Hamburg, April 21 - German coffee roasters are increasing sales as the coffee culture becomes fashionable but a retail price war puts them under huge cost pressure, the head of Germany's coffee industry association DKV said on Tuesday.
"Currently brutal retail price competition is taking place," Holger Preibisch told Reuters in an interview.
Last week, two German discount supermarket chains cut some roast coffee prices by 39 percent to 2.59 euros for a standard 500 gramme pack.
Retail prices for a standard 500 gramme pack included around 1.30 euros in taxes as Germany has a special coffee tax as well as value added tax, he said.
Discount retailers are using coffee as a cheap item to lure people into their shops. "This is putting German roasters under intense pressure," he said.
The price war was taking place at a time when coffee demand was strong despite a general economic slowdown.
"Coffee demand is firm, coffee is a strong product in the face of the crisis," Preibisch said.
Germany's 2008 coffee sales rose by 7,140 tonnes on the year to 519,160 tonnes, association figures show.
New fashionable coffee drinks and an expanding coffee shop culture helped increase sales notably to young people, he said.
Production of espresso rose 20 percent on the year to 26,000 tonnes partly because of increased popularity of drinks such as latte macchiato and cappuccino in cafes and coffee shops.
"Coffee is now a fashionable, social drink," he said. "A few years ago this was not the case."
Coffee had in recent years suffered in Gemany from an image of a drink for older people but this has changed with the spread of coffee shops, new household and catering coffee machines and coffee drinks.
"A few years ago coffee was regarded as dull and stuffy but this is no longer the case," Preibisch said.
Higher standards of coffee from new generations of automatic machines were also encouraging more coffee drinking.
"Coffee used to be kept warm in restaurant coffee machines for two hours before it was drunk, now it is freshly made," he said. "People who spend money on their own coffee automat also spend money to buy proper coffee for it."
Sales of single-portion coffee drinks for new types of coffee machines rose by around 24 percent in 2008.