is in an unenviable position of struggling now to maintain margins and get by, but with the coming certainty that things will only get worse. Not only producers, but in some cases the governments of some producing countries are looking toward the soluble market as a value-added way-station to either park, market or otherwise make at least part of the world’s staggering over-production of coffee go away, for a little while, at least.
This is not to say that more soluble plants should not be built, they certainly will be built to fill the needs of producers and certain niche markets - especially for the growing sector of ready-to-drink milk based coffee beverages. The opportunities in soluble will be found but they will be harder to come by and harder to hold onto over time - pretty much like everything else in today’s world economy.
Three industry representatives painted a slightly different picture of the soluble market based on their areas of expertise.
Nestor Zarate, owner and president of Zarate Consulting in Miami, Florida has been in the soluble field for 32 years. “I started out in the early 90s importing cappuccino from Brazil into this country, when powdered cappuccino in the shelf was not a hot item,” he began. “And then shortly after that everybody started coming out with the Maxwell Houses. We are into that niche marketing - which is the market of industrialized coffees - coffees that have a little more value-added than just roasted and ground.”
Zarate continued, “I’m a consultant and we trade soluble or instant. People call us and they say ‘we want a piece of equipment or we want a whole plant.’ We’re also into decaffeination of coffee, just a little different technology from making soluble coffee. So we give advice here on those subjects - roasting and decaffeination and manufacturing soluble or instant coffee.”
Zarate talked about the difference between buying roasting equipment and soluble equipment and how his company helps others. “If you tell me, you want to become a roaster over night, I can give you the names of 10 companies in Europe, Brazil and the U.S. where you can go an buy first-rate roasting equipment to roast green coffee beans. And knowing that you'll be satisfied with any of those 10 and that you will be able to ‘buy it off the shelves.’ But soluble coffee you can't do that. There's not a place where you can go and say 'I want a plant; and I want it in two months.' It has to be tailor made. You've got to go to Niro and say, 'I’m looking to build a plant of this capacity; this is what I want.' Then the guys will come out and they'll tell you, 'what we will sell you is basic production equipment for instant coffee.’ They'll give you tips on the auxiliary equipment, water purification and the boilers and what have you. But it has to be tailor made, in other words, you can't just find it already made. Unless, of course, you find somebody that went out of business and they're selling their equipment or you come across somebody who's downsizing.”
Zarate also offered his assessment of the soluble industry. “I have to admit with great sadness, in the soluble coffee field, there’s not much new. If you look at 30 years ago, what telephones were like, and what telephones are like these days or the typewriter versus the computer. There’s not such thing in soluble coffee. We’re still using the same equipment. We’re still using the same manufacturers. There’s practically a world monopoly by a company called Niro. By now you can't do anything without talking to Niro. There are no equipment manufacturers for soluble coffee in this country [U.S.] anymore because most of the instant coffee that in consumed in the United States is imported. In other words, it's cheaper to import than to invest the huge sums that are required to build a plant.”
He’s also worried about the fate of the soluble industry and a possibility of another crash in the market. “If you build 20 or 30 or 40 plants in Vietnam and start turning all that green coffee into soluble coffee, we're going to have another crash in the coffee market.
While Zarate’s outlook on the soluble industry is not positive, it is realistic. "It doesn't look too good, of course it's an opinion," he pointed out. "They assemble those plants that will take two or three years to build and put them into operation and fine tune them and in three years time, by 2005 or so, we're going to have this flood of instant coffee around the world that's going to drive instant coffee prices rock bottom and it's going to drive half the people who are in that business out of business. It's a very apocalyptic view but it may also prove accurate."
“If all the other consultants and all the other equipment manufacturers go ahead and sell those plants, we're going to be killing our own industry. The soluble coffee industry will go under three or five years from now. There will be a tremendous over production, and we already have some of that even now. There are factories in Brazil that have been closed down for years, other huge factories in Brazil that have been working at 10 or 20 percent capacity.”
Zarate is quick to note that although there are many options for the consumer for instant coffee, that does not mean that consumption has grown or that the category is expanding. "Instant coffee has lost a hell of a market share in this country and all around the world." Rather, confronted with shrinking share, it appears that the instant market is learning how to better cannibalize itself
Niro, located in Copenhagen, Denmark specializes in the design and supply of spray dryers, fluid bed dryers, membrane filtration, extraction, heating and cooling plants for processing liquid particulate and solid materials. Niro acquired freeze-dryer company Atlas in December of 2001, which according to Sten Warburg, deputy division manager, Food & Dairy, allows them to cover "a full range of technologies. No matter what the client desires, he has the possibility of getting it from us."
Niro has been developing its coffee technology for more than 50 years and deals with the technologies of liquids and solids processing of instant coffee, tea and cocoa and they have expertise in extraction, concentration, centrifugal separation, filtration, aroma preservation, drying, agglomeration/granulation, and powder handling. Warburg explained, "Our core technology starts with grinding and the conditioning of the roast and ground coffee. And from there we go all the way through until we have either a liquid coffee or a spray dried coffee or an agglomerated coffee or a freeze-dried coffee. All of the steps in between is our core technology."
"We're constantly developing our equipment on all sides," said Warburg, who is perhaps in disagreement with Zarate as to whether there has been any recent innovation in the soluble coffee industry’s technological base. One innovation in the double extraction technique is the Battery FIC extractor, where water is introduced at two different stages so as to decrease the overall extraction time while producing two completely separate extract fractions (aroma and hydrolysis). The process is continuous and features batch operated multi-extraction percolators. With the design and operation of the double extraction plant, Niro believes a superior aroma profile is achieved, which makes it ideal for canned coffee production. The total extraction time for this plant is 1/2 - two hours, compared with conventional extraction systems where the total extraction time is typically three - four hours.
"Some years ago, we turned the spray drying side of it upside down and we came up with the way we are spray drying today," Warburg said. The Fluidized Spray Dryer (FSD) which produces spray dried instant coffee is an economic method of producing soluble coffee. The feed to the spray dryer is a mixture of concentrated aroma and hydrolyzed fractions, with the preserved aroma components added. In order to maximize aroma retention, drying of the extract takes place under conditions that maintain low powder temperatures. Different types of spray dryers can be used for the drying of instant coffee. Bulk density and color control is possible by means of in-line gas mixers. Inert gas is injected into the feed system just prior to the nozzle atomizer used in the spray drying system.
In cases where spray dried powders require further agglomeration, an additional process stage is used involving powder wetting, after drying and cooling. Control of wetting is carried out with water and/or saturated steam in an agglomeration chamber equipped with a rotating impactor. The agglomerates are then dried and cooled in the attached fluid bed, followed by sieving and packing. Fines and oversize fractions are reprocessed within the agglomeration plant.
Niro’s freeze drying process starts with the concentrated coffee extract and goes all the way through pre-freezing and foaming, freezing and granulation and finally the freeze-drying. Plant production capacities range from 300 up to 4000 metric tons of freeze-dried coffee per year in a continuous round-the clock operation.
Dieter Adamsons, president of Fine Foods International in New York noted that, “Convenience products are in an upward trend. Instant coffee being a staple household product will always have its place in certain consumer groups. Capturing new consumer groups will partially depend on development of new instant coffee drinks.” Adamsons’ company is in the process of working on that. “More important though is building new consumer trust by improving the instant coffee qualities,” he continued. “Production companies or retailers, whatever - we all have the same employer and that is the consumer. We must not disappoint him or else consumption will go down. With American taste buds learning to recognize different coffee varietals and blends, soluble must follow this trend and bring gourmet instants into the market.”
Explained Adamsons, “With the New York “C” Market hovering around 50 cents, the green coffee makes for less than 20% of total soluble production cost. The high energy cost and maintenance for extraction and drying is something that the roasters do not have, as well as packing lines for glass jars. Still, there is a new round of price pressure on the soluble industry because all the roasters have reduced their prices. Again I hope this will not result in putting qualities further down south.”
The mantra for commodity based industries has been “value-added” pretty much since the inception of the term. “Value-added” is what soluble is to raw coffee, at least as far as soluble processors are concerned. Now those processors must differentiate even further amongst themselves in order to justify their continued operation in a climate of over-capacity, uncertain energy costs and vast oversupplies of raw material. May the best team win!
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: firstname.lastname@example.org