By the time the $390 million has been spent down Mexico way, some time in 2013, and the production plant outside Toluca is boosted by 40 per cent, it won’t just be a sizable operation. It will be the biggest of its kind in the world.
But what could be so in demand as to to warrant such vast investment? Cars? Computers? How about instant coffee. Nestle, the plant’s owner, is perhaps all too aware that the recession is encouraging some consumers to cut back on more expensive coffees - typically made with pricier arabica beans, rather than the cheaper robusta beans (and even then sometimes the lower quality robusta) used for instant.
But surely instant coffee is on the wane? It may have seemed exotic when the first mass-produced version was launched, a century ago, with its sci-fi-ish promise of never having to wait for your morning brew again. But with many markets having undergone an education in the black stuff, seeing it pondered with all the sniffiness of haute cuisine, instant coffee must be passe by now.
And yet while a doppio macchiato may be a treat on the town, instant coffee still accounts for just over 80 per cent of the total coffee drunk at home in the UK. Its price and convenience - together with heavy marketing, which has gone some way to rescuing a tarnished image - still counts.
The question is: for how long? Latest analysis by market researchers Mintel reveals that, in the UK at least, instant coffee is predominantly drunk by 35 to 64-year-olds. The problem is that older people are ditching instant for health reasons or because they’ve left the workplace - defecting to a lower consumption of fresh ground coffee - and younger people consider the better quality coffee on which they were brought up to be the norm.
Sales growth in instant coffee is flat-lining and inexorably being overtaken by those of ground coffee - up 1.1 per cent last year to £133-million-worth in the UK - and coffee pods - up 1.8 per cent to £27 million (and that is with the obstacle of having to buy an expensive machine up front). For all the coffee snobbery, instant coffee remains the giant, but a sleeping one.
But perhaps not for long. The $21-billion global instant coffee market is increasingly coming up with ways of repackaging itself, some - such as Nestle’s 2 and 3-in-1 format, including milk and sugar too - seeing impressive growth, heightening the convenience but hardly its quality image; with others seeking to introduce what just a few years ago would have seemed oxymoronic: gourmet instant coffee.
After 20 years of development, last year the UK saw its moment in what has been touted as the biggest product launch in company history - of Via, Starbucks’ own blend of instant coffee; it has already sold $200-million-worth of it, hinting at the opportunity for the other major coffee chains to do the same.
Instant maybe the mainstay of coffee drinking, but it has an image problem now especially with the young
This year has seen big manufacturers take telling steps too: Kenco, for example, has launched Millicano, a combination of instant coffee and 15 per cent finely-milled beans which, it is claimed, produces a taste reminiscent of ground coffee. And Douwe Egberts has launched its “mood-based” Inspirations line of instants, three flavours inspired by Brazil, Kenya and the East.
“Consumers are in search of more premium instant coffee,” says Rob Craddock, Douwe Egberts UK’s general manager. “With the instants segment, it’s powdered, granulated and sachets where sales are in decline as consumers search for a smoother, better quality coffee - predominantly freeze-dried. Is ground and filter coffee a threat to instant? We think there are big differences between ground and instant consumers and, for reasons of convenience, we believe British consumers will always drink instant coffee. In fact, we predict healthy growth for instants in the future.”
Of course, convenience isn’t everything in a market that places increasing emphasis on coffee less as a commodity and more as a connoisseur choice. That is perhaps why Starbucks has underlined its quality message: that its instant is not only chemical-free and naturally roasted, but produced using a proprietary technology awaiting a US patent that, in effect, grinds real coffee beans down so fine as to make them soluble. It doesn’t come cheap either, compared with a jar of other brands’ coffee: around £5 for 12 servings.
Whether, in fact, instant coffee really is of lesser quality than ground is perhaps a moot point. Coffee powder is created by spray-drying, blasting hot air into coffee liquid, though careless spraying can create a burnt taste. The more expensive freezedrying sees the liquid poured in a very thin layer, which is frozen, crushed and dried.
Claims that processing in several tonnes at a time cannot possibly give as good a flavour as “artisan” coffee tends to get short shrift from the big brands. They argue that computer-controlled roasting is, in fact, more precise, if only because the commercial consequences of getting it wrong - several tonnes wasted - are that more painful. The production means consistency from cup to cup too - unlike with a barista or his machine.
“But’s it’s true that a lot of instant coffee has traditionally not been of the best quality - after all, there’s been no real innovation in the market since the 60s. However, with the rise of cafe culture There’s a consumer who knows what good coffee tastes like, whatever its format,” says Claire Waugh, director of marketing for Starbucks Via. “But that represents huge opportunity now, especially given the trend for ‘premiumisation’ and a greater quality awareness.”
“Instant may still be the mainstay of coffee drinking in the UK, but it has an image problem now, especially with younger consumers. Premium is the only way ahead - and the only category of instant doing well,” adds Lorraine Kelleher, consumer insights manager for Cafe Direct, who cites the premiums as having recorded a 26 per cent year-on-year increase in value terms.
Certainly, while the freeze-drying process still requires huge quantities to be efficient and the industrialisation of production means instant coffees may continue to be seen as less “natural”, Ms Kelleher predicts a rise in instants’ use of both better quality and single estate beans, as well as various ethical and environmental certifications (habitat loss and low proceeds to farmers being among the less positive sides of the coffee industry). The company’s own premium product, Macchu Picchu, launched in 2009, uses only arabica beans. “The market is now simply trying to catch up with the demand for quality,” Ms Kelleher adds.
Quite how quickly this transformation will roll out might be read only in the dregs of a coffee cup. In this global business, it pays to recall that there remain many markets in which even un-rehabilitated instant remains king. In China, for example, sales of instant coffee grew 13 per cent last year, according to Euromonitor, and this despite a deeply-ingrained habit of drinking tea. There instant coffee is still typically served in restaurants - what would amount to a faux pas in western Europe.
And affordability remains a factor - last year saw food giant Kraft relaunch its 70s favourite Mellow Birds coffee brand, this time aiming it at students and, the advertising’s strap-line unexpectedly suggested, playing on its lack of strength: ‘“Born to be mild. Coffee, but not as full on.” If that kind of pitch can work, maybe instant coffee is a long way from being written off.
By the time the $390 million has been spent down Mexico way, some time in 2013, and the production plant outside Toluca is boosted by 40 per cent, it won’t just be a sizable operation. It will be the biggest of its kind in the world.
