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Clearing up the decaf confusion.

Decaffeinated coffee as a category, after a brief lull, has continued to grow along with the growth in specialty coffee sales. This is despite the confusion surrounding the category of decaffeinated coffee on the part of consumers. Concerns about the healthfulness of decaf coffee and the various processing techniques used to decaffeinate have been key issues for the coffee buying public over the past several years.

Consumers responded quickly and decisively to a preliminary study done at Stanford University in 1990 tentatively linking consumption of decaffeinated coffee with heart disease. Decaf consumption halted its upward trend as a percentage of the total coffee market that year. Despite the fact that those involved with the study said that it was strickly preliminary and by no means definitive, the press and the public latched onto it with the short-lived and mindless tenacity for which they are both famous.

Allowing confusion about decaffeinated coffee to prevail poses risks to roasters dependent on the profits that decaf sales reliably generate. With all the murky information out there about decaf coffee and how it is decaffeinated, the category has been at risk of consumers getting tried of the whole issue and abandoning decaf coffee for the regular stuff. (Ironically in this case, despite all of caffeine's negative PR, regular coffee might thus become the "healthy" alternative.) Even worse, some consumers might be tempted to quit coffee altogether rather than deal with the health issues of caffeine consumption and the wholesomeness of all the various sundry chemicals they have heard are used to decaffeinate coffee (many non-coffee people will tell you formaldehyde is often used). So far, however, decaf has avoided these pitfalls and has continued to be not only an avenue of growth, but increased profitability, especially for specialty retailers.

Despite the bad press in 1990, imports of decaffeinated coffee actually rose in 1992, indicating that the outlook continues to improve and specialty retailers also report that the category is growing. This is good news for the coffee business in general because many coffee roasters find that decaf coffees account for a disproportionate share of their profits. Wholesale customers and consumers alike are less price sensitive when it comes to buying decaf coffee. Wholesale customers, particularly restaurants, look at the price of their regular coffee, but often do not even ask or consider how much the decaf coffee costs. Consumers expect to pay a premium for decaffeinated coffee and don't have a clear perception of how much that premium should be.

To get a clearer idea of where the decaffeinated coffee market is headed Tea & Coffee Trade Journal spoke to Terry Taciuk, marketing & sales manager for the Swiss Water [TM] Decaf Division on Nabob Foods, Ltd. Taciuk's outlook for decaf coffees in general is bright, "Long term, the decaf market is going to grow, consumers are going back to very basic values and basic measures of value, personal well being as opposed to their personal status. We see decaf coffees in general and our product in particular to be very well positioned to fit in with this trend. We believe the range of consumers willing to pay for the added value of decaffeination will continue to grow -- there are lot more people concerned about their health and the health of the environment. The strong demand for organically grown food is another example of this trend."

"Further," Taciuk continues, "if some of the lifestyle changes that have been predicated come to pass, we see yet another area where decaffeinated coffees are a natural. Cocooning for example, is the name given to the trend where people are spending more evenings at home either as a family unit or with friends; decaffeinated coffee is an obvious accompaniment to this lifestyle."

Taciuk also points out that the decaf market has not been immune to the driving forces behind the specialty trend in North America. "It used to be that the decaf coffee drinker expected to get a lousy tasting cup of coffee. Thanks to the greater awareness by the consumer today, the quality in the cup has become a paramount concern for the decaf drinker of the 1990's. This is why we've invested so much time and money over the past several years refining our process to the point that we feel we are offering a high quality decaffeinated coffee which tastes as good, or better, than any other and which also happens to be processed in a chemical-free manner. The bottom line is that consumers today are now looking for a lot more than just decaf coffee, they want it all -- quality, healtfulness and no caffeine. Today's knowledgeable consumers know a lot more about origin disctinctions and even processing technology than they did a few years ago. We try to educate everyone we can about the Swiss Water Process [TM] and we have just added two new origin classifications to our line-up, Celebes and Genuine Yemen Mocha Sanani. Both of these efforts are an effort to cater to what we believe is a new breed of coffee consumer."

Coffee as a category is going through a renaissance of awareness on the part of consumers that wine went through over a decade ago according to Taciuk. "The difference is that decaf gives the consumer the option of drinking coffee at any time, and unlike wines that have had the alcohol removed, decaf coffee is actually tasting pretty good these days. In addition, you've got more marketing support from the major roasters who are investing in media with their half decaf and that will help build the category and heighten an awareness of decaf consumption in general."

According to Taciuk, this gives specialty retailers a great opportunity to piggyback onto the efforts of the large roasters in promoting their decaf coffees. "Smart specialty retailers will realize that decaf sales can be a more profitable opportunity, if they are ready, willing, and able to step up with specialty decaf products which compare to their regular coffees in quality. In addition, decaf coffees have to be presented in a way that addresses the concerns that consumers have about decaffeinated coffees in general and about the specific process used to decaffeinated the coffee. Again, quality is key but trust and recognition of the product are also essential."

Taciuk continued, "It is those roasters and retailers who can squeeze the extra pennies out of every level of their business that are going to be here 10 years from now. The increasing competitiveness of the coffee business doesn't allow people to ignore this category. Using the decaf coffee category to create additional profits will be an essential strategy for successful retailers in a market as tough as the coffee business is today."

When asked in conclusion about the ongoing issue of worldwide overcapacity in coffee decaffeination, Taciuk had this observation, "We've had three groups, including a producing country, come to us and ask questions and they have all backed off. Many people, particularly at origin, perceive it to be an valued-added opportunity at first blush, but then they look at what it takes kto capitalize a decaf plant and the oversupply of capacity and they find the information rather sobering. I wouldn't hold my breath waiting for the next decaf plant to open."
COPYRIGHT 1993 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:decaffeinated coffee
Author:Castle, Timothy J.
Publication:Tea & Coffee Trade Journal
Date:Feb 1, 1993
Words:1208
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