Tea & Coffee Trade Journal / June 2003
By Larry Luxner
SAN JOSÉ — For tourists visiting Costa Rica, taking Café Britt's famous coffee tour has practically become a rite of passage.
And no wonder. From the moment they arrive at San José Juan Santamaría International Airport until the moment they depart, the Café Britt brand name jumps out at them — from duty-free shop displays, billboards placed strategically along the highway, and colorful tourist pamphlets distributed in their hotel rooms.
This is no accident.
Steve Aronson, president of Café Britt S.A., has worked hard to make sure his gourmet coffee is the best-known in Central America, so that Americans and Europeans will remember the brand and continue buying Café Britt via mail-order long after their Costa Rican vacation is over.
"I'm as important a player in the tourism industry as I am in the coffee industry," Aronson says proudly. "We work with all the cruise ships, rental car companies, taxi drivers, hotels and tour operators. Our promotion budget is running at around 5% of sales; last year, we made about $700,000 in profits."
If there's a crisis in the Costa Rican coffee industry, it sure isn't noticeable here, in the cool mountain town of Santa Lucia, about an hour's drive from downtown San José.
On a typical weekday, dozens of tourists can be seen troooping around the Café Britt estate, thoroughly enjoying what has become one of the most famous "coffee tours" in the world. Actors and actresses in traditional 19th-century Costa Rican costumes explain the history of coffee through bilingual skits, video presentations, songs and an actual walk through a real coffee plantation.
Over 400,000 people have taken the Café Britt coffee tour since it was inaugurated on Nov. 15, 1991 in the presence of Costa Rica's then-president, Rafael Angel Calderón. The cost is $30 including round-trip transportation and lunch at the company's own Restaurante Don Prospero, or $20 if visitors come on their own.
"They get all the espresso and capucchino they can drink, and samples of chocolate-covered coffee beans at the end of the tour," says Aronson, estimating that 60% of those who buy the tour are Americans; the rest are Canadians, Europeans, Puerto Ricans and Japanese.
Yet tourism constitutes only 5% of Café Britt's annual revenues.
"Our main business, around 55% of the total, is exporting roasted coffee and local distribution to supermarkets and hotels," said Aronson. "Our customers are hotels and restaurants in St. Thomas, Curaçao, St. Maarten and Aruba. And we're now a registered supplier to Puerto Rico. The biggest area of our exports is our web and mail-order business. We have an toll-free number (1-800-GO-BRITT) and call center here.
The remaining 40% is local retail, and selling to supermarkets and airport duty-free shops.
A BRONX-BORN VISIONARY
Aronson, 55, is a New Yorker by birth — Bronx to be exact — who came to Costa Rica in 1977 from Ecuador as a coffee broker and exporter. He started Café Britt in 1985 with sales of $100,000 by the third year.
Today the company has 250 employees, with 2002 annual sales of $14 million and 2003 revenues projected to be $20 million or higher. Aronson's wife Anne is a high-school principal and founder of a private school in nearby Heredia, while their 27-year-old son Philippe, one of five children, is Café Britt's commercial manager
Aronson's business philosophy? Simple, he says. "Add value, and look for your economic reason for being. Nobody 'll ever pay you if you're not adding value."
Lilia Gallardo, executive director of the Specialty Coffee Association of Costa Rica, calls Aronson a "genius" at marketing.
"He's been ahead of everybody else and he was the first guy in Costa Rica who talked about quality," she told The Tea & Coffee Trade Journal. "He worked hard and he was at every convention. Steve is a very smart guy and a visionary."
For example, before Café Britt came along and stirred things up, ICAFE regulations had for years prohibited local consumption of the best coffee beans.
"Up until 1991, the law was that coffee for local consumption could only be purchased at a central warehouse by auction, and the auctions — held once every two weeks — were based on a quota of 9% that the coffee growers had to deliver," Aronson explained. "The growers got about one-fourth the international value of their obligatory 9% retention. The coffee beans sold at these auctions were dyed blue by ICAFE to make sure exporters didn't buy it."
In 1991, after Aronson was put on a committee to review the government's coffee export policies, Café Britt won an exemption to the law and began roasting small quantities of coffee for export. "As the tourist boom started in Costa Rica, we blew away the law."
For several years until about 1993, Café Britt was a major supplier to various companies in the gourmet coffee industry including Starbucks and Seattle's Best Coffee (SBC). Aronson has since discontinued sales to Starbucks but keeps selling to SBC.
"That's the only green business I'm really keeping seriously. I'm probably their major supplier," he said, adding that "I'm a commercial guy, a trader. I just happen to be in the high end of market. The future of coffee here is niches, finding things that other people aren't doing."
For example, organic coffee represents only 10% of Café Britt's business, but "everything we grow is organic," he said. "We have a total of 40 acres, including what we administer for other growers."
To be certified organic, Aronson explained, "you have to avoid using chemical fertilizers, pesticides and herbicides for three years." As he once told a magazine: "Organic is like kosher. The rules are strict and not always logical, but you have to follow them."
Café Britt, one of four or five producers of organic coffee in Costa Rica, has been in that market niche for about 10 years now. The company currently buys from six or seven cooperatives — each one with several hundred members — as well as from four or five larger growers with their own mills.
"We buy all kinds of coffee, Central Valley, Trés Ríos and Tarrazú," said Aronson. "We're a registered vendor with Wal-Mart and Target. We also supply the 25 outlets of Legal Seafoods. We offer waiters four free trips to Costa Rica every year, as an incentive for best service. But our export business is not supermarkets, it's Internet and direct sales to consumers and hotels in the Caribbean. The real meat and potatoes of our export business is people who call our 800 number or order from our website."
Through its "Coffee Lovers Club" promoted via its website at www.cafebritt.com, the company sends coffee annually to at least 20,000 customers around the world. According to Latin Trademagazine, so much coffee is shipped abroad that DHL, the express package company, asked Aronson to appear in several commercial spots the company aired in Latin America. The bearded and bespectacled Aronson is featured in the ads sporting his trademark straw hat.
In addition to coffee, Café Britt also produces Licor de Café, which was introduced in 1995 and competes with Mexico's Kahlua, Jamaica's Tia María and Costa Rica's first coffee liqueur, Café Rica, which is produced by the local firm Salicsa. In keeping with Costa Rica's image as a tropical Caribbean country, the liqueur uses rum as the base spirit — but only after its creators experimented with brandy, whisky and vodka.
Café Britt is so well-known at home that more than 85% of Costa Ricans in a recent survey identified Café Britt as the country's finest coffee, according to Unimer, an independent San José polling firm.
STRIVING FOR QUALITY
At present, Costa Rica produces 1.7% of all the coffee in the world, and between 8% and 10% of premium coffee blends. But much of the industry is in serious trouble.
"ICAFE [Costa Rica's government-run coffee institute] thought their job was promoting high-yield varieties and making sure every campesino got paid the same amount," he said. But then the bottom fell out of the coffee market, with prices falling to depths not seen in years.
"It was like a big shower of cold water," said Aronson. "It caused the industry to say, 'wait a second, we've been looking here for the past 20 years, and we better look here."
Since then, he said, there's been a "tremendous amount of focus on upgrading quality," differentiating regions and pushing environmentally friendly growing methods.
"The best Costa Rican coffees have always been an essential part of the blends of the specialty roasting trade," said Aronson. "In the past, 10% of Finland's coffee imports were from Costa Rica. That's changed, because the U.S. is paying more for better coffee."
There's no question that Trés Ríos, Tarrazú and Central Valley coffees fetch the best prices.
"Costa Rica's coffee industry is sort of split, because a part of it is able to make long-term contracts at high prices, and another part of the industry has to compete on the world market at present prices. They're scrambling to find financing or a way of defining themselves as something that deserves a premium."
Café Britt roasts 2-3 million pounds of coffee annually, about the same as the entire production of Jamaica. Between 30% and 40% of all Costa Rican coffee gets a premium on the international market.
"The reality is that world robusta usage has gone up from 32% to 37% of all coffee in the past two years. So five million bags of milds have been replaced with 5 million bags of robusta. There's no surplus of Vietnamese robustas, They all sold. The surplus in coffee was all pushed to the mild countries because the big roasters couldn't resist the price of Vietnamese coffee. In reality, many of the large coffee companies have used the drop in coffee prices to lower the quality of their blend, not to raise it."
The basic problem, says Aronson, is that coffee is no longer important to the Costa Rican economy.
"In the '70s and '80s, coffee was equivalent to around 30-40% of our GDP. Now it's down to 7%," he said. "If you export two million bags at $75 a bag, that's $150 million. Nobody is going to break any rules internally to finance a losing industry. The only political reasons they'd have would be small coffee growers belonging to cooperatives, and those credit lines are already extended out to their limit."
He added: "The traditional private coffee exporters were financed by German banks until the late '80s. When the Berlin Wall came down, these German banks put all their money into Eastern Europe and most of the credit lines that existed disappeared. The American banks really have never gotten into this area, and the local banking system is regulated. That means they can't finance companies that are involved in a business where you're selling below the cost of production, and where your level of assets to debt don't meet the regulatory requirements. They're not set up to do commodity financing."
As a result, "there's a certain desperation on the part of traditional coffee authorities here, because their job is to defend the whole industry. This country has built its whole system on having a social contract that works. So the government authorities can't be happy about a small percentage of growers doing OK when a large percentage of growers are not doing OK."
On the other hand, Café Britt is getting decent prices for its coffee, up to $190 for a 46-kilogram bag of organic beans.
"We're all happy campers," says Aronson. "We don't have a crisis here."
LEARNING ABOUT COFFEE THE FUN WAY
Certainly no crisis is evident on the faces of the guides conducting Café Britt's coffee tour — which visitors often combine with a trip to a butterfly farm or the Santa Lucía coffee mill, one of the oldest mills in Costa Rica.
The coffee tour premiered on Nov. 15, 1991, and was attended by then-Costa Rican President Rafael Angel Calderón. Just over three years later, in April 1995, Café Britt celebrated the tour's 2,500th performance — with then-U.S. ambassador Peter de Vos in attendance. Since its inception, the tour has now been performed more than 11,000 times, more than any theatrical performance in Costa Rican history.
In high season (which runs from December to March), Café Britt conducts three tours at 9 a.m., 11 a.m. and 3 p.m.
The three campesinos who guide the tourists around Café Britt's operations are played by professional actors: Roberto Zeledón, who plays José Antonio; Xochitl Avalos León, who plays José's girlfriend, Marielitos, and Salvador Solis, who plays Don Prospero.
"José" and "Marielitos" — the latter, in her sundress and apron, her hair protected by a scarf — lead the group of 40 or so tourists into the plantation to show them how to pick their own ripe coffee beans and taste the juice. They select a little child to "find" a coffee bean, which is actually a huge plastic model hidden behind a coffee plant designed to show tourists exactly how the bean is processed.
The actors' humorous banter — a history lesson interspersed with corny jokes — continues as visitors are led into an air-conditioned auditorium where they're shown a video of the entire roasting process. After that, they're asked to participate in a cupping session.
The campesinos tell the tourists that all coffee grown in Costa Rica must be arabica by law, not robusta. "Arabica beans are sweeter, have less caffeine and get better prices on the international market. If you plant anything else, they'll close your plantation."
The visitors also learn that "all our beans are sent to Hamburg, where the beans are decaffeinated, and 99.9% of the caffeine is removed. The caffeine is then sold to Coca-Cola and pharmaceutical firms. We don't do it here because it's not profitable for us. It's a very expensive process, and there's not much demand for decaf here anyway."
Tour highlights include Marielitos in 17th-century aristocratic garb as the Queen of France, complete with a fluffy white wig and frilly pink dress, and the marriage of José and Marielitos. They choose a best man and a maid of honor from the audience, who toasts the new couple with a bottle of Café Britt's Licor de Café.
At the end of the tour — just outside the La Casita gift shop — two more volunteers from the audience are recruited to check the beans for consistency. Then, with a little help from Prospero, they grind the beans with an electric grinder, mix the grounds with steaming water and sample the final product.
Even after the tour is finished, the marketing hype continues. Dark green Café Britt coffee stands pop up all over the countryside, and Café Britt retail stores can now be found at some of Costa Rica's leading tourist attractions — including the Rainforest Aerial Tram, the luxurious Hotel Costa Rica Marriott, the Tabacón resort at the Arenal volcano and hot springs and the elegant National Theater in downtown San José, where Café Britt owns the restaurant concession.
GOURMET COFFEE AT THE AIRPORT
But Aronson's most ambitious retail project to date is at San Jose's Juan Santamaria International Airport — where on Dec. 23, 2002, he inaugurated El Cafetal, an emporium of coffee- and Costa Rica-related merchandise.
The outlet, measuring 1,600 square feet, is located in a newly constructed area of the airport, facing the international departure lounge. It features eight artificial shade trees, a fountain in the middle and a 40-foot-long mural of a coffee plantation.
"When you walk into the store, you feel like you're in a shade-grown coffee field," said Aronson, who invested $350,000 in the project. The store was designed by Café Britt's in-house designer, Monica Carballo, who used to be the head of marketing at ICAFE.
El Cafetal's main attraction is its astounding variety of souvenirs including T-shirts, burlap bags, coffee mugs, hats, books, handicrafts, coffee candy, macadamia nuts, coffee jewelry and, of course, shelf after shelf stocked with gourmet coffee.
"We have a big display of our organic coffees, and will soon have on the market our Tarrazú variety" along with light roast, dark roast and espresso varieties, he said.
The coffees sell for $5 per bag, with promotions that allow departing passengers to buy four bags and get the fifth free (organic and decaf varieties cost $6 per bag).
Besides coffee, the store also sells rums and coffee liqueurs, as well as Cuban cigars through an agreement with Habanos S.A. El Cafetal's bookstore, with a wide selection of English-language book and magazine titles, "is probably among the two or three best bookstores in Costa Rica," says Aronson.
Café Britt outbid half a dozen other potential bidders for the prime space at the airport, which is operated by Alterra, a 50-50 joint venture led by San Francisco-based Bechtel and the Singapore Changi Airport Enterprise.
The airport, which handles between 1.5 million and 2 million passengers a year, is served by American Airlines, Grupo Taca, Continental, United and Delta. Costa Rica, long the most popular tourist destination in Costa Rica, now receives over a million tourists a year, with arrivals growing by an average 10% a year — numbers which bode well for Café Britt.
"Our concession is based on a percentage of sales, and we're greatly exceeding our minimum bid" since the shop opened, said Aronson, noting that El Cafetal employs 20 people per shift.
Aronson declined to reveal terms of the concession agreement, which is confidential, though he did say that "a normal traveler spends $10-15 in retail, but the average coffee-tour shopper spends between $20 and $25.
In addition to El Cafetal, the company also has an 800-square-foot store in the same airport, as well as a number of espresso stands where passengers can get complimentary cups of freshly brewed gourmet coffee while they wait for their flights. Café Britt also has a small presence at the airport in the town of Liberia, which recently began receiving Delta flights directly from Atlanta.
Asked what the future holds for Café Britt, Aronson said his big priority right now is taking the company public. Café Britt has 400 shareholders, though the Aronson family own just over half the company's stock. Aronson said he expects to complete a private placement sometime in the next six months — but he insists that won't affect the quality of Café Britt's products in any way.
"Coffee is a very traditional industry, based on a system of journeymen, guilds and apprentices," he told a Miami magazine recently. "Things go from father to son, and your most important capital is reputation and knowledge."