The Buencafé factory in Chinchiná,Colombia, can produce up to 11,500metric tons of instant coffee each year.It is one of the largest freeze-driedmanufacturing facilities in the world.
CHINCHINÁ, Colombia
By Dan Bolton
Coffee producing nations blessed with the climate and courage to carve a place among the world’s top suppliers will ultimately confront the shortcomings of a cyclical crop in a volatile commodities market.
Colombia has met these challenges in part by developing a competitive solubles industry that supplies freeze-dried arabica and coffee concentrates globally while increasing domestic volume an amazing 17% since 2008.
Coffees produced by Buencafé includesome of the world’s top-selling instantbrands. All are made with 100%Colombian arabica sourced nearby.
The country, a global leader in producing value-added coffee, is a model of efficiency in disposing of each year’s crop because of its commitment to improve the quality of life of coffee growers through a garantía de compra or “purchase guarantee.”
“FNC (Colombia Coffee Growers Federation) purchases the crop from growers at a market price, enhancing the negotiation power of individual producers with domestic buyers in Colombia’s 590 coffee growing communities,” explains FNC spokesman and chief marketing officer Luis F. Samper. “Of course, if coffee is bought by the FNC it must be sold. This is the reason why the FNC has become an important exporter in the world, both of green coffee and freeze-dried soluble coffee through its Buencafé operation,” he said.
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Colombia’s investment in value-added specialty coffee in 2013 yielded six times the 2002 market price, bringing growers an additional $149 million in revenue, premiums that were directly transferred to growers. Its solubles industry generates $200 million a year, of which half come from FNC operations.
Coffee exports increased 31% in June 2015, reaching a total of 997 million 60 kilo bags. Europe is the top export destination for instant coffee, annually purchasing 43% of Colombia’s coffee exports. North America is second, purchasing 28% followed by Asia-Pacific (17%), Colombia (6%), and Central and South America (6%).
Colombia’s domestic market for solubles is growing at a quick pace.
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Buencafé sales surpassed $120 million in 2014, “making this operation a very efficient investment for coffee growers and their families,” acccording to FNC.
Sales of instant coffee globally have tripled since 2000 to $31 billion and will reach $35 billion by 2018, according to Euromonitor, a global leader in business information on markets and trade.
About 33% of the world’s coffee is used to make solubles, consuming approximately 47.6 million bags in 2014, according to Euromonitor. Most of this coffee (70%) is spray-dried, the least expensive method of reducing liquid coffee to instant. In 2013 freeze-dried accounted for 26% of global solubles (191,570 tons) with extracts accounting for the remaining 4%. The volume share of freeze-dried coffee grew 5.4% year to year, according to Euromonitor. Soluble volumes overall grew 3.2% globally in 2014.
World exports of soluble coffee experienced a dramatic rise beginning in 1995 as non-traditional exporting countries entered a market previously dominated by Brazil, Ecuador, India, and Colombia. The International Coffee Organization (ICO) reported a 94% increase in soluble exports between 1995 and 2004 with exports from Vietnam increasing from 5% to 16% of the market and Singapore and Malaysia increasing their relative share by 5% and 6% respectively.
In 1995 producing countries, led by Brazil with 29% market share, produced and processed for export 52% of global solubles. Since then consuming countries have significantly increased their processing capability and by 2002 accounted for 68% of soluble exports, a 20% increase in market share.
The FNC, concerned about losing market share, doubled down during this period by expanding the capacity of its freeze dry factory to 7,500 tons per year. Constructed in 1973 in the heart of the coffee growing region in Caldas, Buencafé Liofilizado de Colombia (as it is now known) exported only 150,000 pounds of coffee in 1982. The following year capacity at the facility was expanded from 1,800 tons to 4,000 metric tons per year.
Production for domestic and overseas brands has been lucrative but in keeping with its strategy to expand value-added output FNC soon established its own brand. Buendía (translation Good Day) brand instant coffee was introduced in Colombia in 2000 and began exporting to the UK with displays in 225 major supermarkets. In 2001 shipments began to Mexico and the US. Emerald Mountain canned coffee, launched in Japan under the Coca-Cola owned Georgia brand, is now the top selling ready-to-drink coffee in that country.
“Our product portfolio now sells in more than 60 countries and we have made a name for ourselves by offering a high quality 100% Colombian soluble coffee for the most demanding instant coffee markets in the world,” said Samper.
Buencafé
The factory today is massive, one of the largest in the world spanning 1.5 million square feet, with a capacity of 11,500 metric tons per year. The factory employs 600. Buencafé manufactures freeze-dried, roasted instant (which contains micro particles of roasted coffee), and coffee extract, a frozen liquid coffee.
Once the locally grown coffee is roasted and ground, liquid coffee is extracted from the brew in giant temperature-controlled percolators. It is then concentrated into dense loaves as it freezes. The resulting flakes are dried in a vacuum and packaged.
“We developed a more complex portfolio of coffees, from roasted instant to freeze-dried coffee, which allows us to sell to various market segments, from grocery chains to coffee based products and third party brand owners; many of which use the 100% Colombian coffee logo on their packages to assure consumers all over the world the coffee is of the highest quality,” said Samper.
Buencafé has continued to develop products that modern consumers require, said Samper. “Even those from emerging coffee consuming markets have high expectations that we can meet, allowing our clients to avoid competing just with price. This is why clients from all over the world come to us to look for differentiated and quality based solutions,” he said.
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Colombians generally prefer fresh brewed coffee but “a taste for less-intense brews has greatly contributed to the rise of instant coffee,” according to Euromonitor beverage analyst Dana LaMendola.
LaMendola cites a 22% increase in sales of instant coffee mixes (flavored and containing either sweetener or creamer or both). In 2013 mixes accounted for 12% of Colombia’s overall instant coffee sales.
In 2013 39.8% of Colombians reported drinking instant, up from 35% in 2009. LaMendola observes that Colombian’s preference for mild coffee is “insufficient” to explain such a significant shift in coffee consumption. “Rather, the convenience of the instant format, and the versatility of flavors available, are also integral to the growing appeal of instant coffee in Colombia,” she said.
For decades, the general conception of soluble coffee has been that it is a low quality product that is produced mainly with low quality robusta beans, observes Samper.
“This theory is very broad and oftentimes inaccurate; the basic question we have to address is: Who is your consumer? Fortunately, there are consumers for different kinds of products, and the consumption preferences are very different from one country to another; furthermore, within a specific country, you can find very different cultures and therefore different consumption patterns and preferences,” he said.
“Over the years Buencafé has improved the process in different stages, bringing new technologies to deliver innovative products to our customers,” according to Samper. “A perfect example is the micro-grinding process which enables us to offer what we call Roasted Instant Coffee,” he said.
Buencafé has been instrumental for Colombian coffee´s penetration in new markets including Russia, Japan, UK and Mexico that value high quality soluble coffee products, according to Samper.
“Across these markets, consumers are looking for high end products, which is one of our biggest strengths and how we differentiate ourselves from the competition,” he said.