A Tale of Two Markets
It goes without saying that coffee is an important part of Nordic culture, and that the interest for coffee straddles all demographic divides with ease. It reaches the old, the young, the rich, the poor and everyone in between. However, the supply side of the coffee market in the Nordic countries is decisively split into two very different parts, governed by completely different rules and objectives.
This divide is commonly referred to as the difference between retail and specialty coffee, and just as commonly written off as the normal segmentation between mainstream and premium products. The fact of the matter is that while they nominally occupy the same space, these markets are worlds apart, and do not compete as much as supplement each other.
An overwhelming majority of all coffee sold in the Nordic countries is supplied by roasteries that seem like behemoths compared to the smaller, newer roasteries that comprise the second market. We will get to just how overwhelming that majority is in a bit.
Entrenched is an apt description of the roasteries that enjoy significant market shares: in Norway, two roasteries have a combined market share of 63% (2009). The two are Friele of Bergen and Joh. Johannson of Oslo. Despite their size, their respective market shares are more or less set in stone, owing to how they market and sell their coffees.
Because they dominate both the catering, hospitality and the retail market for coffee, they have separate, mutually exclusive agreements with these and the parent companies of various chains of supermarkets across the country. The supermarket chains that do not carry one of the two brands often have their own, much smaller – but still substantial – in-house roasteries. This effectively locks Friele and Joh. Johannson into a market share that will fluctuate mostly based on the successes or failures of the supermarkets, more so than those of the roastery.
Coffee is an important part of everyday life, and as such it is often used by these supermarket chains as incentives to draw customers in. In many cases, these stores sell coffee at a loss; this practice requires a very affordable product to begin with. Economy of scale is what allows these large roasteries to sell coffee as affordably as they can. However, it also fundamentally restricts what sort of coffee they can sell, and in turn what they purchase.
Many people who are interested in, or work with specialty coffee, regard the signature coffees of these entrenched roasteries as unexciting, if well-executed. The most important reason behind this is a fundamental difference in approach. The entrenched roasteries are, much in the same way large Italian espresso roasteries like Illy are, striving for consistency of product, across seasons, harvests and decades. They work toward a signature taste that is uniquely theirs; a stable, marketable product that will keep their end-customers loyal. To that end, the quality assurance of entrenched roasteries is, if anything, more rigorous than that of most small roasteries.
Also important is the notion of drinkability: their signature coffees are engineered to be drunk continuously throughout the day. For the entrenched roasteries, this means that it must have a rounded profile: nothing too acidic or bright, nothing too heavy. In the words of Friele’s main green buyer, Bernt Tveitsme, they should not have any “sharp edges.” Compared to large roasteries all over the world, the entrenched Nordic roasteries are known for purchasing higher quality coffee across the board.
Where the entrenched roasteries aim for consistency, balance and drinkability, many of the smaller roasteries aim to showcase seasonality, a sense of place, and what they perceive as being the very best coffee in the world. For many smaller roasteries, predictability takes a firm backseat to uniqueness and surprise.
Small roasteries like Solberg & Hansen, Tim Wendelboe or Kaffa have a structural nimbleness and scale that enable them to purchase, roast and sell small, unique lots of coffee. They have a clientele willing to pay for all the work this requires. And while the work they do have gained them global renown, they comprise less than one per cent of the domestic market in Norway. What Tim Wendelboe roasts in a year, Friele can – and does – roast in less than three hours of normal production. Compare Friele’s annual production of 11,000,000 tons (the red circle) versus the 23 tons of Tim Wendelboe (the black dot):
Even if the entrenched roasteries wanted to do something more akin to what small coffee roasteries do, the scale of their operation would work against them. Where smaller roasteries are be able to purchase very small lots of a ton or two from individual farms in specific areas, the entrenched roasteries deal on such a scale that lots of this size at the premium they must require would be meaningless from a business perspective.
How could they feasibly market a particular lot of coffee, the supply of which would be exhausted within one or two business days? The supermarkets are after consistent, cheap products, and cater to customers who shop mostly by way of habit. Even if everyone who bought the coffee would be willing to pay a premium for that particular coffee again, it would already be stale or completely sold out by the time they wanted to buy another bag.
The entrenched roasteries are very efficient machineries that specialize in a certain type of coffee directed toward the broadest possible demographic. And far from competing with, or feeling disparaged by smaller coffee roasteries, they acknowledge the different roles they play. The way Friele sees it, small roasteries are renewing coffee culture, keeping it vibrant and developing. For them, this is a net positive.
While one might not agree with the priorities of the entrenched roasteries, it is hard to see how a coffee culture could have existed without them. They are and will remain a vital part of Nordic Coffee Culture.