STiR coffee and tea magazine

Volume 3, Number 1

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STiR tea & coffee industry international 39 capacity production of capsules, cups and filter pods. Their challenge is managing margins as the retail price of single-serve falls from 65 cents to 35 cents per cup. Packaging to insure sufficient shelf-life is a major issue. l The great majority of North America's 1,200 roasters are small operations serving a local clien- tele. Roasters and small brands have the option of packaging their coffee in single-serve formats in small batches. Consumers loyal to the brand will pay up to $1 per serving. Freshly roasted whole bean is their niche. Small batches often rule out co-packing. Volume is their challenge as scale greatly re- duces manufacturing cost and packaging is expensive. l Third-wave roasters concerned about qual- ity and sustainability generally shun single-serve but may find that espresso capsules are the gate- way to supplying fine dining establishments. Res- Capsules are air-tight, light-proof with barrier materials that can be flushed with N2 to prevent oxidation and the intrusion of moisture. Shelf life is 12 months without additional packaging. Legend: PET-Polyethylene terephthalate, PP-Polypropylene EVOH-Ethylene vinyl alcohol (oxygen barrier). Image courtesy Rychiger AG. Protective lacquer Aluminum Heatseal lacquer PET Polypropylene EVOH Polypropylene Polypropylene EVOH Polypropylene Heatseal lacquer Aluminum Protective lacquer Convenience is what makes single-serve tea the fastest growing segment of the U.S. hot drinks market. In 2013 packaged goods retailers stacked high on their shelves all the major tea suppliers from Twinings and Tetley and specialty inno- vators like Snapple and Bigelow to mammoth Lipton Tea. Sales were as brisk as the tea in de- partment stores like Target and Bed Bath and Beyond. As year over year growth rates slowed from 77% to 44% in sales of single-cup coffee, tea showed the exact op- posite trajectory. StudyLogic estimated sales of 1.9 billion units for the 12 months ending in July. "What is driving this movement is convenience," said QTrade presi- dent Manjiv Jayakumar. He observed that consumers in the early stages of development tolerated "pretty horrible quality tea." "It is now possible to replicate existing product offerings and deliver an excellent cup," said Jayakumar whose Los Angeles-based company is the largest supplier of organic tea in North America. "The tea industry is not intimidated by the single-serve format, the challenge for us is to get it right in the cup," he said. Once that is accom- plished brewers control the temperature, steep time, water quality and eliminate the intimidation of making great tea. "It's still a game for the big boys with ready access to the mass market," he said, but specialty tea is finding its way into hotels and foodservice. Blenders prefer to sell at least 500 pounds of tea at a time, said Jayakumar, enough to make 28,350 8-gram capsules of iced tea and twice that of 4-gram hot tea. Co-packers such as San Diego- based Intelligent Blends advertises 24,000 cup minimums. Single serve hot tea in conventional flavors such as breakfast blends are the most popular but hot tea brewed over ice makes a great iced tea at home, he said. Keurig brewers heat water to between 160 and 180 degrees which is well suited to green tea and "oolongs come out really nicely," said Jayakumar. The beauty of mix and match multi-packs allows consumers to ex- periment which is what they prefer, he said. Surveys show households with tea drinkers stock several flavors and six or more brands. "QTrade has been formulating single serve since September 2012 and every month we get better," he said. "We anticipate in the next six months a big increase in high quality tea in the Kcups market." — Dan Bolton Great Tea Made Simple

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