The global leader in flavorings, fragrances, functional ingredients and more developed the coffee and tea flavor collection to deliver fully indulgent, authentic tastes for dairy applications that expand beyond the known, and follow traditional flavors, and the trends for more unusual combinations.

“Consumers are looking for that premium experience in their food, which means pushing the boundaries on taste,” said Ian Thurston, senior category manager sweet at Symrise. “Our collection goes beyond what is expected in coffee and tea flavors, utilizing café favorites and unique tastes that pair perfectly with dairy indulgences.”

Flavors include hazelnut and amaretto, salted caramel, cold brew mocha, and hibiscus blossom chai latte in the coffee category; and matcha, chocolate, vanilla earl grey, and white peach for tea. Not only are these strong flavors meant to impart a pleasurable taste sensation, they also serve practical benefits, including masking any astringent or sour notes that are challenging for these dairy applications. The result is a collection of flavors that elevates dairy with the authentic taste of barista-brewed tea and coffee and opens the door to new, more indulgent applications for an eager consumer base.

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Top of list was how much companies have diversified their product offerings following shifts in consumer attitudes towards health and wellness. For example, Coca-cola delivered on its promise to become a ‘total beverage company’ through acquisitions across multiple industry sectors including dairy alternatives, energy and juice drinks and its acquisition of Costa Coffee for £3.9bn.

A topic on everyone’s minds, not just in the beverage market, is the battle against waste, particularly in packaging. The strength of consumer demand for sustainable packaging solutions is driven by industry collaboration and company innovation.

Over 100 brands signed up to the UK’s ‘Plastic Pact’, while PepsiCo joined Nestlé, Danone and Origin Materials in the NaturALL Bottle Alliance. When asked about the effect of a tax on plastic products, Davison found that 79% of global consumers indicated their shopping behavior would change.

In the UK, Government and industry have reflected this sentiment in a number of actions this year. The Government continues its consultation on a UK-wide deposit return scheme (DSR) for drinks containers. Starbucks introduced a ‘latte levy’ of 5p on single-use paper cups, Clipper Tea launched plastic-free teabags and consumers are increasingly more likely to go for a reusable cup for their coffee on the go.

Functional beverages continue to remain popular, with the perceived health benefits of cannabidiol (CBD) driving a surge of interest amongst young consumers in 2018.  Constellation Brands and Molson Coors made significant investments in August and both Coca-Cola and PepsiCo, while not actively exploring the segment, are keeping a close eye on its developments.

Interest in plant-based drinks has grown markedly in 2018, from non-vegetarians and vegetarians/vegans alike. Davison says market volumes are set to increase by 5% in 2018 after key developments from Starbucks with its launch of its Protein Blended Cold Brew, together with launches from PepsiCo and Coca-cola’s AdeZ and Innocent brands.

GlobalData’s report, ‘‘TrendSights Overview: Individualism & Expression – Exploring the impact the Individualism & Expression mega-trend has on innovation across the FMCG space, 2018”, revealed that consumers are looking for more bespoke, individual experiences, with 61% of global consumers expressing an interest in creating their own products.

With over 170,000 ways to customize drinks in Starbucks stores alone, this isn’t a trend that will disappear any time soon. This concept could be widely adopted by ready-to-drink (RTD) formats, providing consumers with more choice by offering customization with convenience, such as tailoring the flavour and sugar content themselves by using a syrup-based sweetener stored in the cap as in Kolibri Drinks’ range of botanical beverages.

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With health-conscious consumers representing a major segment of the beverage market, the industry continues to face a demand for additive-free, nutritious drinks. Specialty teas, coffees and other more natural drinks are growing exponentially in popularity as consumers gain awareness and take stake in the ingredients in their beverages. In this market climate, consumers are willing to pay a premium for beverages they feel will enhance or preserve their health.

This demand presents opportunities for smaller specialty beverage brands with foundations of natural ingredients and home-grown recipes to blossom. As smaller companies find their footing, co-packing can help take business from a local operation to a household name, but entering a co-packing partnership involves so much more than simply handing over the production reins. As tea and coffee manufacturers select a co-packer, it’s critical to consider all of the elements that may come into play, from capacity to reputation.

Benefits of Co-Packing

While it may be difficult for a beverage brand to relinquish part of the manufacturing process, forming a relationship with a co-packer can offer significant time-saving and cost-saving benefits, as well as greater flexibility. Signing on a co-packer means a brand can allocate more resources and funding to building brand presence and marketing initiatives. The decision to hand off production also eliminates the substantial financial burden required for purchasing equipment and the day-to-day risks associated with managing a facility, such as product quality, equipment maintenance and worker safety.

Co-packing also offers the perk of an easier transition if and when the decision is ever made to sell the brand to a large corporation. When selling the business is a brand’s ultimate goal, there is no need to take on in-house production. Larger corporations already have the resources and capabilities in place to handle the manufacturing of many products. Still, even if selling is not in a brand’s future, enlisting a co-packer can be an excellent way to gradually move from initial start-up growth toward in-house production. Co-packing can assist with expanding reach until a brand’s presence becomes more robust.

Market Shifts Impact Co-Packing

The rise of natural products in the beverage market is causing a shake-up in co-packing, according to PMMI’s 2018 Beverage Trends in Packaging and Processing Operations Report. Consumers demand tea made from actual tea leaves as opposed to concentrate, and these formulas require new equipment, different processes and more space that even the major co-packing players cannot always accommodate. As a result, co-packers receive a large portion of new beverage tea production, leading to not only new lines but entirely new facilities that operate around this growing need and can scale up as demand increases. Equipment for this type of tea, as well as for cold brew coffee and retort beverages, currently make up the largest demand for beverage production.

Selecting the Right Size 

Once a brand decides to source a co-packer, there are multiple aspects to look out for before signing a contract. These companies should focus on selecting a co-packer that matches the size of the brand, ensuring the co-packer is attentive to its needs without being too costly. Hunting for the perfect-sized co-packer can be tricky. Burgeoning brands may want to avoid larger co-packers if those companies have a track record of cutting smaller customers out of production when juggling higher-volume orders. Larger co-packers can also come with minimum requirements for runs that are above what a small- to mid-sized tea or coffee brands require. Smaller beverage companies also have difficulties getting good pricing on raw materials and packaging materials, as well as placement in the production schedule, according to PMMI. Ideally, a brand will select a co-packer similar in size and the two entities can grow together.

It is also important for brands to consider the characteristics of their product and required manufacturing processes. Before beginning their search, brands must establish a list of demands, whether it be just manufacturing or also sourcing ingredients and handling other steps. It’s critical for brands to ensure a co-packer is properly equipped to handle their needs, so touring the facility and understanding a co-packer’s current client roster are beneficial steps. Additionally, it’s worth assessing whether a potential co-packing partner is ready to handle busy seasons.

Identifying Special Product Needs

Before entering a contract, it’s imperative to lay out any additional needs or specifications of the product that the co-packer will be manufacturing. It’s paramount that co-packers be open to adding new SKUs to production and that their lines can accommodate this changeover. Certain products also may require special certification or capabilities. Tea made from real tea leaves, for example, requires specific extraction, agitation and steeping techniques. As additive-free beverages continue to gain popularity, filling lines must be adapted to the unique behaviours of these formulas, and not all co-packers will be prepared to meet these requirements.

Co-packers may also lack the packaging format a brand desires. According to PMMI, some companies have had to source co-packers outside the United States to get the packaging required for their products. This is a current issue for retort packaging, which many coffee and tea brands are utilizing for their products.

Transparency and Compatibility 

Ensuring a successful contract with a co-packer relies heavily on how compatible the co-packer is with the brand. Co-packers that make for easy partners are those that offer collaborative environments and are transparent with their brands about any issues or changes in production. Often, the best way to understand how a co-packer operates in a partnership is to examine its previous and existing clients and find out what their opinions are of the co-packer.

A co-packer’s quality is also evident in its response to a crisis. If a co-packer ever had a recall situation, the way it handled this issue can be revealing of its overall attitudes and commitment to product quality and consumer safety. It’s important to research these cases and to also check in on how a co-packer handles various procedures in general in order to understand its sanitary standards, quality testing methods and inspection schedules.

Pick a Co-Packer for the Future

Brands with successful co-packing partnerships have chosen companies that support their long-term growth and are able to adapt to new ideas and changing needs. Often co-packers will have research and development teams in house and can provide insight on packaging trends, graphics expertise and cost-saving methods that brands can utilize in production. Choosing a co-packer that holds these capabilities and is actively anticipating movement in the market can help a brand differentiate.

Ultimately, brands should go with their gut. If a co-packer checks all the boxes for capacity and capabilities and has a solid reputation, entering a partnership has the potential to grow a brand far beyond the collaborator’s imagination.

Sean Riley is senior director, media and industry communications, PMMI, The Association for Packaging and Processing Technologies. Tea and coffee companies seeking expert insight into co-packing and other manufacturing needs can find solutions at the second ProFood Tech, which will be held in Chicago, Illinois, 26-28 March 2019. The show will be organized by PMMI, which produces Pack Expo; Koelnmesse, which runs Anuga; and the International Dairy Foods Association (IDFA). For information on ProFood Tech, visit profoodtech.com.

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With population of 80 million and an average per capita tea consumption of 1.5 kg, Iran is the world’s fifth biggest tea importer, estimations of the Ministry of Agricultural Jihad showed. The overall domestic demand is estimated at 110,000 metric tonnes (mt) of the total worth up to USD $600 million, of which less than 25,000 mt is covered by the national tea industry, according to estimations of the Iran Tea Organization, an industrial association that unites tea manufacturers and importers in Iran.

Mohammad Rouzbehan, head of the Iran Tea Organization (ITO) believes that the Iranian fiscal year that started 21 March 2016 and ended 20 March 2017 was probably the best one for the domestic tea industry in the past decade. The country produced 139,000 mt of fresh tea leaves worth IRN 2.34 trillion (USD $62 million), of which processing factories manufactured 31,200 mt of dried tea, according to a statement posted on the ITO’s website. This was the highest figure since 2009-10 season, when the original international sanctions imposed against Iran began taking their toll.

Preliminary forecasts say that this year the overall production of fresh tea leaves and dried tea would not exceed 120,000 mt and 25,000 mt, respectively, primarily due to the poor weather conditions in the main tea-growing provinces of the country during the first months of the year. Nevertheless, this is almost two times higher, as compared to the record lows in production achieved in 2012-13, when the economic situation in the country was especially tough.

The Iranian tea industry is regulated to a great extent by the government. Almost all fresh tea leaves are purchased by a special government agency at a guaranteed price. With ups and downs in production costs and the offered price, which changes every year, domestic tea producers have had hard times, but in 2016-17 and 2017-18 the industry also saw a record-breaking profitability, the research conducted by ITO showed.

Impact of the Original Sanctions

The original sanctions against Iran imposed by the United Nations Security Council in 2006 have brought turmoil to the domestic tea market, according to the ITO.

“This was not only about the general pressure on the domestic economy, but primarily about the restrictions on international banking transactions. The exchange rate of the national currency slumped, but that was not too important, because all banks in the republic were disconnected from the SWIFT system, so no payments for imported tea could be made,” explained Mohamed Arzani, a member of ITO. SWIFT – The Society for Worldwide Interbank Financial Telecommunication – is an international network that enables banks to send and receive information about transactions. Iran was disconnected from SWIFT when the original sanctions were introduced, and this resulted in the local banks being cut off from the global banking system. This means that no payments for the imported products could be made and no payment for exported products could be received.

“As the result, we experienced severe problems in the domestic tea market, and a strong upturn in the tea smuggling into the country,” Arzani said. “The price for some imported products, like tea, for several years was so high, that it was not affordable for the middle class.” The reinstated sanctions are due to come into effect in a few months and although the production performance in the industry is different from 2016, the impact on the market is still expected to be strong.

In a statement released in early August, the Iran Customs Administration announced that the export of tea as well as some paper, dairy products and tissue were banned in packages weighing more than 500g. The statement said that the restrictions were imposed “until further notice” and the ultimate goal of that measure was “of balancing the domestic market.”

Iran exports only small batches of tea to neighbouring countries as well as to Russia. The overall supplies reach only 10 mt per month, but even these volumes could be crucial, when the domestic market is on the verge of an acute shortage. The export restrictions were maintained for slightly longer than a month, as in early September Mostafa Salari, governor of the Gilan province, announced that tea companies managed to urge the national tea industry to withdraw those limitations.

Despite this, the threat that the new sanctions will push the country to a food crisis similar to the one that took place in 2012, when the strong rise in prices for some products like poultry sparked hungry riots in Tehran and several other major cities, is still quite real. Noting this, some government officials say that the country must become self-sufficient with tea.

“Iran has 50 million ha [hectares] of agricultural land, of which only 20 million ha is actually used. We have good climate conditions and great potential to increase production of the main agricultural products,” commented Mehdi Taphreshi, head of the food department agency of Iran. In theory, Iran could increase tea production by 20 percent per year during the coming five years, in order to eventually abandon tea import completely, Taphreshi forecast. This, however, would take huge state aid and private investments.

Importers Express Concerns

The sanctions against Iran could also affect tea production in India, Sri Lanka and Kenya – the biggest tea suppliers to the country. These three countries jointly export nearly 50,000 mt to 55,000 mt of tea to Iran per year, which constitutes 95 percent of legal tea imports in Iran. All importers confirmed they were concerned about the renewal of the international sanctions.

“We may not be able to export tea to that [Iranian] market because of the sanctions. Payments for tea sold to Iranian companies will be difficult as the dollar is the dominant currency of trade,” Alfred Busolo, director general for the Agriculture and Food Authority of Kenya told the local news outlet Daily Nation.

In the meantime, the Indian Tea Association was seeking to conclude a deal with the Iranian government “on a special exchange rate for tea” after 4 November, when the US sanctions would come into effect.

The “special exchange rate” when some products are purchased avoiding transactions in dollars under financial terms attractive for importers were offered by the Iranian government for some essential goods, like pharmaceuticals. It is not clear, however, whether the same approach could be used with regard to tea imports.

The Central Bank of Sri Lanka is holding a series of round-table discussions on selling Ceylon tea if Iran would be affected by further sanctions, the Central Bank said in a statement published on its website in August. At the same time, Sri Lanka offered to export tea to Iran in exchange to the USD $250 million debt for oil supplies owned to the country by the national Ceylon Petroleum Corporation. The proposal reportedly was rejected by Iran, but the same concerns – about how the trade could be continued after 4 November – are being voiced.

Coffeehouses Jeopardized

For several centuries in the past, coffee was more popular than tea in Iran. Those times have long gone, and now tea is the national drink in the Islamic Republic. Nevertheless, coffee imports to the country increased almost ten times during the past decade, from only $600,000 in 2006 to $8.5 million in 2017, official statistical data indicates.

Iran imports around 3,000 mt of coffee per year, primarily from the United Arab Emirates, Vietnam, India, Indonesia, Turkey and Italy. Whilst most citizens drink tea at home, coffee is primarily served in coffee shops that are rapidly emerging in all major cities of the country. There were 300 coffee shops in Tehran alone last year. Coffee shops enjoy growing popularity, especially among the youth to some extent because in the country there are no bars, as alcohol is strictly prohibited.

Over the past few months, coffee shops and coffee importers were expressing concerns that the new sanctions may put an end to what is called a “coffee boom” in Iran. In April 2018 for the first time in its history, Iran imported more than $1 million of coffee in one month as importers started purchasing coffee in advance. It remains to be seen how the coffee industry will be able to cope with the challenges that are about to arise after 4 November.

Vladislav Vorotnikov is a Moscow, Russia-based journalist specializing in the food industry of Russia, Ukraine and other countries in the post-Soviet space. He may be reached at: Vorotnikov.vlsl@gmail.com.

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The RTD coffee category has exploded recently, with canned espressos and bottled lattes lining the shelves as consumers prioritise convenience, but are still looking for the same taste and experience they would get from a barista-made beverage.

Try as they might, these drinks often fail to replicate the frothy top created in a cafe, however Nescafé claim its Cold Whipped Lattes achieve the sought-after effect.

Available in coffee and french vanilla flavour, it uses a ‘unique coffee production method’ to deliver the frothy latte expected from a cafe. The label recommends shaking the bottle about 10 times to get the desired texture.

Nescafé is also jumping on the functional beverage category with the Coffee Protein Smoothies, which are marketed as a meal replacement option available in banana and mocha varieties.

The smoothies are dairy-free and each bottle contains 15g of plant-based protein with oats, almond milk and almond butter, meaning they are available to a wider consumer market.

Both the Cold Whipped Lattes and Coffee Protein Smoothies launch on January 1 2019.

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Protein Blended Cold Brew is made with slow-steeped Starbucks Cold Brew, alternative milk and plant-based proteins for a non-dairy beverage that’s a good source of protein. This beverage is inspired by the popularity of cold brew coffee and a growing interest in plant-based proteins. Starbucks Cold Brew continues to be a favourite since joining the cold coffee menu in 2015. Additions to this platform include Nitro DRAFT Cold Brew, Cold Foam Cold Brew and Protein Blended Cold Brew.

Starbucks baristas craft the Almond Protein Blended Cold Brew beverage by blending Starbucks Cold Brew with almond milk, plant-based protein, almond butter, Banana Date Fruit Blend and ice. A grande Almond Protein Blended Cold Brew has 270 calories, 12 grams of plant-based protein and retails for approximately USD $5.95.

Starbucks baristas craft the Cacao Protein Blended Cold Brew beverage by blending Starbucks Cold Brew with coconut milk, plant-based protein, cacao powder, Banana Date Fruit Blend and ice. Cacao Protein Blended Cold Brew has 10 grams of plant-based protein.

With more than 170,000 ways to customize beverages at Starbucks stores, customers can create a favourite drink that fits their lifestyle, even with the new Protein Blended Cold Brews (additional cost may apply), such as adding a whole banana in place of Banana Date Fruit Blend, adding an extra packet of plant-based protein to double the amount in the cup, adding an extra shot or two of Starbucks Espresso Roast, or even adding a shot of decaf Starbucks Espresso Roast in place of Starbucks Cold Brew.

Protein Blended Cold Brew is available while supplies last at Starbucks cafés nationwide. For more information, visit: www.starbucks.com.

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Cold brew is a brewing method, not a singular final product. The New York, New York-based National Coffee Association’s (NCA) Cold Brew Toolkit draft, released this spring for industry comment, explains that “cold brew coffee is made with roasted and ground coffee. In most cases, the brewing process trades time for temperature; instead of brewing with very hot water over a very quick duration, cold brewing typically uses ambient or cooler water and extended periods of time to extract an optimal amount of flavour compounds and solids from the beans.”

Establishing the Category

The cold brew category is growing. Because of its versatility as a ready-to-drink (RTD) product, cold brew increases opportunities for coffee occasions throughout the day. According to Sarah Snudden of Keurig Dr Pepper, based in Waterbury, Vermont, a presenter at the NCA’s webinar, The Business of Cold Brew,

“Cold brew is one of the ways coffee is becoming more premium, convenient and refreshment driven.”

Matthew Barry, beverages industry analyst for London, England-based global market intelligence firm, Euromonitor International, said that cold brew’s growth in RTD form “does not seem to be taking consumers away from mainstream brands like [Starbucks] Frappuccinos, which are still performing well. The growth of RTD cold brew represents new consumers entering the category. Cold brew growth should be thought of as complementary to existing RTD products rather than a major challenge to them.”

Cold brew is here to stay and is a major avenue for attracting and retaining lifelong coffee drinkers. Now, the challenge is to stay ahead of potential risks and keep cold brew safe for consumers.

New Safety Considerations

“Different from roasted coffee, cold brew is a liquid,” said Mark Corey, the NCA’s director of scientific and government affairs. “Increased water activity and moisture create conditions for pathogens to grow. Brewed coffee has a low-acid pH, which has inherent food safety risks to consider in a comprehensive food safety plan, similar to other low-acid foods like canned soup or tuna.”

Corey explained that cold brew manufacturers must “understand that pH must be closely controlled to prevent risk of Clostridium botulinum, a deadly pathogen in hermetically sealed containers.” Hazards that can harm a consumer fall into three categories: biological (yeast, mold), physical (foreign objects) and chemical (lead, pesticide residue, allergens). Risk is the proximity of a hazard and the likelihood that it will affect the manufacturing process.

Controlling the Risks

The US Food and Drug Administration’s (FDA) Food Safety Modernization Act (FSMA) requires that all food manufacturers write a Food Safety Plan identifying how a facility controls inherent manufacturing risks.

Corey suggests thinking of risk control as a pyramid. “The baseline is good manufacturing practices (GMPs), next is identifying hazard analysis critical control points (HACCP), and the top level is a Food Safety Management System that builds confidence into your process.” Confident processing means that statistical and scientific knowledge is built into the process to reduce the need for testing every time. “There is less risk, and the risk is controlled appropriately,” he said. “You want to empower your employees with knowledge so safe processing becomes innate and intuitive.”

FSMA’s Hazard Analysis and Risk-Based Preventative Controls (HARPC) rule requires a facility’s food safety plan to first identify hazards and then establish preventative controls for the risks those hazards pose.

The NCA’s Cold Brew Toolkit recommends that cold brewers “complete challenge studies, which involve testing the ability of unwanted micro-organisms to grow in a product in use and abuse conditions. Apply the Process Approach: Plan, Do, Check, Act.”

An Array of Packing Options

Different packing materials have different food safety requirements. Additives like dairy and sweeteners also change the safety measures required for different RTD cold brew products.

Emeryville, California-based Peet’s Coffee manufactures a variety of cold brew products, all of which are pasteurized as a kill step to guarantee food safety and freshness. “Peet’s Cold Brew line has two dairy-free beverages. The Baridi Black is pasteurized and then hot filled into the glass bottle still at pasteurization temperature to meet federal processing requirements for low acid foods in hermetically sealed containers,” commented Gretchen Koch, director of marketing and innovation for Peet’s Coldcraft division. “For our canned Nitro Cold Brew, we High Temperature Short Time (HTST) pasteurize the coffee first and then fill the cans through sterilized lines. The coffee is nitrogenated in line just prior to capping and seaming of the can.” These processes preserve the taste and improve shelf life in refrigerated distribution.

Dairy and dairy-alternative flavours in the Peet’s Cold Brew line are sold in PET bottles, “pasteurized using Ultra High Temperature (UHT) to minimize the time of the heat treatment and maintain the longest shelf life in a refrigerated supply chain,” explained Koch. “Both methods provide food-safety benefits but still require the product to remain refrigerated throughout the supply chain.”

Peet’s True Iced Espresso is manufactured with a retort process that renders the canned espresso commercially sterile and capable of being distributed and sold at room temperature. “We did this to better utilize our current Peet’s Coffee ambient temperature delivery routes for coffee beans, so we can reach a broader national distribution quickly and cost effectively.”

Cold Chain for Safety and Quality

Shelf-stable products have certain distribution advantages, but maintaining the cold chain, even for pasteurized products, offers other advantages in final taste. Setting up a new cold distribution network is part of the challenge for a coffee company adding cold brew manufacturing to its portfolio.

“[Our] company is 109 years old, and several years ago we started with a new RTD product,” noted David Mendez Jr, vice president of Newark, New Jersey’s WB Law Coffee, about building a nitro cold brew facility from the ground up. “We know coffee but refrigerated trucks and refrigerated distribution were completely new to us.” Law’s Ironbound Cold Brew and private label products for wholesale B2B are packed as bag-in-a-box kegs, made with an in-line nitrogen system.

WB Law has extensively trained its distribution team in the importance of maintaining the cold chain. “Cold brew has to be delivered directly into a refrigerated space – it can’t be left on a hot loading dock,” commented Mendez.

In St Petersburg, Florida, Made Coffee also roasts, brews and packages a canned cold brew. It will soon produce a concentrate for a retorted product line. “We are vertically integrated under one roof, so we are able to control our processes,” shared Made Coffee founder Mike Rideout. Made is set to launch its Cold Brew Con Leche in September.

“Made’s in-house coffees are cold chain products brewed and packaged at temp and distributed through the dairy channel in refrigerated trucks to local grocery stores,” explained Rideout. “We are big on testing our products. We pull random samples during production for full-panel testing on listeria, yeast, mold, and botulism. It’s our extra step in quality control, some consumers want to see that we have documentation and testing.”

Beverage Industry Cross Pollination

When Made Coffee began, there was limited information available in the coffee industry about how to design a safe facility for canning cold brew. “Ultimately, it was the craft beer community that gave us our first idea what to do. We flew to craft beer trade shows and attended many seminars.” Made also consulted with equipment manufacturers while writing its facility’s food safety plan and with other food service industry professionals during construction.

WB Law Coffee sought recommendations on kegged products from fountain soda companies and consulted architects with expertise in building FDA-approved clean room facilities prior to constructing their plant, but Mendez also found a lack of cold brew-specific resources. “There is a Gold Cup standard for desired TDS [Total Dissolved Solids] when brewing hot coffee. Will that be established for cold brew? Where is the collaboration to keep cold brew safe?”

Space to Collaborate

According to the NCA’s Corey, collaboration is just beginning and will determine the next chapter of cold brew’s evolution, particularly as the category maintains consumer confidence in food safety. “With the enactment of FSMA and cold brew’s rapid changes, there is so much new product innovation, questions from throughout the supply chain, even consumers making cold brew at home. This is a great opportunity to bring the industry together to address these concerns,” he said.

The Cold Brew Toolkit was drafted to reflect those questions and concerns, and the next step is a workshop hosted by the NCA this fall to offer a Preventative Controls Qualified Individual (PCQI) certification with content specific to the coffee industry, such as draft model food safety plans for manufacturing roasted and ground, flavoured, decaf, and instant/soluble coffee.

“You don’t have to be a big brand to win in this space. The ones who do best are focusing on specific consumer needs,” noted Snudden in the NCA’s webinar. If smaller, newer brands are to continue to meet consumers’ demands, then the cold brew conversation, especially as it relates to food safety, must continue to share information and provide education to new brands getting into the space. “We’re ready to share what we’ve learned,” said Made’s Rideout. “Now is the time to collaborate and help build the proper procedures for this category.”

Rachel Northrop has been covering coffee for T&CTJ since 2012, while she lived in Latin America’s coffee lands writing When Coffee Speaks. She is based in Brooklyn, NY. She may be reached at northrop.rachel@gmail.com.

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According to research from the Mintel Global New Products Database (GNPD), in 2017 approximately one in five (19%) global new coffee launches was iced, ready-to-drink (RTD), up from 16% in 2015.

“Chilled” coffee is surging in the United States, growing at least 10% annually between 2013-17, per the London-based Mintel’s’ report. In fact, more than half (56%) of new RTD coffee launches in the US were cold brew in 2017, up from 38% the prior year. Further evidencing RTD coffee’s popularity, Rabobank figures also show that RTD coffee has had significant growth in the US with 14% CAGR for last 5 years in the US (4% globally).

Globally, Japan leads in RTD coffee innovation, representing 18% of all iced RTD coffee launches in 2017. The US follows, accounting for 13% of these launches in 2017, up from 10% in 2016. RTD coffee is also building momentum in China; Mintel projects annual growth of around 20% in the next five years as RTD grabs more share from instant coffee.

Europe has been slower to follow the iced coffee boom, but Mintel forecasts strong potential among younger drinkers — Generation Z and young millennial consumers. Two-thirds (66%) of UK 18-24-year-old coffee drinkers think chilled coffee is a good alternative to sugary drinks, compared with a quarter (26%) of drinkers aged 45+. This mimics what is happening in the US where younger drinkers, who are less ingrained in the habit of drinking hot coffee, have driven RTD coffee growth. About 68% of US 18-34-year-olds currently consume single-serve RTD coffee compared with 43% of all adults.

The National Coffee Association’s (NCA) 2018 National Consumer Drinking Trends (NCDT) Study further segments younger drinkers showing that 20% of 13-18 year olds, 16% 19-24 year olds and 10% of 25-34 purchased RTD coffee in the past day.

But not everyone is jumping on the RTD coffee “bandwagon.” Despite its growing global appeal, Europeans remain resistant to the lure of iced coffee. While Spanish consumers are most likely to have tried iced/chilled coffee in Europe, Mintel finds that only 10% have actually purchased it either from a store or online. Meanwhile, in ‘coffee-purist’ countries like France and Italy, purchase of iced/chilled coffee among all adults is just 3% and 4%, respectively.

Jonny Forsyth, associate director, Mintel Food & Drink, in the report, said, “Global investment in chilled RTD coffee has increased as producers target a younger drinker who enjoys the format’s taste, refreshment and indulgence.” He noted that RTD coffee is proving a better format for innovation than other hot-serve formats and, “in 2017, manufacturers continued to push the format’s boundaries. Cold brew is helping to premiumise the RTD category and is growing fast in the US, albeit less so in other markets.”

And while new product launches of iced coffee have reached record highs globally, Forsyth said that in the US cold brew has emerged as a vibrant growth segment of chilled coffee and could prove to be the tipping point for take-up of cold coffee in Europe. “The key to success lies with the younger generation who have been introduced to chilled coffee in branded coffee shops, which are growing quickly in Europe.”

However, as we are learning, younger consumers – Generation Z specifically – respond to advertising and marketing differently so those companies with RTD coffee lines (or those looking to launch RTD coffee products) to need to understand how to properly target them or risk losing current and potential customers. Sustainability, transparency, traceability, uniqueness and a variety of flavours and choices (such as non-dairy options) appeal to the younger demographic, so it’s essential to keep these factors top of mind when entering the RTD coffee market.

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Organized in partnership with global coffee and tea company Jacobs Douwe Egberts (JDE) and agricultural solutions company Syngenta, the three-year, USD $1 million project will train farmers in climate change resilience techniques, agro-chemical management, and work safety.

“LDC has been present in Vietnam since 1998, with coffee merchandising, processing and agronomy as our main operating activities. This project reaffirms our commitment to increasing Vietnam’s production of sustainably grown coffee, while improving long-term profitability for the farmers who grow it,” says Hidde Eikelboom, LDC Vietnam CEO and country head of coffee.

Duoc Nguyen, LDC Vietnam coffee sustainability manager, adds, “Alongside our like-minded project partners, JDE and Syngenta, we will work with Vietnamese coffee farmers to meet growing industry demand for product traceability and food safety, while also ensuring farmer welfare.”

“This project will provide coffee farmers in the Dak Lak region with the practical skills to grow coffee, using inputs such as crop protection products more efficiently. This is critical for the coffee value chain,” explains Cindy Lim, head of sustainable productivity, Syngenta Asia Pacific. “Farmers need to increase their production sustainably, supplying safe and affordable beans, while minimizing their environmental impact.”

Do Ngoc Sy, JDE’s sustainability manager for Asia Pacific, says “JDE recognizes the various environmental and social issues that go with coffee cultivation. As part of our Responsible Sourcing Program, we engage openly with direct suppliers such as LDC to tackle these sustainability challenges. Our joint project with LDC and Syngenta will focus on the improper use of agro-chemicals, unsafe working conditions and climate change. We recognize that the complexity of these issues may take years and the commitment of multiple stakeholders to address.”

A key aspect of the project will be the development of 30 demonstration plots, each between one and two hectares, where new techniques for soil and fertilizer management, the use of crop protection products, intercropping and water irrigation systems will be implemented. The most successful techniques will then be replicated across 300 hectares of coffee farms. To promote a more responsible use of crop protection products and fertilizers, the project will test the soil and take expert advice on the optimal quantity of nutrients for coffee farming. A list of banned and dangerous chemical substances will be compiled for each province, along with a recommended list of fertilizers and crop protection products, which farmers will be trained to access and apply.

Farmers will also learn aspects of work safety such as environmental and crop risk assessment, and the use of standard safety equipment. Personal protective equipment (PPE) will be supplied to farmers and spraying workers.

To build local capacity in farm management, agro-chemical management and work safety, various technical tours, seminars and workshops, as well as Training of Trainers (TOT) and Farmer Field School (FFS) sessions, will be organized for 3,000 farmers, 300 agriculture students, 44 farmer group leaders and four agronomists within the targeted communities.

This project follows a similar initiative by the three companies in 2016, which reached out to another 3,000 farmers within Vietnam’s Central Highlands region. This brings the total number of beneficiary farmers to 6,000 for both projects combined.

Louis Dreyfus Company is a merchant and processor of agricultural goods. LDC’s activities span the entire value chain from farm to fork, across a broad range of business lines (platforms). Since 1851 our portfolio has grown to include oilseeds, grains, freight, global markets, coffee, cotton, sugar, rice, dairy and juice. Structured as a matrix organization of 6 geographical regions and 10 platforms, LDC is active in over 100 countries and employs approximately 19,000 people globally. For more information, visit www.ldc.com.

Jacobs Douwe Egberts is a global coffee and tea company, serving consumers in more than 140 countries through iconic brands including: Jacobs, Tassimo, Moccona, Senseo, L’OR, Douwe Egberts, Super, Kenco, Pilao and Gevalia. Learn more at www.jacobsdouweegberts.com.

Syngenta is an agriculture company helping to improve global food security by enabling millions of farmers to make better use of available resources. Through scientific and innovative crop solutions, Syngenta’s 28,000 people in over 90 countries are working to transform how crops are grown. To learn more visit: www.syngenta.com and www.goodgrowthplan.com.

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The Golden Latte is a subtly sweet, creamy beverage that uses shiitake mushrooms, which surprisingly provides beauty and skin health benefits, as well as turmeric, known for its antioxidant properties. The Golden Latte’s functional benefits help to foster beauty from within and give skin a natural glow. Additional ingredients include the adaptogenic herb, tulsi, warming ginger, and a pinch of black pepper to support turmeric’s skin-healing properties.

Four Sigmatic’s Chai Latte is a twist on the classic chai that provides a calming, caffeine-free blend of ingredients to support gut health. It features reishi mushrooms to calm, turkey tail mushroom for gut support and carminative spices to aid in digestion and help support immune function. The Chai Latte is a soothing blend that was created to support occasional stress and overall health.

“We’re always asked about the functional benefits of Four Sigmatic’s products, so we’re excited to launch products that specifically tackle both beauty and gut health,” says founder and president of Four Sigmatic, Tero Isokauppila, Los Angeles, California. “By utilizing unexpected yet powerful mushroom superfoods, we can deliver amazing beauty benefits and provide a way for people to literally eat their way to glowing skin.”

The Golden and Chai Lattes are both dairy free and plant-based with only one gram of coconut palm sugar. All of Four Sigmatic’s products are made from a simple list of vegan and Paleo-friendly ingredients without any fillers. They are sold in 55 countries, including national retailers in the US, such as Whole Foods and Sprouts and other natural retailers, as well as online at FourSigmatic.com.

Four Sigmatic is a superfood company founded by a group of Finnish “Funguys.” They aim to popularize functional mushrooms and adaptogens by incorporating them in mainstream products like coffee, tea and cacao. They achieve this by using mushrooms for immunity and gut health, nootropics for the brain and productivity, superfoods for glowing skin and anti-aging and adaptogens to fight stressors and lethargy. The company was started in 2012 and launched its products in the US in 2015.

For more information about the new products or Four Sigmatic, visit: www.foursigmatic.com.

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Coffee brands are rapidly consolidating, with moves in 2018 that are reshaping the coffee landscape from roasting through consumer product distribution. Rabobank senior analyst for beverages, James Watson, sees the current market as a buy or be bought environment, with significant pressure on companies with 1-3 percent retail share. “If a [potential buyer] was interested and you’re not selling now, you will miss the boat. With only so many strategic buyers, there is pressure to sell early,” commented Watson.

There is also pressure on smaller roasters and brands from their competition. Watson noted, “If you’re a small player, it’s a fragmented market and competition is your size. They get bought, and you’ll be surrounded by giants.”

Farmer Brothers has been actively acquiring companies since 2016, first with China Mist tea, followed by West Coast Coffee and Boyd’s Coffee in 2017. “There’s a degree of investment needed to level up,” said David Robson, Farmer Brothers chief financial officer. “It’s harder for smaller players to compete, either they put in a lot more investment or be purchased.”

Savvy consumers are more educated to the nuances of coffee’s attributes, like flavours from origin-specific terroir, and to the variety of ways coffee can be prepared hot or cold at home or in a retail setting. They expect choice and quality. “Several years ago we leaned into the expectation that the market will get bigger and more sophisticated,” Robson commented. Farmer Brothers’ new headquarters in Northlake, Texas doubles its capacity to 200 million pounds of coffee per year.

Efficiency of scale is one of the main benefits large buyers offer to the smaller brands they acquire.

“What we bring to the table from an efficiency standpoint is this large capacity,” said Robson. “Acquisitions like Boyd’s work really well because we both have large national accounts, they have a direct to store delivery model like we do, and this continues cost effectiveness.”

Coffee experienced its artisan craft revolution in what is often described as “third wave” and “fourth wave” trends towards single origin offerings, transparent traceability, agricultural changes in varietal cultivation and processing, and a hands-on approach to roasting, packing and brewing in small, custom batches. For this craft segment to grow and serve the customers it draws, smaller players can take advantage of the cost-effective structures already in place by larger companies. This consolidation pathway closely mimics the transformation of craft beer’s recent trajectory.

Following Beer’s Path

“We see the beer segment as an example because it is consolidated so thoroughly,” noted Watson. He also highlighted the overlap between Anheuser-Busch InBev (ABI), the largest global beer brewing portfolio, and JAB Holding Company, one of the largest global coffee brand owners. In the last several years, and in just the United States, Luxembourg-based JAB has acquired Peet’s Coffee (Emeryville, California), Caribou Coffee (Minneapolis, Minnesota), Stumptown Coffee (Portland, Oregon), Intelligentsia Coffee (Chicago, Illinois), Keurig Green Mountain (Waterbury, Vermont) and Dr Pepper Snapple (Plano, Texas).

“ABI partners are also partners in JAB. Money is coming into JAB from ABI, and their philosophies are very similar. The comparison between coffee and beer is the ability to create value by consolidation,” said Watson.

Dodie Butler, director of mergers and acquisitions for Farmer Brothers, echoes this. “Coffee is similar to beer in that craft brands are regional, and they can be consolidated by larger players quickly.” Acquisition also includes the added value of expertise. “We found West Coast Coffee’s go-to-market model attractive. It’s synergistic and we can learn from them.”

RTD Coffee Replaces Soft Drinks

Coffee’s consolidation maneuvres parallel those taken in the past decade by beer, but the products sold by these new global brand owners will compete with soft drinks’ share of the market. “Keurig Dr Pepper is JAB’s biggest acquisition yet, blurring the line between coffee and soft drinks in general,” Watson explained. “Another risk to small coffee players is potential entry from large soft drink players.”

Consumers are moving away from sugar-heavy drinks like sodas and juice products towards healthier beverages with fewer calories and more plant-based ingredients. RTD coffee is well positioned to respond to consumer demand for grab-and-go cold drinks with reduced sugar content and natural ingredients. “Market data shows demand for healthy drinks is growing. Tea, coffee and water fit into that,” observed Farmer Brother’s Robson. “Everyone consuming those products are in their 20s.”

Swiss multinational Nestlé AG’s 2017 acquisition of Austin, Texas-based Chameleon Cold Brew and subsequent acquisition of Oakland, California-based Blue Bottle in 2017 supports the growth of premium RTD coffee. Watson noted, “Coffee is now a soft drink. Coffee companies have to ask, ‘Do you know how to have a branded cold drink on a grocery shelf?’”

Independent Expertise

La Colombe has successfully placed branded cold coffee drinks on grocery shelves, specifically with its canned Draft Latte products. This was accomplished through a new partnership rather than a merger or acquisition.

Hamdi Ulukaya, founder and CEO of Chobani yogurt, based in Norwich, New York, became Philadelphia, Pennsylvania-based La Colombe’s sole investor and majority owner, along with founders Todd Carmichael and JP Ilberti, in 2015. The press release announcing this change stated, “La Colombe is also developing plans to improve every segment of the coffee industry with high-quality offerings, including ground-breaking ready-to-drink, single serve, retail, e-commerce, and packaged coffee.”

Since that statement, RTD has emerged as the most transformed of those coffee segments, with cold brews, sparkling coffees, and coffee with milk beverages hitting the market aggressively, packed in glass, plastic bottles, cans, boxes, and pouches. Ulukaya’s investment came with his expertise in the single-serve cold dairy category, a space that overlaps with RTD three-in-one coffee’s growing popularity.

Changes in Distribution Patterns

La Colombe was able to use Ulukaya’s expertise and investment to adapt its distribution system to a new category of coffee products. The need for streamlined distribution is crucial to the viability of consolidated coffee, across cold RTD and roasted coffee channels.

Looking at soft drinks’ recent changes to anticipate coffee’s moves, Watson said that Coca-Cola went through a national refranchising. “National brands like Coke need coordinated national networks to distribute their brands. Giant national brands need giant national partners,” he explained. “It is hard to ask a retailer like Walmart to work with ten national distributors, so a coordinated roll out with a single partner makes it more feasible for new coffee products to be carried at national retailers.”

Farmer Brothers operates a channel-based direct to store delivery approach. “Customers demand to work with experts,” said Robson. “There’s a difference between selling to casinos versus convenience stores versus college campuses.” As coffee transforms from being a hot beverage brewed at home, in the workplace, or in a café setting, into a hot or cold beverage for any time of day, the networks for delivering coffee must update as well, something large global coffee companies have the infrastructure and capital to carry out.

“Coffee is consumed throughout the day,” noted Robson. “We are adding more cold brew, RTD, and iced drinks in a way that is easy for restaurant providers to serve. Coffee is one of the few areas where we are not driving down to the lowest price point. Customers have more sophisticated palates and are indifferent to a USD $0.25 price increase because they want to enjoy the product.”

Consolidated Outlook

As coffee enters new retail spaces, smaller roasters feel pressured to innovate beyond legacy operations. “For a traditional coffee roaster wholesaling to food service with some brands on the grocery shelf but no expertise in RTD, it might be difficult to do without a partner moving forward,” Watson concluded.

Watson’s comment came just days before Nestlé and Starbucks Coffee, based in Seattle, Washington, announced their partnership, an agreement that affords Nestlé the rights to market, sell and distribute Starbucks products across its channels. Starbucks’ press release referred to an “Alliance to leverage the complementary strengths, scale and sophistication of two of the world’s most recognized and respected consumer brands.”

Commenting on the partnership, Michael Schaefer, global lead, food & beverage at Euromonitor International, said, “For Nestlé, the deal represents a sea change in strategy – the company has long resisted allowing outside brands access to its Nespresso and Dolce Gusto pod platforms. While “Nespresso-compatible” products have existed in some markets for years, an official Starbucks partnership is something else altogether, with the Swiss company now devoting considerable resources to marketing an outside brand. With Starbucks coffee shops serving as a powerful brand driver in key emerging markets, this move allows access to an important and growing consumer base.”

To grow at a competitive pace, coffee roasters and retailers are seeing that they need to acquire new skill sets and modalities at a pace that demands partnering with other established companies.

Impacts along the Chain

While brands acquired and sold in the current flurry of consolidation maintain a bullish outlook on the overall growth of the coffee market, coffee producers and intermediaries are more reserved.

The financial pressure exerted on green coffee exporters and importers by consolidated buyers further strains producers at origin. By extending credit terms to up to a full year, green coffee traders have less liquidity to invest back in buying from producers. As climate change threatens producing regions and coffee agriculture requires more strategic investments to remain viable, the limited flexibility of the first buyers of green coffee threatens the economics of production.

The other potential direction the situation could take, however, is positive. With consolidated purchasing power, global coffee brand owners could source certified coffees and make investments in sustainable production at a scale that has previously been impossible.

Finally, in the consumer space, another question remains: can brands once synonymous with small-batch craftsmanship and local artisans retain their customer loyalty as they are folded into global coffee portfolios? The success of all coffee brands depends on consumers’ trust in the products.

The same consumers who demand healthier beverages are also those who demand ethical verifications. As coffee becomes less fragmented, these newly powerful brands will need to proceed wisely if their coffee products are to remain the continued RTD, any-time-of-day beverages of choice for discerning demographics of today’s newest coffee drinkers.

Rachel Northrop has been covering coffee for T&CTJ since 2012, while she lived in Latin America’s coffee lands writing When Coffee Speaks. She is based in Brooklyn, NY. She may be reached at northrop.rachel@gmail.com.

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Duncan Moir, vice president channel development and foodservice, Starbucks EMEA, says, “The strength of our relationship with Arla Foods over the past seven years has seen our RTD business grow by an average of 40% per year across EMEA.

“This new licensing agreement signals our commitment to continue to work together to grow the business within the ready-to-drink sector, and we are proud to be working alongside Arla Foods.”

Commenting on the agreement, Hanne Søndergaard, executive vice president and CMO at Arla Foods, says, “We are proud to take another step in our partnership with Starbucks, bringing great tasting Starbucks ready-to-drink coffee beverages to consumers across Europe and the Middle East while adding value to our farmers’ milk.

“The partnership combines Arla’s extensive experience in manufacturing dairy beverages and our widespread distribution network with Starbucks unique coffee expertise. Consumers in the EMEA region have welcomed the great taste and premium nature of the beverages, and we remain committed to working closely with Starbucks on developing and growing the category in the future.”

Opportunities within milk-based beverages is an important focus area in Arla’s Good Growth 2020 strategy.

“It is our ambition to be a leading provider of milk-based beverages in Northern Europe, The Middle East, Asia and Northern Africa in 2020 and the new strategic licensing agreement makes the Starbucks partnership a vital part of delivering on this target and we believe that innovation is the key to future success. Our recent launches of new Starbucks Double Shot products are a great example of our joint commitment to innovation and to consumers,” Søndergaard concludes.

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As with food, many beverage trends start in foodservice before retail, hence, I was on the lookout for newness. In terms of hot drinks, there was no discernible new trend. Many of the tea companies were focused on getting restaurants to elevate their tea programmes to either more tea offerings or better quality — from the traditional bag and string to sachets or pyramids. Nespresso was highlighting its women in coffee campaign within the restaurant industry, where sustainability/eco-friendly across all food sectors is a growing movement.

The one aspect of coffee and tea that was trending, was cold brew. Its presence, including nitro cold brew, was strong at the show — even some tea companies were promoting nitro. Evidencing the popularity of cold brew coffee, even casual restaurant chain Denny’s (known primarily for breakfast and lunch) which has about 1600 outlets across the US, launched cold brew earlier this year. (Denny’s cold brew – “Steeped in cool water for 12+ hours for a silky, smooth flavour” – is available unsweetened or sweetened.) At the show, JoeFroyo was promoting its coffee/yogurt cold brew that is made with Real California Milk but is also lactose-free and has probiotic cultures. As cold brew is still growing among consumer awareness, and functional coffee is extremely new, it will be interesting to see how consumers respond to functional cold brew.

After his presentation, “Key Trends Shaping the Future of Foodservice,” B. Hudson Riehle informed me that research is showing that cold brew’s popularity is not just being driven by millennials, but by baby boomers as well given its perceived health benefits (lower acidity and a sweeter, smoother taste leads to using less sugar and/or dairy).

During his presentation, Riehle said that labour issues were top concerns for the industry and managing labour costs are critical for the viability of foodservice operators. It is also crucial for foodservice operators, and restaurants especially, that websites – emphasis on menus – are smartphone compatible and kept current.

In the session, “The Future of Restaurants,” where the discussion focused on technology and robotics (a robot named “Penny,” developed by Bear Robotics, can serve as a food runner or busser), the moderator, Daniel Burns, author of The Anticipatory Organization, and panelists challenged foodservice operators to shift from adapting to trends to anticipating them in advance and using technology to elevate and enhance customer experience.

The NRA Show’s keynote speaker was Condolezza Rice, the 66^th Secretary of State of the US, who spoke on a variety of topics including how the international economic system has changed, applauded efforts in technology, but warned against losing the human touch. Referring to middle-aged people who are not trained in digital tools, she said, “Before you automate people out of the workforce, you should think about how to retrain them.” Words of advice that can be applied across many sectors.

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The acquisition of Janoušek will enable Synergy Flavours, based in Wauconda, Illinois, to expand into these European geographies and to provide its expertise in areas such as nutrition and dairy to these markets.

Synergy’s flavour creation and application capabilities span the globe – with commercial, manufacturing and technical support facilities in Ireland, the UK, the US, Brazil, and Thailand. The company is part of the Carbery Group – a leading international manufacturer of specialty food ingredients, flavouring systems and cheese producer, owned by four Irish dairy cooperatives.

“We’re thrilled to be welcoming the Janoušek business into our group as it brings new expertise and products into our natural flavour, essences and extracts portfolio and complements our long heritage in dairy processing in Ireland and vanilla extraction in the USA. The Italian site has an excellent record for high quality manufacturing and offers room for growth with easy road access to much of mainland Europe,” says Steve Morgan, CEO, Synergy Flavours, adding “Janoušek is a growing, well run business and we have no plans for major or immediate changes. Our intent is to invest in and grow the team, adding new skills and new capacity to the site as required over the coming years.”

Jason Hawkins, CEO of the Carbery Group adds, “With ongoing investment and expansion underway in the US, Asia and Brazil and recent investment in Mexico, our intention is for Synergy Flavours to be positioned to support customers across the world, regardless of borders or geography. The acquisition of Janoušek gives Synergy in Europe a new home on the doorstep of Eastern Europe, potentially easier access to the Middle East and an established base to support flavour and natural ingredient manufacturing for new and existing customers in Italy and the wider region.”

For further information about Synergy, visit: www.synergytaste.com. To learn more about Carbery, visit: https://carbery.com. To learn more about Janoušek, visit: http://www.janousek.com/?lang=e.

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Starbucks opened its first Reserve store in its headquarters, located in the SODO district of Seattle in February. Designed in an open marketplace style, the Reserve store has the full beverage menu and brewing methods that are available at the Seattle Reserve Roastery along with new drinks such as the Nitro Draft Latte and Bianco Mocha. The Reserve store also features the Princi bakery that offers freshly-baked breads and pastries, food items cooked on-premise, and a full mixology bar serving traditional Italian cocktails. The fireplaces, brick walls, and wood accents and floors, add to the cozy lounge ambiance. The Reserve store also has multiple private rooms that can be rented for meeting spaces.

Across town, the atmosphere in Bulletproof’s café, is quite different. The company’s third café, which opened in late 2017, is the first in its home city of Seattle (the other two are in California). The new Bulletproof café is situated in the South Lake Union area, across the street from Microsoft (and a booming district for the biotech industry). Bulletproof Coffee appeals to millennials (or as one Re:co Symposium speaker referred to them, the “avocado toast” generation). A large segment of this café’s customer base is the morning post-workout crowd, given its close proximity to a gym.

Founded by “biohacker” (it’s my understanding that biohacking is the process of making changes to your lifestyle in order to “hack” your body’s biology to feel your best) Dave Asprey, the new Bulletproof café has circadian-compliant lighting that changes throughout the day to match circadian rhythms (which reportedly supports improved sleep patterns), while also counteracting the harsh blue-light effect of computer screens, and an electrically grounded floor in the seating area to reduce static charge and inflammation.

The walls are peppered with sayings such as “Tap Into the Unlimited Power of Being Human” and “You. Only Better.” The Seattle café also features an in-house Bulletproof Vibe whole body vibration plate. The Vibe machine is designed to reduce recovery time after exercise, strengthen muscles and bones, improve mental acuity, improve flexibility, and stimulate microcirculation, including lymphatic fluid. I do not know if it truly works, but it was fun and strangely rejuvenating even after just a few minutes testing it.

The signature item on the menu is the original Bulletproof Coffee, which is made with Bulletproof coffee beans, Brain Octane oil and grass-fed butter. The store manager informed me that grass-fed butter emulsifies better than half ‘n half and milk with the coffee and oil. For those who want a vegan option or have a dairy intolerance, cacao butter and ghee butter, respectively, can replace the grass-fed butter. Upgrade options include Bulletproof Collagen Protein (for amino acids and skin, nail, hair, and joint health) and cacao nibs, among others. The menu also includes teas, bone broth, Bulletproof supplements, Bulletproof Collagen Protein Bars, and Bulletproof Ice Cream.

I admit, when I first learned of Bulletproof Coffee, the idea of the concoction shocked and unnerved me, and it seemed gimmicky. Butter in coffee? Why would anyone want to add butter (whether it’s grass-fed or not) to their coffee? But Bulletproof Coffee is not for those coffee drinkers seeking specialty coffee, those who grind the beans themselves and want to savour the flavour notes of the coffee. Bulletproof Coffee is more so an energy drink or “body fuel.” Furthermore, it supposedly reduces carb cravings and acts as a meal replacement.

The company buys coffee beans from only Rainforest Alliance-certified farms in Guatemala and Colombia, which behooves the producers. And if consumers choose a coffee-energy beverage rather than a sugary, carbonated energy drink or protein shake, then more coffee being sold and consumed, which benefits the overall coffee industry.

So, although I do not fancy it, grass-fed butter-blended coffee might not be such a bad thing for the industry if more coffee is being purchased, sold and consumed, and coffee’s healthy attributes (high in polyphenols and antioxidants) are being touted — along with providing the desirable energy boost that the target demographic highly craves…

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Whether you call them Generation Z, the iGeneration, or post millennials, this demographic has been raised in a period of political and global upheaval creating a generation of realists. They are not easily persuaded by marketing and advertising, in fact, the majority will opt out of watching traditional ads. Instead they are looking for products that are authentic, respond to their needs, and reflect their values.

For millennials, it was all about the messaging and the identity of the brand, for Generation Z, they are the brand. “It is not about how the brand is evolving, but how this generation is interacting and applying the brand in their lifestyle,” shared Locke Hildebrand, chief insights officer, Culture Waves, a market research firm based in Springfield, Missouri. “Their sense of brand loyalty is completely different than anything we’ve ever seen before. They are continually questioning what can the brand do for me?”

Today, “Gen Z” – born between 1997 and 2011 – comprises 27 percent of the population, and these digital natives are adopting high expectations both for the products themselves, and the brands that they choose to interact with. Social media is not just an influence, it is a part of their every day existence. “This is the generation that can Facetime their friends, text their moms, and order pizza all at the same time,” said David Portalatin, vice president, food industry advisor, The NPD Group, based in Port Washington, New York. “They are the true digital natives, technology is a deeply inherent thing.”

Gen Zers can stream their own television programs and music, design their own clothing, and customize their own beverages. Menus are approached as simply suggestions, not prescriptions. This demographic has developed a refined palate for food and beverages, including being exposed to dairy-free products, super foods, specialty coffee and loose-leaf tea. This is a cohort that is not intimidated by flavours, but instead, wants to experiment with it and share their experimentation online. “Sixty-four percent of 13-17-year old’s who had a brewed or ready-to-drink coffee yesterday said it was pre-flavoured,” said Cheryl Hung, market research consultant for Toronto, Ontario-based market intelligence firm, Dig Insights.

They are actively seeking unique flavour profiles, providing an opportunity for tea and coffee companies to engage and connect to this group through product innovation and sampling. “Food is pop culture, it is entertainment,” said Hildebrand. “At the same time, Generation Z is focused on health and wellness, providing great opportunity for green and black tea, and ingredients such as turmeric, ginger, and floral, which not only add flavour but provide the health benefits that interest this group.”

Non-dairy has exploded, with Generation Z approaching milk-free as simply another ingredient that they can use to customize their own beverages. This is a generation that wants something to talk about. Craft, customizable beverages is a natural solution. “Our Generation Z attendees seem to lean towards the unique (creative) signature drinks. These are either drinks that the participating shops have on their seasonal menu or are testing a new concoction,” said Jason Burton, founder, Caffeine Crawl, based in Kansas City, Missouri. “These customized drinks often take the preparation time and amount of ingredients that you would find in a craft cocktail.”

The Parental Influence

Largely still at home, Generation Z viewpoints of life are shaped by either a millennial or Generation X parent, providing an interesting dynamic on the collective group. “The highest rated consumption of organic products is amongst young children,” said Portalatin. “It’s the parents who are really influencing this subset of Generation Z.” Tea companies that offer herbal and rooibos products would benefit by creating both children-centric product lines and messages that appeal to these discerning parents.

With a little bit of money in their pocket, the 13-20 subset is participating in away-from-home food and beverage consumption. They are looking for the relative value of products and are willing to spend the money on items that they believe they will get value for in return. “Take the example of footwear — this subgroup will spend crazy amounts of money if they feel that it will fit with their own brand,” said Portalatin. “They are not looking at the price point of items, but the way that they can build their own personal expression and, in turn, engage with brands.” Social media platforms such as Instagram and Snapchat, are providing a platform for this digital generation to share their story and develop their unique brand.

For the older Generation Zs, they are delving into creating their own beverages like tea-based cocktails, part for the beverage itself, but also because it’s beautiful, creative and is going to get the user likes. Product launches, such as Starbucks Unicorn Frappuccino, appealed to the consumer behaviour of taking a photo and sharing it online. While events, like caffeine crawls (adapted from the concept of a traditional pub crawl where “crawlers” engage in a presentation by the coffee shop or a hands-on activity and enjoy a free drink or chocolate – redeemable by attendees only) and sober raves, create a social sober scene that encourages entertainment, product sampling, and sharing the story of a beverage.

“Our younger audience has been our most engaged with the presentations,” said Burton. “They are the first generation to grow up with specialty coffee, but they still take in the information and really seem to enjoy the drinks.” The Generation Z audience for the caffeine crawls tends to consist of small groups of college students, or middle/high school students attending with a parent, evolving the crawl into a family outing.

Brand loyalty has become an interesting kind of dance, shared Hildebrand. On the one side, they understand what a legacy brand is from their parents – Star Wars, Avengers, Wonder Woman, but on the other side, the new wave of Generation Z YouTube celebrities are influencing which brands to gravitate towards, and which to stay away from. “For them, Generation Z is the brand, collecting pieces and parts to tell the story of who they are,” said Hildebrand. “One of the great examples is the resurgence of the enamel pin [collectible small pins with various images that brands produce] which brands are creating and encouraging Generation Z to engage and share their story.”

Generation Z are interested in the story behind the products and looking for companies that will share not only about the product, but where it came from, and who created it. “They are looking for authenticity, it has to be real,” explained Portalatin. “This group has immediate access to a plethora of information sources and can quickly discern what is true and what is just marketing.”

Tata Tea, a division of Tata Global Beverages, has used the digital medium to initiate conversations and activism among youth. “While traditional mediums of marketing will continue to be employed, digital is a particularly powerful route,” said Sushant Dash, regional president, India, Tata Global Beverages. “Our strategy is to have a long-term conversation with them and not rely on merely push communication.”

Their campaign, Jaago Re (wake up), focused on two prevailing issues that were impacting India: women’s safety and sports. Their hope was to urge individuals to act now to prevent future crisis. In the end, Tata Tea collected 1.8 million signatures across the nation, which advocated to include gender sensitization and sports in the school curriculum.

New Wave of Coffee Drinkers

Unflavoured bottled water remains the most popular beverage for this segment group. In the 2017 National Coffee Drinking Trends report, commissioned by the New York-based National Coffee Association (NCA) and conducted by Dig Insights, a total of 1,060 individuals, aged 13-18 were sampled, providing one of the first in-depth analyses of coffee and tea consumption practices for this cohort.

Although coffee was not the most popular beverage sampled in the previous day, 70 percent of the coffee that was consumed was gourmet. Tea consumption, noted Hung, was higher than past day level for coffee. This number has been consistent for the past few years, hovering slightly under the 40 percent mark.

The follow-up study, conducted in 2018 (with a substantially smaller sample group), found that the gourmet category continued to track upwards. “The gourmet category continues to be very youth driven,” said Hung, “with the majority skewing towards espresso-based beverages. While the ready-to-drink segment and innovative beverages like bubble tea, continue to be largely driven by this younger demographic.”

The most popular beverages among this group are frozen blended coffee (19 percent), lattes (18 percent), and cappuccinos (16 percent). Espresso-based beverages are also strong among the 19-24-year old’s (which encompasses both Generation Z and young millennials), with lattes (27 percent) being the most consumed beverage in the past week.

One of the interesting findings from these studies, Hung revealed, was that there were marked gender differences on their attitudes towards coffee. Males in this group tended to focus on the health (they pay a lot of attention to medical news) and sustainable (coffee grown in an environmentally sustainable way) attributes about coffee, while females were more likely to agree with the productivity-driven statements (coffee helps me get things done). And, even though Gen Zers were extremely low (six percent) in agreeing that coffee was good for their health, 26 percent stated that coffee was a trendy thing to drink.

For the discerning and youthful Generation Z, not any brand will do. These consumers are seeking products that will help to share the story of their own brand. Tea and coffee companies can respond to these consumers by offering products that can be customized, personalized, and easily shared. At the same time, they can engage this community of influencers by sharing their own story and appealing to this sector’s interest in activism, equality and change.

Anne-Marie Hardie is a freelance writer, professor and speaker based in Barrie, Ontario. She may be reached at: annemariehardie1@gmail.com.

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According to the brand, Micro Figures aims to make cold brew more accessible whilst upholding the quality and values of specialty coffee. The company ethically sources single origin Arabica coffee. It roasts, grinds and brews with cold, filtered water for over 18 hours at its microbrewery in Hackney, UK.  This slow-and-cold method of brewing yields a less acidic style of coffee and brings out the natural sweetness in the beans, the company says.

The three-strong range includes: Iced Mocha, Black Coffee and Iced Latte. Black Coffee is infused with nitrogen for a creamy texture. The Iced Mocha combines the same smooth nitro coffee with house-made oat milk and cocoa. Iced Latte blends the sweet nitro cold brew with oat milk.

For this year’s launch, Minor Figures has rebranded to visually appealing pastel-hued cans with illustrations.

The Nitro Cold Brew range is dairy-free, suitable for vegans and contains no added sugar. The products should be served chilled.

The canned beverages are available to purchase at major retailers including Sainsbury’s, Ocado, Whole Foods and Planet Organic at a RRP of £1.99 per 200ml can.

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According to PG tips, The Tasty Decaf has a natural flavour inspired by the brand’s tea gardens in Kericho, Kenya. It has a “rich, fresh and rounded taste” and contains less than 0.2% caffeine.

The Perfect with Dairy-Free beverage is a black tea targeted towards vegans and non-dairy drinkers.

Both flavours are available at a RRP of £2.60 in all UK supermarkets.

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As Hong Kong’s appetite for more vegan-friendly options increases, Pret’s organic coffees and hot chocolates are now available with Rice-Coconut Milk. This is a great dairy-free alternative to milk and provides a naturally sweet flavour to Pret’s Barista prepared drinks. The new blend of organic coffee includes beans from Ethiopia, Mandheling, Peru, and Nicaragua. This 100% Arabic bean blend combines a nutty almond-like flavour with a sweet berry chocolate aftertaste.

The Matcha Latte (Hong Kong $38), which blends Matcha green tea with steamed Rice-Coconut Milk, is also joining the menu, alongside Rice-Coconut Hot Chocolate ($29) and Rice-Coconut Latte ($38).

From 26 March to the 30 April, Pret is empowering over 5,000 customers to ‘Make Someone Smile’; an initiative that enables customers to give the gift of a free hot drink. Pret’s Barista’s will choose 5,000 customers at random who will receive a special sleeve on their takeaway coffee cup. These customers are, in turn, encouraged to pass the sleeve onto somebody else – a friend, a colleague, or even a complete stranger – who can then redeem it for a free coffee or tea.

Additionally, Pret’s baristas will now give customers (HK) $5 off any barista-prepared organic hot drinks when they bring in their own reusable cup.

Founded in London in 1986, Pret is the short form of the British household name of Pret A Manger (“Ready to Eat”). In 2002, the first Hong Kong outlet opened in IFC Mall. Pret offers freshly-prepared food, using high quality ingredients, avoiding obscure chemicals, additives and preservatives. Today, Pret A Manger has over 500 stores located in eight countries. For full details, please visit www.pret.hk.

For full list of Pret A Manger locations in Hong Kong: http://www.pret.hk/en-gb/pret-shops.

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The Uelzena Group is one of the largest private label producers of instant beverages in Europe. In order to improve communications with its customers the Uelzena, Germany-based enterprise has consolidated its marketing activities and sharpened its corporate image. The suppliers, H Schoppe & Schultz GmbH & Co KG, and Uelzena eG, are now operating as Schoppe Instant Beverages, which will be the new brand for instant beverages from the Group.

With the motto ‘Individual care – perfect fit for your brand,’ Schoppe Instant Beverages is positioning itself as a medium-sized producer with a long-standing tradition. For decades, both companies have been offering individual solutions for instant beverages along with the respective services covering the entire supply chain, which range from the development of recipes to the procurement of raw materials and packaging to storage. “We would like to be immediately recognisable under the joint brand as the producer of private label instant beverages,” explains Hans-Detlef Wieben, general manager at Schoppe & Schultz, based in Ratzeburg, Germany.

The new name ties in with the abbreviated name ‘Schoppe’ from Schoppe & Schultz while at the same time identifying the business division, namely ‘Instant Beverages’. The new corporate design with its warm colours and the world of powders reflects the new external look.

“We are presenting a brand that addresses both brand manufacturers and professionals from the hot beverage sector,” says Uwe Radke, managing director of marketing and sales at Uelzena eG.

The greatest asset for Schoppe as a private label manufacturer has always been its discretion. “We are very proud of the long-standing trust that our loyal customers have in us and our instant beverages,” explains Wieben.

From chocolate drinks to toppings and coffee creamers to innovative chai or matcha tea, Schoppe Instant Beverages offers its customers a complete range of instant beverage products for hot beverage vending machines, capsule systems or preparation by hand. Schoppe Instant Beverages offers its partners all services along the entire supply chain and individual, cooperative support. The service portfolio is completed by a large selection of packaging options.

Schoppe complies with all the important European standards including ISO, IFS and BRC. Upon request, customers are advised and supported in the implementation of organic, Fairtrade or UTZ products.

The new website – www.schoppe-instant-beverages.de – provides a comprehensive overview of the products and services offered by Schoppe Instant Beverages.

Another outcome of the consolidation is that Uelzena eG will no longer be promoting instant beverages but rather focusing on its actual core business as a dairy. The profile of the Uelzena Group as well as its strategic marketing will be aligned in a needs-oriented fashion. “In the field of instant beverages, we act as a medium-sized enterprise with high flexibility and individuality. This is what the name Schoppe will stand for from now on. In the field of milk ingredients, customers expect a certain company size, Uelzena eG can meet these expectations,” says Radke.

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