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Soluble themes.

Soluble coffees have benefited and grown from the growth of variety and increased awareness of alternative coffee products over the past 10 years. Bottle and canned ready to drink coffee beverages, many of these flavored with things other than coffee, have opened up many opportunities both for beverage marketers and soluble coffee manufacturers as well. Soluble manufacturers no longer make the somewhat self-destructive assumption that soluble coffee users are happy to drink the worst tasting coffee conceivable. Technology of all soluble manufacturing systems has improved and has made it possible to make a better tasting coffee for any type of soluble user. Beverage marketers meanwhile are more willing than ever to consider using a better quality soluble product. While the soluble industry is certainly not enjoying the best of times -- given the pressures that the low prices of green coffee are putting on the value-adding activity of turning roasted coffee into soluble coffee granules, crystals, or just plain dust -- there is still much reason to hope that the soluble industry will prosper and come to better represent the flavor of coffee to consumers that the rest of the coffee marketing community might consider marginal and unworthy of development into full-fledged coffee drinkers.

For the fresh scoop on soluble coffee we turned to four soluble manufacturers and marketers for their view of the soluble coffee landscape and also for an update on the activities in which each was engaged. Brew Fresh Coffee Co., located in Salt Lake City, Utah initially got into the soluble business because they were manufacturing water purification systems and as a result, they saw a need for a system that would dispense pure coffee, which would utilize the pure water, as well as the coffee. "We couldn't find a coffee that would be as good as or equal to a brewed pot, from the sources that we were able to locate and find," general manager Tony Brog explained. "It's our view that for the most part, people have had to had to trade off choices.

We're different than most in that we not only manufacture, but we're the primary end user of our product, so we don't get the input that others might with the larger customer base. With our system that was engineered in-house and built, we think we have a cup of coffee equal to or better than brewed. Based on our volumes, we have minimum doubled our volume every year. The last year we were up 243%. Most of that being word of mouth. I think that we're getting some of that business based on overall flavor, perhaps more than pricing or other things we might offer."

Brew Fresh focuses on the office coffee niche and is working on a new institutional machine that will be focused just on dispensing their product. "It will be targeted towards convenience stores and cafeteria type settings to where it will be larger volumes, with the emphasis on coffee volume and not merging the water and coffee together," Brog said.

As far as the industry as a whole, Brog has a tough time seeing the bigger picture, but with some expansion hopefully his company will be able to get a better sense of the market. "We live in a bubble in a sense. Our primary market has been Salt Lake City, which is not an easy sell for coffee. For us as a company, we will expand our systems into areas south of us -- Las Vegas, Phoenix, and Southern California."

Brog thinks the uniqueness of their company is definitely an advantage. "We initially got onto this on the equipment side, then we ended up on the manufacturing side. But I think arguably, in the long side, as far as the production side of coffee, I think that our company is unique and that we will approach the market with a package deal --here's the equipment and the product to go through it"

Ryan Coffee in the San Francisco Bay Area makes a liquid concentrated coffee that they sell to grocery stores. Starting this business on the west coast, they are now in about 1500 grocery stores in California, Oregon, Washington, Alaska, Colorado, Arizona, including a chain in Chicago and in Safeways in the Northeast. Greg Ryan Jr., president of Greg Ryan Coffee says they sell this liquid concentrated coffee as an alternative to the freeze-dried or powdered instants. "We're the only product out there that makes a concentrated coffee without the use of preservatives or additives and sell it to grocery stores. That's kind of been our core business. We're growing it where we can, kind of location by location because we don't pay any of the slotting allowances that grocery stores try to charge some of the bigger companies. We are kind of growing from West to East, is our goal, but we've also seen a pretty significant growth in our business as our concentrates are used as an ingredient for coffee flavored milk -- soy milks, rice milks, regular milk drinks. As people, I think, try and jump on the frappuccino bandwagon. I think the reason people use our product is because our product has a more rounded and less aggressive taste profile than a lot of the freeze-dried or powdered instants. And so when it comes to a drink, the person making the drink doesn't have to kind of take off the edge of bitter or acidic coffee ingredient. And that business has been pretty explosive for us. We've doubled it over the last couple of years." Ryan's company is also working on expanding their concentrates to iced teas in order to obtain what he calls a "smoother tasting iced tea." "We are actually kind of playing around with some coffee-traded teas which we're probably going to introduce later this fall or early next year. It's kind of on the same premise as instead of a powdered instant tea, you can use a concentrate to hopefully get a much better, smoother tasting iced tea situation."

Since the beginning of this year, Ryan has noticed an increased interest in the dispenser. "I'm not sure if somebody in the business or the industry had a conference and mentioned it or used it as a topic, but we've had probably and inquiry a week into putting our concentrate into kind of like a bag in a box, like they would for a Coke dispenser. I'm not sure who's driving that. There's a bunch of people that are trying to find a way to deliver a good tasting cup of coffee in a dispenser application. And I think they're saying that they don't think that freeze dried or powdered gets it, so they're trying to find a way for a concentrate or something like that to deliver that."

In terms of the state of the industry, Ryan doesn't see the low market as being hurtful to Solubles; if anything, he thinks it might help it. "Solubles have been traditionally a low-grade market," Ryan explained. "This market it somewhat helpful for that. The cost of the beans is really, really low. For the most part, the soluble market doesn't use high quality, so I don't know if this is impacting them as much as it would a roaster who's selling whole bean."

With the increase in the awareness of good tasting coffee, Ryan sees the future of the soluble industry as being full of opportunity. "It's quick and it's easy, but it's characterized by really bitter acidic coffee," Ryan said. "I've always said that there is a huge opportunity, that's why we've been making our concentrates for the last 10 years now -- for someone who can deliver a nice tasting cup of coffee one cup at a time without having to brew a whole pot. I still think that's the case today, if not, kind of more paramount because of the increase in the awareness of good tasting coffee. Solubles, in all cases, have no where to go but up from a quality standpoint. If they don't, they run the risk of really getting left behind, if not almost turning into a dinosaur."

U.S. Nutraceuticals in Florida has developed technology for the separation and recovery of both oil solubles and water solubles from the roasted coffee bean. "This technology is based on extraction of the roast coffee oil with supercritical carbon dioxide," explained Dr. Tony Evans, vice president of product development at the company. "This technology leaves an absolutely pure residue [free from any contaminating organic solvents] from which the water-soluble flavor components can be obtained by simple aqueous extraction. The roast coffee oil and water-solubles can be recombined to suit a variety of targeted flavor applications. This program is now entering the commercialization stage as USN's new ultra-high pressure Supercritical Extraction Facility in Eustis, Florida, comes on stream this month [April]." Grace Torbus, president of Tonex Inc. in Wallington, New Jersey has developed a product for people who can't drink coffee due to health reasons. "We have a ground coffee that's acid free. If somebody has intolerance to coffee and they have stomach problems from it, they can drink this product. It's a Colombian coffee. That's a fairly new product in the market." Tonex has a large business in the super market industry when it comes to instants and cappuccinos, especially because they make them less fattening than the other choices out there in the market. Torbus talks about their product, "Our cappuccino is probably one of the only ones out in the market with the lowest amount of calories. We don't add that many sugars or sweeteners into it."

Torbus has definitely seen an effect of the low market in certain areas, plus she sees the U.S. market leveling off a bit. She explained, "I would say the consumption dropped. It's starting to pick up right now. It had quite a large effect in our European market, but it didn't have an effect when it went out towards the Russian countries. That market actually stayed the same. It's because it's the same thing as it was a few years ago in the eastern block countries where it's a novelty it's a new product. People want something a little more exclusive than, for example, what they were drinking before. I think the market there is only going to grow. Where you come here in the U.S. the market becomes saturated. There's only a certain amount of truckloads that you can get out some place. And then once everybody's tried something once, then they slow down."

In terms of quality, like many others, Torbus believes that coffee drinkers are much more savvy "I think our market is getting more specific. People are not into just coffee anymore. They are more specific into what type of coffee they drink. They want something with flavor. The soluble coffee industry depends on the vitality of its members. While few observers have predicted its demise, many have suggested that it is both losing relevance and becoming moribund. Judging from the preceding comments, however, it seems that the opposite view might paint a clearer picture of the soluble coffee industry's status at present."

Timothy J. Castle is the president of Castle Communications, a company specializing in marketing and public relations for the coffee and tea industries. He is also the co-author (with Joan Nielsen) of The Great Coffee Book, recently published by Ten Speed Press, and the author of The Perfect Cup (Perseus Books). He may be reached at (310) 479-7370 or via e-mail at:
COPYRIGHT 2002 Lockwood Trade Journal Co., Inc.
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Title Annotation:soluble coffee products
Author:Castle, Timothy J.
Publication:Tea & Coffee Trade Journal
Geographic Code:1USA
Date:May 20, 2002
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