How does the war against Ukraine directly influence NKG's operating business?

What the war has brought to all people, including the coffee business, is the uncertainty of what will happen next. Coffee that was on its way to Odessa (Ukraine), or by truck was stopped and had to be redirected. We assisted our clients in solving logistic problems. As the risk is lower in the cities of Kiev and Lvov, imports are slowly restarting. Clients have huge buffer stocks in Gdynia and other European cities and are postponing purchase decisions. In turn, European companies with sales markets in Ukraine and Russia have seen business boosted by some decisions of the Ukrainian government, like to skip import VAT, especially in respect to instant coffee. We have also noticed big pressure to stop the business with Russian companies.

What are the indirect effects of the war (e. g., on the economy) that we also have to face?

For sure the inflation, which was already high before the war, has increased further by 3-4 %. With binary number inflation, we expect a decrease of consumption by 20 %. Governments must find alternatives for Russian gas and petroleum; some European countries are already cut off from Russian deliveries. The war has left a big gap in the labor market; Ukrainians who worked as truck drivers, warehouse workers, constructors and other professions left the EU and went back to their country to fight the invaders. This also creates problems for our industry: roasters are facing problems with manpower and costs of roasting processes. Millions of refugees, the majority of them women and children, are hosted in the neighbor countries, especially Poland. Providing shelter, medical services, schools for children and efforts to integrate the refugees into normal working life create huge challenges for government and non-governmental organizations.

How can we as a group mitigate these effects?

It is very important for our clients to feel that we do not leave them alone with their problems in this terrible situation. Knowing that they cannot pick up the goods, we do not put them under pressure. Together with our sister companies in Hamburg we try to find best solutions; partly we buy the coffee back and will supply it in the future. We redirecting the coffee to save ports and changing the contracts to FCA instead of CIF. We also offered to temporarily store goods, which they did not buy from NKG. We didn’t change our sales conditions. All these steps are highly appreciated by our clients and on the other side our assets are still safe. Bero Polska initiated a special roasted series called “Ukrainian edition” together with eight local roasters. All the proceeds from the sales were donated to the Polish Humanitarian Action. Besides the practical side of this action, it was also a sign of solidarity with Ukraine. We offer, as NKG, to provide direct help and assistance to units and organizations named by our clients; as they are in the war zone, they know better than us who needs our help.