Jahani & Associates Capital Market Report: Freight-Forward Technology

Jahani & Associates Capital Market Report: Freight-Forward Technology

As a top investment bank headquartered in New York City, Jahani and Associates (J&A) have rich experience providing bank mergers and acquisitions (M&A) advisory, private placement and commercialization, fund advisory, and global trade services to clients all over the world.

Our report provides an overview of the freight-forward technology sector, analyzes recent capital market activity in the space, and spotlights the recent rise conducted by Flexport. From the data collected in our capital market report, our expert tech investors forecast the continued expansion in freight technology and an increase in deals and capital deployed within the sector.

J&A Capital Markets Report: Freight Technology

Freight technology, or freight-forwarding technology, has seen an approximate 2,000% increase in capital deployment since 2010. Freight technology companies, such as Flexport, Forto, and YunQuNa, have achieved billion-dollar valuations and unicorn status based on their growth across the USA, Europe, and China. This report provides an overview of the freight technology sector, analyzes recent capital market activity in the space, and spotlights the recent rise conducted by Flexport.

Freight forwarding involves brokering a variety of logistics services to assist clients with international and domestic shipments. Freight technology companies have digitalized this brokering process. These companies allow customers to arrange international trade through ship or sea using an online portal, perform live tracking, and exercise logistics data management.

Announced Freight Technology

JA-freight-technology-2021
  • Global capital deployed in the freight technology sector increased by 1,987% between 2010 and 2021.
  • In the sector, $62.14 billion was deployed across 835 deals, with an average deal size of $74.42 million. Considerably large acquisitions have resulted in a significant increase in capital deployed over the first half of 2021. Deal count has increased by over 1,000% since 2010, a trend that J&A anticipates will continue.
  • The most significant deal within the sector was the acquisition of the German technology company Bombardier Transportation by the French logistics firm Alstom. The acquisition was announced on January 29, 2021, for a reported $9.24 billion.

Announced Supply Chain Management Technology Deals

  • Venture and pre-venture capital deals represented 24% of capital deployed in the sector. The involvement of early-stage investors shows the potential for new entrants to the market and the freight technology sector’s growth potential.
  • Mergers and acquisitions represented the largest capital deployment, 36%, since 2010 in the sector. Most acquisitions have been conducted by large logistics corporations looking to add the competitive advantages that cutting-edge freight technology provides.
  • Freight technology companies from the USA received over 65% of the deployed capital in the past decade. Venture capital and private equity groups in North America have been particularly active in the sector since 2010.

Deal Spotlight: Flexport

The Company

Flexport is a freight forwarding technology company that has implemented a platform designed to provide greater insights and influence over every stage of logistics in the supply chain. Flexport offers product delivery and tracking through its platform along with real-time data analytics. The company facilities logistics through cargo ship, plane, or truck and allows logistics companies to use and monitor their assets effectively.

 Recent Fundraising

  • Flexport completed a late-stage VC round of $10 million on July 15, 2021, at a pre-money valuation of $2.2 billion.
  • The deal was led by GV, SoftBank, and Fabrica Ventures. Ten other investors participated in the round.
  • Flexport has already raised $1.36 billion through 10 previous equity rounds and one debt raise.

The rapid acceleration of globalization was halted by the economic effects of the COVID-19 pandemic. International trade has rebounded and will reach new heights in 2022 and beyond. Freight technology already plays a critical role in international trade, and this will only increase over time. J&A forecasts the continued expansion in freight technology and an increase in deals and capital deployed within the sector.

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Inventory Management and Warehousing Technology

Inventory Management and Warehousing Technology

Capital markets activity for inventory and warehousing solutions has exceeded expectations in 2020 and is on track to more than double in 2021, with more than $90 billion in announced transactions thus far.

This is mostly due to pandemic-related changes in 2020 and 2021 in these industries. Contrary to most industries, inventory technology sectors have seen an increase in adoption over the last few months, increasing competition for retailers, e-commerce companies, wholesalers, and distribution firms.

In 2021, deal count has already exceeded previous years in both deal count and average deal size and could double by the end of the year. In this report, J&A provide an analysis of the reasons behind these trends, as well as a profile of key players in these industries.

Supply Chain Technology

Companies in the supply chain management industry and similar sectors are increasingly using a combination of technologies like artificial intelligence (AI), machine learning, and predictive analytics.

By doing so they can automate warehouse operations, improve delivery times, proactively manage inventory, optimize strategic sourcing relationships, and create new customer experiences. This increases customer satisfaction, reduces attrition, benefits the top line, and boosts income margins.

Inventory Management and Warehousing

Developments during the COVID-19 pandemic in 2020 and 2021 have increased the need for all businesses to integrate warehousing and inventory tracking technology. This trend has accelerated in 2021 and is not expected to slow down, even after business operations normalize once the virus is controlled.

Recent advancements in inventory management systems readily offer real-time tracking of inventory levels, orders, and deliveries, providing instant error detection, efficient actionable feedback, and quicker response times. Radio Frequency Identification (RFID) chips, sensors, and asset-tagging technologies are leading spaces attracting investor interests.

Innovations in warehousing revolved around improving warehouse efficiency through the application of robotics and other automation software; wearable augmented reality-based devices; and third-party warehousing services targeting individual retailers. The sector also saw the rise of warehousing marketplaces in recent years, adding alternatives to the handling of excess inventory and excess warehouse space.

Competitive Landscape

The supply chain management industry has over 2,000 technology firms in diverse verticals. Two of the most active verticals are inventory management systems and warehousing software. Other verticals include business productivity software for supply chain, logistics, media technology, and application software. The most crowded markets in 2020 are transportation logistics services ($39 billion raised), quality management software ($32 billion raised), and logistics service providers ($82 billion raised).

Public companies, such as Amazon, Oracle, Uber, and FedEx, are the most active companies involved in capital placements and M&A activity in this space. Private companies like Grab, Instacart, and Aurora are involved in smaller series funding in comparison. Forecasts show that players like these will continue being involved in PIPE transactions, Series A to D funding, and acquisition activities.

  • The year 2021 has been record-breaking for logistics software and supply management technology firms.
  • Forecasts suggest more than $180 billion will be raised by the end of 2021, doubling the capital raised in 2020.
  • With roughly the same number of deals forecasted for 2021 as were done in 2020, forecasts suggest 2021 will double the capital invested.
  • So far in 2021, $90 billion has been raised; $91 billion was raised in all of 2020. This upsurge in deal size is due to COVID-19 trends expected to require logistics technology for businesses to integrate or implement.
  • J&A does not expect that the deal count in this space will increase in 2021; deal counts in 2020 and previous years have consistently increased by an average of 25% since 2011.
So far $90 billion has been raised in 2021; $91 billion was raised in all of 2020. This upsurge in deal size is due to COVID-19 trends expected to require logistics technology for businesses to integrate or implement.

The Future of Inventory Management and Warehousing Technology

The COVID-19 pandemic has affected the way many businesses operate their in-house warehousing capabilities and outsourced technologies. J&A expects the trends set by this influence will grow for at least half a decade once the pandemic is officially contained. Most players in the industry have and will continue to buy strategic smaller entities to tap into new sectors and integrate the technologies offered by them.

Source: Pitchbook, Accessed August 2021


Global Trade Analysis: The Role of the GCC in Long-Term MENA Development (5/5)

Global Trade Analysis: The Role of the GCC in Long-Term MENA Development

Part 5 of 5

Global Trade Analysis: The Role of the GCC in Long Term MENA Development (5 of 5)

The Gulf Cooperation Council (GCC) includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The GCC was formally established on May 25, 1981. The council’s purpose is to unify the countries’ currency, trade markets, and other economic markets. There have been discussions to turn the council into a union with closer unity through a single currency and other economic integrations.

The GCC has made several changes to its policies that support its continued openness to trade. These policy changes include generating unified technical standards, harmonized customs administration procedures, and reduced clearance requirements to lower non-tariff barriers within the GCC. There are a number of special agencies in charge of creating and implementing technical standards, undertaking commercial arbitration, and registering patents: the Standardization and Metrology Organization for GCC in Saudi Arabia, the Technical Telecommunications Bureau in Bahrain, and the Regional Committee for Electrical Energy Systems in Qatar. These organizations have focused on making trade organizations more efficient.

The GCC Will Continue to Play a Crucial Role in International Trade

The following chart shows the trade openness of the GCC. This index is calculated by adding imports and exports in goods and services and dividing by the total GDP. The larger the ratio, the more the country is open to international trade.

  • All GCC countries are more open to trade than the world average.
  • The UAE has significantly increased its trade openness since 2006 and is currently the most open GCC country.
  • This openness to trade remains a significant strength of the region to attract new companies to offer products and services in and around the region.
  • Bahrain has maintained a historical and current openness to trade in excess of its GCC counterparts; this is likely due to the country’s limited oil reserves.

The GCC’s Greatest Long-Term Sustainability Risk Is Lack of Diversification

  • GCC countries remain wealthy due to their dominance of the global fuel market.
  • As global economies move towards renewable energies, the GCC can expect a reduction in oil revenue.
  • Therefore, for GCC countries to continue growing, they must diversify into non-fuel areas such as technology and services.
  • Factoring the oil industry into the GCC’s GDP increases its real GDP by 50%.

The UAE Has Implemented a Successful Path to Diversification and KSA Is Set to Follow

  • As evidenced in this series, the UAE has diversified its economy and will continue to do so as a hub for global trade, technology, and services—particularly in the MENA region.
  • The UAE’s investment in free zones and open economic policies have attracted businesses. These free zones include Abu Dhabi Global Markets (ADGM), Dubai International Financial Centre (DIFC), Dubai Multi-Commodities Centre (DMCC), and many more with specific industry focuses.
  • KSA will be a rising force in the GCC. The Kingdom’s Crown Prince, Mohammed Bin Salman Al Saud, has made a commitment to the country’s Vision 2030, which includes significant steps to diversify the economy.
  • Saudi Arabia’s debt as a percentage of GDP remains very favorable: in 2019 the kingdom’s debt was only 20% of the GDP, whereas countries like the USA and UK have over 100% debt-to-GDP ratios.

This completes J&A’s series on global trade in the MENA region. The series covered major categories of imports and exports in the region such as raw materials, fuels, transportation and machinery, textile, and other product categories. The region represents approximately half the volume of imports and exports compared to the USA and China, but produces nearly 40% of the world’s fuel supply. The general volatility of fuel has pushed leaders to diversify the economy. Food independence is a major objective of MENA leaders. The GCC’s trade openness as measured by the World Economic Forum has significantly increased over the last 10 years. J&A anticipates trade openness to continuously increase in the region, particularly with the anticipated expansion of the Kingdom of Saudi Arabia and its Vision 2030 program.

Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance


Global Trade Analysis: Food Independence in the MENA Region (Part 4 of 5)

Global Trade Analysis: Food Independence in the MENA Region (Part 4 of 5)

Global Trade Analysis: Food Independence in the MENA Region (4 of 5)

So far this series has covered the MENA region’s global import and export position, the dynamics between KSA and the UAE, and the region’s general dependence on fuel, which drives the need for diversification.

As part of their effort to diversify, MENA countries are seeking food and agriculture independence. The UAE and KSA are minor contributors to MENA’s food and agriculture export totals. Food and agriculture imports and exports make up a relatively small portion of total MENA numbers, but they are essential to the long-term stability of the region.

The following data indicate the current state of food imports and exports in the MENA region, the UAE, and KSA as well as key steps being taken to improve food production capability through technology.

The UAE and KSA Are Minor Players in MENA’s Total Food and Agriculture Exports and Imports

UAE, KSA, and MENA Agriculture and Food Imports and Exports from 2015-2018
  • The UAE and KSA export less food and agriculture products than the average MENA country.
  • Food and agriculture account for approximately 4.5% and 3.5% of MENA’s imports and exports respectively; these percentages are expected to grow over the next five years.
  • The UAE’s food and agriculture exports are growing; imports have remained stable.
  • KSA’s food and agriculture exports have remained stable; imports have slowly decreased.

KSA Imports More Agriculture and Food Products Than Other MENA Countries

UAE, KSA, and MENA Agriculture and Food Imports as a Percentage of Total Imports
  • KSA imports approximately 2% more food and agriculture products compared to other MENA countries.
  • The UAE imports 50% less food and agriculture than other MENA countries.
  • This stark contrast between the two countries highlights the UAE’s investment in food production capacity and technology.

The UAE and KSA Export Fewer Food and Agriculture Products Compared to Other MENA Countries as a Percentage of Total Exports

UAE, KSA, and MENA Agriculture and Food Exports as a Percentage of Total Exports
  • The UAE and KSA both export less food on average than other MENA countries as a percentage of total exports.
  • This is less significant than import disparities since food independence is a major economic driver, while food production and distribution are not.
  • KSA and the UAE are expected to continue producing less food and agriculture products than MENA countries in the near future.

The UAE’s Commitment to Food and Agriculture Leadership Is Evidenced in Its Tech Investments

As shown in the previous J&A series, tech investments are on the rise in the MENA region. The UAE has recently made 10 major food-tech investments as part of its continued commitment to food independence and leadership. These food-tech investments include smart farms, food delivery, curated menus, and more. Below are three examples of these investments from different categories.

KSA & Middle East Food-tech investments
In the final part of our series, we will investigate the Gulf Cooperation Council’s (GCC) role in global trade for the MENA region, as well as steps the council is taking to increase its cooperation and cumulative strength.

Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance


Global Trade Analysis: Fuel Dependency in the MENA Region (Part 3 of 5)

Global Trade Analysis: Fuel Dependency in the MENA Region (Part 3 of 5)

Global Trade Analysis: Fuel Dependency in the MENA Region (3 of 5)

Fuel has been, is, and will continue to be the MENA region’s most dominant export category. MENA countries export nearly 40% of the world’s fuel supply, and fuel makes up approximately 50% of the region’s exports. Global consumption of fuel has allowed the MENA region to grow in power over the last 50 years. However, these opportunities bring risk; fuel volatility can affect the region disproportionately to other more diversified economies. Therefore, MENA countries are seeking immediate diversification.

Today, the MENA Region Is Dependent on Fuel Exports

MENA Fuel Exports compared to All Other Export Categories
  • Fuel is consistently just over 50% of the entire MENA region’s exports.
  • There are major government initiatives within all MENA countries to continue diversifying their economies away from fuel dependence.
  • In 2020, fuel remains the region’s top export.

KSA Is More Dependent on Fuel Exports Compared to Other MENA Countries, Including the UAE

KSA Fuel Exports compared to All Other Export Categories
  • Fuel makes up approximately 80% of KSA’s yearly exports.
  • Saudi Arabia’s Vision 2030 is to reduce the kingdom’s dependence on oil and diversify its economy, and to develop public service sectors such as healthcare, education, infrastructure, recreation, and tourism.
  • Saudi Arabia’s economic evolution will also come with political considerations, as the kingdom continues to enhance its global positioning.

The UAE Is Least Dependent on Fuel as Its Major Export Compared to Other MENA Countries

UAE Fuel Exports compared to All Other Export Categories
  • Fuel makes up approximately 20% of the UAE’s yearly exports.
  • This is a result of the UAE’s ability to diversify its economy and increase its services, technology, and trading value.
  • The UAE’s investment in free zones and open economic policies have attracted businesses to the region. These free zones include Abu Dhabi Global Markets (ADGM), Dubai International Financial Centre (DIFC), Dubai Multi-Commodities Centre (DMCC), and many more with specific industry focuses.

KSA Is Expected to Follow the UAE’s Diversification Strategy Through Its Vision 2030

KSA’s Vision 2030 is a framework to reduce Saudi Arabia’s dependence on oil and diversify its economy. This will be accomplished through investments in health, education, infrastructure, recreation, and tourism. The Vision 2030’s goals include reinforcing economic and investment activities, increasing non-oil international trade, increasing government spending on the military, and promoting a more secular image of the kingdom.
The Crown Prince Mohammed bin Salman Al Saud announced Vision 2030 on April 25, 2016.
The next part of our series will review the importance of food independence for the MENA region as well as steps governments are taking to develop agricultural capabilities.

Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance


Global Trade Analysis: UAE and KSA Imports and Exports (Part 2 of 5)

Global Trade Analysis: UAE and KSA Imports and Exports (Part 2 of 5)

Global Trade Analysis: UAE and KSA Imports and Exports (Part 1 of 5)

The Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) are the two most dominant countries in the Middle East and North Africa (MENA) region. These countries possess advantageous economic, cultural, financial, trade, and religious positions. They also represent almost half of the imports and exports for the entire region.

Herein is an analysis of KSA and UAE’s imports and exports across major categories. The data indicates key themes in food and fuels that will be the subject of parts three and four in this series.

J&A summarizes imports and exports into six major categories for MENA analysis

The nomenclature followed within these categories are based on World Customs Organization nomenclature and sector classifications for the harmonized system. Data was collected directly from publicly available World Bank systems.

The UAE and KSA Make up 50% of MENA’s Imports and Exports

  • The UAE and KSA are the most dominant players in MENA, accounting for over 50% of the region’s imports and exports.
  • Exports for the UAE, KSA, and the MENA region have steadily been increasing while imports have steadily decreased, suggesting increasing independence of MENA economies.

The UAE and KSA Are Relatively Equal When It Comes to Import Diversity

  • The UAE and KSA import goods and services in relatively equal proportions.
  • The UAE imports more than KSA by approximately 60%.
  • Both the UAE and KSA import and export transportation, machinery, and raw materials more than any other category.

KSA Dominates the Region’s Fuel Exports; the UAE Leads in Transportation Exports

  • KSA is by far the region’s leader in fuel exports, which serve as a major differentiator for the country and economy; there has been no year since 2015 where the UAE exported more fuels than KSA.
  • Fuel is less than 50% of UAE exports on average, while it makes up nearly 80% of KSA’s exports in any given year.
  • KSA’s second most common export is raw materials, accounting for approximately 10% of the kingdom’s exports.
The UAE and KSA are the most dominant players in the MENA economy. They account for the majority of imports and exports as well as most of the region’s economic activity. The UAE has been removing barriers to trade that are not tariff-related, such as allowing expedited customs and the use of technology to create more efficient government organizations. KSA has recently started opening trade policies that reflect UAE standards.

Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance


J&A Report: Regional Focus: Why Single-Origin Coffee Matters

J&A Report: Regional Focus: Why Single-Origin Coffee Matters

Specialty coffees have been on the rise for coffee connoisseurs. This trend has boosted general knowledge and enthusiasm for single-origin coffees. In this report, J&A briefly provides an introduction of single-origin coffee, outlines the differences in flavor profiles by region, compares single-origin with blended or mixed coffees, and lays out overall trends.

What Is Single-Origin Coffee?

Single-origin coffee comes from a single producer, crop, or region in one country. Single-origin coffee is often called single-farm, single-estate, single-malt, or single-vineyard coffee. Coffees that are not single-origin are blends, which include more than one single-origin coffee. Due to the one-time harvest in the year, single-origins are only available during specific times throughout the year.

Because tracing single-origin coffee leads to a single place, they have a distinct flavor based on the process from growth to processing of the region. Many factors influence flavors including botanical variety, soil, climate, altitude, and shade. Processing methods also vary by region and influence the final taste.

FIGURE 1: Coffee Flavor Profiles Along the Coffee Bean Belt


Single-Origins Versus Blends

Blends are a mix of two or more single-origin coffees from different regions. As such, the tastes vary, and the origin is not as distinguishable. Blends are more flexible in the market but cannot be sold at the same price or compete against single-origin coffees in niche markets. Blends are usually cheaper and found most commonly.

Single-Origins Coffee Taste

Single-origin coffees taste different than blends in the market. Light roasting single-origin coffee develops subtle aromas and distinct tasting notes. The body is more tea-like, and the flavors are fruity and citric rather than nutty or chocolaty.

Single-Origin Coffee Popularity

  • In the first half of 2019, the single-origin coffee market resulted in $182 million in grocery sales.
  • In 2020, these sales grew by 4%, outpacing the total premium coffee segment.
  • Among coffee drinkers between the ages of 25 and 49, 81% are willing to pay 10% more for single-origin coffees, incurring financial rewards for the many smallholder farmers who provide 80% of the world’s coffee beans.

The rising amount of cafés offering alternative brew methods has influenced the current interest in single-origin coffee. Single-origins are particularly popular because of their traceability. The impact of single-origins affects farming methods, and specialty farmers are developing and improving high-quality crops in response to demand. Some farms and processing plants experiment with their varietals or cultivars selection, control over the growth stage, harvesting time and technique, and the milling and processing method.

Outlook for Single-Origin Coffee Moving Forward

This report outlined what specialty single-origin coffee is and what specifics categorize a coffee as such. The difference in atmosphere and preferred processing methods within regions produce many flavors, making single-origin coffees a niche market for coffee connoisseurs. Blends are a mixture of various single-origin coffees that are indistinct from a specific region’s flavor profile. The rising sales and marketing trends for specialty coffees boosted the market for single-origins by 4% in 2020. J&A expects this trend to maintain as the coffee industry raises awareness for farm owners and consciousness towards processing methods.

Source: Counter Culture Coffee, MyRecipes, Perfect Daily Grind, Tripe Pundit, and Forbes


Jahani and Associates Industry Report: Specialty Coffee Testing

Jahani and Associates Industry Report: Specialty Coffee Testing

The global specialty coffee market grew by 11.8% in 2020 despite drastic contractions in the restaurant and hospitality sector1

The market is set to expand with a compound annual growth rate of 13% between 2021 and 2024. Specialty coffee is an artisan industry with unique scoring methods and flavor profiling designed to test the quality of each cup. This article will provide insights into the industry-standard coffee testing process and the rules and regulations regarding specialty coffee.

Coffee Testing: The Official Process

The Speciality Coffee Association2 has set specific guidelines for coffee sampling to ensure uniformity in testing standards. Beans are roasted, sampled, and then assigned a grade (out of 100) based on numerous characteristics and criteria.

Samples are roasted for between eight and 12 minutes and allowed to rest for at least eight hours2. The beans must be consumed within 24 hours of roasting. The Speciality Coffee Association makes recommendations for the size of the cup, the pouring method, and the measurements used when testing beans. At least five cups of coffee are prepared from the samples to evaluate the beans’ flavor profile and unique qualities.

Sample Testing Criteria

Scoring is based on 10 defined categories2. The fragrance of the beans when pouring, roasting, and tasting is the first noted quality. The sweetness, body, balance, acidity, and the beans’ flavor profile contribute to the majority of the total score.

Homogeneity of the coffee cups, a lack of defects, and the brightness of the coffee are the remaining categories. The overall perception of samples is what grants additional points.

The points in each category are assigned as follows: six points for satisfactory, seven for very good, eight for excellent, nine for outstanding, and 10, being the top score, for perfect.

To be classified as specialty coffee, coffee beans must score 80 or higher 2. Beans with a score of 80 – 84.99 are considered very good; between 85 – 89.99 are considered excellent. The top 1% of all specialty coffee beans hold outstanding scores of 90 or above.

Coffee Testing: Flavor Profile

Coffee sampling and tasting notes are subjective, but the coffee tasters’ flavor wheel denotes the standard categories of flavors commonly experienced by coffee drinkers.

The coffee tasters flavor wheel was designed by World Coffee Research in 1995.

Simplified Coffee Tasters’ Flavor Wheel

The wheel outlines nine flavor categories with numerous sub-categories. Desired flavor profiles include fruity, sweet, nutty, and cocoa, and various spices. Unwanted flavors such as chemical or sour notes will lead to lower testing scores. Coffee flavors are uniquely perceived, and individuals with different tasting pallets may pick up specific notes over others. Generally, specialty coffee is roasted in a manner to highlight the natural flavor profile of the beans.

For the accurate comparison of beans, the testing of specialty coffee is a standardized and repeatable system.The quality of specialty-grade coffee beans is verified to ensure consumer confidence. The rise of specialty coffee will continue as global coffee drinkers gain access to new varieties, regions, and flavor profiles.

Sources:
  1. finance.yahoo.com/news/research-report-specialty-coffee-shops
  2. sca.coffee/research/protocols-best-practices
  3. worldcoffeeresearch.org/work/sensory-lexicon/

J&A Report: Coffee Processing: How Washing Affects Taste

J&A Report: Coffee Processing: How Washing Affects Taste

The process of washing coffee consists of removing its fruit layers before drying. Coffee is washed with water to remove the mucilage after the beans have been fermented. Mucilage is the soft, sticky layer that is responsible for sweetness.

Washing coffee beans results in a clean flavor profile. It is an ideal processing method for mild and bright brews. Removing as much mucilage as possible produces coffees with a light body and a bright, clean cup. The result is a fruiter, acidic flavor, while unwashed methods yield a heavy, smoother, and sweeter bean.

Washing Coffee Process

Before starting the process, weighing raw coffee cherries is necessary to calculate the yield in volume and weight. Then the pulp is removed using mechanical pulping machines. Inside the machinery, a blade cuts the cherry open, extracts the seeds, and discards the empty cherries. The coffee beans are set aside for mucilage removal.

The mucilage is composed of different sugars and alcohols that affect the flavor of the bean. Leaving this layer entirely or partially intact produces sweeter flavors. After the removal of the mucilage layer, coffee dries to prepare for the roasting process.

FIGURE 1: Coffee Washing Process

Washed Versus Unwashed Coffee Taste

Washed Coffee

Washed coffee has a cleaner taste than unwashed coffee. After the removal of the mucilage layer, the focus is drawn to the actual bean’s flavor. The result is a fruity-tasting coffee with a slight, fresh acidity. Specialty coffee experts prefer clean coffee because its flavor reflects that of the real bean. Properly washed coffee develops fundamental flavors, which vary based on the origin of the coffee bean.

Unwashed Coffee

In unwashed coffee, processing methods alter the taste of the bean. Unwashed coffee has a heavier body; it produces complex and smooth-tasting coffee. Due to its dense body and sweet characteristics, the taste often has hints of berries or tropical fruit.

Other Processing Methods

Honey Process

Central America is known for the use of the honey process. Beans are left with some mucilage when drying. Honeyed coffees taste naturally sweet and bright—a combination of unwashed and washed coffees.

FIGURE 2: Classification of Honey-Processed Coffee


Unwashed Coffee

In unwashed coffee, processing methods alter the taste of the bean. Unwashed coffee has a heavier body; it produces complex and smooth-tasting coffee. Due to its dense body and sweet characteristics, the taste has hints of berries or tropical fruit.

Anaerobic

Anaerobic means without oxygen. Anaerobic coffees are renowned high-end coffees that undergo a process similar to the washed process, but the fermentation happens in sealed tanks. Anaerobic-processed coffees have wild, unexpected, and complex flavor profiles.

Carbonic Maceration

This is similar to the wine-making process; the fermentation of the cherries happens during the harvest in carbonic maceration. The process breaks down the cell walls of the fruit flesh from inside out. Beans get soaked in all the flavors from the mucilage during the fermentation. Carbonic maceration yields varying flavor profiles and aromas like red wine, whisky, banana, and bubblegum.

Giling Basah

The Giling Basah method is typical of Indonesia. Giling Basah is a similar process to the washed process, but the beans are dried partially only. After 35 – 40% drying and elimination of the mucilage, the coffee beans need to be dried again. Giling Basah yields earthy flavors like wood, mustiness, spice, and tobacco.

Washing Coffee Beans to Improve Taste

A variety of flavors result from minor alterations in the duration of each step. Sorting and pulping remain the same for the various methods of the washing process. It is during the fermentation phase when flavor profiles develop, depending on the amount of mucilage left to react on the bean and the duration of fermentation, and form new flavor compounds. After being washed, the coffee beans now have distinct tastes based on these stages, their origin, and their variety.

Sources: Coffee Cartel, Coffee Wiki, Paulig


Global Trade Analysis: MENA Imports and Exports (Part 1 of 5)

Global Trade Analysis: MENA Imports and Exports (Part 1 of 5)

Global Trade Analysis: MENA Imports and Exports (Part 1)

This is the beginning of J&A’s five-part series on global trade in the Middle East and North Africa (MENA). The following articles focus on imports and exports for the MENA region as they relate to other major economies, the role of the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) in the region, the region’s fuel dependency, the region’s growing focus on food independence, and finally the Gulf Cooperation Council’s (GCC) role for the MENA region and across the world.

The data and analysis contained within these articles is taken from the World Bank, World Customs Organization nomenclature, sector classifications for the harmonized system, the International Monetary Fund, the United Nations, the Food and Agricultural Organization of the United Nations, and J&A’s own market intelligence.

The MENA Region Competes With China and the USA on Gross Import and Export Volume

The MENA Region Competes With China and the USA on Gross Import and Export Volume
  • The MENA region’s imports and exports are approximately half the volume of the USA and China.
  • The MENA region imports approximately 50% as many goods as China.
  • The MENA region exports approximately 60% as many goods as the USA.

MENA Exports Are Steadily Expanding Across All Categories

MENA Exports Are Steadily Expanding Across All Categories
  • Fuel represents approximately 50% of MENA’s exports, concentrated regionally in just a few countries. This will be discussed in part three of this series.
  • Fuel exports have been steadily increasing from the MENA region since 2015.
  • Only miscellaneous categories of exports have decreased since 2015, suggesting a focusing of MENA economies. Miscellaneous exports include items like watch pieces.

MENA Imports Raw Materials More Than Any Other Category, Suggesting a Focus on Regional Manufacturing

MENA Imports Raw Materials More Than Any Other Category, Suggesting a Foc us on Regional Manufacturing
  • The steady decrease of MENA imports coupled with the steady increase of exports is good news for MENA countries seeking self-sufficient economies.
  • Raw materials are a large portion of MENA’s imports, suggesting a focus on refinement and manufacturing for the region.
  • The year 2018 showed the lowest total imports since 2015.

The chart below identifies the type of products associated with each import and export category based on World Bank nomenclature.

The MENA Region Plays an Important Role in Global Trade Due to Its Geographic Position

MENA’s trade position is unique when compared to China and the USA. MENA’s dominance is driven by the presence of oil, a natural resource. The USA and China’s imports and exports are not driven by a natural resource and are therefore easier to replicate. If MENA countries successfully diversify their economies, the region can become an increasingly powerful player by building on this natural resource foundation and then competing with other regions on services, technology, and other high-growth sectors. Due to current reforms in major MENA countries, the region is actively accomplishing this.

Lastly, the MENA region is a gateway between the growing economies of Africa and Southeast Asia and more stabilized regions like North America and Europe. This gives the region a strong value-added position when participating in trade between these other parts of the world.

In the next newsletter, J&A will take a deeper dive into the imports and exports of UAE and KSA. We will compare the UAE and KSA’s imports and exports to each other and the MENA region while investigating what each country must do to maintain its competitive advantage.

Source: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance


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