homepage_name! > Editions > Number 119 > Inteview - Andrej Bele ATLANTIC

Andrej Bele, General Manager of the Strategic Business Unit Coffee with Atlantic Group

Transparency as a Guarantee of Coffee Quality

Atlantic Group, with its four coffee roasting plants in the region, i.e. in Serbia, Slovenia, Bosnia and Herzegovina, and Macedonia, applies quality standards so high that they require investments of EUR 400,000 each year. Although Serbia is one of the few countries that has introduced excise stamps, we can export to the European Union the same coffee that we have produced in Slovenia without any issues with the FSSC 22000 quality standard, whereas the export of the exact same coffee from Serbia requires additional control of the same certificate. This is exactly why registers available to the public and predefined criteria would additionally contribute to the affirmation of standardization, and thus the quality of the products exported to the EU.

  1. Atlantic Group has another successful year behind it. The company achieved record results on all major markets, as well as record market capitalization and the lowest level of indebtedness since 2010. What was it that lead to such results?

Responsible planning and transparency of business operations, along with monitoring and forecasting consumer needs, have once again confirmed Atlantic Group’s leading position. When you are the largest coffee producer in the region, in addition to setting standards and dictating trends, it is a great challenge to surpass yourself each year, which is absolutely essential for Atlantic Group – primarily through innovation and the ambitious realization of plans that are realistic with regard to the potential of each market. So, after having pushed the limits with the launch of Black’n’Easy – traditional freshly ground coffee that is made in a minute, last year we went a step further and introduced the first Barcaffè freshly ground coffee in a capsule. This is something that currently makes us unique in Europe, since we are the only company offering such a product, which has been available in supermarkets throughout the region since December. During the first quarter of the year, we have continued on the path of innovations, introducing Barcaffè Latteato, a new “ready to drink” (RTD) beverage, as well as Barcaffè DiVino, a top-quality espresso in a can, made from 100 percent Arabica, Single Origin India beans intended for the HoReCa customers.

  1. Your company is regional. What is your explanation for the fact that the privatization and change of ownership did not have a negative impact on your brand, good results and position on the market? To what extent does Grand kafa contribute to the development/profit of the Atlantic Group?

I think that the secret lies in the high-quality assortment in the categories of freshly ground, instant and espresso coffee with unique, strong brands carefully developed to meet the needs of the most demanding consumers while meeting and monitoring local needs. Through the successful acquisition by Atlantic Group, established brands with their own identities have gotten a serious and responsible owner who aims to improve business operations and ensure long-term success on the regional market. This new energy has only introduced additional motivation and desire for continuous improvement of already established brands, as well as processes and internal practices. As a result, coffee, with 21.4% of the share and EUR 150 million in sales revenue for last year, is still the largest single category in the Group's total income.

  1. Grand kafa is the one that started the initiative for the introduction of excise stamps. One year following the implementation of this law – are we seeing a clear picture when it comes to the quality of coffee in Serbia?

As the largest coffee producer in the region, we have to adhere to the latest European quality standards, as well as the national policies and regulations of our industry, but also to influence other producers to follow in our footsteps. It is true that the initiative for the introduction of excise stamps for coffee originated from Grand kafa, with the idea that visible excise stamps would serve as confirmation of legal import flows and compliance with all production standards, and thus be a way of combating unfair competition and the gray market.

Serbia is one of the few European countries to have an excise on raw coffee, alongside Croatia, Germany, and Belgium. In this sense, we are trying to provide support for state institutions through all forms of cooperation, based on our long-term experience, as well as expertise, in order to keep going together in a positive direction of change and to make the implementation of excise stamps even more efficient, all of this in order to protect consumers’ interests. When I say this, I really don’t want it to sound like a cliché, since the primary aim of transparency in highlighting information on labels and clearly defined criteria for granting stamps is to show consumers the differences in quality and, therefore, the price of their favorite beverage.

  1. To what extent has the introduction of excise stamps contributed to combating the gray market?

Unfortunately, a year after the implementation of legal regulations, we cannot say that we have a completely clear insight into its effects.I believe that we will be able to see a clearer picture once we have introduced more detailed measures of controlling the manner in which coffee products sold in stores are labeled, as well as once a register of coffee producers with clearly defined criteria for roasters becomes available. However, it is noticeable that at places that were once the Mecca of the gray market and inadequately packaged products, like markets, less coffee is now being sold compared to last year.

  1. How much has the number of registered coffee producers or importers increased since the introduction of excise stamps? Are there clearly defined criteria determining who can sell, i.e. import coffee?

According to unofficial sources, following the introduction of excise stamps, the number of registered coffee producers or importers has almost doubled, from 170 to more than 300. Paradoxically, these statistics are a somewhat logical result of the current practice – the criteria that need to be fulfilled by a coffee roaster in order to officially become a registered producer have not been defined, and only registered coffee producers are able to buy, i.e. pick up the stamps from ZIN.

Therefore, the explanation for this increase can be found in the fact that the system, and thus the consumer, does not differentiate between coffee that can be produced in a modern factory, such as our own, or in some smaller workshops which are potentially in the gray zone. Since coffee is considered to be a food product, the fulfillment of at least the HACCP standard, which is related to good manufacturing practice, should be a minimum requirement that guarantees certain quality and the protection of the consumers’ health. Customers have the right to know whether they are buying pure coffee or coffee with additives, in which case they need to know exactly what has been added and in what percentage. Mixing coffee with additives is not forbidden, but the producer must clearly label the additives on the packaging, which is sometimes left out. In this way, the consumer is potentially being misled, both in terms of quality and price, because our coffee in a 200g pack is sold for RSD 270, and next to it is another brand of coffee being sold for less than RSD 150 for the same quantity.

  1. In Serbia, there is no register of coffee producers that would be available to the public like there is for other producers of excise goods such as tobacco and alcohol. If there was one, to what extent and in what way would it contribute to better market operations?

The availability of such a register to the public would be most beneficial for consumers, which is, I believe, the ultimate goal of everyone involved in the process, regardless of whether these are large producers or small roasting plants. The mere availability and transparency of available data in the register would lead to the evaluation of undertaken measures and good practices that the country started with the introduction of excise stamps. I don't see any reason for it not to be publicly available, just like registers of producers of excise goods, for example, tobacco and spirits.

7.You are known as a leader when it comes to innovation. What should we expect in 2019 regarding freshly roasted coffee?

After pushing the limits by launching the Black’n’Easy traditional freshly ground and roasted coffee made in a minute, that we first introduced back in 2015, at the end of last year we – dare I say – started a caffeine revolution by making the first traditional coffee in a capsule. We are trying to innovate our portfolio by keeping up with the changing lifestyle of our consumers, in order to respond to their current, but also foresee their future needs.

This year will also be marked by the expansion of existing categories along with the launch of new products, as evidenced by the launch of new products in the first quarter of this year. As I stated at the beginning of the interview, we have introduced innovations in the RTD category, 100% Arabica, Single Origin India beans on the espresso market, as well as Single Origin in the freshly ground coffee category. We also have plans for the further expansion of the “On the GO” category, having sold more than 12.5 million of these beverages in the previous period.

8.What kind of coffee is consumed in Serbia and how much do consumers know about its quality?

By putting consumers at the center of our business and monitoring their needs and desires, we have identified a need for greater recognition of the quality and characteristics of freshly ground coffee. For this reason, one of our main tasks this year will be to educate consumers so that they gain a better understanding of what is coffee from a certain geographical origin, grown especially for our consumers, which guarantees that the cup of your favorite beverage contains only pure coffee beans from a plantation in, let’s say, Colombia, or some other origin, and nothing else. What also makes a difference when it comes to freshly roasted and ground coffee are the mills in which it is prepared, and in that sense, Grand Gold coffee, for example, is unique in terms of hot milling technology and the use of traditional stone mills.

9.What has caused the culture of drinking traditional coffee to become less and less popular? In your opinion, what’s its future like?

The first cup of coffee in the morning is still usually freshly ground, while the afternoon cup is increasingly being replaced by instant coffee. There’s a number of reasons, including a faster pace of life, lack of time for brewing, sipping and socializing, a tendency to gravitate towards instant varieties that are sometimes more like desserts than coffee. In addition, we are witnessing an increasing migration of the population with a poor demographic balance, which, along with lifestyle changes caused by the digital revolution, have inevitably left a mark and had an impact on the number of our consumers.

Nevertheless, despite different predictions, we are still focused on the category of freshly roasted and ground coffee, and in order to maintain our leading position, we are preparing numerous surprises for our consumers in this category. We will strive to bring the quality, richness of taste, freshness, and the irreplaceable smell and taste of freshly ground coffee even closer to our consumers and keep the leading position of our brands in this segment, not only on the Serbian market, but also on the markets of Bosnia and Herzegovina and Macedonia, when it comes to Grand kafa and its traditional coffee brands that, I believe, will rule these parts of the world for a long time.

10.Exports from Serbia require additional control processes compared to other countries. What is the main reason for that?

Atlantic Group, with its four coffee roasting plants in the region, i.e. in Serbia, Slovenia, Bosnia and Herzegovina, and Macedonia, applies quality standards so high that they require investments of EUR 400,000 each year. Although Serbia is, as I mentioned, one of the few countries that has introduced excise stamps, we can export the same coffee to the European Union that we produce in Slovenia without any issues with the FSSC 22000 quality standard, whereas the export of the exact same coffee from Serbia requires additional control of the same certificate. This is exactly why registers available to the public and predefined criteria would additionally contribute to the affirmation of standardization, and thus the quality of the products exported to the EU. Simply by adhering to the local legislation and reducing trade on the gray market, Serbia will be able to adapt to EU business operations more easily, eventually becoming a member state.

11.Do the awards and acknowledgments that you received during the previous year truly reflect the fact that shared enthusiasm, creativity, and carefully planned strategy win every time?

The acknowledgments we received during the previous year serve as confirmation that our experts and our consumers share the same passion. By paying attention to their needs and walking in their shoes, last year we set new standards in digital marketing in Serbia with our campaign titled “Kolegende” (Eng. “Collegends”) for Black’n’Easy, that was voted No. 1 and became “The Best Social Media Campaign 2018” at the KAKTUS 2018 marketing festival. Additionally, consumers in Bosnia and Herzegovina voted Black’n’Easy a compulsory product in stores as part of the “Top 100” acknowledgment. Another award by consumers for 2018 was given to Barcaffè in Slovenia, which is now proudly recognized as a “Trusted Brand”, and this only confirms the strength and quality of this brand. Beyond regional awards, we are particularly proud of the acknowledgment of the quality of the Barcaffè espresso blends that was recognized at the International Coffee Tasting competition in Milan organized by the International Institute of Coffee Tasters, where Barcaffè espresso won two gold medals for its brands Barcaffè Tradizione and Barcaffè Prestigio.

12.Generally speaking, what are your plans for 2019?

Our plans are simple – to continue with good practice and adhere to the highest ethical standards of the profession, to educate consumers and continue to recognize their desires, and carry on with innovations in line with the actual needs and wishes of those whose love and passion are reflected in a cup of coffee. This will be the only way to achieve our goals for this year since the bar has been set higher than ever. As I always like to point out — “Sometimes, it is more difficult to st