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Bulk handling opportunities for the roaster; pitfalls for others.

The bulk handling of coffee, while it is certainly not a widespread practice, is poised to spread through the U.S. coffee trade during the next decade. Already Folger's has instituted systems for handling their coffee in bulk from the time they receive it. KGF will undoubtably be next. Nestle, although they have not announced to receive coffee in bulk. can hardly expect to follow the path of their competitors. For one thing, Nestle's European counterparts have been handling coffee in bulk for years.

It can also only be a matter of time before shippers start using bulk methods to deliver coffee to the dock, although expert regulations and internal transportation methods and facilities may make this more difficult.

It is unclear what this will mean to the economics of the coffee business and the intrinsic price/value relationship that presently exists for various coffees. Supporters of bulk handling methods say that it is easier to monitor quality in a bulk handling system. Folger's system, for instance, does not begin evaluating deliveries until the coffee is delivered into the system. This allows the coffee to be continuously sampled from the entire lot rather than to be sampled from a certain percentage of bags. The roaster is therefore less vulnerable to variations from bag to bag or to a few bags of particularly bad coffee that might be (quite by accident of course) stashed in the middle of a particular lot. If a rejection occurs, the supplier must then share the burden of taking the coffee out of the system (i.e. taking it out of the silo, putting it back into bags, etc.).

This stipulation certainly ensures that suppliers will be less likely to deliver coffee which they feel might be rejected. On the other hand, however, it in no way forces roasters to consider better quality coffees. Bulk handling is after all, a money-saver first. If it allows the quality evaluation phase to be handled more expeditiously that is merely an unsought, if welcome, benefit. Greater consistency at a particular level of quality is likely to be the outcome of large roasters adopting bulk handling techniques.

Indeed the bulk handling of coffee may allow coffees to keep better after they are harvested by allowing factors of humidity and temperature to be better controlled. This may be of interest particularly to large specialty roasters which want to maintain as much acidity and consistency in their coffees as possible throughout the crop year. To allow them to take advantage of bulk handling, however, would require considerable capital investment, something only a few specialty roasters are in a position to do.

For small roasters, it will be impossible for bulk handling to be an option. In their case, it is likely that bagged coffee will become a product which will continue to receive additional marketing attention, while the bulk coffee will be the generic choice of large roasters capable of generating their own marketing mystic.

The bulk handling of coffee, even as it advances in North America, does not approach the level of sophistication applied throughout much of Europe. There, large roasters and decaf processors handle raw coffee as if it were a liquid, transporting it in trucks that look as though they were designed for milk.

Bags are stripped out of containers at the pier and the coffee is then moved with screw conveyors to silos where it is stored and/or blended with other coffees and allowed to settle--often for a few weeks, sometimes for months-- while the moisture level of the various blend components even out. The coffees are then moved to trucks using conveyors and large hoses which are connected to the tops of tanker trucks.

At the roaster the trucks are unloaded via the funneled underbelly of the tankers into underground weighing hoppers. The tops to these hoppers are flush with the drive-through receiving area at the plant and covered with grates. In such a roasting plant then, there is literally no manual handling of the coffee from the time it enters the plant until the time it leaves in cases on shrink-wrapped pallets.

In decaffeination plants, much the same system is used. Roasters having their coffee toll-decaffeinated for instance, have the coffee delivered to the decaf plant via tanker trucks into underground hoppers. Empty tankers return in several days to pick up the decaffeinated coffee via overhead hoses and the coffee is then taken to the roasting plant.

While it may seem at first that the bulk treatment of coffee may harken further degradation of coffee at the mass consumption level, it is unlikely that this will occur. It may be one of the fortunate examples of a cheaper method also being the better method. Bulk storage and continuous sampling both are likely to benefit quality at any level of differentiation within the market. it will also allow large specialty roasters to control the quality of their coffees throughout the season and to be more exacting in their blending procedures.

Small roasters, unable to take advantage of the capital intensive volume-oriented systems in use by their larger competitors will focus on fancier coffees undoubtably delivered in fancier multicolored bags, and decry the "bulk" coffee "mass produced" by their big brethren. This does not mean that estate coffees won't be handled in bulk, or that they might not benefit from this procedure, rather, it simply gives the small retail-roaster the chance to point to the bag of coffee next to the roaster and say, "My coffee is produced the old fashioned way, and delivered in this beautiful traditional bag while my competitors handle their commodity coffees in bulk." Greater quality control, greater economy of scale, and greater differentiation are on the buffet of benefits that will accrue to roasters as bulk handling becomes more widely accepted.

Another possible, although an admittedly unlikely outcome, is that green dealers, in order to develop quality control as stringent as their customers, might convert to bulk handling themselves, either at the same (rented) facilities in use by their customers or at their own. Again, this is not uncommon in Europe, where green dealers actually develop and market their own proprietary blends to roasters. This benefit of bulk handling is unlikely to accrue to any American green dealer, as any attempt to add value in the U.S. is frowned upon by roasters unless it is the roaster who is adding the value.

The losers, in fact, won't be roasters at all but warehouses and truckers that are unwilling or unable to adapt to the new techniques and, of course, the designated loser of the coffee industry, the hapless green dealer, forced to accept more risk, at a possibly higher expense, for the same or lower margins. (Sound familiar?)
COPYRIGHT 1993 Lockwood Trade Journal Co., Inc.
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Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Author:Castle, Tim
Publication:Tea & Coffee Trade Journal
Date:Mar 1, 1993
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