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Market Update 2010 Delving into Decaf

By Barbara DuFrene & Alexis Rubinstein

At the Tea & Coffee World Cup Vienna, the “Decaf Trends and Technology” panel discussed the future of the decaffeination segment. Here, we recap the panel presentations and interview some of the industry’s top decaffeinators to delve deeper into the world of decaf coffee.

Taking place shortly after the annual SCAA venue in California and slightly overshadowed by air travel obstructing ash clouds emitted by one of Iceland’s sub glacial volcanoes, the four panel speakers had however all managed to arrive in Vienna in time to meet up and to coordinate their presentations before the conference session.

Coming from different and truly complementary horizons we were, by alphabetical order: Massimiliano Fabian, chemical engineer and doctorate in management and economy, actively involved in many coffee associations and CEO of DEMUS Spa (Trieste, Italy); Joseph Rivera, food chemist, director for Science and Technology with SCAA for many years and now in charge of his independent “coffee intelligence” consulting office in California (USA); Daniel Robles, graduated from management and commercial studies and export Vice President of Mountain Water Decaf in Cordoba (Mexico); and Barbara DuFrene, the author of this synopsis, lawyer by training, in charge of the European Decaffeinators’ association since 1985, with its seat in Paris ( France ).

Right from the beginning of our discussions there was a shared conviction that “decaf” was an important part of the coffee market and should endeavor to reach again, catch up with previous much higher consumption rates by: building up a more global and non conflicting communication, enlarging the decaf coffee profile to include also some “specialty coffees,” drawing attention to the assessed health benefits of the non caffeine components and carving out a defined and specific niche for the “why and when to drink a decaf cup.”

We also agreed that the drop in consumption that had occurred about 20 years ago was only partly due to some never fully confirmed and alarmist communications about research findings - the famous “Superko study”- but that the market had been eroded already severely before the 1990s by conflicting and adverse commercial advertising .

Firstly the panel recalled the facts and numbers: It was said that the market of decaf consumption was significant in the U.S. and in parts of Europe, mainly Spain, Germany, France, Austria and Italy while not yet of relevant presence in Scandinavia and Eastern Europe, nor in Japan. In the absence of published data the current market share is estimated at around 10% in Europe and around 12-15% in the U.S., while 20 years ago it used to be around 12-15% in Europe and close to 20% in the U.S.

The invention of the decaf process by solvent extraction goes back to Kaffe HAG, launched in Bremen, Germany by Ludwig Roselius in 1905. The development of water extraction was launched from 1941 onwards and CO2 extraction from 1962 onwards; one can clearly see that the basic four methods of caffeine extraction are all operationally applied for half a century by now. Innovation, legal requirements and fine tuning of equipment have certainly allowed to gradually improve the product quality, but to date, no fundamentally new process had been added to the existing four.

The current share out between the different extraction means was estimated to be DCM for more than 50% of the volume, a relatively small share for EA, over 20% for water and around 20% for CO2.

Looking Ahead
On one side we see the coffee majors, i.e. the multinationals Nestlé and Kraft, who decaffeinate their own branded coffees in house , within a few big restructured and re centered decaffeination plants in Europe and in the U.S. On the other side, there are the more numerous third party decaffeinators, mostly privately owned companies of which nine are located in European countries (Germany, Italy, Spain and Switzerland), four in producing countries (Brazil, Mexico and Colombia), two in Canada and two in the U.S.

In Europe, the decaffeination industry is federated since 1969 within the European Decaffeinators Association (EDA); membership has been severely reduced after restructuring and rationalizing within the multinationals during the recent years; today it stands at 10 industrial plants while there used to be 26 about 20 years ago.

Having thus established the scenery and current pattern the panel then focused on future challenges, potential markets for newcomers to decaf consumption and the global economic outlook.

A major challenge would consist in reaching mutual agreements to refrain from comparative advertising which often gives bad marks to the solvent extraction, referred to as “chemical,” or worse. One must remember though that the existing legal framework enshrines the complete safety of all the four extraction methods. Furthermore it was also recalled that in spite of so many years of very adverse claims by some competitors, the U.S. FDA still does not see any need to revise the longstanding maximum residual level (MRL) for dichloromethane from 10ppm downward, even though this revision had been carried out by the EU legislator in 1992, when the DCM MRL for decaf roasted coffee was reduced from 10ppm to only 2 ppm.

Another matter for counterproductive considerations was then recalled insofar that today the two main decaf consuming markets have different legal provisions for the residual caffeine content: the EU requirement being that caffeine must be removed to equal or below 0.1 % which ensures its factual absence, while the U.S. only asks for 97% of the caffeine to be removed, which may not be entirely satisfactory for a cup containing only Robusta coffees.

Another important challenge was unanimously recognized to be a genuine quality improvement: enlarging the decaf choice for the consumers. Why not only offer single origin decafs, but also try to ensure faster rotation to avoid the decaf coffees sitting on the shelf for too long, and also to obtain decaf slots for most single cup brewing equipment.

An additional challenge would be to build up a global communication about health benefits of the non caffeine component to attract all those consumers who are keen on the antioxidants and their benefits which are contained in the coffee polyphenols but who wish to avoid the stimulating effects of caffeine, be it because of the late hour or for other reasons.

Following on from all the above, the way forward would be to investigate those markets where coffee drinkers are not yet aware or interested in decaf, be it lack of factual information, lack of product communication or just unavailability. In order to explore these markets constructively, it would be of great interest to enshrine consumer and authority acceptance of all the current decaffeination methods and to chisel out and agree upon some global messages. In countries like Japan, with more than three paper edition journals devoted to coffee only; in Russia, where coffee consumption grows fast; and not to mention China, such efforts carried out by the decaf industry together (and not against each other) could generate new consumer demands which would rapidly exhaust the current worldwide production capacity.

Having thus explored the subject under all possible angles the panel members fully agreed on the following conclusion: The decaf industry has a considerably wide playing field, a favorable growth potential, valid production alternatives and fully enshrined safety provisions but does not well enough recognize the need to communicate in a coherent way nor does it take advantage of attracting attention to the scientifically assessed “favorable health benefits.”

Exploring any possible steps to be taken with the view to setting up some cooperation, exchange of data and information could eventually lead to finding means towards operating more globally and acting in a more converging way. Attempts to proceed in that direction could pave the way for increased demand and thus generate a wider product choice, for even better satisfying the former and the new consumers.

Barbara DuFrene is secretary general of the European Decaffeinators Association.

Tea & Coffee Trade Journal Talks to
Some of the Major Decaffeinators

Here, we interviewed Bob Weagle, vice president of marketing for Swiss Water Decaffeinated Coffee Company, based in British Colombia, Canada; Carlos de Aldecoa Bueno, CEO of Maximus Coffee Group in Houston, Texas; Massimiliano Fabian, CEO of Demus SpA in Trieste, Italy; and Demetrio Arandia Muguira from Decamex Mountain Water Decaf in Veracruz, Mexico.

Tea & Coffee: Have there been any new advances in technology, machinery, processes in the decaf sector within the last year?

Maximus Coffee Group: The recent advances in decaf have been in the sector of enhanced public awareness and the necessity to move from purchasing products processed by outmoded forms of decaf production (those using methylene chloride, a carcinogen, and ethyl acetate, a synthetic chemical). This is a part of the general movement by the public toward the increased demand for natural and organic food products in general, and decaf coffee in particular.

While not new, our technology is unique in its method of processing decaf coffee using only natural ingredients (water and CO2) at a price unmatched by other natural methods. Our facility remains the most technologically advanced coffee decaffeination facility in the world, using a fully automated process incorporating the latest control systems. We continue to improve and upgrade systems to optimize the caffeine extraction process.

Fully in step with the recent increased awareness on the part of the public, our natural process results in the most environmentally friendly method to decaf coffee, as it produces no waste or uses any additives, chemicals or filter agents that ultimately are placed in landfills, as is the case with the other non-natural methods. Ours utilizes a closed loop system where the water used in the decaffeination process is distilled and reused in subsequent batches. This promotes sustainability, another important element of which the public has become aware and which guides consumer choice.

Demus SpA: As usual, we have in place a continuous system for improving our process and looking to other alternative ways to extract the caffeine, with a constant benchmark towards competitors. So, yes there are always new things introduced by us but they can't be disclosed at this time. 

Decamex: That we know of there has not been big changes in the industry this year. There is still some research on plantations for coffee beans that produce less caffeine in a natural form but so far no real advances in this regard.

Our Mountain Water decaf process remains the same even though there has been many changes on smaller details of our process like more efficient engines, new materials (most of them oriented to save energy), better software and controllers and for our lab a new gas chromatographer for quality control testings.

We are also part of a project that will start on 2012 in order to obtain a big part of the energy that we need from an Eolic system.

T&C: Have you remodeled your facility, purchased new machinery, improved your production flow in any way?

Swiss Water Decaffeinated Coffee Company: Swiss Water Decaffeinated Coffee Company continuously strives for quality improvement linked to the Six Sigma Methodology and Quality Management Systems. By adopting lean manufacturing practices, reduced variability in our process has resulted in two major improvements in terms of output to the customer. The first improvement is better acids retention for a better in-cup flavor. The second is improved bean color (now closer to the original green) for easier roasting. The result is fresher, more consistent decaf quality.

Maximus: Since it purchased the facility from Kraft in 2006, Maximus has significantly integrated operations that have lead to greater efficiencies in the movement of coffee through the plant and the various phases of coffee production.

Demus SpA: Yes, the decaf plant was and is always being updated, the warehouse is now automatic and ready to give out 30, 60 and 600 kgs bags with a completely ergonomic system.

ISO 14000 (Environmental) was obtained last December, after the very best environmental technology was applied. Our Demus Lab, ISO 17.025 accredited by ACCREDIA ILAC, is always up to date and able to provide all type of analysis on coffee. Both companies are, for a long time, ISO 9000 certified.

T&C: What new trends do you see in the decaf sector?

Maximus: We see an overall trend in the food industry towards products that are better for you and naturally processed products. All the data produced by marketing experts in the area of food manufacturing have noted the overwhelming trend toward natural and organic products.

Demus SpA: The consumer is more careful of price and has a differentiated sensibility to how the coffee is decaffeinated or to environmental issues; consequently the market moves in the short term. I do believe quality will continue to pay in the medium to long term.

Descamex: We believe that the market will continue to grow slowly and steady as the general coffee consumption increases. Two mains sectors will drive this: the specialty coffee market demand for great quality decaf and the developing countries and new consumers from Asia. Also regular consumers will start reducing their caffeine intake as they grow older and this will probably increase the percent of decaf consumption for the evening and night coffees.

T&C: Do you deal a lot with Organic or other certified coffees? Are these handled differently than non-certified coffees during the decaffeination process? Is your facility organic certified? If so, what led to the decision (consumer demand, ethical opinions, etc)

Swiss Water Decaffeinated Coffee Company: We offer a variety of Fair Trade Certified coffees and decaffeinated Rainforest Alliance for a number of customers (toll programs). Certified coffees are not handled differently from non-certified coffees during the Swiss Water Process.

The Swiss Water Process is certified organic by the Organic Crop Improvement Association, the world's largest organic certification agency, in accordance with standards developed by the National Organic Program. The decaffeination facility itself must conform to the OCIA's rigorous standards. The organic integrity of our operation ensures organic coffee beans are decaffeinated using the Swiss Water Process maintain their organic certification.

Maximus: We process both organic and standard coffee and also work with both Rainforest Alliance and Fair Trade coffees. We remain the only organic certified coffee decaffeination plant in the U.S., located in the geographical center of the country, which provides an ideal platform for the distribution of coffee beans to the rest of the country. This results in both a reducuction of transit time and transportation costs which also decreases any environmental footprint.

After we purchased the plant from Kraft in 2006 and were positioning our decaf capacity with the roasting community, many of our customers immediately recognized the benefit of purchasing a naturally processed decaf coffee from a single source located in the U.S., replacing both their Methylene Chloride and Ethyl Acetate suppliers. This greatly simplified their operations by eliminating the need to carry inventory of multiple types of decaf processed beans. Specialty customers began to inquire how they could incorporate naturally processed decaf into their existing organic product lines. These inquires led to the organic certfication from the USDA, which we obtained in 2008.

Demus SpA: We do not handle Organic or other certified coffees for now, as demand in our area is extremely limited.

Descamex: Yes we deal with certified coffees and according to their certifications they are handled differently and segregated from conventional coffee.

We originally became organic certified in 2003 based on demand. After that we started working on the other certifications and up to today we have organic (NOP, EU and JAS), FLO, UTZ, Rainforest Alliance, Kosher and been awarded also as ESR ( Socially responsible Enterprise) by CEMEFI (Centro Mexicano de Filantropia).

T&C: Where do you see decaf coffee heading in the future?

Swiss Water Decaffeinated Coffee Company: As decaf consumers continue to demand equal emotional and sensory satisfaction from decaf coffee as per regular coffee, I expect that the category will grow by delivering to that expectation.

In addition, I also expect that decaf coffee will start to have a more exciting selection of interesting taste varieties as the need for more flavor variety is high amongst decaf users.

Maximus: Clearly, the public has spoken concerning its increasing demand for natural and organic products. There is also the opportunity to incease the overall market share of decaf by incorporating a two-pronged approach: 1) by improving the quality of green coffee used in decaffeinated products; and 2) by offering a greater supply of natural and organic coffee, thus moving away from the outmoded processes already mentioned.

T&C: What is your company doing to improve the reputation of decaf coffee?

Swiss Water Decaffeinated Coffee Company: We are the only decaffeinator in the world to invest in consumer insight and brand support on behalf of our customers and we will continue to do so to ensure that we understand and elevate the decaf coffee category.

Maximus: We have dedicated a great deal of energy to allow for a higher quality end product and have been at the forefront of the movement away from chemically processed decaf to naturally/chemical free processes. All we have really done is listen to what the consumer has decided and have positioned ourselves to take advantage of their demands.

Demus SpA: We do our best to monitor media, internet and feed back coming from customers or competitors. Cooperation between decaf producers is key

Descamex: We would like to focus our advertising campaigns in making it clear that drinking decaf coffee is good for you, and that our mountain water is the best option of having a great tasting water decaf. The constant challenges that we have is to continue improving the quality and results of our process. Our main objective is to preserve the original characteristics of aroma and flavor of the green coffee beans and have the best decaf cup available of the market.

T&C: Do you think the demographic for decaf coffee will stay the same or evolve/expand over the next year?

Swiss Water Decaffeinated Coffee Company: The current demographic for exclusive decaf coffee is typically middle aged women who enter the decaf category due to health concerns. Dual usage continues to grow and will expand linked to improved health benefits and taste and quality improvements.

Maximus: I believe that by focusing on the stated consumer demand for natural organic products and increasing quality, we will see the demographics widening.

Demus SpA: Tendency should be in expansion, due to aging of population.

T&C: Do you see any challenges in the future and if so, how do you intend to tackle these?

Maximus: The non-natural chemical and synthetic processed decafs face difficult futures, as the public demand for purely natural and organic coffee will only further increase. Thus, the fact of enhanced consumer awareness and the ever increasing possibility that environmental and labeling policies may eventually require the disclosure of not only the ingredients, but any process incorporating known carcinogens, such as Methylene Chloride.

Demus SpA: Low caffeine coffee could come out and potentially compete with decaf, but it will be very different and to be in depth legally analyzed and labeled. The four systems will continue on the market (dichloromethane, ethyl acetate, liquid or super critic carbon dioxide and water) with some environmental risk on carbon dioxide linked to emissions.

Tea & Coffee - July, 2010

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