Entering the Scandinavian market for coffee

Over 90% of the coffee imported by Denmark, Sweden and Norway is sourced directly from producing countries. The emergence of small specialty coffee roasters increasingly offers opportunities for direct trade models, while opening up space for a wider range of origins and suppliers within the Scandinavian coffee market. This movement is also driven by an increasing consumer interest in high-quality and sustainably produced coffees.

1. What are he requirements for coffee to enter the Scandinavian market?

Sweden and Denmark are part of the European Union (EU), Norway is not. However, Norway takes part in the European Economic Area (EEA), which extends the European Union’s single market to non-EU countries in the European Free Trade Association (EFTA): Iceland, Liechtenstein and Norway. In practice, this means that Norway’s food laws and regulations to a large extent mirror European Union rules. Hence, EU legislation can be taken as a basis for all three countries.

In order to export coffee to any of these countries, you need to comply with strict European Union requirements. For a complete overview of these standards, refer to our study on buyer requirements for coffee or consult the specific requirements for coffee in the EU Trade Helpdesk.

Buyer requirements can be divided into:

1. Musts: legal and non-legal requirements you must meet to enter the market;
2. Additional requirements: those you need to comply with to stay relevant in the market;
3. Niche requirements: applying to specific niche markets.

The highlights for these requirements are given below, specified for the Scandinavian market where relevant.

Legal and non-legal requirements

Legal requirements

You must follow the European Union legal requirements applicable to coffee. These rules mainly deal with food safety, where traceability and hygiene are the most important themes. Special attention should be given to specific sources of contamination, of which the most common are:

• Pesticides — consult the EU pesticide database for an overview of the maximum residue levels (MRLs) for each pesticide;
• Mycotoxins (fungi);
• Salmonella (although coffee is considered low-risk).

Quality requirements

Green coffee is graded and classified for quality before export. There is no universal grading and classification system for coffee. The Specialty Coffee Association’s standards for green coffee grading are often used as a point of reference. However, most producing countries have and use their own grading systems.

According to the International Trade Centre, grading is usually based on the following criteria:

• altitude and region;
• botanical variety;
• preparation — wet or dry process, washed or natural;
• bean size or screen size, sometimes also bean shape and colour;
• number of defects or imperfections;
• roast appearance and cup quality in relation to flavour, characteristics and cleanliness;
• bean density.

Specialty coffee is graded according to its cupping profile. Fragrance, flavour, aftertaste, balance, acidity, sweetness, uniformity and cleanliness are important topics in the grading process. If you sell specialty coffee, it is important for buyers to know what the cupping score of your coffee is. Although not mandatory, it could be relevant to add this information to the documentation of the coffee you are exporting.

Note that there is no exact definition of specialty coffee within the coffee industry. The Coffee Quality Institute and the cupping protocols of the Specialty Coffee Association consider that coffees graded and cupped with scores below 80 are considered standard quality and not specialty. Nevertheless, the exact minimum scores defining specialty coffee differ per country and per buyer. Some buyers consider 80 too low and demand a cupping score of 85 or higher.

Labelling requirements

Labels of green coffee exported to Norway, Sweden and Denmark should comply with the general food labelling requirements of the European Union. The label should be written in English and should include the following information to ensure traceability of individual batches:

• product name
• International Coffee Organisation (ICO) identification code
• country of origin
• grade
• net weight in kilograms
• for certified coffee: name and code of the inspection body and certification number

Figure 1: Examples of green coffee labelling

 

Source: commodity.com

Packaging requirements

Green coffee beans are traditionally shipped in woven bags made from jute or hessian natural fibre. Jute bags are strong and robust. Other materials, such as Grainpro or other innovative material like Videplast liners, are often used to pack specialty coffees inside jute bags.

Most green coffee beans of standard quality imported into Scandinavia are packed in container-sized bulk flexi-bags that hold roughly 20 tonnes of green coffee beans each. The rest of the green coffee is transported in traditional 60 kg or 70 kg jute sacks, each with a net volume of 17 tonnes to 19 tonnes of coffee.

Other packaging used in transporting coffee includes polypropylene super sacks for 1 tonne of coffee, polyethylene liners for 21.6 tonnes and vacuum-packed coffee. These techniques provide two advantages in the coffee trade, namely increasing efficiency and maintaining or preserving quality.

Figure 2: Examples of coffee packing: jute bag, container-sized flexi bag, GrainPro and Videplast liner

Sources: raadtradingco.com, bls-bulk.com and GrainPro

Additional requirements

Additional food safety requirements

Expect buyers in Scandinavia to request extra food safety guarantees from you. Regarding production and handling processes, you should think of:

• Implementation of good agricultural practices (GAP): The main standard for good agricultural practices is GLOBALG.A.P., a voluntary standard for certification of agricultural production processes that provide safe and traceable products. Certification organisations, such as Rainforest Alliance-UTZ, often incorporate GAP in their standards.
• Implementation of a quality management system (QMS): A system based on Hazard Analysis and Critical Control Points (HACCP) is often a minimum standard for green coffee storage and handling.

It is good to keep in mind that your Scandinavian importer might re-export green coffee to other destinations in Europe. Those other buyers push their requirements forward to other players in the supply chain, which might increase the need for you to adopt other specific certifications or standards. This will depend on the final market and market channel used.

Additional sustainability requirements

Corporate responsibility and sustainability are growing in importance in the coffee sector. Adopting codes of conduct or sustainability policies related to your company’s environmental and social impacts will give you a competitive advantage. The leading companies in the Scandinavian coffee market, such as Jacobs Douwe Egberts and Merrild, all have sustainability policies in place.

Certification standards like Rainforest Alliance-UTZ have also become important in the mainstream coffee market. These certification standards are usually part of the sustainability strategy of traders, roasters and retailers. Scandinavian importers and roasters, such as NAF Trading (Denmark) and Joh. Johannson Kaffe (Norway), handle a wide range of coffees from various origins and using various certifications. Jacobs Douwe Egberts also cooperates with all main certification sustainability schemes. Large Scandinavian retailers, such as Kiwi and Coop, have roasted coffee certified under sustainability standards in their assortments.

Scandinavia is an important market for organic coffee, which is expected to continue growing strongly for the coming years. Major Scandinavian coffee companies as well as smaller roasters offer a wide range of organic coffees to cater for consumer demand in Scandinavia. In order to market your coffee as organic in the Scandinavian market, it must comply with the regulations of the European Union for organic production and labelling. Obtaining the EU organic logo is the minimum legislative requirement for marketing organic coffee in Norway, Sweden and Denmark.

In Sweden, KRAV, a private organic association with its own standard and label certifies approximately 80% of the organic products in the country. The KRAV standards are adapted to IFOAM standards, but in some cases they are stricter than the EU standards.

Denmark has a state-owned ecolabel: the Danish organic logo, the red Ø mark. Coffee certified according to EU organic legislation and further processed, packed or labelled in a Danish company inspected by public authorities, can be labelled with the Ø logo, in addition to the EU logo.

Norway’s official national organic logo is the Ø-label, issued by Debio, Norway’s national organic farming association. Debio’s Ø-label can be applied to imported products that are certified by an accredited body in the country of origin, in accordance with Norwegian rules and regulations.

The market for fair trade certified coffee is also growing in Scandinavia, offering interesting opportunities in this niche market. The most common fair trade standard in the Scandinavian market is Fairtrade. Before you can market your coffee beans as fair trade or organic, an accredited certifier must audit your growing and processing facilities. Examples of accredited certifiers include Control Union, Ecocert, FLOCERT, ProCert and SGS.

Niche requirements

Direct trade relations, and high transparency and traceability from source to consumer, characterise the high-end specialty coffee segment. This means that buyers of these types of coffees ask for requirements that go far beyond certification. These buyers will visit your coffee farm, evaluate your product, and try to establish a relationship with you. Besides high-quality, these buyers are interested in your stories from origin. This implies that you should know the specifics of your coffee, and be willing to honestly share this.

2. Through what channels can you get coffee on the Scandinavian market?

The Scandinavian coffee end market can be divided into in-home and out-of-home consumption. Speciality coffee represents a growing niche market in both segments, as consumers demand high quality and are willing to pay high prices for it. Suppliers in producing countries mainly enter the European market through an importer, but there has been an increase in direct trade.

How is the end market segmented?

The Scandinavian coffee end market can be segmented as follows:

Figure 3: Coffee end market segmentation by quality

Low end: These are mainstream low-quality, mainly blended coffees. Approximately 40% to 100% of the beans in these blends are Robusta. Most coffee pads, ground coffee and instant coffee belong to this low-end segment. This market is in decline. Product and price examples in the low-end segment, based on Sweden’s Hemköp 2019 retail prices, include:

	Product	Price (€/kg)
Low end	Lindvalls (Rainforest Alliance certified, whole beans, 450 g package)	6.67
Löfbergs (Rainforest Alliance certified, ground coffee, 450 g package)	7.08
Gevalia (ground coffee, 425 g package)	7.50

Coffees on the low end of the market are mainly sold in supermarkets and through service channels, such as offices and universities.

The largest retailer groups in Norway are:

• Norgesgruppen, with a market share of 43% in 2017, which operates the shops Kiwi, Joker, Meny and Spar;
• Coop Norway, with a market share of 30% in 2017, which runs the stores of Obs, Extra and Coop Prix;
• Reitangruppen, with a market share of 23%, which includes Rema 1000 and Narvesen.

The largest retailer groups in Denmark are:

• Coop Denmark, with a market share of 40% in 2017, which operates the stores of Kvickly, Fakta and Irma;
• Salling Group, with a market share of 35%, which includes the stores Netto, Føtex, Salling and Bilka.

The largest retailer groups in Sweden are:

• ICA, with a market share of 50% in 2017, which includes ICA Supermarket, ICA Nära, ICA Maxi and ICA Kvantum.
• Axfood, market share of 17%, which operates Hemköp, Willys, Eurocash, Handlar’n and Tempo.
• Kooperativa Förbundet, market share of 18%, operating the Coop shops in Sweden.

Mid range: Good commercial quality coffee. Mid-range coffees typically consist of Arabica and Robusta varieties in blends, such as high-quality espresso. Sustainability certifications are important. The mid-range segment represents a stable coffee market. Mid-range coffees are often sold in supermarkets and by the food service industry. Examples of products and prices in this segment, based on Sweden’s Hemköp retail prices in 2019, include:

	Product	Price (€/kg)
Mid range	Arvid Nordquist – Amigas (organic, Fairtrade-certified, whole bean, 450 g package)	11.88
Garant (organic, fair trade certified, whole bean, from Rwanda, 400 g package)	12.19
Lavazza (Qualita Rossa, whole beans, 1 kg package)	13.05

High and upper end: High-quality coffee mainly consists of washed Arabicas. These coffees are often single origin and coffees with a background story. The upper end of this segment consists of specialty coffees of excellent quality, often from micro or nano lots that go through innovative processing such as naturals and honeys. These are mainly fully traceable and single origin Arabica beans with a cupping score of 85 and above. Long-term contracts between suppliers and buyers characterise this segment, as well as higher paid prices. Buyer’s direct involvement makes sustainability certification uncommon. Buyer and supplier usually agree on projects for communities and distribution of money to farmers. The high or upper end segment is a small market but is growing.

These coffees are mainly sold directly by specialty roasters and specialised coffee houses, at their physical or web shops and at coffee events. Examples of events in Scandinavia include the Trondheim Coffee Festival (Norway), the Danish Coffee Festival (Denmark) and the Stockholm Coffee Festival (Sweden). To find examples of Scandinavian specialty roasters and cafés, see the city guides on the website European Coffee Trip.

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

	Product	Retail price (€/kg)
High and upper end	Ethiopian natural processed coffee from Guji, Wamena, roasted by Prolog (Denmark), 250 g package	53.59
Colombian washed processed coffee from El Pital, Huila, roasted by Tim Wendelboe (Norway), 250 g package	65.72
Special edition of Bolivian natural processed coffee from Bolinda, Caranavi, roasted by Drop Coffee Roasters (Sweden), 250 g package	105.16

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

Apart from market segmentation by quality, the Scandinavian coffee sector can further be segmented into in-home and out-of-home consumption:

• In-home consumption: Most coffee consumption in Scandinavia takes place at home. In 2018, retail sales in Denmark accounted for approximately 75% of the country’s coffee volume sales. In Sweden, retail sales accounted for approximately 71% of total coffee volume sales. Capsules and pods have a relatively low market share in Denmark at 4% of all retail sales in 2018, while in Sweden it is 1%. In Norway, at-home consumption made up 47% of coffee volume sales in 2018.
• Out-of-home consumption: Out-of-home consumption is growing strongly in Scandinavia, where consumers increasingly look for unique, high-quality coffee in coffee shops. In 2018, about 53% of total coffee volume sales in Norway were consumed out-of-home, divided into 29% at work and 24% at coffee shops, restaurants and hotels. The food service market share in Sweden reached 29% of total coffee volume sales in 2018, while in Denmark out-of-home consumption had a 25% market share. Denmark showed the highest growth rate of new coffee shops in Europe in 2018, with an annual outlet growth of 14.5%.

Figure 5: Scandinavian coffee sector segmentation by in-home and out-of-home consumption

Through what channels does coffee reach the end market?

As an exporter, you can use different channels to bring your coffee to the Scandinavian market. Entering the market will vary according to the quality of your coffee and your supplying capacity. It is important to realise that shortened supply chains are a general trend in Europe. This means that retailers and coffee roasting companies are increasingly sourcing their green coffee directly.

In Scandinavia, more than 90% of the end-market consumption consisted of roasted coffee in 2018. Hence, the trade channels discussed here relate to roasted coffee, particularly specialty coffee. Figure 7 below shows the most important channels for your green coffee beans to reach the Scandinavian market.

Figure 6: Market channels for green coffee in Scandinavia

Importers

Importers play a vital role in the coffee market, functioning as supply chain managers. They maintain wide portfolios from various origins, pre finance operations, perform quality control, manage price fluctuations and establish contact between producers and end buyers, such as roasters. In most cases, importers have long-standing relationships with their suppliers and customers.

Green coffee beans mainly enter Scandinavia via the ports of Oslo (Norway), Aarhus (Denmark), Gävle or Stockholm (Sweden). In general, importers either sell the green beans to roasting companies within their own countries or re-export them to other European buyers.

Large-scale importers usually have minimum quantity requirements starting at around 10 containers, covering a wide ranges of qualities, varieties and certifications. At the same time, they provide strong support on logistics, marketing and financial operations. Examples of large-scale importers in Scandinavia include Coop Norge, Joh. Johannson Kaffe (Norway), BKI and NAF Trading (Denmark).

Specialised importers are able to buy smaller volumes of high-quality or single origin coffees. Examples of small and large specialised importers in Scandinavia are: Collaborative Coffee Source and Nordic Approach (Norway), Ally Coffee and Pezo Import (Sweden).

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

Specialised traders can be interesting if you have evidence of high cupping scores at least 80 or higher, although some buyers may require scores higher than 85, plus sustainability certification, such as organic or fair trade, or you are selling single origin coffee. Keep in mind that many specialised importers prefer to work directly with producers or cooperatives.

Large roasters and private labels

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

Roasters can operate under their own brands or private labels. Examples of large roasters operating under their own brands in Scandinavia include Arvid Nordquist (Sweden) and Friele-Jacobs Douwe Egberts (Norway). An example of private label coffee roaster is Impact Roasters (Denmark). In addition to roasting under its own brand, Löfbergs (Sweden) is also a leading private label coffee roaster in all of Scandinavia.

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

Small roasters

Even though small roasters mostly source their green coffee from importers that also help with finance services, quality control and logistics, a growing number of smaller roasters import green coffee directly from origin. Small roasters are often specialised in certain high-quality blends and single origins. However, not all small roasters are able to sustain direct trade relations, since they have to take on additional responsibilities which are usually outsourced to traders, such as logistics, documentation and pre financing. Therefore, many small roasters continue to buy via importers, but still maintain direct connection with their producers.

Examples of small roasters in Scandinavia directly importing coffee include: Kafferäven, Drop Coffee Roasters and Johan & Nyström (Sweden), Lippe and Solberg & Hansen (Norway), and La Cabra Coffee Roasters and Coffee Collective (Denmark).

Who may find this an interesting channel? Supplying to small roasters is interesting if you have high-quality coffees, micro lots, sustainability certification or if you are willing to engage in long-term partnerships. So if you have very high-quality coffees and are working through an importer, for example, you could explore direct trade possibilities and connect with specialised roasters. In addition, if you are a farmer that has the financial means and technical know-how to organise export activities, then you can offer your coffee directly to specialised coffee importers and small coffee roasters.

Intermediaries and agents

Agents act as intermediaries between you, coffee importers and roasters. Some agents are independent, others are hired to make purchases on behalf of a company. An agent acts as an intermediary and has the knowledge to evaluate and select interesting buyers for you. Examples of agents in Scandinavia are: Inge Karlsson Handels (Sweden) and Bjørn R Paasche Agentur (Norway).

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

3. What is the competition like in the Scandinavian coffee market?

In general, competition is higher for mainstream coffee with low added value. This segment is mainly dominated by major suppliers and cooperatives which are able to deliver large quantities so they can compete on price. It is difficult for small and medium-sized companies to compete in this segment. The level of competition is generally lower in the specialty coffee market, where volumes are smaller and the focus is more on quality, origin and sustainability. However, the entry point into this segment is much higher and may require larger investments.

New entrants to the market may face some extra competition from already successful coffee exporters, especially so because of their already established long-term relationships with buyers. Entering the market as a newcomer requires you to have extensive knowledge of your product assortment, stable quality and volumes, and open and honest communication to start building your own new relationships with buyers.

Figure 7 below shows Scandinavia’s main green coffee producing suppliers.

Figure 7: Main green coffee suppliers to Scandinavia 2018

Source: International Trade Centre, 2019

Brazil is Scandinavia’s main coffee supplier

Brazil is the world’s largest coffee producer and Scandinavia’s largest supplier. Brazil produces both Arabica (75%) and Robusta (25%), but exports 95% Arabica. Brazilian supplies to Scandinavia reached 57 thousand tonnes in 2018, being 39 thousand tonnes to Sweden, 14 thousand tonnes to Norway and 4.2 thousand tonnes to Denmark. These totals show declining volumes between 2014 and 2018: to Norway by -0.7%, to Sweden by -2.0% and to Denmark by -6.0%.

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

Other Latin American countries are also important Arabica suppliers

Apart from Brazil, other relatively large Arabica suppliers to Scandinavia are Colombia, Peru and Honduras. Colombia is Scandinavia’s second largest coffee supplier with 16 thousand tonnes in 2018. Of those, 9.2 thousand tonnes went to Norway, 5.2 thousand tonnes to Sweden and 1.4 thousand tonnes to Denmark. Colombia’s supplies to Norway and Denmark remained relatively stable, while supplies to Sweden decreased between 2014 and 2018.

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

Peru follows Colombia with an export volume of almost 16 thousand tonnes in 2018, of which 13 thousand tonnes went to Sweden, 1.3 thousand tonnes to Denmark and only 769 tonnes to Norway. A large share of Peruvian coffee is organically produced; Peru is the world’s third-largest producer of organic coffee. The Andean country takes fourth place in coffee production with sustainable certifications, such as Fairtrade and Rainforest Alliance-UTZ, which gives Peru a competitive advantage to promote its specialty coffees. Peru actively promotes its unique origin and high-quality coffees, having recently introduced a national coffee brand, Cafés del Peru, to the international market.

Honduras registered an average annual increase of 13% in coffee exports to Scandinavia between 2014 and 2018. Sweden is the largest importer of coffee from Honduras in Scandinavia, with 9.9 thousand tonnes in 2018. The introduction of more disease resistant varieties in Honduras, after a severe coffee rust outbreak, is perceived to have lowered the cup quality, but production volumes have increased. Honduras is Central America’s largest coffee producer, of which a large share is organic. Approximately 28% of all Honduran coffee exports consist of sustainably produced coffee.

Scandinavia imports low volumes of Robusta

Asia is mainly known for its Robusta production, particularly Vietnam, which is the world’s second largest coffee producer. Robusta coffees make up approximately 95% coffee exports from Vietnam, whose production is strongly focused on creating large volumes of standard quality coffees mostly directed to the instant coffee market. Large coffee players, such as Nestlé, own multiple factories in Vietnam, where it produces its Nescafé soluble coffee brand. Since Scandinavian markets are all directed towards high-quality coffees, the region imports relatively high volumes of Arabica and low volumes of Robusta.

Sweden and Norway import very low volumes of Robusta from Vietnam, with 3.9% and 1.8% of total coffee imports respectively. Denmark on the other hand sourced about 18% of its total coffee imports from Vietnam, amounting to 2.7 thousand tonnes in 2018. Sweden imported about 3.7 thousand tonnes from Vietnam that year, and Norway 567 tonnes. Norwegian imports from Vietnam went down -4.4% between 2014 and 2018, while Denmark (+12%) and Sweden (+8.2%) increased their import shares from Vietnam.

Sustainability issues are a major concern in Vietnam. Climate change poses a serious threat to the country’s coffee sector, while poor farming practices cause environmental degradation. Sustainable coffee makes up an estimated 9% of Vietnam’s coffee exports.

This study has been carried out on behalf of CBI by ProFound – Advisers In Development.

Please review our market information disclaimer.