Coffee retail info.

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• dantheristrettoman

  November 2004

  It amazes me that big corporations like lavazza can sell their product in the supermarket for around the same price that you can get it fresh from your local roaster and people still choose the 3 month old beans over 3 day old beans. That's the power of marketing I guess. It'll be interesting to see where the domestic espresso market will head in the next few years. I think local roasters will become much more prominant - they are already becoming so. Right now there is the massive interest in espresso machines but the consumers don't understand a $300 machine will never live up to their expectations. You really do pay for quality in the espresso market. But for most people $2000+ on a quality machine isn't viable. However if the percentage of home owners buying machines continues to rise, this can only help drive down prices on hx machines like isomac which is so overpriced here compared to America. The next 10 years will be very exciting for Australia!

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• Unknown

  November 2004

  Agreed, I lived in United States (back in aussie now) and last year bought isomac millenium new with extras, coffee etc, for 799 US delivered to my door.  even with exchange rate thats 1120 aussie and im allowing exchange rate of 60 cents in the dollar.   with the rate of now close to 80cents is only 920 dollars. here the machine retails for 2250.    go figure.  and it isnt due to freight, etc,  they have to freight it in US as well and pay import taxes and margins as well so that arguement does not work. I bring in a lot of goods to aussie, freight isnt to bad if you bring in enough of any one good,  ie twenty machines, taxes 5 percent, 10 gst, docks and handling cost thrown in etc. someone is still getting 1000 extra.  i guess isomac must sell to america either really cheap for some reason or aussie mark ups are too high. I know from chatting to a coffee shop machine importer in the US that they are close to getting a machine of HX high end quality made in China for half what they normally cost.  they are making quality and service of the machine a priority, and intend offering a 2 year warranty on it.He said its in association with a italian brand but having problems as a few manufacturers in italy are strongly resisting the change of the old ways. It is only a matter of time and the machines will drop a lot in price.  Look at bunnings etc, drills jigsaws for 14 dollars with 12 month warranty.   10 years ago they were 100.    yes I know they lack quality but thats just an example as if you pay 28 for the same drill you can specify to the chinese manufacturer for a high end motor. high end drills from their have dropped as well if you want a comparison, ie Dwalt drills are 1/3 cheaper than it was 5 years ago. I know of one importer in australia who is in talks long term of setting up such a deal with an american company.  its a way off but it will happen and the consumer will get HX machines for 1200-1500 dollars initally (will get cheaper )compared to 2000 they pay now. Other coffee people here are sure to have heard of this trend too Im sure. cheers kevin

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• Unknown

  November 2004

  Regarding the difference in markups on machines between the US and Oz markets. Dont forget to factor in the huge difference in the size of the client base and therefore, number of units that can be sold in the diff markets. In a market where you have little turnover (by comparison), you may need to make more profit to make ends meet...that' Mal The Real Koffee Politik.

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• FreshCoffee2

  November 2004

  The Chinese price, ex factory, will have to be 1/2 of the Italian price. There will have to be a very big shift in the clients/markets perception of the "acceptability"  of Italian VS Chinese made espresso machines. FC.

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• dantheristrettoman

  November 2004

  The size of the Australian market compared to the American one is definately one of the major issues. But it doesn't make sense that in America the isomac tea is only $900US and the ECM giotto is $1600US. Here they are roughly the same price. I think machines built in China will definately be popular in Australia because the consumer generally cares about saving a buck over traditionally built Italian machines. However with higher end consumers I think the market will stay with the Italians (like cars in Australia). Such items as the mazzer mini can not be mimicked on a cheap production line. But it will still force the big companies to charge competitive prices. I think it would be a shame to see Italian espresso machines mass produced on a production line by people with no knowledge or interest in the product they are making.  

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• Unknown

  November 2004

  Hate to be the bearer of bad news but China can mass produce quality.  You pay more than their normal production lines but its done. Everyday we buy their quality product. I order electronic components off them.  Say I want a board of parts for my computer.  in aussie its 50 bucks, in china 8.   If I want really top quality, ie as good as italy I pay 12. Its done every day and the consumer will accept it, tv, plasma displays, etc do it daily and its growing rapidly. your die hard expresso fans will stay with the italians, but the italian coffee owners off the factories will start with say the boilers or parts being made there, (example only) And yes fresh coffee it will leave the factory in china at less than 1/2 of the italian price.  more likely less than 1/4 of the price. Its sad I agree, and has cost countless jobs in industry, my profits and my collegues have shrunk in the last 4 years due to this happening. We work harder for the same or less money. the cheap myer machines are just the start of the trend.  ie $100 home expresso machine. Italians supervising the runs in china and putting their people their is another way its done. if you own say isomac, and make 5 million a year profit, and move your machines or part of its manufacture to china and are offered 18 million profit what would you do. Okay some wont go, but some will and that will force the others through price to go.   if your machine is 800 dollars, say millienium, and identical clone Hx brand machine is 1900 dollars, 90 percent of people will buy the cheaper one, even if its from china, which they will eventually accept. Do people paying 10,000 thousand dollars for a plasma screen question china. Anyway good topic, but from my partners experience in their various companies, china expresso machines in the upper end will come, you will sell more machines, but with a less margin on the machine.  And you move with it, or become a specialist and have less sales. Who knows when though. and re sales numbers in the UNITED STATES,,,,,a 1200 dollar difference on a machine costing 2000 here doesnt add up, even taking into account numbers moved. Somebody, probably factory and retailer is taking a lesser cut. cheers leon p Trust me the change is coming, and the people will accept it.

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• FreshCoffee2

  November 2004

  "Without Prejudice" !!!!!!!!!! I accept the change is coming. You can bet your life that if one (Italian) manufacturer is already in discussion with a Chinese manufacturer and or some other middle man leading to a chinese manufacturer, that there are others (Italian manufacturers & middlemen) doing exactly the same thing. It's already been done before, that's how the Spanish espresso machine industry got started. They represented real cheap labour compared to Italian labour in the sixties. Trouble is, their quality was never as good, so the cheaper price didn't (and still doesn't) mean much...you buy cheap, you get cheap. Notwithstanding I have seen a MAJOR improvement in the quality of goods coming out of China in the last couple of years and have no doubt their high end espresso machines will be of very good quality....the fully commercial machine coming out of China right now is said to be a very good machine...but it has the "stigma" of being Chinese and is NOT cheap...therefore it is currently going no where. I dont necessarily think Chinese manufacturers are the source of a possible "problem" to any of us. The problem as I see it, is the proliferation of department stores and johhnycomelately's that all want to jump onto the espresso machine and coffee bandwagon. It's the creation / existence of these third party resellers that know jack sch#%$t about what they are selling that is upsetting the espresso machine import and resale industry. Yup they have destroyed the market (for "professional / traditional espresso machine resellers") in base price espresso machines, give buzz-all service, and leave us traditional professional (in the sense of making a long term profession out of coffee & machines) resellers to shift our emphasis like chamelions, to the high end gear and to other facets of the game like going into the training consultancy business to teach all these el cheapo machine buyers how to use the new toy... After which the new toy is relegated to the botom cupboard next to the bread maker and the rice cooker..... The domestic market in heat exchanger machines is small here (if not everywhere else) so I dont necessarily think there is all that much to worry about, small business will change it's colour and adapt just like it always does. Forewarned is forarmed however! One thing is for sure. People who are genuinely in the know are going to be less likely to share their knowledge in public forums like this where they currently give a lot of free advice for little gain. Come the revolution you are talking about and they will have clammed up firmly, because this free advise will have become the basis of their traning consultancy businesses where they will have to train all these thousands of new espresso machine owners that know not what they are doing. The training consultancy buiness is already under attack where we have so called trainers springing up all over the place...johnnycomelately's many of'em, all giving so called "barista" lessons, with "accreditation" no less! Accreditation to what, the Royal Society of the Fellowship of the Royal Barista's Arse? One such fine example is one chap that freely admits to being in the coffee business only 4 years. In that time it is said he has has owned several cafes, written 2 books on coffee, runs an "espresso" school, learned how to roast and blend coffee and has become a "Master Roaster". Great isn't it! The only saving grace is we are reliably informed that there are some industries that are in even more dire straights than ours! Heat Exchanger machines comeing out of China and lowering prices????? So what, I'm going fishing! Keep Smiling, FC.

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• Unknown

  November 2004

  Dear crema forum people, I am not in the espresso industry but having bought goods from china a lot I can tell you they have become very very good at what they do in the last few years. I agree with FC also here. Leon is also right about putting your foreman in the factory, its what we did and with outstanding results. He watched everything and the product after a few months was way better than from italy and way way way cheaper. My interest is in coffee machines too as I have a giotto. I know that makes me no expert, just an interest in coffe for the last few years and a growing one.  The experts come out of the woodwork , and the guys running real coffee businesses for the last 20 years get left out. Dont worry, it happens to all industries that grow rapidly. Computers, everbody is an expert there, cars, tv,s,,,     less margins for all is what I call it.  Buying on the internet is killing lots of companies.  You can order things from singapore ,US, etc and have them delivered to aussie within 5 days often for half the price, no service but thats the way it goes and its hurting my company and others a lot. I am amateur here in the coffee world not telling anyone how to suck eggs but here is my two cents worth., We used to get testing eqipment for electronics and various other things made in italy and also had reliability problems there.  We now get them made in China and have very few problems and pay 1/5 of the price. If the machine has a problem and because of the "relationships"  (or ongoing business)  you have with the chinese they are very keen to solve problems. If a espresso machine has a faulty guage they will work out a solution to future machines. If they need a second guage in italy its another 50 dollars (example only) so the italians leave it off the HX home machine. For 10 dollars the chinese will add it on and sell more machines. And if you buy 1000 they will throw it in.  If they need to source a new part they get it on the internet to source it immediately or will set about making one. I do mean immediately,              i was asking about a new part I wanted on a machine, one of the men in the meeting jumped on his laptop, found it on the net, rang the maker,,,,and gave me a price for it to be added on future machines all within 4 hours. that would have taken 1 month in italy and most other places.  They are very very can do people, and can manufacture something within weeks of ordering. If a new model espresso machine came from italy it may take say 12 months from design, (wild guess)  the chinese could make it in 4 weeks from your blueprint, deliver it to you to approve or modify, and churn them out the following week.   My companies profits are very lean these days but I take my hat of to the asian companies. Toyota cars are an example, very very reliable, more so than anything europeon. I actually look forward to a rebadged chinese machine, HX quality like my giotto.  I am sure the first few will have a few bugs, but once they sort them out, the machine will be half the price with dual guages and anything else you can ask under the hood included in the price. Reliabilty will come. forever is a long time. Interesting to know what else you could ask for if this was the case. I see dual boiler home machine,, dual guages,, seems to be talked about. Dont really get all that Im sure someone can tell me. I enjoyed FC and Leon and others letters, good broad chat. changing topic slightly FC is right too, everybody these days is a coffee expert, the term barista is so so overused.  work in a coffee shop for 2 weeks and your a barista.  6 weeks roasting beans and your a roaster.  My local coffee shop has a master roaster working there. His been there 8 months after leaving uni. I am sure he will open a school soon. David joans is demonstrating espresso machines at the moment, but ask the lady anything there about boilers, copper or aluminum  (example only)  and she says she would have to ring the importer about that.    try and find parts for all these 500 dollar machines made of plastic in 14 months.  (ie end of warranty) yes the bread makers of the future. a question, if people on this forum who sell machines are into upper end machines too, have you ever thought of putting together a blueprint and getting a quote from china yourself and naming a machine,  I mean get in on the ground floor and be the manufacture ,importer, and make some real money, I know its 12 months of slogging, but wouldnt it be worth it.   the tiny starbucks chinese machines would have a big markup on them and a real machine in its place would sell well and you could make the money. one last note re price. a well known barbecue maker used to sell one of its large family barbecues for 600 dollars three years ago. Its now 260 dollars, reason,  China.       and competition,   bunning order 1000 lots at a time, 60 dollars each, and sell them for 140 dollars.   that hurt your local barbecue store a lot.  they now sell for less than half what they did years ago, they sell a lot more but have tighter margins, and people throw away old barbies now.  is there a motto there, well we are a throw away society now i guess. keep chatting Don

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