Regional Discussion : “ Trends and Opportunities of Coffee in ”

13 October 2016 What is TPSA? A Bilateral Trade and Investment Project between Canada and Indonesia

• The Conference Board of Canada (CBoC) is Canada’s foremost independent, not-for-profit research organization. • CBoC was awarded a CAD$12.05 million project in August 2014 to increase trade and investment between Canada and Indonesia, with emphasis on assistance to SMEs. • The project will also identify and work to overcome barriers to trade and investment between Canada and Indonesia. • The project has four years remaining, and will continue until August 2019. Four Main Activity Streams

1. Improve Trade and Investment Information Flows

2. Enhance Private Sector Business Linkages

3. Strengthen Trade and Investment Analytical Skills

4. Improve Understanding of Regulatory Rules/Practices Introducing Role in the TPSA Project

• TFO Canada is the primary Canadian provider of information, advice and buyer contacts for exporters in developing and transition economies.

• CBoC will engage TFO Canada and their expertise to undertake the SME export facilitation support and SME capacity building sub-activities of the TPSA project.

• http://www.tfocanada.ca Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)

Brief Overview of Canada Market Opportunities The Canadian Population

Atlantic : 2.3 Million Québec: 8.1 Million Small, concentrated population: : 13.5 Million • Total population: 35.7 million (October Prairie Provinces: 5.3 Million 2014 estimate) : 4.5 Million The : 0.1 Million • 10% size of U.S. population

• 62% of live in Ontario and The North British Columbia • 80% of Canadians live within 160 km of the U.S. border The Prairies Ontario Québec • 81% of the population is urban Atlantic Canada • 1 in 3 Canadians lives in one of Canada’s three largest (, , and )

Source: Canada, Population estimates and projections (2013)

5 New Immigrants to Canada Immigrant Population by Region in 2013

4% 5% Caribbean Other 6% Latin America

• 1 in 5 Canadians are immigrants 9% (highest % in G8 countries) Middle 51% East • 1.6 million new immigrants settled Asia in Canada from 2006 to 2011 10% Europe • 62% of new immigrants settle in Toronto, Montreal and Vancouver 15% Africa • 51% of new immigrants are from Asia

Source: Statistics Canada, (2011), National Household Survey (2011) Source: Citizenship and Immigration Canada, Permanent residents by source country (2013)

7 Market Comparison: Canadians import almost twice as much per person compared to their counterparts in the USA:

Canada USA Population 35.7 million 317 million

GDP per capita $46,331 $50,744

Exports $14,706 $5,656

Imports $14,342 $8,170

Values in $CAD estimates (2014) Source: Canadian & US Government Sources, Trade Data Online

13 Canadian Imports on the Rise ($CAD billions, excludes minerals) $ 411 Why Canada? $ 324 $ 347 $ 365 $ 380 Significant volume of imports valued at $411 Billion (2014) 2010 2011 2012 2013 2014

• Imports represent 31% of GDP Excludes minerals (HS Codes 26-27 and 71-80) Source: Industry Canada, Trade Data Online (2014) • 5% average yearly growth in imports over the past 5 years Canadian Imports by Region th • 11 largest import market in the 8% United States (54%) world Latin America Asia (23%) 13% Europe (13%) Diversification of trade partners Europe Latin America (8%) Middle East (0.5%) • Canada is undertaking a major 54% Africa (0.4%) 23% United Caribbean (0.3%) effort to diversity trade States opportunities, including signing Asia Australia (0.3%) East Europe (0.1%) new Free Trade Agreements Other (0.4%)

Source: Industry Canada, Trade Data Online (2014) Regional breakdown based on countries with imports valued over $500,000. Excludes $3.2 billion in re-imports to Canada.

14 Canadian Imports by Sector (2014)

For more information: Download TFO Canada Market Information Papers www.tfocanada.ca/mip.php

Excluding mineral products (HS2 Codes 26-27 and 71-80) Source: Industry Canada, Trade Data Online (2014)

17 Overview of trade from Indonesia to Canada

Canadian Imports from • Imports into Canada from Indonesia Indonesia totaled CA $1,392 M (excluding ($CAD millions, excluding minerals) in 2014 and are growing at minerals) a rate of 5% CAGR over the past 5 $ 1,356 $ 1,392 $ 1,242 $ 1,281 years $ 1,115

• Indonesia’s exports to Canada are primarily in 3 product categories: Ø Rubber articles: $241 million or 23% 5% growth over Ø Woven apparel: $164 million or 16% the past 5 years Ø Knitted apparel: $ 151 million or 14%

2010 2011 2012 2013 2014

Source: TFO Canada Trade Data Analysis Tool

18 Coffee Market in Canada

• The total Canadian import market for coffee (HS6 - 090111) grew from CAD $273 million in 2002 to CAD $714 million in 2014.

• In volume (Kgs) terms the import market has grown from around 108 million Kgs in 2002 to 166 million Kgs in 2014.

• Indonesia is the 6th largest coffee exporter in the Canadian import market. Indonesia’s market share in the Canadian import market in 2014 was approximately 4%.

• Canada’s coffee import market is dominated by 3 players – Colombia, Brazil and Guatemala – which together account for about 65% of the Canadian import market

• Indonesian coffee is approx. 37% higher priced compared to the average coffee import price in the Canadian market - due to premium and specialty coffee demand

• There have been significant increases in the consumption of specialty coffee (Maritz Research, Canada 2012)

• Two thirds of adult Canadians enjoy at least one cup of coffee a day with the average at 3.2 cups/day.

• Specialty coffee and frozen blended coffee beverages are most popular among 18- 49 year olds. Coffee Market in Canada. Continued

• Based on Indonesia Coffee Associations finding from their visit to Canada; there is still a huge potential markets for Indonesian coffee

• At present, due to transportation challenge and the emerge of Micro Roasters, coffee is imported from the US suppliers.

• There is a possibility that Micro Roasters in Canada are willing to import the coffee directly from the resource like Indonesia

• It is found from the visit that around 2 or 3 coffee traders in Canada are willing to purchase from Indonesia.

• Indonesia coffee producers and exporters need to aggressively approach Canadian Micro roasters

• The business visit to Canada facilitated by TPSA project has improved Indonesia coffee associations’ understanding on Canada coffee market Opportunities for Indonesia Coffee

• Indonesia produces certified coffee Specialty as expected by coffee roasters in Canada

• Indonesia also has to promote good quality Robusta coffee for blending to the Canadian roasters to serve BEST ESPRESSO - similar to many Italian roasters who also need Robusta.

• Import prices for Indonesian coffee have increased from CAD$3.6 per Kg in 2002 to CAD$5.8 per Kg in 2014.

• Indonesian coffee is perceived to have a unique taste, particularly for Sumatra beans (Competitive Advantage) - unique and highly valued by some consumers.

• Growth opportunities exist, specifically with respect to organic and ethically- sourced products, and products differentiated by their geographic origin and blend

• Many Canadians’ willingness to pay a premium for fair trade and organic coffee Major Buyers of Indonesian Coffee in Canada

• RGC Coffee • Café Vittoria • Royal Coffee Incorporated • Metro Logistics Inc • Costco • Bridgehead Canada-Indonesia Trade and Private Sector Assistance Project (TPSA)

Thank You! For further information, please contact the Project Office in Jakarta, Indonesia:

Canada-Indonesia Trade and Private Sector Assistance Project (TPSA) Canada Centre, World Trade Centre 5, 15th Floor Jl. Jend. Sudirman Kav 29-31 Jakarta 12190, Indonesia Phone +62 21 5296 0376, 5296 0389 Fax +62 21 5296 0389