Succumbing to the lure of the bean

A RECENT court action by a big coffee wholesaler has thrown the spotlight on the battle being fought by Perth’s coffee suppliers.

At a time when consumer attention is focused on the opening of new coffee chains, Perth’s independent cafes are being lavished with big offers to lure them into lucrative coffee contracts.

Cantarella Bros, makers of the Vittoria brand, is suing Subiaco icon Oriel Cafe and proprietor Loretta Evangelisti for $40,000 for an alleged breach of contract.

The coffee supplier is seeking a payout for the remainder of the contract after Oriel swapped coffee suppliers last July, seven months before Vittoria alleges its contract was due to expire.

Ms Evangelisti did not wish to comment on the legal matter except to say the cafe would be defending the claim.

Just what happened to prompt Oriel’s change to Piazza D’Oro, makers of Espresso de Manfredi, is difficult to decipher and is likely to be a subject of the commercial dispute.

But the legal action offers a rare insight into what appears to be a common occurrence among Perth’s cafes, swapping suppliers.

Research by Business News has revealed independent cafe operators are frequently approached by wholesalers offering incentive deals to get a cut of the market.

Simon Dimittina, director of rival wholesaler Dimittina, said he approached Oriel before the cafe switched to Piazza D’Oro, but couldn’t match Vittoria’s existing contract.

“It’s fairly competitive. There are a lot of giveaways and a lot of money spent on individual accounts,” he said.

This is supported by many cafe owners, who claim they are visited by a regular procession of company sales representatives.

Anne Ockwell, from Fremantle’s Marconi Cafe Restaurant, changed coffee suppliers a year ago and said sales representatives from most companies visited her regularly.

“Piazza D’Oro made us a very good offer. They had been trying to get our business for about a year,” Ms Ockwell said.

“We didn’t have any problems with Dimittina, we just thought it was time to change.”

Piazza D’Oro’s offer, a three-year contract, came with what has become a standard package deal – the coffee machine, coffee cups and umbrellas – but Ms Ockwell said Piazza D’Oro also put money towards staff uniforms and backed this with advertising.

“They put a full-page ad in the Fremantle Herald,” she said.

It seems many cafes swap coffee companies on a regular basis because they only have supply agreements, rather than long running contracts.

“We bought the business seven years ago this August. We started with Vittoria then Jacobs, then changed to Mocapan to Dimittina and now Piazza D’Oro,” Ms Ockwell said.

Cantarella Bros area manager Colin Hannan said the company was simply defending its commercial rights in taking legal action against Oriel.

“You couldn’t imagine Coles Myer signing a contractual agreement (with a third party) and both parties walking away from it,” he said.

“That’s the commercial reality. Contracts are not new in the coffee industry. There has to be a return on investment,” Mr Hannan said.

“That’s the commercial world. You’ve got to do your sums.”

Others agreed that the Vittoria wholesaler is not alone in offering contracts.

One industry source said some cafes were locked into contracts they found tough to fulfill. For instance, some owners agreed to contracts that stipulated a minimum amount of coffee that must be bought, an agreement the source said had resulted in at least one cafe stockpiling coffee because it could not sell the volumes stipulated.

But it’s not usually the cafes which are on the wrong end of this market battle. With the incentives getting bigger and bigger, the market is becoming tougher for smaller roasters who do not have the manufacturing muscle to compete with the larger players.

Voodoo Coffee’s Gregory Leech said he had to rely on his blend and customer service because he could not afford the expenses the national companies could absorb.

“It not just the blend, its the technique and the service,” he said.

“Where the coffee matters you can get business, that’s the niche market.”

Competitive it may be, but it’s a lucrative business that largely escapes consumer attention.

“It’s not transparent enough for the consumer to be aware,” said one supplier.

The number of coffee suppliers has increased dramatically over the past 10 years but Australia is importing fewer coffee beans of a higher quality.

While industry sources say there are about 42 coffee suppliers, only six or so heavyweights offer the world to the cafes.

One big player, Coffex’s State manager Ivan Bertoncini said it was critical to deliver on promises.

“We don’t promise anything we can’t deliver. We want to be known for ethical behaviour,” he said.

“People will change coffee (supplier) for a change, we want to leave on good terms.

“Perth is a small town, too small to make enemies.”