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Bewley's Cafés and the crisis in the world coffee market
 national |
consumer issues |
opinion/analysis
 Friday October 29, 2004 12:09 by Michael Hennigan - Finfacts.com
'The Irish poet Brendan Kennelly once described Bewley's Café in Grafton Street as the 'heart and the hearth of Dublin'. Dublin, he said, would not be Dublin without Bewley's. These sentiments have been echoed by generations of Irish people since Joshua Bewley first introduced tea to the Irish public in 1835.
Bewley's is a name synonymous in the history of Dublin and more recently of Ireland as a whole. Bewley's itself has a rich history of growth and survival which has proved it to be one of the last bastions of tradition in a changing Ireland.' The foregoing words are from the Campbell Bewley Group website and yesterday, the company announced that the landmark Bewley coffee shops in Dublin’s Grafton Street and Westmoreland Street are to close next month. The coffee shops have accumulated losses of over €4m despite investment of €12m since 1996. The Grafton Street shop is located on one of the most expensive streets in the world and inevitably will become another site for a global consumer brand.
It may surprise some coffee drinkers that the coffee plant originated in southern Arabia, in the area that is now known as Yemen. The green coffee bean, boiled and seasoned with cardamom spice, is a traditional beverage in the region. The other popular Arab beverages are Turkish coffee- ground roasted beans, served unfiltered and black tea in a glass, with lots of sugar.
The world's second biggest commodity has been big business in recent times at the consumer level but coffee growers have experienced many years of low prices.
In the early 1990s, earnings for coffee-producing countries were about US$10-12 billion and retail sales, mainly concentrated in industrialised countries amounted to US$30 billion, according to the International Coffee Organisation (ICA). Today, retail sales have more than doubled to $US70 billion, but earnings for the mainly poor producing countries have fallen by half, to about US$5.5 billion.
According to the ICA, prices in real terms, have been at their lowest in about a century. Prices which averaged US$1.20 per pound (0.45kg) in the early 1980s fell to lows of US50 cents and have recently recovered to around US75 cents on US markets.
The price collapse has been caused by a sharp rise in worldwide production. New plantations have been opened in Brazil, the world’s biggest producer and the rise of countries such as Vietnam, which is vying with Colombia for the number two spot, has created a glut. Worldwide production in 12 months to September is expected to have fallen 17.4% to about 100 million bags.
The Fair Trade model guarantees farmers a price of $1.26 per pound for coffee. This enables farmers to make a sustainable living and encourages them to invest in quality coffee crops. In The US TransFair USA certifies which products can carry a fair trade label and chains like Starbucks and Dunkin Donuts are now carrying Fair Trade coffee. Procter & Gamble, maker of the popular US coffee brand Folgers, in September began offering a fair trade certified Mountain Moonlight coffee under its premium Millstone brand.
“It’s still a very small percentage of the market, but something that people are starting to pay more attention to, and roasters are starting to view as a market niche worthy of servicing,” said Joseph DeRupo, of the US National Coffee Association.
However, the higher price provided by the Fair Trade model does not always filter down to the farmer who has no resources to change to production of the higher priced quality bean varieties.
-The world's most expensive streets' survey:
http://www.finfacts.ie/biz10/irelandworldexpensivestreets.htm
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Comments (9 of 9)
Jump To Comment: 1 2 3 4 5 6 7 8 9RTE story link
To get a better understanding of the issues around fair trade coffee (true fair trade vrs somehwat fairere trade) you could go to one of the 100% fair trade (and true fair trade) sites. Since it's in this neck of the woods (and where we get ours) you could look at the literature at deansbeans.com >
The problem (what the others say) is that a coffee roaster needs access to a wide range of coffees to do the blends, coffees from all over the world. So they can't offer 100% fair trade coffee, especially not real fair trade, because how to make direct contact with the growers cooperatives. >
I think the real story about Bewley's is why it is closing and 234 people are losing their jobs, not Fair Trade Coffee.
Whatever about the past contribution to Dublin's social life, Bewley's lost all it's character and cachet when Campbells took it over. It's been crap since the late 1980's with little more to offer Dublin than Cafe En Seine on Dawson Street. It was also massively expensive to go there - a rip-off by Campbells.
I think this closing is a sham, based on the fact that Starbucks will open in Dublin soon - and Starbucks will really KILL Bewleys in the market place.
noticed a sign on the canteen in DCU the otherday...
"This canteen proudly serves Starbucks Coffee, the only place in Ireland to do so"
dcu ain't no ucd?
riddance to Bewleys.maybe we will get some company in here that serves decent coffee.Not that overpriced overboiled muck that bewleys claimed was coffee.
Interesting piece Michael though the emphasis on the global coffee market, per se, is something of a tangent to the demise of a what is after all, a subsidiary to the otherwise, successfull Campbell Catering business worldwide.
A point aside, is the piece from the Irish Times today that reveals at least two thirds of the staff are now, foreign nationals.
You may also be interested in hearing the views of one customer in todays Irish Independent:
QUOTE - "Some customers yesterday felt that the great institution had, indeed, lost its way in recent years. Too many foreign staff had led to a change in the atmosphere, said one."
Personally I blame the obvious lack of direction, paucity of investment, non-existent viable and distinctive growth stategies, only AFTER noting the overall shabby and poor presentation of the Bewleys cafes, and the subsequently degraded product for sale.
I am but one former customer.
However, I suspect that anyone interested in providing any discretionary service, whether it be serving a coffee or running a country - ignores their customers and pretends their concerns do not exist, at their own risk
Municipilise Bewleys!
In 1986, Bewley’s cafés and the wider company could have disappeared if it was not for the far sighted intervention of the Campbells who took a serious risk in rescuing the business.
It is also worth noting that much of the media and public commentary around the then 1986 crisis, while full of nostalgia, was critical of Bewley’s cafés, stipulating the need for ‘change’ both in the management, format and food offering of these cafés.
It was the personal and business goodwill of the Campbells which led to the survival of the cafés for a further eighteen years and, as importantly, to the development of a modern and successful Bewley’s tea and coffee business at home and abroad. In my view, this is ‘expertise’ at work.
In purchasing the cafés in 1986, the new owners also cleared the business of all of its extensive liabilities.
The Campbells saved the generous employee pension fund and in subsequent years topped it up to the tune of over EUR 1 million so that pensioners could have increases.
They paid the creditors and gave the employees their first pay rise in several years, bringing the business onto a financially sound footing. This included the clearance of all tax arrears outstanding at the time.
In the late 1990’s they also gifted staff with shares and recently, they purchased these back at a considerable premium. These actions are representative of a conscientious and socially responsible approach.
At major expense the Harry Clarke Windows have been preserved, renovated and protected over the years. They remain in pristine condition and are intended to remain a part of Dublin public life into the future, at an alternative location. These windows are currently placed against interior light boxes and are fully demountable.
The open fires, the mahoganies, woodwork and furnishings throughout the buildings have all been maintained over the years.
Bewley’s has also further enhanced its traditional role as a major promoter of national charitable, artistic and social causes, including support for the Irish Hospice Foundation and Ireland’s Biggest Coffee Morning, now in its eleventh year, and the Bewley’s Café Theatre in Grafton Street.
Bewley’s has openly admitted that not everything has been done correctly in respect of the operational management of the cafés and/or the décor. They acknowledge that the cafés were in major need of a refit to meet contemporary needs and standards. But then, on occasion, they have also received severe criticism when even the wallpaper has been changed.
The major operational costs of these large premises, on the fifth most expensive street in the world, make them impossible to run profitably in today’s economic climate. This is particularly apparent when you compare the scale of losses involved against the fact that the cafés contribute only 5% to overall group turnover.
Since 1986, more money has gone into the Bewley’s Café division than it has been capable of generating. This was only made possible by the successful development and growth of other business activities. Cumulative losses from these two cafés exceed EUR 4 million.
Ironically, the company has supported coffee industry developments throughout Ireland to the extent that the majority of ALL ground coffee consumed in Ireland is provided by Bewley's - even though you might be buying your cappuccino or latte from a differently branded coffee house.
Bewley's is also a major promoter of Fairtrade and the Ethical Trading Initiative. The company practices ethical procurement in all of its operations.
As for Starbucks, Bewley's competes successfully with Starbucks thoughout the United States, so do please look beyond the obvious hype about their arrival into Ireland. They will find the market here deeply competitive as do all other participants.
Bewley’s was originally established as a coffee and tea importation, wholesale and retail business in the early 1800s, gradually evolving into café operations. To an extent, this development involves the company going back to the roots of its success.
The company has grown significantly and it will continue to pursue growth through its strengths in the provision of speciality beverages to the foodservice, hospitality and retail markets.
As one chapter closes on the Bewley’s story, others will open. The Bewley’s name, tradition and ethos will be preserved and it will remain synonymous with the company as it continues into the future.
The current stewards of the business are committed to the Bewley’s legacy. It is that, and the support of wonderfully loyal customers over many years, which will ensure that Bewley’s continues into the future.
Finally, don't let anyone criticise the staff. They are exceptional in every respect and dignified in the face of the adverse circumstances they now find themselves in. Thankfully, many will be redeployed and many others will find new employment through outplacement initiatives by Bewley's.
There are as many opinions about these two cafés as there are people in Ireland. The company will not contradict anyone's views as such, but it does at least seek objectivity from all commentators.
Enjoy your coffee!
The closure of Bewleys is directly related to the price of land.