CAFÉ TOSTADO SIN DESCAFEINAR

Tecnology University of Panama

Faculty of Industrial Engineering
Degree in industrial engineering

Product Profile “Roasted Non-Decaffeinated Coffee”

Subject:
Market research

Teacher:
Giancarlo Yanisseli

Members :

David Arosemena 8-897-670

Aileen Barroso 4-776-938
Lilibeth Vásquez 8-900-467

Cluster:
1II-254

Date of delivery:
Thursday, July 5, 2018

I Semester 2018
 INDEX

Content
“COFFEE” PRODUCT PROFILE................................................................................................3
1. PRODUCT CHARACTERISTICS.........................................................................................3
1.1 Product description..........................................................................................................3
1.2 Product data sheet............................................................................................................4
1.3 Uses and Forms of Consumption.....................................................................................5
2. MARKET SIZE........................................................................................................................5
2.1 Local Production..............................................................................................................6
2.2 Exports from the destination country.............................................................................7
2.3 Imports from the destination country.............................................................................7
2.4 Regions/Sectors of greatest demand................................................................................8
2.5 Competitor analysis..........................................................................................................8
3. ANALYSIS OF DEMAND....................................................................................................12
3.1 Consumer demand profile.............................................................................................12
4. AUDIT IN STORES...............................................................................................................13
5. MARKET ACCESS CONDITIONS.....................................................................................14
5.1 Tariffs, customs duties and taxes...................................................................................14
5.2 Market entry restrictions, standards and regulations.................................................15
6. MARKETING AND DISTRIBUTION CHANNELS..........................................................20
7. VALUE CHAINS...................................................................................................................22
8. BUYER PROFILE.................................................................................................................25
9. PROMOTION ACTIVITIES................................................................................................26
9.1 Fairs.................................................................................................................................26
9.2 Exhibitions......................................................................................................................27
9.3 Specialized publications.................................................................................................28
10. OFFICES AND UNIONS...................................................................................................29
 “COFFEE” PRODUCT PROFILE
ROASTED COFFEE WITHOUT DECAFFEINATING CODE: 0901.21.00.00

1. PRODUCT CHARACTERISTICS
1.1 Product description
The coffee tree is a small, evergreen shrub or tree with a straight stem that can reach 10
meters in the wild; In crops they are normally kept smaller, around 3 meters. The leaves are
elliptical, dark and leathery. It blooms from the third or fourth year of growth, producing
axillary, fragrant, white or pinkish inflorescences; some species, especially Coffeaarabica ,
are capable of self-fertilization, while others, such as Coffea robusta , are pollinated by
insects. The fruit is a drupe , which develops in about 15 weeks from flowering; The
endosperm begins to develop from the twelfth week, and will accumulate solid matter over
the course of several months, attracting almost all of the energy produced by photosynthesis
. The mesocarp forms a sweet and aromatic, reddish pulp that matures in about 35 weeks
from flowering .(Wikipedia, 2017)
Coffee is found in the market in different presentations such as: green bean, roasted, ground
roasted and decaffeinated. These are imported and exported from the country through
cajetas where a certain amount of packages or bags of coffee are placed and then
transported to their destination.
Coffee Varieties:
The most important types of coffee in international trade are Arabica and Canephora
(Robusta).
 Arabic:
They represent 70% of world coffee production and are considered the most select for their
aromatic qualities and mild flavor, which is why they are usually more expensive. The
caffeine content of the bean is relatively low, between 0.9 and 1.5%.
 Robust:
It is considered less tasty and aromatic than Arabica, which is why it is widely used by the
food industry in the production of instant coffee and other cheaper coffees. It contains twice
as much caffeine as Arabica (between 2 and 3.5%).(López, 2005)
In Panama, Arabica coffee can be grown in the provinces of Chiriquí, part of Veraguas and
in the Ngöbe Buglé region. On the other hand, Robusta coffee cultivation is usually found
in the provinces of Coclé, Panama, Colón and part of Veragua.(Ministerio de Desarrollo
Agropecuario, 2017)
There are many varieties in which coffee can be found in Panama, such as chocolates,
drinks (hot and cold), ice creams, foods, flavorings, bonbons, etc. Panama is one of the
countries that grows the famous Geisha coffee, which is one of the most exclusive varieties
of coffee in the world.

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 1.2 Product data sheet
 Scientific Name: Coffea
 Kingdom: Plantae
 Division: Magnoliophyta
 Class: Magnoliopsida
 Order: Gentianales
 Family: Rubiaceae
 Subfamily: Ixoroideae
 Tribe: Coffeeae
Coffee plants (Coffea) are a genus that contains around one hundred accepted specific and
infraspecific taxa, of the almost 400 described plants of the Rubiaceae family, native to
southern Asia and subtropical Africa. They are widely cultivated for their seeds that are
used, ground and roasted.(Wikipedia, 2017)
To grow coffee, the following requirements are needed: A temperate and humid climate,
with frequent rains and temperatures between 15 and 25 degrees Celsius, deep, permeable,
well-watered crop soils and with a subsoil that removes water easily. , an ideal altitude for
its cultivation is between 600 and 1200 meters; The best areas are mountainous and
volcanic terrain.(López, 2005)
 Place of origin:
Historically, coffee is native to tropical Africa, probably Ethiopia called by many historians
as Kaffa or Caffa where it is said Coptic Christian monks drank the infusion of Coffea
plants to stay awake.
Studies confirm that coffee growing in Panama dates back to colonial times, coming from
Cartagena, Colombia; In the 1940s, it is estimated that there were around 3,803,000 coffee
trees in the country, very few dispersed plantations. Over the years, this activity has been
growing commercially. (Miranda, 1989)
In Panama, coffee is grown in two well-marked or differentiated areas, the farms that are
located at altitudes above 1000 meters above sea level, the cultivars used are of the Coffea
arábiga variety (high altitude coffee) and most of them fall into this category. from the
producing areas of Chiriquí, part of Veraguas and areas of the region Ngöbe Buglé ; The
other area corresponds to lowland crops that grow the variety Coffeacanephora (Robusta)
that are below 1000 meters above sea level and is where the largest number of farms with a
low level of organization as a commercial crop are distributed. This category falls into the
areas of the provinces of Coclé, Panama, Colón and part of Veraguas. (Ministerio de
Desarrollo Agropecuario, 2017)
The coffee that is imported to Panama comes from countries such as Mexico, Colombia,
Italy, the United States, the United Kingdom and Polinia. These 6 countries are the ones
that have the largest import of roasted coffee to Panama.

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 1.3 Uses and Forms of Consumption
Coffee is used as a highly stimulating drink due to its caffeine content. It is usually taken
during breakfast, after breakfast or even as the only breakfast, although it is also customary
to take it after lunch or dinner, to start conversations or just out of habit.
It is also used in gastronomy, baking and confectionery as a flavoring and flavoring in ice
cream, chocolates, etc. Currently there are many medications with caffeine, both alone and
in combination with other active ingredients, such as analgesics. In addition, it is a good
fertilizer for gardens due to its nitrogen content.

2. MARKET SIZE
The coffee bean comes from the coffee trees, which produce a cherry that is harvested
when it ripens when it is red. Once the pulp is removed, a coffee bean is obtained that is
dried in the sun. This coffee bean is called green coffee and must be roasted in order to
prepare the freshly brewed coffee that we all enjoy. Roasted coffee is a very commercial
product that requires an elaborate production process to bring a quality bean to the
consumer.

In the Republic of Panama, roasted coffee whose classification is found in heading 0921
and subheading 0901.21.00.00 (not decaffeinated) faces a tariff equivalent to 54%, while in
Peru the subheading is 0901.21.10.00 with a tariff of 11%. (Aduanas, 2010)

Coffee harvesting process in Panama

Unlike coffee plantations in other countries, in Panama, mainly Boquete, it is not on flat
land and the harvest is not carried out with machinery but by hand, which means that it is
necessary to go through the same plot up to 10 times, since the cherry That is not
completely ripe will not be touched. It is also important to know the sugar content of coffee
cherries to know the exact time to harvest.
Coffee has to go through three processes. The ripe fruit dries up; Depending on the
intensity of the sun and the temperature, it can be for up to about 20 days. When dried, the
moisture that the grain retains is recorded. When the desired humidity is achieved, it is
stored in a dark room with controlled humidity to age it. It is stacked and toasted.
Throughout the process the humidity is checked. Coffee should be roasted with radiated
and convection heat. Thus the result is even. (Arjona, 2015)

National consumers

Coffee is a highly consumed good in Panamanian territory, both by nationals and

foreigners, where the average is 2 cups a day. Therefore, it is a product that has a market, a
long tradition and enjoys good popularity.

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The coffee most consumed by Panamanians is ground and grain, while the instant product
registers little preference, contrary to what happens worldwide, where it is widely accepted
by people who want to prepare the product faster. Countries that produce good coffee do
not consume the instant product, since “it is a sacrilege, it should be taken as God
intended,” according to studies.

These consumption habits attest to the fact that, in Panama, despite not being among the
largest coffee-consuming countries (a position occupied by the United States, Germany,
France, Japan and Italy, which together represent 70% of global demand), ), there is an
increasing preference for specialty or high-quality coffees. (Lamuño, 2014)

2.1 Local Production

Table n°1 AGRICULTURAL YEARS
INDICATORS
2012-13 2013-14 2014-15 2015-16 2016-17
Production (qq) 229,455 223,196 201,220 194,127 199,960
Planted area (ha.) 20,084 20,254 19,886 19,825 19,240
harvested sup 18,337 17,831 16,495 18,695 17,081
Yield (q/ha.) 12.51 12.52 12 10 11.71
Producers 7,664 7,660 8,161 7,600 7,677

Gráfica n°1: Evolución de la producción según años

agrícolas
250,000
200,000
Quintales

150,000
100,000
50,000
0
2012-13 2013-14 2014-15 2015-16 2016-17
Producción (qq) Años agrícolas

Gráfica n°2: tasa de crecimiento promedio en los indicadores de

producción durante los últimos 5 años agrícolas
0.25
-0.25 Producción Superficie sem- Superficie Rendimiento No. de Produc-
-0.75 brada cosechada tores
-1.25
tasa de -3.4 -1.1 -1.8 -1.7 0.04
Tasa %

crec--1.75
imiento
-2.25
-2.75
-3.25
-3.75

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Coffee is one of the items of economic importance for the country. The data shown in
graph 1 reveal that during the years 2012-13/2014-15, production decreased by 15%
(35,328 quintals). However, compared to the last two years, it recovered by 3%,
representing 5,833 quintals more than last year and an increase in yields of 1.43 q/ha. In
graph n°2, it is observed that the only indicator that reflects a slight growth in the five-year
period is the participation of producers, but not in the others. Among its top producers are
the provinces of Chiriquí, Coclé, Colón and Panamá Oeste; of which Chiriquí is the leader
in this activity with 61%, Coclé 18%, 7.8% and 7.7% for Colón and Panamá Oeste
respectively. This activity contributes 76.3% to the country's economy, with an average
producer price per quintal of 280.00 USD and an average production cost of 3,965.91 USD.
2.2 Exports from the destination country
From October 1, 2015 to September 31, 2016, 39,065 60-kg bags of coffee were exported
for an FOB value of 18,033,113.00 USD, whose average price for each exported bag was
461.62 USD.
Destination: United States, Holland, Belgium, Japan, Italy, Germany, Taiwan, Canada,
Australia and Chile. (MIDA, 2017)
2.3 Imports from the destination country
The information obtained from the AUPSA (SISNIA) website informs us that 2,624,321.50
kgs (57,735.07 qq) of Coffee in its different presentations have been imported:
 Unroasted and undecaffeinated coffee beans represent 67.69% of the total import,
where 85% comes from Vietnam.
 Roasted and/or ground coffee without decaffeination (prepackaged) represents
12.43% of imports and the country that imports the most is England - EU
 Instant coffee (soluble) heading 2101.11.10 represents 16.41% and the largest
importer is the EU
Origin: United States, Colombia, Vietnam, Brazil, Mexico, Nicaragua, Chile, England,
France, Germany. (AUPSA, 2017)
According to the study 'Economic impact of the coffee industry in Panama', prepared by the
consulting firm Indesa, reveals that in 2015 the coffee industry contributed $212.2 million
or 0.4% to the country's Gross Domestic Product (GDP).
The analysis also concluded that the integration of the entire grain production chain has
great potential to boost the economy, despite low production. This indicates that the
greatest opportunity is found in the export of roasted coffee, because it generates greater
added value and the prices per international ton are three times higher than the prices of
unroasted coffee. From 2012 to 2017, imports and exports of coffee beans fell 10%, while
roasted coffee grew 5%.

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The prospects for exporters of roasted coffee, by generating greater added value to the
coffee bean, are more positive than those of exporters of unroasted coffee beans, given that
the growth rates of exports and prices per ton are superiors. (Rodríguez, 2018)
2.4 Regions/Sectors of greatest demand
Approximately 19,440 hectares of coffee are cultivated in the country. Where the majority
of their production comes from the provinces of Chiriquí, Coclé, Panamá Oeste and Colón .
In Panama, coffee production is around 200 thousand quintals per year, between traditional
and special coffee, the latter being the one that has gained the greatest popularity in recent
years with the opening of gourmet coffee shops, which has even promoted the importation
of the product for be able to meet the demand.
Annual per capita coffee consumption in Panama is 2.49 kilos, something that will rise
soon as the production of specialty coffees is influenced by the wave of gourmet coffee
shops that have opened in the last two years. Coffee growers export less than 20 thousand
quintals of high-altitude coffees, and it has been discovered that the industry imports about
30 thousand quintals of gourmet coffees to cover demand.
The national market has become interesting, in the sense that before a good percentage of
the harvest was sold abroad and now a part stays in the country, since there are people
willing to pay between $3.50 and $9. The boom experienced in the domestic market is such
that the Santa María La Antigua University opened a diploma in barista. Due to the high
demand and growth of this product, every time there is the opening of a new hotel, the most
sought after position is for baristas. (Lasso, 2018)
2.5 Competitor analysis
For this point, 5 of the most important companies within the coffee category in the
Panamanian market will be analyzed: Café Durán, Kotowa Coffee, Casa Ruíz, Starbucks
Coffee and Juan Valdez. The first being the one with the greatest presence and power in the
market, participating in several subcategories in both traditional and Specialty coffee. The
following represent local Specialty coffee brands with strong leverage to the designation of
origin and national tradition. The last pair corresponds to the international brands with a
presence in Panama City within this category. Specialty Coffee is one category among
several (e.g. traditional, decaffeinated, instant, etc.).
 Product
In general, all brands meet the following criteria which are necessary to mention at the
product level:
o Durability:

All products are non-durable goods.

o Shopping habits:

All products are convenience and common use goods.

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 o Product hierarchy:

In terms of need it is Beverage, in terms of product it is a processed beverage and in terms

of the type of product it is coffee.

o Product levels:

They all meet the basic (drink with coffee flavor and aroma), generic (all products are in
presentations suitable to be prepared by traditional methods such as grinding, straining,
etc.), expected (all products have a coffee aroma and flavor) levels. acceptable coffee,
standard packaging that fulfills its function of preserving the coffee in acceptable
conditions, instructions for use on the packaging for a well-made coffee) and increased
since they all compete in the Specialty coffee subcategory in its different definitions
(height, gourmet, of origin) and formats (roasted, grain, ground) and, potential, since they
all present delicacies such as exclusive harvests (Geisha, Caturra), single origin (Volcán,
Sumatra, etc.) and special preparation (Espresso, extra fine ground, etc.).

 Price (Height and Specialty Categories)

Table n°2 Prices

Price
per
Brand Subcategory Presentation Price ($) Strategy
gram
(cents/g)
Pure coffee - High altitude coffee 340g 5.19 1.52 Good Value
Middle
Duran Panamanian coffee of origin by Durán 340g 8.40 2.47
value
Panamanian Geisha Café by Durán 200g 35.00 17.50 Superior
Middle
Gourmet Coffee 340g 7.85 2.30
value
Kotowa Gourmet Coffee – Organic 340g 8.75 2.57 High Value
Blend family reserve 340g 13.00 3.82 High Value
Gourmet Geisha 340g 37.44 11.01 Superior
Cafe Mix, ground 250g 4.15 1.66 Good Value
Ruiz Tall, grain (several types roasted) 450g 8.30 1.84 Good Value
Middle
Special roast 1 lb. 12.95 2.85
value
Middle
Express 1 lb. 13.95 3.07
value
starbucks
Middle
Single Origin 1 lb. 14.50 3.19
value
Middle
Mixtures 1 lb. 16.50 3.63
value

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 Juan 500g 16.03 3.20 High Value
Premium
Valdez 340g 11.08 3.25 High Value

 Square

Table n°3 Seats

Brand Square 1 Square 2 Square 3 Observations
Institutional
It has around 16 Coffee Stores in
Channel
Supermarkets Coffee Panama City. Grocery stores High NSE
Duran (restaurants,
(retail) Stores (only Height and Specialty), Medium
cafes, hotels,
and Low.
etc.)
Kotowa Coffee are sold only in the
corporation's own coffee shops
Coffee
(Kotowa Coffee House) with 15 stores
Stores,
Kotowa in Panama City located in low-volume
Deli
airports (Albrook, Panama Pacific),
Gourmets
business centers and inside Deli stores
(mainly Grand Deli Gourmet ).
Casa Ruiz only has a presence in the
Supermarkets channel in Panama City,
in each of the levels: Premium
Supermarkets (RibaSmith, El Rey), Medium (Súper
Cafe Ruiz
(retail) 99), Economic (El Machetazo, 125
gram presentation only). It has a
cafeteria owned by the Finca in
Boquete, Chiriquí province.
In the first channel, a maximum of 4
varieties are observed (Sumatra,
Espresso, French and Italian Roast)
Supermarkets Coffee only in certain stores in high SES areas
starbucks
(retail) Stores of the Riba Smith chain, while in the
coffee stores they do have most of the
Specialty subcategories depending on
the season.
Juan Valdez has 3 coffee stores in the
metropolitan area. In the first channel,
Juan Supermarkets Coffee there are a maximum of 3 varieties at
Valdez (retail) Stores the same time exhibited on shelves only
in certain stores in high SES areas of
the Riba Smith chain.

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 Promotion
o Duran Coffee:
These have a presence in all the media in the country from radio, television, to social
networks, including billboards. The approximate budget for advertising and fairs is
approximately 750,000 USD.

Durán runs two promotions to exchange packaging for gifts a year. During the first half of
the year, consumers change a certain amount of packaging for collectible mugs with
different designs (Crazy Mug). In the second semester, they hold a large raffle where cars
are given away to the winning contestants. To participate, consumers put a certain amount
of packaging in an envelope that is then sent as part of the registration requirements for the
contest.

Durán does not carry out promotions with consumer discounts, nor does it give away
products because they consider that the demand of their consumers is inelastic and these
incentives would only have an impact on delays in repurchases.
o Kotowa Cafe:
Use press releases to report on the national and international awards won by your products.

With little presence in their digital marketing and poor use of social networks. Its website
highlights the product offering (Roasted Coffees), history of the founders, origin of the
name, social responsibility, awards, etc. They also show a list of the farms they own, some
details of production methods (grain processes), harvest height, region, rainfall level, etc.
that produce.
o Cafe Ruiz:
Poor presence in the media, they do not appear on billboards, commercials, etc., except for
appearances that they usually make at the Book Fair. It should be noted that they are very
active in the town of Boquete, Chiriquí where they offer tours and on-site tastings.

They do not handle social networks, and their website is totally neglected, making it not
attractive to the consumer. They appear on other web pages.
o Starbucks:
It is important to note that the basis of this promotions revolves around branding with
emphasis on its prepared drinks, not on the single product category (be it infusions, coffee
or juices). These are always promoting their drinks according to the season we are in.

It has a good presence in the market since being a renowned international brand helps it
establish itself in it. These have billboards, commercials on cable television, spots on local
stations focused on the brand in general but not the product in particular. They do not have
a Panama website, but they are active on social networks.
o Juan Valdez:

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It is important to highlight that Juan Valdez works under the franchise business model,
therefore, a good part of the promotion results are borne by the local franchisee. Therefore,
in this section the efforts made in the Panamanian market will be mentioned.

It does not have billboards and they do not appear on radio and/or magazines. They have
commercials on Cable television (CableOnda, Cable&Wireless) and TVN (Local channel
with national coverage) focused on the brand in general, not on a particular product. They
do not have an absolute presence on social networks directed to Panama, much less a
website.

3. ANALYSIS OF DEMAND
3.1 Consumer demand profile
In Panama, the coffee most consumed by Panamanians is roasted and grain coffee, while
the instant product registers little preference. 50% of the population of Panama is under 15
years old and the other percentage is older, so the new generations are more accustomed to
products that facilitate consumption, that is, instant products. On the other hand, people
over 15 years of age are the ones who most frequently consume roasted coffee, which is
why they are the ones who buy it the most.(Lamuño, 2014)
People usually consume coffee daily, whether during breakfast, after meals, to start
conversations, relieve stress or simply out of habit. That is to say, coffee in Panama is in
constant movement due to its high frequency of consumption.
This does not have an exact season since people usually ingest it, although it can be
considered that it obtains a greater regularity of use for the rainy season that begins in April
and ends in December, this is because due to the cold people seek to take hot things and
one of the biggest options is coffee.
Although Panama is not among the countries with the highest coffee consumption, a
position occupied by the United States, Germany, France, Japan and Italy, which together
represent 70% of global demand, there is an increasing preference for specialty or high-
quality coffees.
Supermarkets in Panama offer quality and several brands of coffee on their shelves, both
national and international, but products that are harvested and manufactured in Chiriquí
predominate, such as Ruiz, Sitton, Durán coffee, among others.
The most expensive coffee is Juan Valdez, which comes from Colombia, it has different
types and prices, which gives consumers the ability to enjoy, in the comfort of their home,
coffee from that region, considered one of the of higher quality.
But the national product takes up the most space on the shelves of supermarket chains and
small stores known as mini-supers or “chinitos”, where you can get the basic basket
product made in Panama, from 25 cents to around 9 cents. dollars the national product can
cost.(Panamá América , 2017)

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Among the companies or commercial premises that buy, sell and distribute roasted coffee
in Panama are: Tzanetados (dedicated to coffee distribution), Nestlé, Duran Coffe Store,
Café Unidos, Kotowa Coffe House, Tostado Café by Gerald, Tosto Coffe Co., Starbucks,
among others, all dedicated mainly to coffee, it is worth mentioning that the hotel industry
is a sector that buys large quantities of roasted coffee for its gastronomy.

4. AUDIT IN STORES
Marketer
Trading company MICA FULL SERVICES SA
Marketing channels Importer
Customs Item: 09012100
Customs Item Description: ROASTED COFFEE
WITHOUT DECAFFEINATING
Customs: NORTH ZONE (COLON)
Import Date: 04/26/2016
Commercial Description: ROASTED COFFEE
Company (data and website) BEANS WITHOUT DECAFFEINATING ELKAFFE
Importer: MICA FULL SERVICES SA
Producing Country: Italy
Web:
https://www.veritradecorp.com/es/panama/importacion
es-y-exportaciones-mica-full-services--sa/nit-1592387-
1-664786

Trading company HORECA SOLUTIONS, SA

Marketing channels Importer
Customs Item: 09012100
Customs Item Description: ROASTED COFFEE
WITHOUT DECAFFEINATING
Import Date: 08/25/2017
Commercial Description: ROASTED COFFEE
BEANS WITHOUT DECAFFEINATING
Company (data and website)
(DIPLOMAT CAFFEE 4 CUPS)
Importer: HORECA SOLUTIONS, SA
Producing Country: United States
Web:
http://business.veritradecorp.com/Veritrade/MisBusqu
edas.aspx

Supplier
Company (data and website)/ Café Durán/ Café Geisha Panameño by Durán

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 Brand
website: http://cafeduran.com/
 Flavor: Exotic notes, citrus notes (citronella /
mandarin), red fruits and ginger stand out
 Aroma: Delicate, with floral notes (jasmine),
Characteristics
very fragrant, with some citrus (the aroma is
the most precious attribute of Geisha coffee)
 Body: Light and delicate
Unit of measurement 200 grs.
Price 35.00 USD
Origin (local or foreign-country) Local

Format (product image)

Company (data and website)/ Ruiz Coffee / High-Italian Roasted

Brand website: http://caferuiz-boquete.com/
 This roasting, the beans become oily and shiny due
to their caramelization.
 The acidity becomes practically non-existent and a
Characteristics burnt flavor predominates.
 Very dark grains close to black.
 It is the favorite roast for those drinks prepared
from dairy.
Unit of measurement 420 gr. and 320 grs. (it varies)
Price 8.30 USD
Origin (local or foreign-country) Local

Format (product image)

(Madera, 2016)

5. MARKET ACCESS CONDITIONS

5.1 Tariffs, customs duties and taxes
Tariffs in the sector under study are defined with the help of tariff codes, which classify the
products that are intended to be exported in the context of international trade. Through
these codes, it is possible to make comparisons in the performance of the different markets,
through the analysis of statistical commercial information of the importing and exporting

14
countries of the sector. For Panama, as for other Central American countries, the Central
American Tariff System (SAC) constitutes the official classification of import and export
goods at the regional level. The numerical code of the SAC It is represented by ten digits
that identify: the first two, the chapter; the next two, at the departure; the third pair, to the
subheading; and the last four, to the subsections. The identification of the merchandise will
always be done with the ten digits of said numerical code.

According to the harmonized system, coffee is classified in tariff heading 0901 and in the
following openings emphasis will be placed on roasted coffee without decaffeination
0901.21.00.00:
 0901 coffee:
o 0901.2 roasted coffee ( )
o 0901.21 not decaffeinated ( )
The following table presents the tariff items of the products that correspond to roasted
coffee along with the tariff rate imposed by Panama.(CEI, 2011)

The 54% tariff must be paid by all producers who wish to market this product in the
Panamanian market. Despite the free trade agreement negotiable in 1974 between both
countries and the new negotiations contemplated in the free trade agreement negotiated in
2007 and ratified in 2008, in both cases the product was excluded. Coffee did not become a
negotiable product; Therefore the rate applies to all countries without exception.(AUPSA &
PROCOMER, 2008)
Roasted non-decaffeinated coffee has a category E where tariffs on goods included in
category “E” in Panama's Schedule will maintain MFN tariffs. These goods are excluded
from the elimination or reduction of the tariff.
5.2 Market entry restrictions, standards and regulations
I. Tariff and non-tariff barriers to the entry of products: The General Directorate
of Customs, attached to the Ministry of Economy and Finance, are the institutions in

15
 charge of monitoring and supervising aspects related to the entry and exit of
merchandise.(PROCOMER I. , 2009)

II. Sanitary and phytosanitary requirements: According to the Panamanian safety

authority (AUPSA) and for food imports from that country, the sanitary and
phytosanitary requirements for the importation of food in general are stipulated in
the following articles of the decree that establishes the sanitary requirements for the
importation of some semi-processed or processed foods.

Article 5: At the time of the shipment's arrival at the point of entry into the country, the
shipment must be supported by the following supporting documentation:
a. Copy of import notification form
b. Certification issued by the competent official authority of the country of origin,
according to the type of food:

o For semi-processed or pre-packaged foods, a copy of the free sale or safety

certificate or other equivalent must be presented, which states that the food
is suitable for human consumption.
o For semi-processed or processed foods that are not prepackaged, such as raw
materials, among others, a health certificate or equivalent must be presented.

c. Certificate of origin of the product

d. Copy of commercial invoice of the product
e. Customs pre-declaration.

Article 6: Containers must be sealed (marked, strapped) and sealed so that said seals can
only be removed in the presence of the respective health authorities of the country of transit
or destination.

Article 7 : The Panamanian food safety authority reserves the right to take the required
samples for the analysis of organoleptic characteristics, determination of additives, toxic
residues and for the microbiological analysis of food products.

Article 8 : These health requirements are exclusive for the introduction of semi-processed
or processed foods, however, they do not exempt compliance with other national
regulations for their marketing in the national territory.

III. Requirements and procedures to import: For the registration of imported foods,
the following documents must be submitted to the Panamanian food safety
authority, AUPSA:

1
1. A registration request with US$, stamped or franked on legal paper ( 8 x 13 or
2
14), inside a long folder with a file clip with the following information:
 Product name and its description.
 Manufacturer name.

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  Place of origin (country, province/state-city).
 Name of the importer or applicant (RUC and DV of the company, address
and telephone number)

2. Additionally, you must attach the following document:

a. Free sale certificate from the country of origin of the product (original):
o It must be issued by the health authority or competent authority of the
country of origin, duly authenticated by the Panamanian consular
authorities at the place of issue or with the apostille seal. The validity of
the document will not be accepted after twelve months after it has been
issued.
o The CLV must specify the product you wish to import and that it is for
consumption and free sale in the country of origin.
o When the trade name with which the product is to be registered is
different from that registered in the country of origin, the health or
competent authority of the country of origin must specify it in the
certificate or in a separate certification, preferably; If it is not viable, the
exporter will make a notarized sworn declaration stating that the product
described in the certificate is the same one that is desired to be registered
in Panama with another commercial name.

b. Product qualitative formula:

o The list of ingredients of the product, preferably in the official language
of Panama, specifying each ingredient and its content, including the
additives used.
o Both ingredients and additives must be detailed according to
international nomenclature.

c. Product manufacturing method description:

o The production method where the transformations that the raw material
undergoes from the beginning of the process to the final product are
explained. This information should be presented in narrative or flowchart
form and include holding temperatures, pasteurization time and
temperature where applicable.

d. Specification of the type and material of packaging in which the product is

contained.

e. Information regarding the conservation and biological stability of the product:

o This information must be accompanied by an explanation of the method
used to determine it.

f. Production and expiration date, batch interpretation:

o The declaration of the production and expiration date, description of the
batching system and its interpretation according to what is declared on
the product labeling.

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 g. Four product labels:
o The labels must be original and have the complete information required
in accordance with current legislation. When the packaging is difficult to
handle (cans, large boxes, bottles with the information engraved directly
on the packaging), they must provide art identical to the original.

h. A copy of the packaging.

IV. Packaging requirements: Regarding the information that the label of prepackaged
food containers must contain, it is as follows:
o name of the food
o list of ingredients
o net content and drained weight
o name and direction
o country of origin
o lot identification
o date frame and storage instructions
o Instructions for use

V. Others: According to the lists of the Ministry and Commerce (MICI) of Panama,
no regulation or technical standard for the manufacturing and marketing of coffee in
Panama does not apply. (AUPSA & PROCOMER, 2008)

VI. Format:

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19
 6. MARKETING AND DISTRIBUTION CHANNELS
Roasted coffee is a product ready to reach the hands of the consumer either by purchasing it
in the retail channel to prepare at home, or by consuming the drink already prepared in an
establishment. Worldwide, according to data in 2013, 78% of the coffee sold was placed in
the retail market, and the rest in the foodservice segment, which includes restaurants, cafes
and other establishments where coffee is sold. Despite the lower relative participation, this
sales channel is the one that shows the greatest dynamism, with an average annual growth
of 3.3% between 2000 and 2013.(PROCOMER, 2014)

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Below is a diagram of the most frequently used marketing channels: Distribution and
Marketing Channels for coffee.(PERFIL PRODUCTO, 2015)

Another example of roasted coffee distribution channels:

Roasted and packaged coffee:

 Consumption at home (retail):

o Supermarkets
o Convenience stores
o Specialized stores

 Consumption outside the home:

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 o Coffee shops
o Restaurant and hotels
o Work places
o kiosks

 Mark-up
The profit margin on fresh products that is usually used in Panama is between 30% and
50%.

7. VALUE CHAINS
Obtaining a cup of coffee involves a series of stages that range from the cultivation of the
coffee tree to the finished product that is available to the consumer in a wide range of
presentations. Each of these stages implies added value, which is greater in the processing
and marketing phases.

Transformation stages of the coffee value chain

Process and Description
 CROP:
It requires a hot and humid climate, with temperatures between 20 and 25 °C and rainfall
between 1,500 and 1,800 millimeters per year. The plantations are located in mountains or
plateaus for the Arabian species, and in the plains or plains for the robusta species.

The cultivation is carried out through seedbeds that have previously been germinated and
grown in nurseries, which are then transplanted to the plantation.

 Harvest:
For the Arabica species it occurs 6 to 8 months after flowering, and for the robusta species
between 9 to 11 months after flowering.

It is a long and meticulous process that consists of collecting the ripe fruits of the coffee
tree one by one. First the cherries (coffee fruits) must ripen until they reach a reddish color
and then the pickers go through the coffee trees and collect the ripe cherries one by one;
Thus, the process lengthens until all of them are completely ripe.

 Beneficiary:
It is made up of several phases:
o Pulping: mechanical removal of the fruit pulp.
o Fermentation: elimination of mucilage through natural fermentation. It can
also be removed mechanically.
o washing: removal of honey that remains adhered to the parchment by
immersion and passage through water currents.
o Drying: decrease in humidity to a commercial point (between 10% and
12%). After this process, the coffee is ready to be marketed as gold coffee or
green coffee. The beans are protected by their own layer called parchment.
Green coffee is transported in jute bags, carefully arranged so that air
circulates between them, eliminating the risk of mold or condensation.

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 o Threshing and sieving: removal of parchment and impurities; and
classification of grains by size.

 Roasting:
It is the process of roasting green coffee. During this, the bean loses weight and the typical
aroma and taste of coffee develops. Depending on the consumer's taste, the beans have an
optimal roasting time and type, whose variations alter the final flavor. After this stage the
coffee is ready to consume.

 Ground:
In grinding, the roasted grain is crushed to give the final characteristics to the product. The
granulometry of the coffee will determine its flavor and aroma so that if it is lightly ground,
not enough will be extracted and the water will pass through it superficially, limiting its
flavor; On the contrary, if it is ground too much, the less aromatic and more bitter
components will dissolve.

 Solubilization:
In the case of instant coffee, there is a subsequent stage of producing a liquid coffee extract
and then drying it. Drying can be through freeze-drying, which consists of freezing the
coffee extract forming a block that is subsequently granulated for final sale to the public.
This way of drying coffee at very low temperatures prevents the deterioration of flavors and
aromas due to overheating.

Another drying method is solubilization, which consists of obtaining a liquid extract

through percolation and drying it with hot air at a very high temperature.

Due to this high temperature, the aromas and volatile organoleptic compounds are lost in a
very high proportion and therefore the final flavor is very different from that of non-instant
coffee.

The stages of coffee production destined for international markets are clearly segmented
between producing and importing countries. Generally, producing countries are responsible
for the cultivation, harvesting, processing, and packaging of dried green coffee in 46 kg
(quintal) bags, ready for export. Importing countries carry out the subsequent stages, that is,
roasting or roasting, grinding and packaging either for straining or processing as instant.
Each of the stages adds value in the processed coffee chain. As can be seen in the following
diagram, prepared from bibliographic consultation and consultation with experts, the stages
of roasting and retail sales in the different channels (retailers, institutional market and
cafeterias) are those that represent a greater proportion of the value, approximately 29%
and 22% respectively. For example, if a cup of coffee costs 1 USD, 29 cents will
correspond to the value added in the roasting process and 22 cents will correspond to the
margin from the sale to the final consumer. In the case of the coffee producer, the
corresponding value could range between 10% and 21% and for the beneficiary between
9% and 20%, with combinations such that they make it possible to complete 100% of the
value of the coffee. At this stage it was not possible to specify an estimated percentage, so
ranges were constructed according to the opinions collected.(PROCOMER, 2014)

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Local coffee supply chain(CADENAS, 2006) :

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 8. BUYER PROFILE
Buyers of non-decaffeinated roasted coffee: 5 company names, telephone, contact, email,
person responsible for the purchase, position:

Coffee importing companies:

 Company Nestlé Panama, SA:
o Buyer contact: Idalis Moreno
o RUC: 82-30-15216
o Phone: 507-220-811
o Fax: 507-220-9066

 Company Agencias Feduro, SA:

o Buyer contact: Damaris Moreno
o RUC: 277-83-60760-90
o Phone: 507-304-4257
o Fax: 507-304-4229

 Company Productos Alimenticios Pascual, SA:

o Buyer contact: José Tomas Cabrera
o RUC: 147-569-40208-18
o Phone: 507-217-2233
o Fax: 507-217-6831
Coffee exporting companies:
 Company Café Volcán Barú, SA:
o Contact: Carl Janson
o Email: cafevolcanbaru@gmail.com , jasoncafe@gmail.com
o Telephone and fax: 771-4306

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  Kotowa Coffee Company:
o Contact: Ricardo Koyner
o Email: kotowafarms@cwpanama.net
o Telephone and fax: 720-1430, 6614-7493

 Company Café Sittón, SA:

o Contact: Gabriel Sittón
o Email: sales@cafesitton.net
o Telephone: 217-2888, 217-2889, 720-1353
o Fax: 217-2886

 Hacienda Esmeralda Company:

o Contact: Daniel Peterson
o Email: daniel@haciendaesmeralda.com
o Telephone: 720-3202
o Fax: 720-3443

 Company Garrido Coffee Highland, SA:

o Contact: Teodoro Garrido, ZuleicaMitre
o Email: cafegarrido@cwpanama.net
o Telephone:775-0032
o Fax: 720-3259, 775-1938

9. PROMOTION ACTIVITIES
9.1 Fairs
In Panama there are many national fairs that are held throughout the year, but very few
exhibit coffee as the main attraction of the event. Among the fairs in which coffee is
exhibited as the main attraction in Panama are:
 The International Flower and Coffee Fair:
Its objective is to exhibit the great floral variety that is grown in the region, in addition to
demonstrating the work, dedication and sensitivity of the Boqueteños when dedicating
themselves to the cultivation of high-altitude coffee.
This fair also seeks to market flowers and plants, crafts, preserves, typical foods, jewelry,
clothing, cars and various other services.
o Location: Boquete
o Date: It occurs during the month of January, although the dates vary
according to the year.
o Website: http://atp.gob.pa/eventos/feria-de-las-flores-y-el-cafe-boquete

 The Chitra Fair:

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Its objective is to exhibit and market products grown organically in the highlands of the
Calobre district such as tomatoes, lettuce, coffee, carrots, cucumbers, citrus fruits,
strawberries and vegetables, among others.
o Place: District of Calobre, province of Veraguas.
o Date: It occurs during the month of February, although the dates vary
according to the year.
o Website: http://www.atp.gob.pa/eventos/feria-de-chitra-en-calobre
Likewise, a fair dedicated to international trade exhibition is held in Panama:
 EXPOCOMER:
Its objective is to promote commerce and industry through the presentation of new products
and services to the market. This event is a multi-sector exhibition, which focuses on five
main categories: food and beverages, textiles and accessories, construction, technology and
services. Likewise, it gives participants the opportunity to do business with Europe, Asia
and America.
o Location: ATLAPA Convention Center
o Date: It takes place during the month of March, the dates vary according to
the year.
o Phone: 207-3434
o Website: http://expocomer.com/
o Instagram: @Ferias_ccap
o Facebook: /expocomer
o Twitter: @expocomer
9.2 Exhibitions
Panama coffee has been on display at different festivals, events and exhibitions both
nationally and internationally, of which we can mention the following:
 27th International Food Equipment and Services Exhibition HOTELEX:
This exhibition included representatives of eight Panamanian coffee companies. At the
Panama stand, samples of grain from the brands Elida Estate, La Mula, Finca Lérida, Hi
Cofee, Agrícola Geisha, Don Pachi Estate, Café Volcán Barú and Hacienda La Esmeralda
were exhibited.
The objective of this is to promote the quality of Panama's specialty coffee, mainly to the
Asian market, which is becoming the most important market.(Tejera, 2018)
o Location: This exhibition took place in Shanghai, China
o Date: It occurs during the month of March

 Coffee Fest Panama:

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An event that brings together suppliers, producers and specialists in the coffee industry.
During the event, information, demonstrations and tastings are provided to publicize the
latest developments and trends in the world of coffee and all its variations. Also with this
event it is expected to make each of the proposals known to the public, from the origin of
the coffee, through its roasting, selection processes and distribution.
o Location: In 2017 it took place at the Hilton Hotel Panama
o Date: Given for the month of September
o Website: https://www.coffeefestpanama.com

 Specialty CoffeeofEurope Fair:

Various varieties of coffee from the Chirican highlands were presented at this fair. Among
the varieties that were tasted by roasters and importers who meet year after year at this
important event, we can mention Geisha, Catuai and Caturra coffee.
o Location: London, England
o Date: It occurs during the month of June
o Website: https://sca.coffee/

 International Coffee Reign 2018:

It is the XLVII edition of the Reinado Internacional del Café contest, during the Manizales
Fair, where candidates from 23 different coffee producing and exporting countries
competed for the title and the international crown. At the end of the event, Panama was left
as Second Princess with its candidate Norma Díaz.
o Location: City of Manizales, Colombia
o Date: January 13, 2018
o Website: http://es.concursos-de
beauty.wikia.com/wiki/Reinado_Internacional_del_Caf%C3%A9_2018

 XXII International Coffee Tasting “ThebestofPanama”:

During this event, judges from Europe, Asia and America were welcomed to choose the
best coffee beans. In this event, 75 lots of the Geisha, Traditional and Pacamara varieties
competed, in addition to 50 invited buyers who came to taste the fine coffee from Panama.
o Location: Boquete, Chiriquí province
o Date: It occurred during the month of May 2018 for 1 week
o Website: https://www.efe.com/efe/america/gente/arranco-la-xxii-cata-
internacional-de-cafe-panama/20000014-3625873
9.3 Specialized publications
Among the recommended means to disseminate information or any matter related to the
advertising of a product, in this case with coffee, the following are recommended:

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  PanamáAgro “Diario del Sector Agricultural”:
It is an online newspaper from Panama that addresses issues of agriculture, livestock,
environment, fishing, agroeconomics and politics, aimed at decision makers who seek
relevant information based on professional journalism.
o Website: http://www.panamaagro.com/

 Scientific Magazine – Agricultural Science:

It is a journal with the objective of disseminating the partial impact and final results of
work carried out by researchers, in collaboration with other national and international
institutions in agricultural or related sciences.
o Website: http://www.idiap.gob.pa
o Telephone: 500-0519/0520
o e-mail: Cienciaagropecuaria@idiap.gob.pa

 Agricultural News Magazine:

It is a monthly publication with free distribution, produced and distributed by
Comunicaciones ERMIF. The magazine is aimed at meeting the needs of our men and
women in the countryside, regarding agro-technological advances; of sowing, product,
prices, markets and at the same time briefly inform them about the main events that have
occurred in the country that have made the news. It has various sections such as livestock,
poultry, swine, agriculture, forestry, conservation, ecotourism, agricultural administration,
paid advertising articles, etc.
o Website: www.actualidadagropecuaria.com
o Telephone: 6672-0044

 The Press:
It is one of the main newspapers in Panama. It is an independent newspaper in Savannah
format that publishes entertainment, international, national, sports, agricultural, economic,
political news, etc.
o Website: https://www.prensa.com/

 The Star of Panama:

It is the oldest newspaper in Panama. It publishes national, international, economic,
political, social news, etc.
o Website: http://laestrella.com.pa/
o Telephone: 204-0000

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10. OFFICES AND UNIONS
 Customs:
o Telephone: 507-506-6400.
o Email: https://www.ana.gob.pa/

 AUPSA:
o Telephone:507-522-0000
o Email: http://www.aupsa.gob.pa/

 MEASURE:
o Telephone:507-507-0600
o Email: https://www.mida.gob.pa/

 IMA:
o Phone:507-504-4495
o Email: http://ima.gob.pa/

 Chamber of Commerce:
o Telephone: 507-207-3400
o Email: https://www.panacamara.com/

 Companies Café Barú, SA:

o Guild: ANBEC, ASOC. OF SPECIAL COFFEES

 Kotowa Cafe:
o Specialty coffee association of panama (SCAP)

 Cafe Sitton, SA
o Industrial Union of Panama - SIP

 Hacienda la Esmeralda
o Specialty coffee association of panama- SCAP

 Garrido Coffee Highland, SA

o Specialty coffee association of panama- SCA

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