Another look at soluble coffee: the view from Brazil.
Roberto Devienne is an international soluble coffee consultant based in Brazil and is in constant contact with the soluble coffee industry there. With 35 years of experience working in several positions in major and medium plants, according to Devienne, he is "constantly following the happenings in the instant market and in its technology as well."
Devienne's expertise is not limited to Brazil's soluble coffee industry alone, but this is obviously where his heart is. Devienne respectfully takes issue with those that have characterized the Brazilian soluble industry as in decline, but he does acknowledge a market, which is presently experiencing a condition of oversupply. "While it is true," Devienne observed, "that we have factories which have been closed down for years, we also have newer plants that have taken the business that formerly went to them. In fact, 20 years ago we had nine soluble plants with only two of those freeze dried coffee. The other seven produced spray dried coffee mainly and one of those plants also produced decaffeinated coffee (green and soluble)." The reasons for two of those plants shutting down were not market related but were internal problems, according to Devienne. "Due to several problems specific to the plant, one big facility was shutdown and imploded, as it was located almost near the center of the city Sao Paulo. Another plant located at the state of Rio de Janeiro also shutdown due to their own problems."
Devienne then endeavored to characterize the present situation in Brazil's soluble industry. It is a more positive story than many industry watchers have told. "Presently, we have seven plants working and one of freeze-dried plant (Macsol), which was incorporated in total by Companhia Iguacu. So, in fact, we have a plant doing only freeze-dried coffee presently. Most of these plants are fully booked with orders due to the low green coffee prices. So, in that way the soluble prices are very attractive especially after the end of duties on Brazilian coffee imposed by EC. Most of these plants have up-to-date equipment and have installed computer-monitored operations like those at Cacique, Realcafe, Iguacu and Cocam." In a sense, it can be inferred from Devienne's comments that the plant shutdowns that the country did experience have made the nation's industry much stronger. "Almost all of the plants currently operating here have already invested in high technology to produce good coffee to the standards required by their customers. So, now we can say that the principal soluble producers are able to produce very good soluble coffee on a competitive basis and each company achieved this due to huge efforts in R&D during their lifetime." Devienne continued, "Cacique, for instance, is the biggest plant under one roof and now, besides producing spray dried coffee and agglomerated, has also installed a very modern freeze dried plant from Niro Atomizer/Atlas. Another big plant we have here is Nestle's and they are doubling the capacity of their present plant due their new policy of concentrating soluble production in coffee producing countries. We also know that they are doubling their capacity in Thailand too." This concluding comment includes the inference that Brazil is not alone in its effort to remain competitive in the world's soluble coffee arena. In fact, he does not see more production as a threat to the industry as a whole.
Devienne, in fact, welcomes competition, "I disagree with those that have held that the soluble market will be killed if Vietnam starts to install plants. I visited Southeast Asia a year ago and learned that it is likely that two or three plants will be installed there in the near future. But it will take some time until they are able to compete in the international market. Further, it will take these factories at least two years to go on stream. In five to ten years we might have possibly five plants in Vietnam altogether, but their size would be for small capacity, and this is indicated by inquiries we know have been made to some partners. In addition to the two year turnaround to build these plants it also takes time for these factories to reach a the level of sophistication required by this very difficult market."
"The biggest market and the biggest trend for coffee either instant or R&G will be China," Devienne continued. "It seems, from information received from an expert I know in this area, the younger generation in China is changing and has started to follow Western-drinking habits. The big news now is that in about four years China may become the number one economy in the world, and that by the year 2008 they will have 400 million middle class people, so we can imagine the volume of coffee that this country will demand."
Whether one is considering entry into the soluble market, expanding existing facilities or simply trying to comprehend the dynamics of the market, it is important to consider the dynamics of plant installation and/or expansion. In this regard, Devienne went on to explain that soluble coffee plant installations are not always simple, turnkey operations. "It is not true that to make an instant plant we have only to ask Niro Atomizera (a company active in the business of developing soluble coffee manufacturing facilities), which, by the way, is a very, very good company with liability and good background in that field." Even so, Devienne indicated, the current requirements of those companies wanting to install or expand a soluble coffee plant are usually unique to given markets and given sources of supply. The process takes a great deal of planning and analysis, both from a technical and a financial point of view. in particular, according to Devienne, "There is the price factor now and we are feeling that new customers are looking for inexpensive plants. Stone plants are expanding through the use of their own internal resources and expertise."
Devienne indicated that there are many options available when it comes to building or expanding a soluble coffee plant. He also enumerated a few of the newer advances that are being employed, "In addition, there are other companies in Europe, for example Spray Processes Ltd. from U.K., that are also able to supply complete plants with good know-how at fair prices. This is achieved by a collaboration of consultants with years of experience in the soluble field. Obviously, these companies are following the new technology for instant coffee. This technology includes new roasting equipment to preserve aroma, several processes in extraction and aroma recovery, and low temperature spray drying technologies (To name a few of the newer technologies currently being applied)."
Devienne points out that when installing a soluble coffee plant, it is important to incorporate the ability to produce product throughout a wide range of quality levels. "Quality depends on the market you are looking to serve. When building a plant, you need to be able to serve any class of customer. It also depends, obviously, on the price the customer is looking to pay. To project and install a plant will take only one to two years, no more, and will depend on the way the plant is acquired as well as the funds of the buyer. Normally to manufacture the required equipment takes about four to six months. Then transportation to the site will take perhaps one month. Installation should require four to six months. All this is achieved with several companies working at the same time with a consultant coordinating the total project. Commissioning will take one month. It is very important to have a skilled personnel training local workers so that in four months the local workers can be ready to run the plant by themselves." The quality mission is necessarily less focused due, in large part, to the much larger capital investment required to build a soluble plant as opposed to a small artisan roasting facility.
Devienne noted that the expectations of this market, the conventional wisdom as it were, are not always prescient, to say the least. "Decaffeinated coffee has not grown as expected by producers; and freeze-dried coffee is now growing faster than ever before. However, the market that is increasing tremendously is agglomerate coffee and in that way you have to purchase very good equipment to produce that product efficiently. There are some processes that can be applied, more specifically the ones from Niro Atomizer and from Spray Processes Ltd. that can produce a good agglomerate coffee, with hard particles, better visual appearance and good control for density besides keeping taste, all critical aspects to consider for this product."
Obviously, with low cost leaders like Vietnam entering the market in the near future, any contemplated soluble plants will have to be built with a view toward unprecedented efficiencies and cost savings. Devienne noted, "The trend for the next five to ten years is that the instant plants have to improve quality and at the same time have a fair price because the competition will be extreme. This means that costs for manufacturing have to be minimized. Eastern Europe, England, U.S., Japan, and now Russia will keep demanding very high quality and reasonable prices," in Devienne's opinion. "But on the on the other side of the coin, Western Europe and other countries will demand a better average quality and lower prices. This, essentially, is the market in which future companies (like those that are presently gearing up in Vietnam) will participate." Devienne points out as well that the Vietnamese operations can look forward to providing soluble coffee to the growing market in Asia where consumers favor soluble coffee over regular at a ratio of three to one.
Finally, Devienne noted that, "There are also some studies underway looking at the installation of new instant plants in Russia or at least agglomeration plants." Devienne, over all, paints a picture of a prosperous and dynamic market for a category that many people have written off as a "dying category." This is a treacherous position to be in, as the dynamics of the soluble market have become global in scale and, so too, has their impact become on the market for coffee altogether.
At this year's Roaster's Guild, one of the industry's respected senior members was overheard to tell a young roaster that flavored coffees, while something that he himself would never drink, are important for roasters who are selling it to produce as high a quality product as they could afford. A good flavored coffee, the sage concluded, will lead non-coffee drinkers to eventually drink good, unflavored specialty coffees, "if it's done right."
Needless to say, there's a parallel, perhaps even a stronger argument to be made for soluble coffee. While soluble coffee is a product that many coffee purists would rather not think about, soluble coffee has and will continue to bring more consumers into the coffee tent, it could, in fact, prove to unleash a new era of consumption around the world, if it's done right.
For more information, go to: www.delcafe.org.
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|Author:||Castle, Timothy J.|
|Publication:||Tea & Coffee Trade Journal|
|Date:||Oct 20, 2004|
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