Issue link: https://read.dmtmag.com/i/491365
54 STiR tea & coffee industry international Via is not the only premium soluble coffee, but it certainly spoke to a segment of consumers who had not previously considered instant. Younger customers, not hesi- tant to spend premium dollars on premium coffee, trusted the label and were willing to take a chance on this microgrind instant coffee. In an energized way, instant coffee was talking to young consumers. And yet, even Starbucks has experienced the less than stellar results as sales have begun to drop on Via, as it faces stiff competition from single-serve brewers like their own Verismo. They aren't losing hope, however. The company has moved into grocery stores and rolled out latte and mocha products. At $6.95 for a four-pack, they're banking that their customers are still willing to pay big prices for convenience. The challenge is the balance between single serve brewing machines and instant coffee packets. According to Erik Juch, v.p. of sales at Deutsche Extract Kaffee, the coffee pods reach a different group of consumers. "You have to buy an expensive machine. You have to buy the same type every time. There is a lot of growth there; however, what I have seen in the United States is that they haven't taken away any mar- ket share. They have shrunk our shelf presence by half but we haven't lost any sales." Projections for growth Datamonitor reports that the majority of consumers say that they trust products that save them time and effort in preparation. Soluble coffee and coffee pods speak to this need, but will they consume each other's profits or will they expand the market of customers? The answer may depend on the market. Industry representatives think that the real space for growth is in new geographic markets. Europe and American markets con- tinue to slow as they struggle to balance interests in single-serve brewers, instant coffee on-the-go, and fresh brewed coffee, both premium and non-premium. Asia is now pre- senting itself as the place to focus attention. China, Indonesia, Vietnam, Malaysia, and South Korea are all cited as the next places to look for soluble sales. Latin American markets are also expecting larger sales. "India and China are just learning to drink more coffee," says Juch. "In 10 years there will be massive growth in those markets. Wherever you see lots of tea drinking you can expect to see heavy growth." China is particularly noteworthy. Until recently average coffee consumption in the nation was slightly more than two cups per year per person. Over the past two years, the coffee that has been making an impact has been ready-to-drink and, now, instant. Top Exporters of Soluble Coffee (ave. 2000-2011) Thousand bags Source: International Coffee Organization, Feb. 2013 0 750 1500 2250 3000 Brazil India Columbia Ecuador Mexico Indonesia Ivory Coast Thailand 45.3% 12.6% 9.2% 9.0% 7.6% 6.7% 4.9% 2.8% of the global import market. Considering the attention currently being placed on the segment, and its relatively small size currently, analysts are very optimistic that there is tremendous room for growth in the sector. Price polarization Soluble coffee is experiencing a situation of price polarization, which could be seen as a challenge or an opportunity. From its early days in military rations, soluble coffee was seen as a product of convenience. With a small packet and hot water, a cup of coffee could be made nearly anywhere. That perception of quick and easy may have contributed to instant coffee's decline over time, however. It be- gan to be seen as an inferior option, one that was used only when freshly brewed coffee wasn't available. Then came Star- bucks Via. Nescafe Ready-To-Drink