How I Got Into Coffee Smuggling
My own experience with coffee smuggling was from 1969 to 1973....during the highpoint of smuggling from Switzerland to Italy. I had moved to Switzerland from New York and was hired by USEGO Olten, a major coffee roaster. Based on my experience as a coffee trader in the American market I was put in charge of the coffee department. Part of my job was dealing with coffee that was to be smuggled from Switzerland to Italy. I was curious and wanted a firsthand look at how it worked so I took a drive. The trip from Olten by car took 6 hours on a mountainous road twisting over two passes. Traveling from St. Moritz across the beautiful Bernina pass and onwards to the valley of Puschlav (Poschiavo in Romansh), the valley air filled with blue smoke and the strong scent of roasted coffee. This experience is still strong in my memory. This is my story as I lived it.
Switzerland was not a wealthy country as it is today and many Swiss left for the USA to find a better life. Especially hard hit were the border regions. High unemployment and poverty created a hard life, particularly in the area of the Puschlav valley. The poverty was on both sides of the Swiss/Italian border with hardly any employment available. Coffee has always been an integral part of the Italian lifestyle. Knowing that Italians would pay a high price for this daily necessity, their government raised import taxes on coffee.
Since coffee, a tropical crop, is grown only between the Tropic of Cancer and the Tropic of Capricorn, Europe needed to import 100% of its demand. Switzerland also applied tax on coffee, but at a much lower rate. The cost for coffee roasted in Switzerland was much lower than the Italian product and this price difference made smuggling possible. From some parts of Switzerland getting coffee into Italy was fairly quick. One hiked across a mountain pass and crossed the border. However, it was hard & treacherous work.
The Swiss government knew that large quantities of coffee were smuggled into Italy but before that could happen it needed to be imported Into Switzerland. Of course import tax was due and collected by the Swiss tax man. Now the coffee could be roasted and smuggled into Italy. This operation was very elegantly called EXPORT 2 by the Swiss tax authorities. The Swiss government kept the taxes collected from Export 2 coffee apart from taxes collected on coffee for Swiss home consumption The EXPORT 2 duty collected was used to fill the coffers of the Swiss Social Security, reaping over one billion Francs. At its peak more coffee was roasted for Export 2 than for the whole of Switzerland.
Most coffee went out from the Puschlav valley into Italy. Why the Puschlav.? It is a very narrow valley in the SW corner between St.Moritz and Tirano Italy. The Puschlav was used by Caesar and other Romans and still today the Roman roads are visible. The tracks made by horse drawn carriages are deep in the limestone. This is how it worked.
The green coffee was imported into Basel, Switzerland, railed to the Puschlav on the famous Bernina Bahn. The roasting was done by 6 firms working 24 hours daily to fill the demand from Italy. USEGO had a substantial share of the export 2 market and supplied many of the roasters that did nothing else but supply the Italian market.
The roasting was done in old houses, garages, very simple operations. Roasting machines were all second hand and could be had cheaply. There were no afterburners available and the blue smoke went up in the air. Today it would be impossible to run a roasting operation without an afterburner to get rid of the smoke. The roasted coffee was packed into 50 lbs jute bags that were plastic lined. This was done to keep the coffee scent subdued and in case border guards were around, the packs could be dropped and picked up later. The plastic protected against water damage. There were lot of streams the smugglers had to cross and sometimes back packs were dropped into the water before they started running from the guards. When the smugglers lost 20 packs the guards reported only 15 or 16. recovered. The rest went home with the guards.
These packs went to roasters all over Italy, to be blended with their own proper production to reduce their cost-price. To help the smugglers keep order a warehouse was built to store the roasted coffee before trying to carry it across the border into Italy. This warehouse, a wooden cabin, was high up the mountain side and could be reached only by cars not bigger than a VW bus. These busses fulfilled several purposes. One, for trucking the coffee to the cabin. And two, for transporting the smugglers across the border to be dropped at the cabin to begin their dangerous treks back into Italy. It was a regular shuttle for coffee and smugglers.
The border station was Campocologno - a Roman name. The smugglers assembled by the station, under the eyes of the Italian Guardia, waited for the bus and were taken to the warehouse. The warehouse had several doors with a chute attached. The 50 lb coffee packages that came from one of the Swiss roasters were sent down the chute and kept according destination. Across the openings were the destinations like Milano, Roma, Napoli, Torino. The packs contained different qualities and had markings showing the name of the recipient but in code.
I was allowed to be on a trucks from one of the roasting plants to the warehouse cabin, which turned out to be an interesting experience and gave me the picture I hold in my mind.
Besides coffee Italy liked cigarettes from Switzerland. These were packed also in the same size backpack. All brands were available, about 100’000 per backpack. A minimum order per brand was 1000 packages. Swiss cigarettes cost only half of those in Italy and Immense quantities went across the border. The Italian border guards of course knew about the smuggling. But some money changing hands went a long way. They even knew the names of the Swiss coffee suppliers. And my name was on their list as well.
The Guardia needed success stories to prove that they were active and on the job. They arranged with the smugglers a really impressive scheme that always made headlines. An old truck was loaded with old coffee and placed somewhere near the border. A phone call to the border guard headquarters in Milano pointed to the truck. The press was invited and next day headlines grazed the newspaper that the border guards did a great job of confiscating a large amount of coffee. Sales from the Swiss importer to the Swiss roasters in Puschlav were confirmed by a hand shake and there was no guarantee that the coffee would be paid. Most of the bills were paid, but normally with some delay.
A competitor of mine had bad luck. His Italian buyers had no money and in order make good on their debt they offered him a piece of property in Milano. It seemed like a fair deal and was readily accepted. Unfortunately the location was on a Milano cemetery. There was no problem with hard drugs at that time and hardly ever violence. I heard of only one fatality, a swiss coffee roaster got shot by a border guard On the Italian side of the border.
Everything came to an end when Swiss import taxes were raised and the rate of exchange from lira to swiss franc changed, making business impossible. There was no more incentive to roast coffee and smuggle it into Italy. All roasters from Puschlav have gone out of business, but the financial impact was remarkable. The valley had new houses built, hotels came, and tourism grew. It was an amazing transformation.