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Roasters talk about the coffee business: 1993 and beyond.

Being involved in the coffee business in the 1990's involves a great deal of know-how. The coffee entrepreneur needs to have a knowledge of many types of state-of-the-art packaging, roasting and grinding equipment. They need to be aware of new consumer interests and attitudes toward coffee, new product ideas and innovative marketing methods. They need to have an understanding of trade relations, and this is just to mention a few.

What we thought might also be helpful as we enter 1993 is an overview of the state of the industry, as well as some ideas of what might be in store one, two or five years down the road.

Essentially, that is what we have tried to do in this article, to ascertain where the coffee industry is today and where it is going over the next several years. To do this, we have interviewed those in positions of leadership at 20 U.S. companies.

The questions we asked related to the type of methods and equipment currently being used in the areas of packaging, roasting and grinding coffee. We queried interviewees on current products and products for the future. We asked about convenience packaging, about competition and about where the market will be going over the next five years.

Our subjects were most gracious of their time and their thoughts. For that, we thank them. The following survey article is the result of those conversations which are presented here in alphabetical order, according to company name.

Boyd Coffee

The Boyd Coffee Company was rounded in 1900 by P.D. Boyd in Portland, Oregon. In its third generation of family ownership and management, the company employs 460 employees on its 27-acre site just outside Portland.

At Boyd Coffee we spoke with Bobbe Brown, marketing services manager. According to Brown, Boyd coffee is primarily business to business, providing coffee for restaurants and foodservice companies. The company provides office coffee service and operates six retail coffee stores in Portland and Seattle. Offices and restaurants use Boyd's gourmet coffees, Italia D'Oro Espresso, Today Food Products, and Techni-Brew brewing equipment.

"We are a gourmet specialty coffee roaster with well over 90 blends, varietals, flavored and decaffeinated coffees. Our blends will have our name on them. They are blended to match a standard of special flavor, aroma, and character established for each coffee," Brown said.

Boyd uses Gump granulizers, Probat roasters and several brands and models of coffee packaging equipment, including Hayssen, Bosch and Goglio.

The items that most effect sales growth are specialty blends. There is great interest in espresso and flavored coffees and a trend towards milk-based coffee drinks, such as Mochaccino. There are also milkbased espresso drinks, both hot and cold. Brown felt that the trends will continue to grow, as they have in the Northwest where such beverages are well-established.

According to Brown, coffee markets are going toward high quality coffee consumption. "Consumers are becoming more moderate in their behavior. They are reducing their alcohol consumption and their fat consumption. Their attitude towards coffee seems to be 'I'm not going to give it up, but when I drink it, it will be the best I can have,"'she said.

When asked about filterpack and other convenience-type coffees, Brown said filterpacks work if the coffee is of good quality and the packaging system keeps coffee fresh, perhaps with a valve outer wrapper.

Boyer Coffee Company

Boyer Coffee Company, roaster and manufacturer of gourmet and flavored coffee, was rounded in 1968 by Bill Boyer in Denver, Colorado.

The company has a very large number of products for a small company--200 coffee products and a total of 300 products when teas and spices are included. There are 130 different varieties of whole bean gourmet and flavored coffees, exotic specialties and espressos, 25 teas, and 100 spices and seasonings.

According to Jim Twiford, a main thrust for the company is wholesale accounts. The company does 65 products for one of its leading national foodservice clients. "We do a lot of runs and changeovers for this account. We do small batches for freshness," he said.

"We package in almost every way you can think of. We manufacture fractional nitrogen flush packets from 1.1 oz. to 2 1/4 oz. at different increments for institutional. We pack ground coffee in 10, 12, 14, 16 oz. packages for institutional in regular, decaf and flavors. These are all nitrogen flushed and designed for hotel urns and brewers," Twiford said.

Boyer is also creating gift tins for consumers and one and five lb. bags with a freshness valve for retail stores and foodservice. In addition, they are one of the first to do a one-cup brew in a tea-like bag which can be microwaved and Per Pot packets that brew a pot of gourmet coffee in premium, gourmet and flavor blends.

"We are a very market-driven company. We feel that packaging is very important for maintaining and merchandising our products," Twiford said. The company has recently added a new valve bag machine, custom-built and designed to Boyer's specifications.

The machine uses a new type of film, a 3-ply poly-foil structure. The structure is a very high quality, strong material that provides an excellent barrier. It provides gussets better than the 2-ply materials. It allows for 3-color graphics, and an ink jet imprinter imprints the name of the product on the film so that you don't have to label it. There are 20 different types of film with different colors and graphics. The company provides many different packages for its 200 coffee products. Two-ply is used for functional packages for ground coffee and for foodservice. Three-ply is used for beans with valve bags.

Boyer uses two large commercial grinders. The company has the grinder heads redone frequently so they don't crush the beans. The grinders are entirely refurbished frequently so that the grinder is consistent. Roasting is a direct fresh air method using Jabez Burns Thermalo machines. "The high altitude here allows our coffee to be roasted at lower temperatures, giving it more flavor. Also, pollutants and gases are vaporized with emission control. We don't recycle gases. This effects the taste of the coffee for the better," Twiford said.

The company does 25 proprietary blends and 40 exotic specialty coffees. It does 30 different flavored blends and 30 decaffeinated flavored blends. "Our flavors are all natural. We coat the beans and cure them for seven days. Flavored coffee is like a dessert specialty. They are a phenomenon."

"We have been here for over 25 years and the growth has been phenomenal. The growth has been 20 to 25% for the industry nationally and 30% for us, especially in our proprietary blends and flavored coffees," he said.

"We're similar to Millstone and Starbucks in Seattle. We think when Starbucks comes into a marketplace, it provides a good stimulus toward quality for everyone. We've just opened the world's largest coffee emporium, over 4000 sq. ft. We have three stores. We plan five more for next year, four will remain ours and four will be franchised," Twilford said.

According to a company press release, the new "Coffee Emporium" provides bins for 130 different fresh roasted, whole bean gourmet, and flavored coffees. It also features an espresso bar care plus gifts, accessories, teas, and a complete line of fresh spices.

"We stay in touch with consumer trends. We offer the whole line, with the most variety to satisfy consumer needs. You have to offer the consumer value. Our goal is to provide exotic specialty coffee at a reasonable price, value at an affordable price. People love Jamaican Blue Mountain. Our stores buy it at a good price and pass that saving on to the consumer."

Twiford felt that the filterpack convenience packaging was good for foodservice and worked well for the airlines. "But l feel that the trend is away from that and that there is more concern about quality and freshness than convenience. It is nice for a single person who just wants one cup of coffee."

"People love having their gourmet coffee. It is a status symbol. They are proud of it: 'I grind my own coffee' they say. They have espresso machines. Now Mr. Coffee has a consumer espresso machine," Twiford said.

"The consumer needs, and is looking for, education. We do a lot of it. Then they come back and buy, and we have a loyal customer."

Cadillac Coffee Co.

Cadillac Coffee of Fort Wayne, Indiana is a well-known blender and roaster of fine coffees for the institutional and specialty retail trade.

According to Richard Gehlert, vice president of operations and extremely knowledgeable about the coffee business, Cadillac Coffee sells retail, institutional, office coffee service and private label.

The company uses Gump grinders and Thermalo roasters. Cadillac also has a new Victoria roaster from Italy that is totally automated, roasting with reduced shrinkage and better taste, according to Gehlert. The packaging equipment used is a General machine with a Nelson packaging machine used for overwrap. The Iliapack System, a belt driven single tube machine, is used for private label when it is important that the package has to look the same each time.

Three different machines are used to package gourmet whole beans. Bulk whole beans are done in a bag-in-box machine. A Pacrite machine is used for 22 oz. and five lb. gourmet whole beans. Then beans are sealed and vacuum drawn in 12 oz. bags on a PAK machine.

Cadillac is capable of roasting 25 million lbs. of coffee but is not working to that capacity now. The company does both special blends and special flavored blends.

Gehlert feels that gourmet coffees will be the rising stars of the coffee industry next year and over the next five years. "Specialty coffee is a young industry with lots of entrepreneurial people involved. It can become saturated with competition where price will become a factor. What could happen is a cheapening of quality to gain price. In that situation, there would be a shakeout in the industry with fewer roasters remaining over the long-range period," he commented.

Gehlert felt that there will be greater use of form and fill valve bags as opposed to preformed bags. This would be a natural outgrowth of the emphasis on quality and freshness. He also felt that there will be more packaging of 5 and 10 lb. whole bean bags, using a barriertype film with a valve. "A company will be more likely to purchase an expensive packaging machine ($250,000). The companies who can modernize their equipment will make it, and the others won't," Gehlert said.

Gehlert thought that the large companies won't get into specialty coffee. "It will be the small entrepreneurial companies who will have to come up with the cash for these machines. The mid-sized companies will be able to do it," Gehlert said.

Gehlert predicted what could occur over the next five or 10 years. "Every new product has a life span. When a product comes out in the market, a lot of people are there to produce it first. The life of the product goes on for about 5 to 10 years. The companies who can, will start packaging products in effective ways. There will be a decrease in the amount of margins at that point. Many won't be able to afford expensive equipment. They just won't have the cash for a $250,000 machine. To outfit a store through which products will be distributed costs from $2,000 to $5,000. Whoever has the cash will survive," Gelhlert said.

Gelhlert commented on how far the coffee industry has come in terms of packaging. "You always learn from history. At first we packaged coffee by hand in glassine bags then, as times changed, a roaster had to become more and more automated. With the growth of the gourmet industry, roasters are looking for the equipment that will make production more efficient, for the most cost-effective production of quality coffee."

Gelhlert sees a trend in foodservice packaging being done in a pouch bag with a gusseted bottom and valve and sealed in sizes ranging from 6 to 16 ozs.. done by companies who can afford the equipment for these products.

In terms of the filterpack convenience coffee, Gelhlert felt that it had advantages for airline use. He feels that when you brew coffee in a filter bag, there is a difference in the saturation of the coffee. "Water can't easily go through the filter so it will go around it..I don't think that the proper brewing combination has been developed yet; but it will," he said.

Gehlert sees a large potential for the home area and is starting to get interest from sales, marketing and development people in filter packs for flavored gourmet coffee.

Coffee Roasters of New Orleans

Coffee Roasters of New Orleans is a specialty wholesale roaster specializing in custom-roast, blends, private label and flavored coffees. It is the only surviving business from the 1984 World's Fair and is still in the World's Fair location.

We talked with Patsy Cantrell, general manager, about current and future coffee trends. The company currently roasts five lb. and half lb. bags of bulk beans and two oz. bags of ground coffee, all vacuum sealed and nitrogen flushed. We currently do a two oz. package by hand. "If I were to expand my packaging, I would install a form and fill machine for a two oz. brick pack," Cantrell said.

In terms of grinding methods, the company uses the Gump granulator for 100 lbs and over. For small orders of straight roast, they use a Ditting and a Bum for flavored coffees. Coffee Roasters also uses two batch roasters. The company's capacity is about 5,000 to 8,000 lb.s per week.

According to Cantrell, flavored coffees show the strongest growth. When asked about filterpack convenience coffee, Cantrell said she didn't think it was something for the gourmet specialty coffee industry. She felt that it would have to come a long way in its capability to keep coffee fresh.

"I see a lot more espresso blends and flavors ln the future. Projecting trends for five years, I see a lot of companies going to 1.75 to two oz. brick packs. We are starting to hear more and more about these from our customers," she said. "I think the industry will continue to grow but that competition will stay where it is now. I also see green coffee prices going up because of industry problems worldwide," Cantrell said.

Dallis Bros., Inc.

Dallis Coffee was established in 1913 in Queens, New York City and has been a family-owned business ever since.

David Dallis is very articulate about the coffee business and told us a lot about how his company markets coffee today and what he sees for the industry in the future.

Dallis Coffee uses the Jabez Burns roll mill grinder made by Gump. According to Dallis, it produces a fine and even grind. "We also use a plate mill by Mahlkonig for flavored, espresso and fine coffees. We use the Mahlkonig because it can be cleaned out more easily which is, of course, very important when dealing with flavors and espressos. We keep the flavored coffees separate. We have equipment dedicated for use with flavors so that there is no contamination of other coffees by the flavored coffees," Dallis told us.

Dallis uses three roasters: a 4bag Thermalo; and two small specialty roasters for shop roasting, Probat and Diedrich.

The company packages in vertical form and fill equipment, doing restaurant-style pouch packaging in laminate structures. Dallis uses two kinds of automatic packaging equipment, Prodo-Pak and Triangle. On a semi-automatic, they package in five and one lb. valve bags. "Beginning in the Spring, we will have a new machine that will be able to package one and five lb. valve bags from roll stock. We have acknowledged the trend to valve bag packaging. Our customers are beginning to look for it, ask for it and perceive it as being beneficial," Dallis said.

Dallis does special blends as well as flavored blends. "There is a great deal going on in the flavor area both in coffees and non-coffee flavored products such as flavored syrups and creamers that are added to a cup of brewed coffee. This is becoming popular in the Midwest, particularly in the area of foodservice," Dallis said.

According to Dallis the company's product capability without "killing themselves" for all types of coffee is 3.5 million lbs. per year.

"In terms of growth, we expect to be able to package coffee in little pouches. Doing flavored beans in bulk to go to specialty stores is an easy market to address. It is more difficult to handle ground flavored coffees in small packages. With our new packaging machine, we can now make bags with our own film. I see the largest growth area for the company as the automatic packaging of whole beans," Dallis summed up.

Dallis felt that new production methods allow for quick response to customer needs. He said that presently it is difficult to run short runs on automatic equipment. Packaging equipment companies are working very hard to be more responsive to roasters and satisfy their varied needs. Dallis sees a trend toward much more flexible packaging systems that can handle short runs, systems that allow easy change of bag length with printers on-line to add new product name and graphics.

Dallis thinks one of the largest trends is the service of a single varietal coffee in-restaurants and coffee shops. Dallis quoted a coffee article by Florence Fabricant in Nation's Restaurant News that seemed pertinent. "Just as wine service underwent a revolution in the 1980's, with more personnel becoming knowledgeable on the subject and able to promote it to customers, it is time that the same attention be paid to coffee and tea. It is likely that varietal coffee will begin to appear on menus, a selection presented in the same spirit as wines by the glass and an assortment of bottled waters."

Fancy coffee being offered in restaurants force all companies to change the way they package. Doing more short runs will be the way to do it.

Dallis has observed that some companies are using microprocessor controls on packaging equipment where the settings for a particular package can be saved. All they have to do to make that run again, is to press the button and get the same setting rather than have to re-set the machine each time. For mechanical sizes, an operator need only dial to a 1" or 2" mark rather than using trial and error.

ln terms of competition, there is an increasing awareness on the part of the coffee industry, that quality matters. Dallis thinks that this is a good trend. According to Dallis, both wholesalers and consumers are looking for higher quality products and willing to pay more for that quality product. ("We have had that thought since we opened in 1913.") You can see a response to that demand for quality in the industry. The large companies are saying what the small companies have been saying all along. Even Maxwell House is saying "Better beans make a better coffee."

Dallis pointed out that the model of Starbucks is pushing everyone to do a better job in quality and service. Dallis foresees that competition will elevate the product quality of all companies. "At Dallis, we believe that training is very important to maintain quality. We do extensive staff and customer training on how to recognize quality in coffee and how to make a quality cup of coffee."

The coffee market is aimed at higher quality, more variety and more choice for the consumer. "We as roasters have to provide more education and training to our sales force and retail store personnel. We need to teach the employees at a coffee bar how to make a good cup of coffee. We can provide them with great beans, good equipment and they may still not be able to produce a quality cup of coffee. That's where training comes in," Dallis said.

Dallis runs monthly training seminars for retail stores. He also has a program for in-store cuppings for customers. "We are doing more than ever before...the market is demanding it!"

Dallis said that if he could expand his packaging capability, he would add automated vacuum packaging of square bottom brick packs.

When asked about convenience packaging such as the filterpack, Dallis expressed concern about proper coffee extraction with filterpacks. "A lot of people interested in specialty coffee want to have control over its preparation," Dallis said. In certain situations such as airlines, he felt filterpacks might be applicable. Dallis did mention what he considered a future trend in this product line--a pre-measured unit of pre-compressed ground espresso coffee packed in a filter paper and packed in gas flush foil bag sold to restaurants and small cares. He is looking at the concept with technical interest.

Daymar Corp.

Daymar Coffee, out of El Cajon, California, is owned and operated by Roy Gallegos, general manager and coo. Daymar does a whole bean business with 90% in five lb. bags. The remaining 10% is portion pack 1.5 to two ozs. for restaurants.

Daymar uses BuRn Grindmaster for grinding, Sivitz for roasting and Hayssen for packaging. Gallegos felt that he currently has adequate packaging capability for its needs but could add another roaster. The company does 50% special blends and 50% flavored blends.

Gallegos felt that flavors and organic coffees are strong sellers for his company and continue to grow. When asked about the filterpack convenience products he felt they were "okay for convenience, but for freshness the whole bean approach is better."

"For trends, I see more flavors and better quality coffee. Another important factor is the quality and supply of green coffee. Two years ago green coffee was of a better quality. It went down in price to $.58 per lb. If the price goes down, farmers might lose interest in the crop. That could create a problem getting quality green coffee," Gallegos said.

F. Gavina & Sons

This family-owned business, involved with coffee for over 100 years, is located in Los Angeles and employs 120 workers. Gavina does a variety of coffee products in whole beans and ground. In whole beans they do five and 10 lb. valve pack bags for gourmet stores and 12 oz. and two lb. bags of whole beans for retail. In ground coffee, they do 39 and 12 oz. cans and 1.5 oz. to 2 lb in institutional pouches.

According to Gavina's president, Pedro Gavina, the company uses Gump grinders and Probat and Burns roasters. Gavina uses Hayssen machinery to package institutional pillow packs. For valve packs, they use Fresco Goglio. The company has added a new Unilogo machine for two oz. brick packs. Gavifia is the first in the U.S. to use this type of machine.

Gavina feels that their capacity is 15 million Ib.s per year. Currently they are doing 12 million and expect to reach 18 million with their current expansion.

The company is growing rapidly in the gourmet coffee business and keeps growing. Gavifia does specialty blends and has responded to increasing interest in flavors with many new flavors. The 5 and 10 lb. bags of gourmet beans and two oz. brick packs are continuing to increase sales. The smaller brick packs are geared to gift-giving. Being Cuban, Gavma is also known for its ethnic coffees. Another area of growth for the company is increased sales out of the Los Angeles area.

Gavina feels that the industry has to become more efficient. Customers are asking more and more from their suppliers. They want better prices, new marketing ideas, improved packaging. Gavifia says he still sees growth in higher quality coffee.

Another trend that is effecting the coffee industry, according to Gavina, are the Member Buying Clubs. More and more of them are opening on the West Coast. "They want higher quality, unique products, gift packaging. The buying clubs are taking business from the supermarkets, and the larger markets are suffering from the loss. It is very competitive to get products on the shelves. Sometimes slotting allowances have to be paid. The large companies can do that," Gavina felt.

When asked about filterpack convenience coffee, Gavina said he felt that they have merit, especially for office coffee settings and air lines. He felt that to retain the freshness it should be overwrapped. Gavina thought filterpacks would reduce pilfering of coffee in office coffee service settings.

"The consumer is looking for quality in coffee. People want something good for themselves," Gavifia concluded.

Gloria Jean's Coffee Bean

At Gloria Jean's we spoke with president Ed Kvetco. According to Kvetko, Gloria Jean's does both whole bean and ground coffee. The company sells whole beans mostly in five lb. bags but also in special gift packages that include a grinder. Small gift nitrogen-flush packages are done in different sizes, ranging 1.5 oz.s to one lb. bags.

The company uses a Probat grinder for most of its product line. The Bunn grinder is used in stores.

A Bums 4-bagger roaster is used and the company will be installing a Probat 4-bagger. "In terms of packaging equipment, we use Fres-co for our five lb. bags and Acma for other form and fill products used for small portion packs where you don't need a valve," Kvetko said. Because production is high, the company will be adding another five lb. bag machine and another roaster.

The company was running coffee for Christmas 7-days a week, 24 hours a day. The capacity was 4.5 million lbs. last year and is expected to reach seven million lbs. this year.

Gloria Jean's makes five different coffee blends for stores. They also do some blends for national accounts. "We do flavors as well," Kvetko commented. "In fact, approximately half of our sales are in flavors," he said.

Kvetko said this year has been a very good one for Gloria Jean. In 1991, the company had a 12.8% increase in sales; in 1992 there has been a 20% increase in the stores alone. "We have done especially well with gift packs where they have gone way beyond their projections with a 30% increase over last year.

The trends Kvetko sees for the industry are more espresso-based drinks, including cappuccinos and lattes. There is much more space devoted to espresso machines. In terms of industry competition, Kvetco feels that all the big players in the gourmet coffee industry are in place, although there could be changes outside of the industry that could affect it.

On Kvetko's wish list for 1993 and beyond, is a greater consistency in how coffee is described and graded. "There are no real standards now. These would help the consumer and industry as well. Our standards are not the same as the guy next door. Setting these kinds of standards would be helpful throughout the industry and to the consumer. The Specialty Coffee Association is working on it now. That would be a good start, although I think it would take a while to develop them," Kvetco concluded.

Gold Star Coffee Company, Inc.

According to president Peter Georgilakis, Gold Star packages mostly fractional packs, predominantly for restaurant trade but also does vacuum packs for consumer consumption. Sizes range from 1 1/4 ozs.. to five lbs.

Coffee is ground on two #66 mills. Roasting is done on a Lilla roaster by Cia. Lilla de Maguinas. "We are the first in the country to use the Lilla which is manufactured in Brazil. It has given us excellent service," he said.

The company's capacity is over 1.5 million Ib.s per year.

Gold Star does four blends as well as 60 different gourmet flavored coffee blends. The gourmet coffee blends are the most profitable product line to the company.

In terms of equipment, Gold Star uses Wright packaging equipment. He is satisfied with his current method of packaging and if asked about expansion interests he said he would add more of the same.

Georgilakis feels that Seattle is #1 in gourmet coffee, but that the trend is going national. He feels that espresso, cappuccino and latte coffees are spreading to the East coast.

When asked about convenience filterpack packaged coffee, Georgilakis said he thought it was too expensive. He also spoke about freshness. "We deliver coffee fresh to vacuum pack bags for greater freshness for customers," he said.

Packaging Ties in with Aldine

Technologies

Many roasters feel that one key to leadership in the marketing of specialty coffee is through innovation in packaging in equipment, materials, and design. We spoke with an innovative packaging machinery organization to find out some very new trends in packaging.

Aldine Technologies, whose new high-speed packaging equipment has the technology, in the opinion of some roasters, of a 21st century idea.

According to Peter Gould, president of Aldine, very little has changed in packaging in the last 25 years. "Machines are basically stop and go form and fill types, predominantly mechanical in design and operation. Our new Super 5000 series of high-speed packaging equipment is completely computerized, featuring such technologies as electronic line shafts, electronic camming, computerized electronic filling, precision controls, complete telemetering and a simple, user-friendly interface," Gould said.

Aldine's new packaging line, Gould said, packages coffee, tea and other dry food at speeds of up to 3,000 packages per minute in round, square and rectangular shapes. The Super 5000 is completely controlled from a central console from grinding, in the case of coffee, to finished cartons, palettized.

"We also feel that to remain a player in the specialty coffee industry with its explosive growth, it is necessary to have cost-efficient, high-speed packaging that can maintain the quality and freshness so important to the coffee product. For this reason, we are also making this innovative technology available on a copacking basis," Gould said.
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:part 1
Author:Fader, Liz
Publication:Tea & Coffee Trade Journal
Date:Jan 1, 1993
Words:4994
Previous Article:The delightful hibiscus sabdariffa.
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