Issue link: http://read.dmtmag.com/i/556538
STiR tea & coffee industry international 35 Soluble is a solid investment Buencafé sales surpassed $120 million in 2014, "making this operation a very effi- cient investment for coffee growers and their families," acccording to FNC. Sales of instant coffee globally have tripled since 2000 to $31 billion and will reach $35 billion by 2018, according to Euromonitor, a global leader in business information on markets and trade. About 33% of the world's coffee is used to make solubles, consuming ap- proximately 47.6 million bags in 2014, according to Euromonitor. Most of this coffee (70%) is spray-dried, the least ex- pensive method of reducing liquid coffee to instant. In 2013 freeze-dried accounted for 26% of global solubles (191,570 tons) with extracts accounting for the remain- ing 4%. The volume share of freeze-dried coffee grew 5.4% year to year, according to Euromonitor. Soluble volumes overall grew 3.2% globally in 2014. World exports of soluble coffee expe- rienced a dramatic rise beginning in 1995 as non-traditional exporting countries entered a market previously dominated by Brazil, Ecuador, India, and Colombia. The International Coffee Organization (ICO) reported a 94% increase in soluble exports between 1995 and 2004 with ex- ports from Vietnam increasing from 5% to 16% of the market and Singapore and Malaysia increasing their relative share by 5% and 6% respectively. In 1995 producing countries, led by Brazil with 29% market share, produced and processed for export 52% of global solubles. Since then consuming countries have significantly increased their process- ing capability and by 2002 accounted for 68% of soluble exports, a 20% increase in market share. The FNC, concerned about losing market share, doubled down during this period by expanding the capacity of its freeze dry factory to 7,500 tons per year. Constructed in 1973 in the heart of the coffee growing region in Caldas, Buen- café Liofilizado de Colombia (as it is now known) exported only 150,000 pounds of coffee in 1982. The following year ca- pacity at the facility was expanded from 1,800 tons to 4,000 metric tons per year. Production for domestic and over- seas brands has been lucrative but in keeping with its strategy to expand value- added output FNC soon established its own brand. Buendía (translation Good By Dan Bolton Instant Markets Soluble manufacturers in coffee producing countries are reporting big gains in home markets. Exporters also see rising demand for better tasting instant coffee in Russia, Ukraine, Australia, South Africa, England and Turkey. Consumers in tea-drinking lands prefer better quality soluble coffee. The Asia-Pacific region, where mixes account for 54% of coffee sales, is now the largest market by value for instant globally. Eastern Europe follows. Accustomed to second-rate ground roast, many consumers in producing countries view solubles as superior, not just convenient. Cof- fee drinkers in these lands are more likely to choose flavored coffee with sweeteners and creamers packed together as 3-in-1 sticks. One-third of all soluble coffee produced is consumed at origin, according to Judy Ganes- Chase, c.e.o, J. Ganes Consulting. The top-10 producing countries have expanded output by 30% since 2008, while domestic consumption has climbed more than 40% and is expected to continue growing, said Ganes-Chase. Russian market Russia buys 2.4 million bags of robusta and 1.2 million bags of arabica yearly, but per capi- ta consumption is less than a kilo (.8) per year. "Almost 35% of the coffee market is freeze-dried," according to Ramaz Chanturiya, general director of the Rusteacoffee Associa- tion. "Powdered coffee is actually being forced out of the market and is mainly used for coffee drinks [3-in-1 and 2-in-1] sticks," said Chan- turiya. Nestle dominates in agglomerated, he said. India is Russia's largest supplier of instant accounting for 31.3% of imports with Brazil providing 20.3% and both Ecuador and Germany sourcing 10%. Colombia provides 3.4% of the instant consumed in Russia, most- ly freeze-dried. "The share of freeze-dried products will dominate the soluble coffee segment but the segment itself will be declining in absolute terms," as Russia turns to fresh brew predicted Chanturiya in a technical presentation during 2013 ICO seminar on consuming markets. Instant coffee is increasing its market share at the expense of fresh brew with big gains in emerging markets where convenience and quality drive sales US market Americans prefer fresh brew, fewer than 7% drink instant coffee daily but that still amounts to 19 billion cups a year with $5.7 billion sales. The US is the world's second largest im- porter of instant coffee at 1.4 million bags. Volume hit a low in 2004 at 60 million pounds (450,000 bags), returning only recently to the consumption highs last achieved in 1994, ac- cording to Nestle USA 's Coffee & Creamer Business Review. The successful introduction of VIA, cof- fee concentrates, cold brewed coffee, and a switch to freeze-dried arabica has reinvigo- rated sales and attracted new suppliers. "Americans are eager to find European quality coffee in the US after visiting abroad and tasting the difference in quality," ac- cording to Jamie Robinson, c.m.o., Egoiste Café/Coffee Globe. Germany-based Egoiste decided to enter the US because "the current state of soluble coffee in the North American market leaves a lot to be desired," she said. "American producers use spray-drying technology because it's less expensive and faster, but it definitely lacks taste and aroma. Freeze-drying is a more complicated and ex- pensive process, but it allows us to produce instant coffee of a high quality and with excel- lent taste and aroma that is closer to natural coffee," she said. Egoiste uses a blend of Ke- nyan grown arabica. Jamie Robinson, c.m.o., Egoiste Café Noir/Coffee Globe, Germany