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Comments on the Decaf Coffee Market

BY TIMOTHY J. CASTLE

The decaffeinated coffee market seems to be in a steady-as-it-goes state, with some consistent, if gradual growth occurring since the early 1990’s, largely, it is generally assumed, as a result of the “aging boomer” phenomenon.

Four players on the decaffeinated coffee scene all had slightly different views of how the market was performing. One decaffeinator felt the market was well balanced, with some steady growth in Eastern European countries and in Italy. While this European decaffeinator found some agreement with one of his North American colleagues, another North American had a less than a positive scenario about both the decaf and entire coffee business, in general. Yet another said he has been seeing continuous growth of the overall decaf market. What this indicates is that the decaf business is probably like the coffee business in general, running in cycles to which all participants are subject and that there are also cycles peculiar to each of the businesses under consideration. Coffee is “booked” or purchased in large amounts that often do not neatly collect themselves in calendar year increments. Sellers of raw coffee, exporters, importers, dealers and decaffeinators generally know they have to measure the progress of their sales growth over two years, at least, to gauge accurately how they are doing.

“I think that the demand and supply are quite well balanced right now,” managing director, Dr. Max Fabian of Demus, SpA. in Trieste, Italy commented about the overall decaf market.

Dr. Fabian does not believe that the decaf market is growing worldwide, but in Italy and some Eastern European countries he sees a steady growth. “Now they are having enough money to pay for a particular product such as decaffeinated coffee,” he said about consumers. He also mentioned that people in these areas are beginning to see the health benefits of lowering their caffeine intake. And because consumers are becoming more conscious of the potential benefits, they are increasing their decaf consumption.

Dr. Fabian noted that while there are no new innovations in decaffeination technology, the way the technology is applied is always getting better. Quality and efficiency are always increasing. “We are always working on research and development of our process; getting the best product to our customer in the best way. We closed a good year last year with a good increase in production and revenues. And we expect to have great development for this year and next. It continues to be growing in a good way. Especially judging that we are in a mature market and, nevertheless, we are always growing, not dramatically growing, but always growing. I think one of the reasons is; I think we (Italy) are in one of the lowest markets for decaf in Europe. Italy is growing, not quickly, but slightly,” he surmised.

Daniel Robles, president at Deschis U.S.A. Corp did not have such a positive outlook on the decaf industry. “The decaf industry as well as all of the coffee biz is going through a severe crisis,” he said. “On the specific case of our country (Mexico), the borders are beginning to open up, allowing coffee imports from different origins and letting us process it and re-export it into the U.S. This represents a good opportunity for us and for the roasters, cutting expenses and saving time by processing the coffee in Mexico instead of Germany (specifically for central and south American coffees).”

He continued, “We believe that the market is being divided in two different parts: in one hand, the big transnational companies that are looking for more volume and higher margins who forget a little bit about quality. And on the other hand, regional companies with high quality standards, being this last group responsible every day more for sustaining the current consumption levels.

While Robles’s outlook may be a little bleak, he believes there is still a great potential of coffee consumers, especially in developing countries. “If the whole industry could join efforts, great achievements can be accomplished,” he said. Robles’s view is probably influenced, in part by his being based in a producing country, where things are, indeed, very bleak.

Brent Fleming, president and c.e.o. at Qusac Decaf, Inc. explained the principles behind his growing business. “The competition has been quite fierce, ever since the first day we got into decaffeination,” Fleming said. “We’ve had to create our own niche within the industry. Whatever the customer wants, the customer gets; and quality above all else.”

The company, based in Montreal, Canada, is completing an expansion, which is expected to be finished by the end of the summer. “By June we should be in commercial production of an expanded facility,” Fleming said. “So we figure that by the end of August, we’re actually doing business for the customer.”

Qusac is also launching a water process decaf coffee that is coming to market in June. While he wouldn’t reveal how the process works, his company guarantees that “it’s a pure 100% water decaf.” Many decaffeinators today, it seems, are becoming increasingly concerned with keeping the technology they use confidential-especially when it comes to plants operating either CO2 or “pure water” processes. This may reflect the competitive nature of the business.

Fleming also mentioned that they are marketing their caffeine. “We developed a new in-house process to refine the caffeine from the extraction and take it to a pharmaceutical grade caffeine,” he said. “The byproduct will be for sale in the pharmaceutical industry as well as the food & beverage industry.”

Fleming admitted that he’s not sure what specifically has caused their market share to grow, but he’s happy with the development. “Once again we’ve grown our market share. I don’t know if we’ve done it because we’ve stolen market share from other decaffeinators or if we’ve done it from an increase in general market of decaf consumption. Obviously by increasing our capacity, we see a continuous growth in people requiring our services.”

No other decaffeinators interviewed for this article reported a loss of sales or market share, so either the loss is being borne by other decaffeinators or that Fleming’s second explanation is the likelier alternative.

Frank Dennis, Swiss Water Decaffeinated Coffee Company, Inc.’s c.e.o. and president, noted that his company’s business has also been growing steadily over the past year. “We’ve taken great care not only to understand how best to decaffeinate coffee with 100% pure water, but we’ve also invested a lot in understanding the decaffeinated coffee drinker so that we can work with our roaster/customers in helping them communicate with those coffee drinkers.” Asked about the newer entries into the ‘100% water’ decaffeination arena, Dennis had this to say, “We’re flattered to see our competitors introducing “100% water” and “pure water” processes but we’ve been decaffeinating with pure water using our patented process for a long time - we believe the quality of our product reflects that experience.…our plant, by the way, has been open to tours since the day it opened.”


Tea & Coffee - March/April, 2003
ASIC 2014

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