The Tea & Coffee Trade Journal / February 2006
By Larry Luxner
NEW ORLEANS — At the sprawling Dupuy storage facility fronting Jourdan Road in a grimy industrial neighborhood east of downtown New Orleans, thousands of bags of coffee from El Salvador and Colombia sit rotting on the loading dock, their sides split open and their contents ruined by floodwaters in the wake of Hurricane Katrina.
Less than 100 feet away, in the parking lot, are six gleaming white trailers — a "gift" from FEMA — along with a much larger tan-colored temporary facility housing 48 men.
"We call it the Dupuy Hotel," said company vice-president Kevin D. Colley. "This is for our employees whose houses were washed away in the storm."
Like milions of other Southerners, Colley will never forget Katrina — which devastated New Orleans and Mississippi's Gulf coast, and is considered one of the worst natural disasters in American history.
He said Dupuy had 500,000 bags of coffee stored on behalf of "just about every importing and roasting firm in Louisiana." This coffee was kept at 15 warehouses across the city; up to 20% of those bags were damaged or destroyed in the storm.
In addition, Dupuy lost 18 of its 30 forklifts, and was forced to slash its workforce from 85 employees to 35.
"The hurricane created a lot of chaos in the port, damaged a lot of storage facilities and disrupted the flow of coffee through the port, but that's now coming back as the city returns to normal," he said. "The port was relatively undamaged, because it was high and dry along the river. But some cargoes were diverted to other ports, and some container terminals in the eastern part of the city were damaged."
Nevertheless, Colley predicts that his company, which had 2004 sales of $10 million, will be back in full operation within a month or two.
Robert Landry, marketing director at the Port of New Orleans, said that in a normal year, his port handles between 250,000 and 300,000 tons of coffee.
"Coffee is not a huge portion of our general cargo, about 3-5% of the total, but it's the one commodity that stays in New Orleans. Coffee comes into New Orleans, where it's stored, then cleaned, sorted, blended, roasted and packaged. That's one reason we're here, to be an economic stimulus to the area. If we can be a more efficient transportation conduit for coffee coming into the United States, then we'll feel like we're doing our job."
During the first six months of 2005, the port handled 115,000 tons of coffee, said Landry. He was hoping for an annual total of 200,000 tons, "but more likely we'll end up with 150,000 to 175,000 tons of coffee."
On Dec. 14, the local coffee industry got a badly needed shot in the arm when the New York Board of Trade lifted its moratorium on the issuance of delivery notices against certified stocks in six licensed stores at the port. The six are Store 3 of Dupuy Storage, Store 7 of S. Jackson & Son Inc. and Stores 4, 4C, 6 and 12 of Port Cargo Service LLC. The six contained a combined 519,000 bags of certified coffee.
In addition, NYBOT has terminated its prohibition on the certification of new coffee in the six stores, as well as on licensed stores accepting coffee that had been held in the six stores at the time of Katrina.
Furthermore, said NYBOT, "the board also determined that certified stocks in the four warehouses whose licenses are suspended would retain its status as certified until Feb. 28, 2006, provided that the coffee met such tests and standards as the Board might specify and was moved to another licensed store by that date." This applies only to Stores 1, 2, 10 and 18 of Dupuy Storage.
"There was a lot of uncertainty regarding the warehouse stocks, but NYBOT resolved that," said green coffee trader Christopher E. Colomb of C.E. Colomb Co. LLC.
Colomb, who spent seven years at International Coffee Corp. before striking out on his own three years ago, knows about uncertainty all too well. His office was completely destroyed by Katrina, forcing him to work out of his home in the Buckhead district of New Orleans.
"Being displaced wasn't fun," said Colomb, who rode out the hurricane in Tunica, Mississippi. "The hurricane couldn't have happened at a worse time. Aug. 29 was just prior to the fall season, and the nature of the business is, if you're not there to field the calls, the buyers and roasters will put you on the back burner."
Colomb was lucky that his house wasn't inundated by Katrina; the rising flood unleashed by the powerful storm and the collapse of a levee only a few blocks from his house brought water to within three inches of his front door.
Even so, he urges those in the coffee trade to remember that not all of New Orleans was flooded, and that the city is still very much a viable player in the world coffee market.
"New Orleans is going to have a certain stigma with regard to coffee. People want to write us off," he said. "People are saying that even if it's useable, it's a poor business decision to be in New Orleans, which is entirely not true."
Colomb says he's received absolutely no help from either FEMA or the Small Business Administration.
"It's very slow. You get to the point where you're resolved to the fact that you have to do it on your own. We don't want a handout, but we'd like assistance to get up and go. That's what I keep trying to tell SBA. I've submitted financials for the last three years, and it ain't coming."
He added that "people who have come to lend assistance are very much appreciated and welcomed. You don't know how bad things are until you see it for yourself."
President Bush saw for himself when he toured the Folgers roasting plant not far from Dupuy's facilities in East New Orleans.
"Bush asked what he could do for the company. They wanted 100 trailers for employees and got them the next day," said Colley. In addition, Procter & Gamble, the parent company of Folgers, provided its 550 employees with $5,000 interest-free loans to help them get back on their feet.
Besides Folgers — which is said to account for 25% of the nation's total coffee roasting capacity — other large roasting plants in New Orleans include Sara Lee and Riley Foods. The latter is located across Jourdan Road from Dupuy, and is the home of the famous Luzianne brand.
Curtis M. Zimmerman, Reily's manager for commodity operations, says the plant suffered roof damage and some flooding, but that after a few months, it was operating at 100% capacity.
"It was rough going for awhile, but we're seeing shipments coming back," said Zimmerman, noting that Reily had to divert its tea-packaging business to plants in Baltimore and Knoxville, but that the move was only temporary.
"Within a few months, we were back in operation. Coffee is now moving back into the port and into the warehouses," Zimmerman said. "Some steamship lines don't want to make a commitment to come into the Port of New Orleans yet, but most of them have."
Reily, founded in 1903, sources mild coffees from Colombia and Brazil, as well as various Central American countries. The company, which doesn't give out sales figures, has between 175 and 200 employees in New Orleans and is affiliated with Standard Coffee Service, one of the largest office coffee-service companies in the nation.
Reily has been selling its chicory-flavored Luzianne coffee brand to customers along the Gulf coast since 1960. Besides coffee and tea, Reily also produces mayonnaise and a variety of specialty products.
The state's largest coffee importer is ICC, established 28 years ago. The company is headquartered in New Orleans, which is also where 30% of its coffee imports come into.
"Our biggest struggle is that all of my 11 employees have been impacted by Katrina," said ICC's vice-president, Bill Madary. "About 70% of them lost their homes, so we feel fortunate that we have all our employees back still working, in spite of the personal issues they have to deal with."
Madary is currently operating out of a temporary office in Hammond, on the other side of Lake Pontchartrain.
"When we evacuated, we weren't sure what the extent of damage would be at our downtown office. I wasn't sure whether it was flooded or looted, so we got a temporary office site here in case we couldn't get back," he said.
Madary added that "the warehouses are slow to get up and running, and the biggest reason for that is they don't have enough employees because there's no housing for those who lost their homes. Also, a lot of those people may now be working for FEMA, at a much higher salary than what they'd make in a warehouse. It's just going to take some time."
Similar concerns are voiced by Westfeldt Coffee Co., founded 154 years ago by a Swedish immigrant Gustave Reinhold Westfeldt Sr. in Mobile, Ala. The current president is fifth-generation owner Thomas D. Westfeldt II, who also happens to be Sweden's honorary consul in New Orleans.
Henry G. Hastak Jr., the company's vice-president, said Westfeldt imports 250,000 to 300,000 bags of coffee a year, about 40% of that from Central America and another 20% from Brazil. The company says it "has been most successful selling coffee to the small and medium-sized independent roasters, and in recent years has established a reputation in the gourmet market as well."
Westfeldt's office, which has occupied the same downtown building on Gravier Street since 1925, is decorated with vintage coffee cans, brass coffee grinders, ancient black telephones and coffee posters from around the world. It has a decidedly old-world feeling, which is exactly the way the company's 14 employees like it.
But that office was boarded up for two months following Katrina's onslaught, said Hastak.
"We were operating from two locations — Fletcher, N.C., and Lafayette, La. — not knowing how long we'd be out of the city. We came back into this office at the end of October, right before Halloween," he said "Our main problem right now is restocking our inventory, which took a tremendous hit, and getting the warehouses back to normal, so they can actually do the things they need to get done. It's horrendous."
Hastak declined to quantify how much damage the company sustained, saying only that it was substantial. But it didn't stop there.
"People, even those with homeowners' insurance, were ill-advised that they didn't need flood insurance, so they had no protection. Some of our employees had tremendous damage." For example, Albert Barrientos, who's worked at Westfeldt for 53 of his 85 years, lost two homes.
With the Port of New Orleans out of commission immediately following the storm, Westfeldt began importing through Miami and Houston.
"We buy a lot of spot coffees for immediate use, so we also brought coffee from Mexico into Laredo," said Hastak. "Our major problem now is transportation. FEMA pays a premium for its loads, which makes it harder for us to get trucks to ship our coffee. Even with the LTL carriers, it's been tough for us to get drivers. The labor problem crosses all segments of the community. If a guy doesn't have a place to live and bring his family to, what difference does it make if he's getting four times his normal salary?"
He added: "It's very difficult to do any kind of reconditioning. If a lot needs attention for any reason, there's just a limited amount of labor. I don't think that anyone would have thought only three or four months down the road that the port would be as functional as it is.
Asked how long it might be before things return to normal, Colomb answered with a shrug.
"It could be a year, it could be five years, it could be ten years or never. The experts are saying New Orleans will have a smaller population, but the people who stay are going to be good people. There's a great amount of uncertainty. They keep saying the Army Corps of Engineers has to get the levees up to snuff by hurricane season next year.
"We hadn't been hit by a hurricane in over 40 years, but that doesn't mean it'll be another 40 years before it happens again," he said. "Some people say we shouldn't rebuild New Orleans. That's preposterous. New Orleans was a city before there was a United States."
Says Colley: "I think it's going to be like 9/11. Obviously, the fear of terrorism has faded, and that's human nature. That'll happen here too. We're not the only city in the United States that's suffered a great tragedy. San Francisco suffered a great tragedy and we seem to have short memories when it comes to this kind of thing."
Westfeldt's Hastak summed it up well, when he told us with a sigh that "we don't want to give anyone the impression that it's 'business as usual,' because it's not. We've got a long way to go."
He added: "This isn't a starting or ending point. We're still in the middle of this thing. Katrina continues as we go forward. I think it's going to take quite a long time, maybe years, before we can look back and say how we made out."