax: www: Activities:
Full name of company: Address: 27003 Lugo, Spain +34 (902) 996 500 / +34 (982) 209 025 +34 (982) 209 415 www.cafescandelas.com
Source:
Euromonitor International from company reports, trade press (Alimarket, El Pas, Cinco Das, Actualidad Econmica, Distribucin Actualidad, Expansin, Aral), company research, store checks, trade interviews, Euromonitor International estimates
Summary 3
Cafs Candelas SL: Operational Indicators 2006 2007 EUR28.37 million EUR1.74 million 82 2008 EUR47.86 million EUR4.74 million 202
Net sales Net profit Number of employees

Source:
EUR21.4 million EUR1.36 million 82
Company Background
Cafs Candelas commenced operations in 1973 in the city of Lugo in Galicia. As a result of its rapid growth, in 1980 it changed location, establishing itself in the Ceao industrial estate. Cafs Candelas is primarily dedicated to producing, marketing and distributing fresh coffee, mainly for the on-trade channel. The company is a 100% Spanish coffee roaster. Moreover, Cafs Candelas is one of the companies of Caf Mundi, a non-profit making organisation focused on establishing and developing social projects in coffee-producing countries. Cafs Candelas holds a key position in the northwestern region of Galicia, as well as a significant presence in other regional markets such as Levante, Madrid, Castilla Len and Asturias. In addition, Cafs Candelas is also present in the Portuguese market.
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In 2008 Cafs Candelas acquired two Spanish wholesaler businesses, namely Giorno Espress and Comercial Brik. Through these acquisitions Cafs Candelas aims to expand its presence within the region of Barcelona and continue its expansion in Levante. In 2007, Cafs Candelas acquired a 100% stake in Cafs Dakar and Cafs Baha, located in Valencia. Cafs Dakar was already present in the on-trade channel with the franchised coffee shop chain Aromas de Dakar (26 outlets).
Production
Cafs Candelas factory, located at Lugo, produced approximately 6,000 tonnes of fresh ground coffee in 2008. Its central facilities occupy a total surface area of approximately 4,000 sq m.
Cafs Candelas SL: Production Statistics 2008 Brand Candelas Annual production 6,000 tonnes
Summary 4 Location Lugo

Source:
Competitive Positioning
Cafs Candelas focuses mainly on the on-trade channel, where it is present with its brand Las Candelas, and has become one of the top 10 players in northern Spain. The on-trade channel in Spain is geographically fragmented, with local companies playing significant roles in different regions of the territory. In 2008, through a joint venture with other national players, Cafs Candelas entered the coffee pods category, focusing on the off-trade channel and promoted on www.personalespresso.com.
CAFENTO NORTE SL
Strategic Direction
Cafento Norte SL is a family-run company that is the result of the integration of some traditional companies within the coffee category all over the country. Cafento commercializes and transforms coffee and derivatives. Its strategy for growth focuses on the on-trade commercial networks and sales forces purchasing. Cafento is the owner of traditional brands such as Cafs Gallego, Cafs Beltran, El Trpico, Caf Areces) and pet quality system brands such as Montecelio, Cafs Saroma, Primer Express or Senso Natura.
Key Facts
Summary 5 Cafento Norte SL: Key Facts Cafento Norte SL Polgono Industrial La Curiscada s/n, Tel: Fax: www: Activities:
Full name of company: Address: 33870 Tineo, Oviedo, Spain +34 (902) 11 72 18 +34 (902) 19 35 29 www.cafento.com
Source:
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Summary 6
Cafento Norte SL: Operational Indicators 2006 2007 EUR70 million 450 2008 EUR70 million 450
Net sales Number of employees

Source:
EUR26.7 million 176
Company Background
Cafento Grupo is divided into geographic zones: Cafento Terrasur in Andalucia, with its Cafs Capuchinos brand; Cafento Levante with brands Cafs Valiente and Cafs Beltran; and Cafento Norte with Cafs El Gallego, Cafs Areces and Cafs Tarrero. In 2009 the company entered the coffee pods category in Spain with its Stracto brand, providing pods for both on-trade and off-trade distributional channels in the country.
Cafento Norte SLs volume sales reached 6,000 tonnes in 2008; 120 tonnes corresponded to instant coffee, while 5,880 tonnes corresponded to both fresh ground coffee and coffee beans. In value terms, sales reached EUR70 million in 2008, remaining unchanged from 2007. Cafento Norte is expected to focus on boosting its commercial presence in Catalonia, with a sales target of EUR120 million for its growing Cafs Rovi brand during 2010. In 2010, Cafento Norte will consolidate its activities relating to the Stracto coffee pods system by means of its franchises and a new company image launch. Cafento Norte also will launch a new tea line called Cafs Montecelio Kowa. On-trade sales represent approximately 75% of the companys revenue.
CAFS BAQU SL
Strategic Direction
Cafs Baqu SL is a local manufacturer focused on supplying coffee products both to the Spanish on-trade and off-trade channels. As an strategy for growth. the company entered the coffee pods category in 2009, in association with other small players within the coffee category.
Key Facts
Summary 7 Cafs Baqu SL: Key Facts Cafs Baque SL Polgono Industrial Santa Apolonia UAI 2-2, 48215 Iurreta, Vizcaya, Spain +34 (946) 215 610 +34 (946) 810 226 www.baque.com Fresh coffee
Full name of company: Address: Tel: Fax: www: Activities:
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Source:
Summary 8
Cafs Baqu SL: Operational Indicators 2006 2007 EUR23.5 million 112 2008 EUR28.5 million 119

Source:
EUR23.5 million 112
Company Background
Cafs Baqu was founded in 1964. Initially, the company focused on roasting coffee and commercialisation, but as time went by, it came to concentrate on green coffee purchasing and ground coffee commercialisation. The company operates mainly in the north of Spain, both in off-trade and on-trade distributional channels. Volume sales reach approximately 4,000 tonnes annually. In 2008 Cafs Baqu, in collaboration with other coffee roasters Cafs Candelas SL, Pere Cornell SA, Grupo Caf Dromedario SA and Cafs Orus SA) and DUAL Engineering, established a coffee pods manufacturing facility. This manufacture set in Victoria-Gasteiz would be operated by Sferic Coffee Systems SL. Cafs Baqu gains strength from its continuous efforts in terms of improvements in production methods, which have earned it ISO 9000 certification. At the time of writing, the company is working on the implementation of the EFQM Excelence Model.
Production
The manufacture of coffee pods commenced in September 2008. The companys facility occupies a built surface area of approximately 600 sq m and has a production capacity of 1 million units per day. The facility has four workers.
Cafs Baqus value sales approached EUR29 million in 2008, reporting a rise of 21% compared to 2007. In volume terms, sales reached 4,000 tonnes. The on-trade channel in Spain is geographically fragmented and local companies play significant roles in different regions of the Spanish territory. Cafs Baqu is a local player present in both the on-trade and offtrade channels, operating mainly in the north of Spain. In 2009, the company updated the packaging for its fresh ground coffee, offering a promotional size (10% free), and using a more modern design in an effort to appeal to consumers. The packaging material was also changed, from paper to double polypropylene (flexible plastic) and an easy-open closure system was also included.
KRAFT FOODS IBERIA SL

Strategic Direction
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In off-trade value terms, Kraft Foods Iberia SL is one of the major players in hot drinks in Spain, mainly through its Saimaza brand. Coffee remains one of the companys key focus areas. While Kraft Inc sold its biscuits division to the Spanish company Panrico, in 2009 it also entered the coffee pods category in Spain with the launch of Tassimo, in association with Bosch (BSH Electrodomsticos Espaa SA). Tassimo is a multi-drink system that allows consumers to prepare a wide variety of hot drinks, not just coffee. Over the forecast period, the companys strategy is likely to focus on the promotion of this multi-drink system with the launch of new coffee and other hot drinks varieties.
Key Facts
Summary 9 Kraft Foods Iberia SL: Key Facts Kraft Foods Iberia SL C/ Eucalipto, No. 25, 28016 Madrid, Spain +34 (91) 325 4750 +34 (91) 415 3871 www.kraftfoods.es Coffee, cheese, confectionery, sauces and chocolate

Source:
Summary 10
Kraft Foods Iberia SL: Operational Indicators 2006 2007 EUR504 million n/a 900 2008 EUR300 million n/a 800

Source:
EUR332.8 million EUR1.84 million 894
Company Background
Kraft Foods Iberia SL is the new name (changed in 2006 from Kraft Foods Espaa SA) for the Spanish and Portuguese subsidiary of the multinational food group Kraft Foods Inc. Kraft Foods has been present in Spain since 1968 when the company acquired Industrias Lcteas Leonesas. The coffee company Saimaza was founded in 1908 in Seville by Joaqun Sez de la Maza. In 1983 General Foods Corporation acquired a stake in the company. In 1985 Philip Morris Inc bought General Foods and, following this, Kraft Foods was acquired in 1988. These companies were combined as Kraft General Foods in 1990, the same year that Jacobs Suchard was absorbed by Philip Morris. Kraft Jacobs Suchard was created in 1993 from the union of both companies. The Saimaza company was fully acquired in 1989 and the companys name was changed to Kraft General Foods Espaa. It later became Kraft Jacobs Suchard Iberia SA and Kraft Foods Espaa SA in May 2000. Kraft Foods strategy in Spain is firmly focused on supporting its major brands and ensuring that they are well represented in major grocery retailers across the country. Coffee is one of the companys major areas of activity within the Spanish market. In April 2008 Kraft Foods sold its Spanish biscuits division to the Spanish company Panrico. This took place just one year after Kraft Foods Inc acquired the Groupe Danone biscuits division for EUR5.3 billion. The latter sale included leading brands such as Tuc, Prince and Lu. In Spain, Kraft Foods sold biscuits primarily under the Fontaneda and Artiach brands.
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In 2009 Kraft Foods launched Tassimo. The Tassimo coffee machine is manufactured by Bosch and is widely available across the country. For pods uses international brands: Mastro Lorenzo, Starbucks and Carte Noir for coffee, Milka for chocolate-based flavoured powder drinks and Twinings for tea.
Production
The company operates production facilities in the Balearic Islands (cheese), Seville (coffee), Len (cheese and juice) and Barcelona (desserts).
Kraft Foods Iberia SL: Production Statistics 2008 Brand Saimaza El Casero Royal Philadelphia and Tang
Summary 11 Location
Dos Hermanas (Seville) Mahn (Balearic Islands) Montorns del Valls (Barcelona) Hospital de Orbigo (Len)
Source:
Kraft Foods Iberia SLs share of the Spanish hot drinks market has fallen since 2006, although it registered a slight recovery in 2009 when its off-trade value share saw a marginal rise. One of the companys main strengths is fresh ground coffee, a category in which it accounted for nearly 14% of off-trade value sales in 2009. The company is active with its Saimaza brand in both fresh and instant coffee. It has suffered due to competition from other leading brands and private label products in recent years, resulting in declining share. Kraft Foods Iberia entered coffee pods in the Spanish market in 2009, launching its Tassimo coffee pod system in association with Bosch; it will continue to promote this system during 2010, which is expected to perform very positively over the forecast period.
Kraft Foods Iberia SL: Competitive Position 2009 Value share 10% 14% 14% 12% 3% Rank 3 3 3 3 3
Summary 12 Product type Coffee Fresh coffee
Fresh ground coffee Fresh coffee beans Instant coffee

Source:
NESTL ESPAA SA (GRUPO)

Strategic Direction
Nestl Espaa SA (Grupo) is continuing to focus its strategy and efforts on satisfying growing demand for functional products that have a healthy and innovative positioning. In addition, as the undisputed leader in
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coffee pods in Spain, the company will continue to promote its Dolce Gusto and Nespresso systems, supporting them through the launch of new varieties of coffee pods.
Key Facts
Summary 13 Nestl Espaa SA (Grupo): Key Facts Nestl Espaa SA (Grupo) Avda Pases Catalanes, 25-51, 08950, Esplugues de Llobregat, Barcelona, Spain +34 (93) 480 5100 +34 (93) 473 6470 www.nestle.es Hot drinks and packaged food, including dairy products and bakery products

Source:
Summary 14
Nestl Espaa SA (Grupo): Operational Indicators 2006 2007 EUR1,277 million 3,59 2008 EUR1,280 million 3,550

Source:
EUR1,399 million 3,400
Company Background
Nestl has been present in Spain for over 100 years. The multinational operator first entered the Spanish hot drinks market with Nescaf in 1954, and this remains the leading instant coffee brand in the country. Nestl Espaa SA (Grupo) is among the largest food manufacturers in the country, employing 3,550 people. It is entirely owned by its Swiss parent company, Nestl SA. In 1979 Nestl entered fresh coffee through the acquisition of three traditional coffee companies: Productos Brasilia SA, Herederos de Gomez Tejedor SA (Cafs La Estrella) and Mlaga Comercial SA (Cafs Santa Cristina). Productos del Caf SA was created in 1990, and four years later, in 1994, Caf 154 was added to the company. As well as importing products, Nestl Espaa supplies goods to Europe and beyond. Around 40% of Nestl Espaas production is exported, including 60% of its instant coffee from its factory in Girona. At the 2008 Innoval trade fair, Nestl Espaa presented the first of its range of new products, which resulted in the company receiving two awards (one each for Nescaf Dolce Gusto and Nesquik Go). This recognition reinforced the companys desired position as a promoter of health, pleasure and convenience through innovation. In September 2008 a new marketing campaign was launched for the Nescaf brand, promoting its range of decaffeinated coffee products, named Momentos Des-. In line with the aesthetics of the Momentos Des- campaign, Movilmatch designed the interactive www.nescafe.es/momentosdes web page where Spanish consumers could find detailed information on how to participate in the promotion.
Production
Since the opening of its first Spanish factory at La Penilla (Cantabria) in 1905, Nestl has expanded its presence across the country to offer a wide range of products. In fact, Nestl accounts for a total of 14
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production centres. Nestl Espaa and Productos del Caf are responsible for Nestl's hot drinks activities in Spain. The company has production facilities at Girona (Catalonia), run by Nestl Espaa and specialising in instant coffee, and at Reus (Tarragona), run by Productos del Caf and focused on fresh coffee. The company produces powdered chocolate at its factory at La Penilla. Its main distribution centres are located at Girona, Guadalajara, Madrid, Terrassa and Torrejn de Ardoz. Productos del Caf has its headquarters at Reus (Tarragona) and offices in Madrid, Mlaga and Valencia. The warehouse in Reus is used for the storage of imported coffee beans. In Girona there is one of only two green coffee decaffeinating plants owned by Nestl worldwide. In general terms, Nestl Espaa exports approximately 40% of its local production to other European countries, mainly to France, Portugal, the UK and Italy. Moreover, in 2008, Nestl opted to invest EUR44 million in the construction of a new facility in Spain, which became operational in September 2009. The production facility of Nestl Espaa at Girona (Catalonia) is expected to see its capacity increase, enabling it become the first Nescaf Dolce Gusto producer to supply the European market. With a view to Christmas 2009, Nestl Espaa launched a revolutionary espresso machine called Circolo, which incorporates an original design and a brand-new appearance. The new machine is defined as a multi-drink system, as it allows consumers to prepare coffee, chocolate and cappuccino; it is also presented as the only pod system that is able to prepare both hot and cold drinks. In addition to this, Nestl also launched two new varieties of coffee pods Espresso Ristretto and Cortado to supplement the seven varieties already available (Latte Macchiato, Cappuccino, Caff Lungo, Espresso Intenso, Espresso Decaffeinato, Chococino and Cappuccino Ice).
In 2009, Nestl Espaa SA (Grupo) accounted for almost 23% of off-trade value sales of hot drinks in Spain, while Productos del Caf SA held a share of 3%. Nestl Espaa thus retained its leadership position in hot drinks. In fresh coffee, Nestl Espaas Bonka brand commanded a value share of 14% and a volume share of 13% in 2009. Nescaf Dolce Gusto and Nespresso, meanwhile, reached value sales of EUR8 million and EUR5 million respectively, resulting in them leading the Spanish coffee pods category. Private label is the only real threat to Nescaf in instant coffee. Private label products are gaining share rapidly in this category, particularly in volume terms. Nestl Espaa is active with a wide range of brands, but its core brand continues to be Nescaf instant coffee. Within coffee in Spain, Nestl operates the Nescaf and Bonka brands, while in terms of other hot drinks the company offers Nesquik. Nestl Espaas strongest brand in other hot drinks is Nesquik in chocolate-based flavoured powder drinks. This brand is available in a wide range of pack sizes, including 2 kg, 1 kg, 800 g and 400 g. Nesquik is ranked second in this category and competes directly with Nutrexpa SAs core brand, Cola Cao. Nesquik saw its value share decline over the review period, largely as a result of the lower level of investment employed to advertise new product launches, compared with its main competitor. This resulted in the gap in share widening between Nesquik and Cola Cao over the course of the review period. Its Eko brand dominates the malt-based hot drinks category, which it has led throughout the review period.
Nestl Espaa SA: Competitive Position 2009 Value share 23% 27% 18% 18% 12% 41% Rank 1 1 2 2 2 1
Summary 15 Product type Hot drinks Coffee Fresh coffee
Fresh ground coffee Fresh coffee beans Instant coffee
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Instant standard coffee Instant decaffeinated coffee Other hot drinks Flavoured powder drinks Chocolate-based flavoured powder drinks Malt-based hot drinks
Source:
41% 41% 27% 28% 24% 76%
1 1 2 2 2 1
NUTREXPA SA
Strategic Direction
As the clear leader of other hot drinks in the Spanish market, Nutrexpa SAs future strategic focus is likely to remain firmly focused on the maintenance of its dominance. Its Cola Cao brand is the clear leader in other hot drinks, being one of the most traditional and iconic brands in Spain. The companys brand within the tea category (Granja San Francisco) has been witnessing declining sales over the review period and this fact may eventually lead the company to abandon its interest in tea in the short term.
Key Facts
Summary 16 Nutrexpa SA: Key Facts Nutrexpa SA Lepanto, 410-414, 08025 Barcelona, Spain +34 (93) 290 0290 +34 (93) 290 0342 www.nutrexpa.es Hot drinks and packaged food

Source:
Summary 17
Nutrexpa SA: Operational Indicators 2006 2007 EUR264.38 million EUR12.25 million 673 2008 EUR268.23 million n/a 648

Source:
EUR29.1 million n/a 689
Company Background
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Nutrexpa was founded in 1940 in Barcelona by Jos Ignacio Ferrero Cabanach and Jos Mara Ventura Mallofr and it remains a family-owned business in the hands of the Ferrero and Ventura families, descendents of the founding entrepreneurs. In January 2007 Javier Ventura bought his brother Jos Maras 25% company share, gaining control of 50% of the business. Ignacio Ferrero, the company chairman, holds a 12.5% share and his siblings Javier, Antonio and Nuria Ferrero each hold 12.5%. Therefore, there remains a balance of power in terms of equity, with each family holding 50% of the business. Nutrexpa entered meat products in 1988 with the acquisition of La Piara, the leading brand of pat in Spain. In November 2000 Nutrexpa sold its bread substitute brand Ortiz to Bimbo SA (now part of the Sara Lee Bakery Group), a sale which also included the brands factory in El Vergel, located in Alicante. In addition, in April 2002, Nutrexpa acquired Best Foods Industrial SL and its brands Nocilla (the leading chocolate spread brand in Spain) and Mesura sweeteners. The acquisition also included a factory in Montmel (Barcelona), where the brands are produced. The company created Nocicao SL in 2002, a new subsidiary to handle the brands, but cut jobs in 2002 and 2005, reducing staffing levels by more than two thirds. In 2008 Nutrexpa bought the Cutara biscuits business from Grupo SOS. The company is present in several countries and has continued to expand its presence abroad since it first entered Chile in 1981, Portugal in 1984 and China in 1989. Nutrexpas products, such as Cola Cao and La Piara, can be found not only in these countries but in many others, from Morocco to the Czech Republic. At the end of 2007 Nutrexpa re-launched the Cola Cao Turbo brand, with a new milk chocolate flavour. Moreover, Cola Cao Turbo was awarded Flavour of the year in Alimentaria 2008 (Alimentaria is the most important international food and beverages exhibition in Spain). In 2009, Nutrexpa also re-launched Cola Cao Light but with a new name: Cola Cao Zero (a chocolate-based flavoured powder drink that contains 0% added sugar and 0.4% fat when prepared).
Production
One of the leading packaged food companies in Spain, Nutrexpa SA produces chocolate-based flavoured powder drinks and other cocoa-based products, as well as pat and other meat products, honey, bakery products, chocolate flavoured milk drinks, tea, confectionery and sweeteners. Nutrexpa operates several factories in Spain, the most important of which is at Parets del Valls where soluble cocoa products are manufactured (Cola Cao Original, Cola Cao Turbo, Cola Cao Fibra, Cola Cao Zero, Cola Cao Complet, Paladn). The factory at Riudarenes produces cakes and pastries, as well as packaging for honey and spices, while the facility at Palencia produces flavoured milk drinks (Okey, Cola Cao Energy). The companys facility at Parets del Valls also serves as a general distribution centre for the whole of Spain. Nutrexpa also has production facilities in Chile, Ecuador, Portugal and China. In Russia its activity is limited to packaging chocolate-based flavoured powder drinks in bulk format. Other products are imported from Spain.
Nutrexpa SA: Production Statistics 2008 Brand Cola Cao products
Summary 18 Location
Parets del Valls (Barcelona)

Source:
Nutrexpa is mainly present in chocolate-based flavoured powder drinks through its umbrella brand Cola Cao. Cola Cao is sold in a wide variety of formats and flavours. Nutrexpa retained its leading position in other hot drinks in Spain in 2009, accounting for a 51% share of off-trade value sales. However, within the overall hot drinks rankings, Nutrexpa occupies third position with an off-trade value share of 11%, behind Nestl Espaa SA (Grupo) (23%) and Sara Lee Southern Europe (16%).
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Cola Cao is one of the brands with the highest advertising recognition in the food industry and one of the most valued brands in Spain. Older generations consider the brand to be synonymous with chocolate-based flavoured powder drinks and believe it to be an ideal nutritional complement for breakfast. The companys Granja San Francisco brand has suffered during the review period from competition in black speciality tea and fruit/herbal tea where Bolton Cile Espaa SA with the Twinings brand and Sara Lee Southern Europe SL with Hornimans have pursued a more aggressive expansion strategy. Nutrexpa has created new products to satisfy the increasing interest in health and wellness among Spanish consumers. They are chocolate-based flavoured powder drinks: Cola Cao Fibra (enriched with fibre), Cola Cao Complet (enriched with cereals and fruit, targeted at younger consumers) and Cola Cao Complet Liquido (an on-the-go variant).
Nutrexpa SA: Competitive Position 2009 Value share 11% 1% 1% 1% 1% 2% 51% 53% 57% Rank 3 5 5 3 3 3 1 1 1
Summary 19 Product type Hot drinks Tea Black tea
Black speciality tea Tea bags black speciality Fruit/herbal tea Other hot drinks Flavoured powder drinks Chocolate-based flavoured powder drinks
Source:
SARA LEE SOUTHERN EUROPE SL

Strategic Direction
As the fresh coffee category leader, the companys strategy is likely to be determined by its rivalry with Nestl Espaa SA (Grupo), ranked second in 2009, and it will focus its efforts on supporting its Marcilla brand and promoting its coffee pods system Senseo, launched as a response to Nestls coffee pods systems Nespresso and Nescaf Dolce Gusto.
Key Facts
Summary 20 Sara Lee Southern Europe SL: Key Facts Sara Lee Southern Europe SL Josep Pla 2 Bloque B-2, 08019 Barcelona, Spain +34 (93) 4628 400 +34 (93) 4625 673 www.saralee.com Coffee, tea and other hot drinks

Source:
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Spain
Summary 21
Sara Lee Southern Europe SL: Operational Indicators 2006 2007 EUR122 million 155 2008 EUR106 million 171

Source:
EUR120 million 155
Company Background
Douwe Egberts Espaa was established in Spain in 1993, following the acquisition of Cafs a la Crema J Marcilla. Later, the company changed its name to Sara Lee Southern Europe SL. This Spanish subsidiary is wholly-owned by Sara Lee Corp. The company is one of the two main players in terms of off-trade coffee sales and also has a leading presence within tea. In July 2004 Sara Lee absorbed Marcilla Coffee Systems SA, which distributes coffee and juice concentrates to vending machines and on-trade outlets across Spain. The companys factory is located at Mollet del Valls and shares facilities with Sara Lee. Sara Lee is a member of the Ethical Tea Partnership (ETP), a non-profit making organisation whose aim is to ensure and demonstrate that 100% of the tea its members buy is produced in a socially responsible way. In 2008 Sara Lee launched a tea with milk under the Hornimans brand, developed in collaboration with Corporacin Alimentaria Peasanta SA (CAPSA) responding to the increasing convenience products demand. In 2009 the company launched Good Origin de Cafitesse, a new fresh ground coffee product for the ontrade channel, under its product line Good Origin (which adheres to sustainability criteria during production). In addition, Sara Lee entered coffee pods with the launch of Senseo, in collaboration with Philips Ibrica SA, with several varieties available, including Natural, Mezcla, Descafeinado Intenso, Brasil y Kenya.
Production
Sara Lee produces coffee products at its facilities at Mollet del Valls (Barcelona).
Sara Lee Southern Europe SL: Production Statistics 2008 Brand Marcilla
Summary 22 Location
Mollet del Valls (Barcelona)

Source:
Sara Lee Southern Europe SL ranked second in the Spanish hot drinks market in 2009, accounting for a 16% share of off-trade value sales. The companys strengths are in coffee and tea, where it is present with its brands Marcilla and Hornimans. In 2009 Hornimans continued to lead Spanish tea, accounting for 32% of off-trade value sales. The companys leadership in tea is largely a result of extensive advertising campaigns promoting its different varieties, and the fact that it has the most extensive tea portfolio of the
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Spain
leading players and its wide distribution network that makes the brand available in a range of channels across the country. Within coffee, the company accounted for 18% of value sales in 2009, ranking behind Nestl Espaa SA (Grupo). It should be noted, however, that the off-trade value share of private label has grown throughout the review period, with its share continuing to outpace that of Sara Lee. In 2007 Sara Lee launched a new range of functional teas with anti-oxidants in an innovative 25 ml pack. It also offers a pack of four distinct flavours (green tea, red tea, beauty-enhancing tea and a new white tea). In 2009, Sara Lee entered the coffee pods category in Spain with Senseo.
Sara Lee Southern Europe SL: Competitive Position 2009 Value share 16% 18% 25% 25% 24% 7% 8% 6% 32% 20% 35% 35% 13% 13% 58% 31% 1% 42% Rank 2 2 1 1 1 2 2 2 1 2 1 1 2 2 1 1 3 1
Summary 23 Product type Hot drinks Coffee Fresh coffee
Fresh ground coffee Fresh coffee beans Instant coffee Instant standard coffee Instant decaffeinated coffee Tea Black tea Black standard tea Tea bags black standard Black speciality tea Tea bags black speciality Green tea Fruit/herbal tea Instant tea Other tea
Source:
SEDA SOLUBLES SL
Strategic Direction
SEDA Solubles SL has recently expanded its production capacity in Spain, although much of its attention remains concentrated on expanding its presence in international markets. France, Portugal, Germany, the UK and Russia are its main international markets and its strategic focus is unlikely to change in the short term. Supplying instant coffee and coffee mix products to third parties, the company is exclusively focused on private label production and it is expected to remain thus for the foreseeable future as it would be unable to compete with the marketing power of a company such as Nestl Espaa Sa (Grupo) in terms of branding.
Key Facts
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Spain
Summary 24
SEDA Solubles SL: Key Facts SEDA Solubles SL Padre Faustino Calvo s/n, 34005 Palencia, Spain +34 (91) 125 0400 / +34 (979) 716 100 +34 (91) 662 4488 / +34 (979) 716 114 www.sedasolubles.com Instant coffee and other hot drinks

Source:
Summary 25
SEDA Solubles SL: Operational Indicators 2006 2007 EUR185 million 715 2008 EUR202 million 750

Source:
EUR153 million 715
Company Background
SEDA Sociedad Espaola de Alimentos (Spanish Food Company) was founded in 1963. Until 2002 SEDA Solubles maintained an agreement with Krger for the distribution of its products on the Iberian Peninsula. However, the German company now uses its own agent, Krger Ibrica SA, for this. Nevertheless, Krger still offers SEDAs products in Germany, France and Benelux countries. SEDA Solubles is one of the two leading companies in the European market for private label instant coffee. With its headquarters in Palencia (northern Spain), where it has been active since 1957, it has a longestablished tradition in the country of producing not only instant coffee but also coffee substitute products. In the UK the company formed a joint venture in 2003 called Alliance Coffee Company with Ca Iguau to produce and launch soluble coffee products under the distributors name. Although both companies had experience of supplying the British private label segment, the joint venture was focused on increasing their share in this segment by supplying their coffee products directly. In Russia, the company opened a coffee packaging plant in 2003 with an investment of EUR30 million. In the meantime, SEDA will continue to import coffee into Russia. The company operates two separate businesses in Russia: Interseda for commercial sales and SEDA International for industrial sales. In 2005 the company sold 1,200 tonnes of coffee in Russia. SEDA Solubles is one of the founding companies of Caf Mundi, a non-profit making organisation focused on developing and setting up social projects in coffee-producing countries. Moreover, SEDA Solubles is a member of Calidalia, a company that brings together leading companies in the Spanish consumer market. The company is also certified by Fairtrade, the Rainforest Alliance and UTZ. In 2006 SEDA Solubles entered the North American market through a joint venture with Mother Parkers and the Asian market with the Portonovo brand. In October 2009, SEDA Solubles and Delaviuda Alimentacion SA launched a project to lead the international sales of breakfast bars and granola/muesli bars, focusing its activities on production for third parties.
Production
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Coffee
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80% of SEDA Solubles sales take place in international markets (France, Portugal, Germany, the UK and Russia), while 70% of total sales correspond to instant coffee. In 2005 SEDA Solubles opened a new EUR15 million freeze-dried coffee factory, together with Iguau, in Palencia (Spain) and a 12,000 sq m logistics and packaging centre at Villamuriel (Palencia, Spain). The factory has a production capacity of 4,000 tonnes per year. Moreover, SEDA Solubles is considering the possibility of opening new production facilities in Palencia or Russia.
In 2008 current value sales of instant coffee increased by 25% to reach EUR142 million and by 5% in other hot drinks to reach EUR60 million, as a result of the convenience trend. The company focuses completely on private label production and hence its products do not appear in Euromonitor International brand shares. It focuses on instant coffee and coffee mix products. It is reportedly the leading supplier of this type of coffee to retailers in Spain. SEDA Solubles accounts for a wide range of products, from standard and decaffeinated instant coffee to blends and substitutes (breakfast blends, natural cappuccino, decaffeinated cappuccino, chocolate cappuccino and vanilla cappuccino).
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COFFEE IN SPAIN
HEADLINES
Spanish coffee sales increased by 1% in total volume terms, reaching 140,220 tonnes in 2009. Private label increase and innovation in terms of new launches aided market polarization. Thanks to the growing health concerns among Spanish consumers, decaffeinated coffee continued to outperform standard equivalents in 2009 Unit prices of coffee declined slightly in 2009, as a result of rising demand for private label products In 2009, Nestl Espaa SA (Grupo) continued to lead the coffee category in off-trade value terms, with a 27% share Total volume sales of coffee are expected to fall by 2% over the forecast period, slipping to 137,400 tonnes
TRENDS
In comparison with the decreasing consumption patterns recorded during the early part of the review period, the Spanish coffee category remained relatively static in 2009, with a marginal decline in off-trade value sales and a marginal rise in volume sales. This reflects the increasing penetration of private label products and the accompanying decline in unit prices. Spain continues to be a heavy coffee-drinking country and coffee accounted for a 65% volume share of total hot drinks sales in 2009. The financial crisis changed consumption habits, benefiting coffee sales, particularly in the on-trade channel. A double downgrade has taken place, both in the products consumed (customers are opting for lower-priced products such as coffee instead of soft drinks or spirits) and in the outlets visited (cheaper outlets such as fast food restaurants or bars have grown in popularity). In total volume terms, coffee sales grew by 1% in 2009, a slower growth rate than in 2008. The coffee categorys growth rate was faster in 2008 and 2009 than previously in the review period, mainly as a result of the adoption by consumers of coffee as a cheaper reference. Decaffeinated fresh ground coffee grew by 3% and decaffeinated fresh coffee beans grew by 2% in offtrade volume terms, as a consequence of increasing health awareness among Spanish consumers. In value terms, both categories registered a rise of 3% (growth rates significantly slower than those of 2008), as a result of the growing demand for healthy products. Torrefacto fresh coffee beans sales saw a decline of almost 2% in off-trade volume terms, while mixture fresh coffee beans grew by 5% in volume terms in the off-trade channel. Torrefacto (coffee roasted with sugar) is perceived to be unhealthy due to the high content of sugar, while mixtures are becoming increasingly popular. Sales of coffee in Spain are split almost 50-50 between the on-trade and off-trade channels. With total volume sales in 2009 (140,220 tonnes), 70,310 correspond to the off-trade channel and 69,910 to the ontrade. The faster growth took place in the on-trade channel in 2009, as a result of shifting preferences in consumers habits in restaurants and bars. Spaniards love socialising in bars, and remain reluctant to limit this activity, despite the economic crisis, so they opt to substitute many of the products which they usually consume (for example food or alcoholic drinks) to other cheaper alternatives such as coffee. In March 2009 Sara Lee Southern Europe SL and Philips launched Senseo, their pod system, while Kraft Foods Iberia SL and Bosch launched Tassimo in September 2009. In addition, other players have announced several systems to compete in this category, including Lavazza Espaa SA (Espresso Point, Blue and A Modo Mio) and Illy Cafe Expresso Ibrica SA (iperEspresso).
COMPETITIVE LANDSCAPE
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The Spanish coffee category is characterised by a significant degree of concentration and a high level of maturity. Nestle Espaa SA (Grupo) continued to lead the category in off-trade value terms with a share of 27% in 2009, thanks to the strength of brands such as Nescaf and Bonka. In 2009 Nestle Espaa SA, Sara Lee Southern Europe SL, Kraft Foods Iberia SL and Productos del Caf SA represented a 59% off-trade value share and a 52% off-trade volume share. In 2009 international players continued to lead sales in the off-trade channel in both value and volume terms. However, local manufacturers remained powerful in the on-trade channel. Local players such as Cafs Baqu SL and Cafs Candelas SL play an important role in the on-trade channel thanks to their strong relationship with sellers, tradition, proximity to their customers and wide availability across points of sale. In 2009, many launches took place within the coffee pods category: Sara Lee Southern Europe SL and Philips Ibrica SA launched Senseo, Kraft Foods Iberia SL and Bosch (BSH Electrodomsticos Espaa SA) launched Tassimo, while Illy launched iperEspresso. Alongside the new players in the coffee pods category, there was also a completely new product development, with Industrias del Caf del Norte SAs launch of Descafeinado con Tila y Melisa under the Fortaleza brand. The new product is a decaffeinated fresh ground coffee, with extracts of lime tea and lemon balm. In April 2009 Sara Lee Southern Europe SL launched the advertising campaign Rediscover coffee, for its Senseo coffee pods system, with Sonia Ferrer (actress and model) as brand ambassador. In November 2009 Nestl Espaa SA (Grupo) launched a new Nespresso advertising campaign (the public had the chance to choose the particular advertisement on the brands web page), featuring a return for actor George Clooney. Industrias del Caf del Norte SA launched a campaign promoting Descafeinado con Tila y Melisa with the motto How easy it is to relax with a smile. It tastes like coffee and it has the relaxing effects of lime tea and lemon balm. The campaign targeted consumers with busy lifestyles who seek a moment of relaxation. Nestle Espaa SA renewed its main instant coffee brand Nescaf Classic. The company developed a new roasting process, providing a more aromatic instant coffee. The company re-launched the brand in a new style glass jar. Private label continued to account for the largest share of off-trade coffee sales in 2009 (26% volume share and 22% value share). In the case of fresh coffee, private label led sales in off-trade volume terms, however within instant coffee Nestl Espaa SA (Grupo) led in 2009, with an off-trade volume share of 34% and a value share of 41%, thanks to its brand image which is the favourite option among Spaniards due to their long-term relationship with the brand and its perceived quality. In the light of the economic situation, consumers are opting for low-priced and private label products. The off-trade value share of private label coffee overall consequently increased by two percentage points in 2009.
PROSPECTS
Over the forecast period, coffee consumption will be affected by increasing health consciousness among Spaniards. Decaffeinated variants (fresh ground coffee and fresh coffee beans) are expected to grow at a CAGR of 6% in value terms over the forecast period, being the two categories with the strongest anticipated performance within coffee. Off-trade value sales of coffee are expected to decline by 2% over the forecast period, to reach EUR576 million by 2014, while off-trade volume sales are expected to decrease by 4%, as a consequence of the rise in private label share. In volume terms, the industry in Spain will have to face the lack of a consumer base of heavy and loyal consumers, as the younger generation is more prone to drinking chocolate-based flavoured powder drinks at breakfast time. Spain has one of the oldest populations among EU countries, according to the INE (Instituto Nacional de Estadstica), and senior consumers are among those with heightened concerns about healthy products. Thus, decaffeinated varieties will benefit, recording an increase in share over the forecast period. In addition, instant coffee varieties will be the only categories recording growth over the forecast period in total volume terms due to the convenience trend. Over the forecast period, particularly during the first three years of the forecast period, price will play a key role in consumer purchasing decisions. Unit prices will be affected by two factors: private label becoming
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increasingly popular and discounting campaigns, resulting in a decrease in average unit price. However, after that austere period, a rebound effect is expected to take place, when consumers will opt for launches of new value-added products, which will serve to increase unit prices again. As a result, unit prices will rise for every year except 2010, to reach EUR8.54 per kg in 2014. Coffee consumption through the on-trade channel is expected to grow at a CAGR of 1% in volume terms over the forecast period. From 2012, when the economic situation is expected to become more favourable in Spain, consumers will start switching to other more expensive references within horeca outlets and ontrade coffee consumption is expected to start falling slightly. Functional coffee is expected to see increased sales in the forecast period. These include coffees enriched with cereals, vitamins, anti-oxidants and in general, products targeted towards health-conscious consumers. On the other hand, pod systems are also expected to become more popular among Spanish consumers, due to the wide variety available in the marketplace. Sustainability and fair trade will remain an important factor over the forecast period. Spanish consumers are more aware of social responsibility than ever before, and manufacturers will need to adopt ethical practices and promote sustainable and fair production in developing countries if they are to convince increasingly concerned consumers. Major players are expected to continue to create their own brands with ethical production positioning in order to become more involved in the ethical consumption trend. Coffee pods and machines sales are expected to continue growing over the forecast period, mainly due to the increase in the number of DINK households and one-parent families, as well as due to the higher functionality and convenience of pod systems compared with traditional coffee makers. More players are entering the category and consumers perceive it to be a new stable product area. Key coffee players are working with leading appliance manufacturers. Some examples are Sara Lee Southern Europe SL and Philips Ibrica SA (Senseo) or Kraft Foods Iberia SL and Bosch (Tassimo).
CATEGORY DATA
Table 27 tonnes 2004 Fresh Coffee - Fresh Ground Coffee - Fresh Coffee Beans Instant Coffee - Instant Standard Coffee - Instant Decaffeinated Coffee Coffee
Source:
Retail Sales of Coffee by Type: Volume 2004-2009
2005 61,320.1 57,023.4 4,296.7 9,820.0 4,717.3 5,102.7 71,140.1
2006 60,501.6 56,081.8 4,419.7 9,792.6 4,703.6 5,088.9 70,294.1
2007 59,629.1 55,206.8 4,422.3 9,708.2 4,674.4 5,033.8 69,337.3
2008 60,224.2 55,648.5 4,575.7 9,905.9 4,721.1 5,184.8 70,130.1
2009 60,236.8 55,622.3 4,614.5 10,073.5 4,777.8 5,295.7 70,310.3
60,579.2 56,093.9 4,485.2 10,030.6 4,818.5 5,212.1 70,609.8
Retail Sales of Coffee by Type: Value 2004-2009
2004 Fresh Coffee - Fresh Ground Coffee - Fresh Coffee Beans Instant Coffee - Instant Standard Coffee - Instant Decaffeinated Coffee Coffee
Source:
2005 338.5 305.2 33.3 200.1 89.4 110.7 538.6
2006 346.6 311.1 35.5 204.4 91.9 112.5 550.9
2007 354.1 316.9 37.1 206.7 94.6 112.1 560.7
2008 369.2 329.4 39.8 218.8 99.4 119.5 588.0
2009 365.9 325.9 40.0 220.9 100.4 120.5 586.8
322.3 289.7 32.7 199.9 88.2 111.8 522.3
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Retail Sales of Coffee by Type: % Volume Growth 2004-2009
2008/09 Fresh Coffee - Fresh Ground Coffee - Fresh Coffee Beans Instant Coffee - Instant Standard Coffee - Instant Decaffeinated Coffee Coffee
Source:
2004-09 CAGR -0.1 -0.2 0.6 0.1 -0.2 0.3 -0.1
2004/09 TOTAL -0.6 -0.8 2.9 0.4 -0.8 1.6 -0.4
0.0 0.0 0.8 1.7 1.2 2.1 0.3
Table 30
Retail Sales of Coffee by Type: % Value Growth 2004-2009
% current value growth 2008/09 Fresh Coffee - Fresh Ground Coffee - Fresh Coffee Beans Instant Coffee - Instant Standard Coffee - Instant Decaffeinated Coffee Coffee
Source:
2004-09 CAGR 2.6 2.4 4.1 2.0 2.6 1.5 2.4
2004/09 TOTAL 13.5 12.5 22.4 10.5 13.9 7.8 12.4
-0.9 -1.1 0.6 0.9 1.0 0.9 -0.2
Standard Vs Coffee Pods 2004-2009
2004 Coffee Pods Standard Total

Source:
2005 4.0 96.0 100.0
2006 4.4 95.6 100.0
2007 4.6 95.4 100.0
2008 4.8 95.2 100.0
2009 5.0 95.0 100.0
3.7 96.3 100.0
Trade associations, trade interviews, Euromonitor International estimates
Table 32 % retail value rsp Company
Coffee Company Shares 2005-2009
2005 26.2 18.3 4.5 1.4 0.4 9.9 20.0 19.2 100.0
2006 26.3 18.7 10.0 4.7 1.4 0.4 20.8 17.8 100.0
2007 26.7 18.8 10.0 4.7 1.5 0.4 20.7 17.2 100.0
2008 26.2 18.2 9.7 4.5 1.4 0.5 20.3 19.2 100.0
2009 26.5 18.1 9.7 4.5 1.4 0.5 22.2 17.1 100.0
Nestl Espaa SA (Grupo) Sara Lee Southern Europe SL Kraft Foods Iberia SL Productos del Caf SA Industrias del Caf del Norte SA Toscaf SA Kraft Foods Espaa SA Private Label Others Total
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Source:
Table 33 % retail value rsp Brand Marcilla Nescaf Saimaza Bonka Fortaleza
Coffee Brand Shares 2006-2009
Company Sara Lee Southern Europe SL Nestl Espaa SA (Grupo) Kraft Foods Iberia SL Nestl Espaa SA (Grupo) Industrias del Caf del Norte SA Nestl Espaa SA (Grupo) Nestl Espaa SA (Grupo) Toscaf SA Sara Lee Southern Europe SL Kraft Foods Espaa SA Kraft Foods Espaa SA Private Label
2006 18.5 17.0 10.0 9.0 1.4 0.3 0.4 0.1 20.8 22.4 100.0
2007 18.7 16.7 10.0 9.0 1.5 0.6 0.5 0.4 0.1 20.7 21.9 100.0
2008 18.1 15.9 9.7 8.7 1.4 0.8 0.7 0.5 0.1 20.3 23.7 100.0
2009 18.0 15.5 9.7 8.8 1.4 1.4 0.8 0.5 0.1 22.2 21.6 100.0
Nescaf Dolce Gusto Nespresso Toscaf Soley Columba Saimaza Private label Others Total
Source:
Table 34 tonnes
Forecast Retail Sales of Coffee by Type: Volume 2009-2014
Source:
2010 59,731.0 55,128.3 4,602.8 10,175.8 4,816.0 5,359.8 69,906.8
2011 59,148.8 54,585.7 4,563.1 10,247.3 4,847.3 5,400.0 69,396.1
2012 58,524.5 54,042.2 4,482.2 10,260.2 4,857.5 5,402.7 68,784.7
2013 57,915.1 53,510.4 4,404.8 10,230.8 4,855.1 5,375.7 68,145.9
2014 57,268.1 52,957.4 4,310.6 10,156.1 4,839.5 5,316.6 67,424.1
60,236.8 55,622.3 4,614.5 10,073.5 4,777.8 5,295.7 70,310.3
Official statistics, trade associations, trade press, company research, trade interviews, Euromonitor International estimates
Forecast Retail Sales of Coffee by Type: Value 2009-2014
Source:
2010 361.0 320.9 40.0 221.5 101.3 120.2 582.4
2011 357.6 317.6 40.0 221.8 102.2 119.6 579.5
2012 355.6 315.8 39.8 220.9 102.8 118.1 576.5
2013 356.0 316.2 39.8 219.6 103.3 116.3 575.6
2014 358.6 318.7 39.9 217.4 103.7 113.7 576.0
365.9 325.9 40.0 220.9 100.4 120.5 586.8
Table 36
Forecast Retail Sales of Coffee by Type: % Volume Growth 2009-2014
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% volume growth 2013/14 Fresh Coffee - Fresh Ground Coffee - Fresh Coffee Beans Instant Coffee - Instant Standard Coffee - Instant Decaffeinated Coffee Coffee
Source:
2009-14 CAGR -1.0 -1.0 -1.4 0.2 0.3 0.1 -0.8
2009/14 TOTAL -4.9 -4.8 -6.6 0.8 1.3 0.4 -4.1
-1.1 -1.0 -2.1 -0.7 -0.3 -1.1 -1.1
Table 37
Forecast Retail Sales of Coffee by Type: % Value Growth 2009-2014
% constant value growth 2009-14 CAGR Fresh Coffee - Fresh Ground Coffee - Fresh Coffee Beans Instant Coffee - Instant Standard Coffee - Instant Decaffeinated Coffee Coffee
Source:
2009/14 TOTAL -2.0 -2.2 -0.2 -1.6 3.3 -5.7 -1.8
-0.4 -0.4 0.0 -0.3 0.6 -1.2 -0.4
Forecast Standard Vs Coffee Pods 2009-2014
2009 Coffee Pods Standard Total

Source:
2010 5.3 94.8 100.0
2011 6.5 93.5 100.0
2012 8.0 92.0 100.0
2013 9.5 90.5 100.0
2014 11.0 89.0 100.0
5.0 95.0 100.0
Trade associations, trade interviews, Euromonitor International estimates
Table 39
Coffee Machine Sales: 2003-2008 2003 2004 44.7 814.0 2005 50.0 923.0 2006 61.06 1,010 2007 78.46 1,103 2008 89.53 1,154
Retail value (EUR million) Retail volume ('000s of machines)

Source:
44.0 816.0
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Coffee in Spain

Euromonitor International March 2010

List of Contents and Tables

Imports/Exports of Coffee by category 2003-2008 ......................................................... 13

LOCAL COMPANY PROFILES - SPAIN .............................................................................................15

COFFEE IN SPAIN ...............................................................................................................................30

HOT DRINKS IN SPAIN : MARKET INSIGHT

On-trade Consumption Habits Change Due To the Current Economic Situation

Private Label Sales Increase

Slight Decrease Over the Forecast Period

KEY TRENDS AND DEVELOPMENTS

Health and Wellness Driving Innovation

Recession Changes Consumer Habits in the On-trade Channel

Fair Trade Blossoming in Spain

Pod and Capsules Revolution

% volume analysis 2004 Off-trade On-trade Total

2005 62.2 37.8 100.0

2006 62.3 37.7 100.0

2007 62.4 37.6 100.0

2008 61.4 38.6 100.0

2009 61.1 38.9 100.0

61.9 38.1 100.0

Table 2 % volume growth

Retail Vs Foodservice Sales of Hot Drinks: % Volume Growth 2004-2009

2008/09 Retail Foodservice Total

2004-09 CAGR 4.7 4.4 5.3

2004/09 TOTAL 25.5 22.7 28.2

4.7 5.4 5.7

Table 3 '000 tonnes

Retail Sales of Hot Drinks by Sector: Volume 2004-2009

2004 Coffee Tea Other Hot Drinks Hot Drinks

2005 71.1 3.3 56.6 131.0

2006 70.3 3.4 56.8 130.5

2007 69.3 3.6 57.2 130.1

2008 70.1 3.7 57.4 131.2

2009 70.3 3.8 57.5 131.7

70.6 3.1 56.5 130.2

Table 4 EUR million

Retail Sales of Hot Drinks by Sector: Value 2004-2009

2004 Coffee Tea Other Hot Drinks Hot Drinks

2005 538.6 99.9 193.1 831.6

2006 550.9 107.6 194.6 853.2

2007 560.7 116.0 197.3 874.0

2008 588.0 124.5 199.4 911.9

2009 586.8 127.6 192.7 907.1

522.3 93.2 192.1 807.6

Table 5 % volume growth

Retail Sales of Hot Drinks by Sector: % Volume Growth 2004-2009

2008/09 Coffee Tea Other Hot Drinks Hot Drinks

2004-09 CAGR -0.1 4.2 0.4 0.2

2004/09 TOTAL -0.4 22.8 1.9 1.2

0.3 3.9 0.2 0.3

Retail Sales of Hot Drinks by Sector: % Value Growth 2004-2009

2004-09 CAGR 2.4 6.5 0.1 2.4

2004/09 TOTAL 12.4 36.9 0.3 12.3

-0.2 2.5 -3.3 -0.5

Foodservice Sales of Hot Drinks by Sector: Volume 2004-2009

2004 Coffee Tea Other Hot Drinks Hot Drinks

2005 65,504.0 383.5 13,853.1 79,740.7

2006 64,843.3 392.0 13,863.3 79,098.5

2007 64,068.6 403.2 13,853.1 78,324.9

2008 68,415.1 416.1 13,775.2 82,606.4