This Market Brief focuses on the Swedish market for coffee, both roasted and not roasted, decaffeinated or not, as well as extracts, essences, concentrates and preparations with a basis of coffee.

Coffee falls under chapter 9, subheading 01, of the Combined Nomenclatures (CN) of the European Communities (which is based on the HS nomenclature) with the exception of instant coffee which is included in chapter 21 under subheading 01, together with extracts and essences etc.

In the table below, coffees described in this survey are presented with their statistical numbers according to the Combined Nomenclatures.

Sweden belongs to the countries with the highest per capita consumption of coffee in the world. Coffee consumption has been very stable over the past decades with years of small decreases of one or two percent per year alternating with periods of slow increase, reflecting consumption trends and the price of coffee. However, after decreases during the nineties, the consumption this decade is increasing again.

Coffee is the most important beverage in Sweden. Of the total beverage consumption, the share for coffee is about 30% by volume (when measured in ready-to-drink litres). However, the market share by value is smaller, less than 10% (due to the low price level). See also Appendix 2, The Total Swedish Beverage Market 2001.

In 2002, the Swedish consumption of coffee (all coffee calculated as roasted equivalent) was estimated at 80,000 tons, corresponding to about 9 kg per capita (all inhabitants). Calculated on the adult population the annual consumption was about 11.4 kg.

Of the total consumption, roasted coffee has a market share of 87% and instant coffee of 13% (measured by volume). Several new coffee products have in recent years achieved some market, such as flavoured coffees, as well as organic and fair-trade labelled coffees.

There are several coffee roasters in Sweden who import green beans and blend and roast them to suit the Swedish consumers taste. The typical Swedish cup of coffee is a blend, which is filter brewed from coffee sold as roasted and ground. Swedes are very discerning coffee drinkers, they know what they like and insist on getting the kind of coffee they prefer. This means that it is difficult for foreign exporters of blended and roasted coffee to enter the Swedish market, maybe easier for exporters of instant coffee, which is not manufactured in Sweden.

Instant coffee has a market share of about 13% in volume terms, (a bit higher in value terms) which means that it has gained some market over the past years. The freeze-dried variety is preferred over spray-dried.

Quality, taste and aroma coffees are most important to the Swedish roasters. There are accepted definitions of grades of coffee which are used when quoting prices and taking orders. But before an order is placed samples of the green beans are roasted, ground and brewed into coffee, which is then tasted for acceptance or rejection. Some roasters have their representatives in the shipping ports in Brazil and Colombia who check the consignments before they are loaded.

Exporters to this market must make an effort to convince the buyers that their coffee is suitable for the roasters' blends. It is important for the roasters to keep the taste and aroma of each blend as stable as possible over time, despite variations in the coffee crops or a change in suppliers.

Swedish coffee roasters use only Arabica, as Robusta (< 1% of imports) does not give the right taste for this market. The typical Swedish blend is based on Brazilian Santos with Colombian and Other Milds mixed in for body and character. There is a trend towards darker roasts, which require slightly different blends of coffees.

Imports of roasted coffee are mainly from Denmark and the Netherlands. Blends and roasts are made to Swedish specifications and even the green coffees used may be purchased under the Swedish partners' supervision.

All green beans used by the domestic roasters are imported.

As for roasted coffee, the domestic roasters supply about 94% of the market and other importers account for the remaining 6%. However, the domestic processing is bigger than the actual market, since 12% is exported:

As for instant coffee, the market is totally supplied by imports, about 2,700 tons in 2002 and increasing.

Sweden imported 87,582 tons of green coffee in 2002, an increase of 3.4% compared to the previous year. Four countries account for 81% of the total imports: Brazil (46%), Colombia (20%), Peru (8%) and Kenya (7%).

The balance is supplied by a large number of countries, of which the most notable are Honduras, Guatemala, Costa Rica, Nicaragua, Rwanda, Ethiopia and Mexico. All in all Sweden has during the past three years imported green beans from more than 50 countries around the world, but you can see a tendency towards fewer supplying countries.

Imports of roasted ground coffee has decreased substantially in recent years. In 2002, however, imports increased about 48% to 6,485 tons. In 1994, imports of roasted ground coffee was about 9,000 tons.

Two countries -Denmark and the Netherlands -account for about 70% of exports of roasted ground coffee to the Swedish market. Furthermore, imports from these countries are mostly private label coffees for the retail trade. The remainder is discount coffee with no brand name or espresso type of coffees. Next to nothing is imported from origin countries as finished products.

Instant coffee net imports amounted to 2,700 tons in 2002 and increased 15% compared to the previous year. Of the total, coffee concentrates account for 85% and coffee preparations for 15%.

Main suppliers of instant coffee are Switzerland, Germany and the Netherlands with about 78% of total imports. About 10% of imports are supplied by two coffee producing countries, Brazil and Colombia.

The production of the domestic coffee roasters has during the 1990's varied between 83,000 and 72,000 tons with a decreasing tendency. In 1992, the production amounted to 83,000 tons, and in 1999 to approx. 73,000 tons. After a dip in 2000 the production has increased the past two years and was in 2002 about74,200 tons.

Sweden has in recent years become a substantial exporter of high quality roasted ground coffee, especially to the USA (67%). Anew and expanding market is the Baltic countries (Estonia, Latvia and Lithuania). During 2002, total exports of roasted ground coffee amounted to 11,396 tons and SEK 359 millions.

Swedish coffee processing is dominated by four roasters, of which two belong to multinational corporations (Kraft Foods and Nestle) and the other two are owned and run by families:

These four companies account for 87% of the consumer market and dominate also the HoReCa market.

Thus the green coffee exporter should be very much more interested in the Swedish market than an exporter of roasted ground coffee.

Swedish roasters generally buy green beans directly from coffee exporters in the producing countries. The roasters (especially the smaller ones) may also place orders through coffee agents or from trading houses within the EU, mainly Switzerland and Germany. It is also possible to trade on the New York Coffee Exchange to hedge against losses but not for delivery.

The Swedish food distribution is dominated by four integrated retail groups which together account for about 75% of food sales in both the wholesale and retail trade:

Each group has built up a close integration of purchasing, importing, wholesaling, distribution and retailing. The retail groups may also include wholesaling and distribution to the HoReCa sector. It should be noted that all four groups are engaged in joint Scandinavian and European buying groups.

Some retail chains within these groups also market private label coffees (house brands) produced by roasters abroad, mainly Denmark and the Netherlands. So far the volumes of these house brands are not too big and 90% of the retailed coffee are branded products from the domestic roasters.

Roasted and blended coffee, as well as instant coffee, may be imported by the retail groups themselves or through specialised wholesalers and agents. There are some small and medium sized wholesalers and agents, which generally also act as importers. As a rule, these companies are specialised in a certain product group, e.g. espresso, instant, gourmet or organic coffee, or in selling to specific customers, e.g. the HoReCa sector or convenience stores.

Since the joining with the EU in 1995, EU regulations regarding food labelling, nutritional information, additives and food control are now in effect in Sweden. However, under a transitional period, some Swedish regulations will still be applicable.

From the National Food Administration a list of regulations for food imports can be provided. Usually the Swedish importer informs the foreign supplier of these regulations. The importer also wants to be guaranteed that the supplier can meet the demands of the National Food Administration before he signs a contract.

As with all food imports to Sweden, the goods imported in consumer packages have to be marked with content, weight, country of origin, whether they contain any additives, colorants or other foreign substances (not allowed in roasted ground coffee).

All consumer products marketed in Sweden must contain the following information on the package:

Greens beans are traded in jute or sisal bags of60-70 kg. The bags are then loaded in containers for shipment. The coffee may more and more often be placed in big bags which hold 21 tons, and bulk loaded into containers. Coffee ships usually go to Hamburg or Rotterdam, from where the containers are sent to Sweden overland or on smaller vessels.

Most importers prefer containers to be air-conditioned as there could otherwise be a risk of the coffee getting mouldy due to humidity and temperature variation, but the big bags seem to reduce this risk.

Coffee is normally being bought continuously. Usually the big roasters try to keep only one week's requirement on stock and another 3-4 weeks' supply in transit. Smaller roasters must keep up to a month's supply in stock, as their shipments would be too small otherwise.

Coffee is quoted in US cents/lb. or US dollars for 50 kg and terms are normally Cash Against Documents.

The value of imports is calculated as the price paid by the importer including expenses for insurance and transport to the Swedish border.

At the border, a value-added tax (VAT) of 12% is added to the price. VAT is imposed on the value added at each stage during the manufacturing and distribution process.

Price is one of the single most important factors when it comes to exports (given good enough quality). The price level often determines whether or not the export comes off. Studying the prices of rival products makes export calculations much easier.

There are big difference in the price level of individual products, and the factors that directly affect pricing are:

As a full member of the European Union (EU), Sweden is apart of the EU customs union. This means that there are no customs duties or other trade barriers between the EU and Sweden.

Regarding imports, customs tariffs for countries outside EU apply. Products from ACP-countries and Least Developed Countries are exempted from duty .For other developing countries asp agreements may lower the applicable customs tariffs. As a result of Sweden's joining the EU, an import duty on green beans was introduced in 1995. Furthermore, both roasted and instant coffee are subject to a relatively high customs duty.

Information on applicable customs tariffs, GSP-agreements can be obtained from Eurostat, Swedish Customs or organisations representing importers and distributors (see address list in Appendix 3).

The prospects for new entrants on the Swedish market are not too good, but a bit better for the green coffee exporter than for the exporter of roasted ground coffee or instant coffee. The trade is stable and very set in its trading patterns. The coffee trade is built on trust and long term business relations.

This pattern is reinforced by the long established preference among Swedish consumers for certain blends, which in turn require certain type and quality of coffee beans. Santos is the base in most blends, Colombia in others. As a rule, these blends also contain coffees from Central America and Kenya, as well as a few other coffees, to achieve the right taste and aroma. It is therefore impossible to replace Santos or Colombia (which together account for about 2/3 of the Swedish imports) and difficult to substitute new coffees for the other coffees in the recipes.

Nevertheless, coffee buyers are still interested in looking for new suppliers of green beans to keep their options open when shortages suddenly occur or when prices or quality from old suppliers become less favourable.

The past three years we have noticed significant changes among the supplying countries next to Brazil and Colombia, who still are dominating. E.g. Peru has doubled its share from 4% to 8% since 1999 and is today number 3, when Guatemala went from 11% to 4%. In 2002 Honduras increased from 2% to 5% to be number 5.

There are possibilities for exporters of Arabica to get a foothold on the Swedish market, but quantities will not be large, nor will the business grow very rapidly, unless you are extremely competitive pricewise. The buyer will value the coffee as it works in the blend and not pay extra for a surplus or superior quality.

A new and slowly expanding market is organic coffee. The share of market is about 4%. Fair Trade coffee seems to increase even slower and has not got more than 1% of the market yet.

Robusta exporters do not have any reason to visit Sweden.

For an exporter new to Sweden, it would also be advisable to contact a coffee agent in Sweden or a European trading house before visiting the buyers at the roasters.

• Trade statistics are presented according to the Combined Nomenclature (CN) used within EU, which is based upon the Harmonised System (HS).
• Import quantities are measured in metric tons.
• Import values are measured in Swedish Krona (SEK), for currency conversion, see Appendix 3
• Source: Statistics Sweden