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ASIC 2014

Instant is Coffee, Too!

BY TIMOTHY J. CASTLE

Even the world’s most prominent instant coffee manufacturers admit that instant coffee will never be, can never be, as good as fresh brewed. To the extent that it could be a much better tasting product than it is today is an issue of type casting more than of the limitations of available technology. Instant coffee, in fact, could taste pretty good if packaged goods marketers and retailers were willing to take on the challenge of selling a higher quality instant coffee. That challenge, however, is a big one, especially in the U.S. market where instant coffee is viewed as a low quality product and looked down upon (with some justification) by coffee drinkers who actually brew their coffee from grounds. In fact, the more trouble they take to brew that coffee, say, by buying whole bean coffee and using a grinder at home, the more likely they are to look down upon the instant coffee user. Specialty coffee drinkers have been known to summarily describe someone by concluding, “What can I say, he drinks instant coffee.”

In this sense, the marketers have a point - there is a sort of built in Catch 22 to the challenge of marketing instant coffee in the U.S. If you are interested in instant coffee, it is assumed, you can’t possibly be interested in a good cup of coffee; therefore, the brand managers conclude, you won’t get a good cup of coffee, period. The tragedy (and it’s not too strong a word given the woeful state of oversupply throughout the world) encompassed here is that it is possible to produce an instant coffee that is better tasting than a lot of the roasted and ground product and, indeed, even better than some of the whole bean (and allegedly fresh roasted) coffees on the market. With the mindset established that instant coffee users aren’t interested in a better tasting coffee, marketers and retailers refuse to use a premium (or even slightly better) quality product for their brands and their product therefore compares unfavorably to virtually any roast and ground product. Consumption stays low and the self-fulfilling prophecy (the one that says that the instant coffee drinkers aren’t interested in better tasting coffee) is once again fulfilled. Instant coffee will never compete with regular coffee drinkers, it is product for the convenience-obsessed - but why should this group be generally relegated to the lowest quality level obtainable - a quality level that has certainly chased many an instant coffee to soft drinks, tea or perhaps, simply, No-Doz?

One champion for improving the quality of instant coffee is Dieter Adamsons, president of DEK (Deutsche Extrakt Kaffee GMBH) in Hamburg, Germany one of the world’s largest manufacturers of instant coffee. “We are in all the Aldi’s, a large chain of stores here in Europe, and we made this presentation to them in which we attributed their declining sales of instant to the poor quality of the product. We got them to feature a product that cost 30% more, an all Arabica blend. Sales were up roughly 100% and this gave us a 51% share of the German market with this one single product - a 100 gram jar that costs 30% more. People buy it because it is delicious, it is a 100% per cent Arabica blend, it costs four and a half marks and it is a very good jar of coffee.”

Adamsons is also president of the DEK distribution arm in the U.S., Fine Foods International (New York) L.P., which, despite its name is actually based in St. Louis, Missouri. As such, Adamsons has intimate knowledge of selling instant coffee in the U.S. and reports that he often can’t even get to square one - that of making the presentation. “One buyer for a large chain said to me as I walked into his office, ‘Before you sit down, Dieter, I don’t want to hear anything about your quality.’” Price, according to Adamsons is not so much the primary consideration when selling instant coffee in the U.S., it is the only one.

Nonetheless, Adamsons believes that the U.S. is ready for a better quality instant coffee. “What the specialty segment did for roast and ground it can do for instant. In the U.S., 40,000 tons of instant coffee is consumed annually. If 10% of the market is gourmet, we are looking at a potential number of 4,000 tons of additional instant in the U.S. that might be consumed if it tasted better.” One of the challenges, according to Adamsons, is that the preconceptions about instant are so strong that the company leading the charge to market a better quality instant coffee would have to have incredibly strong brand equity in order to overcome those preconceived notions about the product category itself. “I need a company with a really strong brand, they could afford to do it, if the consumer sees that a strong brand has an instant product, if you could get up to the top, someone at that level might be willing to make the decision - no mid-level marketer will take the chance on his or her job to give it a try - in the marketing, sales and quality control departments there is no one that dares. In the U.S. it is purely a price market, we have much better blend but the market in the U.S. it won’t take it on. The success of companies like Starbucks is based on the fact that the consumer likes a good cup of coffee but in the U.S. no one believes that this could extend to the instant category.”

It is perhaps telling that DEK offers a range of coffee qualities, the top of which is occupied by their premium line of single origin coffees under the Grandos brand and includes Grandos Gourmet, Grandos Costa Rica, Grandos Kenya, Grandos Colombia and Grandos Moca Rica. Even the idea of a single origin instant coffee is a bit perplexing to those of us steeped in the basics of traditional coffee marketing in the U.S. manner.

Adamsons noted that there will always be a market for the convenience that instant coffee provides and that increasing the quality of that product would almost certainly increase consumption. In Germany, Adamsons noted, a coffee market known to quality conscious, over 14,000 tons of instant are consumer every year. Perhaps more significantly, most users of instant coffee in Germany also drink coffee brewed from roast and ground coffee. “Of course,” Adamsons stated, “I enjoy a wonderful cup of coffee on the weekend brewed from freshly roasted and freshly ground beans. But during the week I use instant.” Perhaps, then, the key difference between the U.S. market and markets like Germany is that the German coffee drinker is regularly comparing his or her instant coffee product to the roast and ground version. For instant coffee market sellers there to have survived they have had to compare credibly, if not favorably to brewed coffee from roast and ground. This gets back to Adamsons’ experience with Aldi’s - the limited factor proved to be quality, not the fact that the instant coffee drinking segment was limited and static.



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