The Tea & Coffee Trade Journal / March 1999
By Larry Luxner
BELO HORIZONTE, Brazil -- A little-known coffee company that got its start less than three decades ago has in the last few years become the No. 1 capucchino producer in the world's largest coffee-exporting nation.
Café Três Corações Ltda. boasts 250 employees and annual sales of around $130 million. Several of the company's top officials spoke to The Tea & Coffee Trade Journal during a late November visit to the processor's headquarters in Santa Luzia, just outside Brazil's third-largest city, Belo Horizonte.
Kleber Delton Malta, national sales manager at Três Corações, says ground coffee constitutes 85% of his business, and capucchino the remaining 15%. "Our company is all over Brazil," he says. "We have 53 distributors throughout the country."
In Portuguese, Três Corações means "three hearts," and was given that name upon its establishment in 1970 by the company's founder, in honor of his three children. The Tavares family bought the company in 1984, and now its day-to-day affairs are guided by Ricardo Ribeiro Tavares, the commercial and marketing director.
Today, says Delton Malta, Três Corações has 3.4% of Brazil's $3 billion domestic coffee market, buying 70% of its beans from small producers in the surrounding state of Minas Gerais rather than growing its own coffee. The remaining 30% comes from growers in Espirito Santo, São Paulo, Paraná and other states. The company also exports green coffee to more than a dozen countries including Italy, Germany, Great Britain, the United States, Canada, Uruguay, Belgium, France, Spain, Portugal, Greece, Israel, Lebanon, Russia and Australia.
"Many features contribute to the success of Café 3 Corações," says the company. "Water-refrigerated mills maintain the taste and aroma of the beans. The trítop bagging system -- developed in a partnership with White Martins [a local manufacturer] -- keeps the product from contact with oxygen. This system triples the lifespan of the product while maintaining quality."
Today, roughly half of the revenues of Três Corações derive from Brazilian sales, and half from exports. Although the capucchino business is only 15% of what the company does, Três Corações is Brazil's undisputed leader in this rapidly growing niche market.
According to Delton Malta, the company produces 40,000 boxes a month of regular and diet capucchino in various packaging verions. He says the company's biggest markets are the three states of Minas Gerais, Rio de Janeiro and São Paulo, which together account for 80% of total sales.
In 1997, total capucchino volume in Brazil came to 2.37 million kilograms, an 18% increase over the 1996 figure of 2.01 million kilos. Calculated by value, 1997 capucchino production was worth $28.5 million, up 11% from the 1996 figure of $25.6 million. In 1995, by comparison, capucchino production came to only 1.157 million kilograms worth $15.5 million.
"Brazilian people like capucchino strong in a small cup, with more sugar and cinnamon than in the United States, where capucchino is served in a big glass," says Delton Malta. "It's a breakfast drink for Brazilians, though it's frequently drunk after lunch and dinner too."
Annual per-capita consumption of capucchino varies widely throughout Brazil. It ranges from a low of 7 grams in Region I, which includes Bahia, Sergipe and six other relatively poor northeastern states) to 32 grams in metropolitan São Paulo. In between are the states of Minas Gerais and Espirito Santo and the interior of Rio de Janeiro state, where annual per-capita capucchino consumption comes to 23 grams.
With 50% of the Brazilian capucchino market, it appears Três Corações has little to fear from Brazil's other producers, such as Porto Fino (with an 11% market share), Iguaçü (3%), Malita (2%) and other minor brands. Asked why Três Corações is the leading capucchino producer, the company's sales manager had this to say: "Because our product is the best, and it has cinnamon. That's the difference. We also have very good distribution, and we spend a lot of money on advertising."
Traditional coffee is sold in 20-packs of 250 grams each, in 10-packs of 500 grams each, and roasted beans in 250g, 500g, 2-kg and 5-kg sacks.
Café Expresso is sold in 5-kg boxes of five 1-kg backs, while Cafe Malta -- with a small percentage of beans from the Mata zone of Minas Gerais and Espirito Santo states -- is sold both in roasted and whole-bean form. Vacuum-packed and instant coffee is also available.
Raw coffee is stores in the "Armazem Gerais Leste de Minas" store in Manhuaçu (Minas Gerais state). That operation, with its 48 electronic grading machines, occupies 6,500 square meters of space and holds 200,000 sacks -- boasting the capacity to process one million sacks a year if need be. The 70,000-square-meter factory in Santa Luzia is for both roasting and grinding.
In April, the company created the "Três Corações de Qualidade de Café" prize to encourage the 30,000 coffee growers of the eastern region of Minas Gerais to produce a better-quality type of coffee. In the 1998-99 season, this highly fertile region is expected to yield over four million 60-kilogram sacks of coffee.
Being Brazil's capucchino king isn't enough for Três Corações, however. Rodrigo Lapertosa, the company's new product manager, says "we'll soon start to sell powdered milk and a kind of coffee candy, and Cafe do Cerrado, considered the best coffee of Brazil, because the green beans are from the best region of Minas Gerais. Another new product is coffee in little sacks, known as Medida Certa."
"We're also thinking about getting into the tea business," he says. "Maybe we'll do a partnership with another U.S. or foreign company. We're studying the market now."