The Hindu Business Line : Instant coffee producers source more beans locally

Chennai, Aug. 2 Provisional figures show coffee exports slipping during the current year but there is an interesting angle to it — shipments of instant coffee have almost trebled.

According to data displayed by the Coffee Board on its Web site, total exports (provisional) from January 1 to August 1 have declined to 1.45 lakh tonnes from 1.54 lakh tonnes during the same period a year ago. This figure is arrived at after including re-exports, which has declined to 7,725 tonnes from 18,134 tonnes. Therein lies the real story.

Of the total exports, arabica parchment exports have declined to 22,715 tonnes (40,579 tonnes) but shipments of other grades have increased. (See table).

Re-exports are mainly coffee imported into the country for manufacturing instant coffee. This year, imports are showing a decline of a little over 10,000 tonnes. A look at the total instant coffee exports shows that it has increased by over 20,000 tonnes.

What is happening on the instant coffee exports front? “It is simple. Vietnam’s loss is Indian growers’ gain,” says Mr Milan Shah of Jayanti Exports, Bangalore.

Vietnam price

Usually, coffee for re-exports as instant is imported from Vietnam. But this year, Vietnam prices were high and it also ran out of stocks. This was despite Vietnam producing a record 9,30,000 tonnes of coffee last year.

Coffee from Vietnam, the world’s largest exporter of robusta, was gobbled by the global market as roasters decided to go on a hand-to-mouth existence and inventories were low. Prices also have been ruling high, mostly above $1,600 a tonne, for most part of the year.

“Until last year, it made sense to buy coffee from Vietnam and re-export it in the instant form. But this year, supply has been a problem, while prices too have been high. Therefore, instant coffee producers have sourced their requirements from domestic growers,” he said.

Production setoff

Plantation sources said instant coffee exports were looking up also because companies such as Tata Coffee were setting up new processing units. Tata Coffee recently set up an instant coffee manufacturing unit at Theni in Tamil Nadu. Another exporter is setting up a unit in Karnataka.

“Instant coffee manufacturing is a more lucrative business. Coffee procurement for it is not a problem since quality of the end product depends on the manufacturing procedure,” said the sources.

On the other hand, green coffee exports have been less and the stronger rupee, which has gained about 10 per cent against the dollar, is also causing problems. “The Centre too has not been of much help as the duty drawback on coffee exports is only one per cent,” the sources said.

However, demand for robusta cherry has been good and India enjoys a niche market for it. Prices too are at a premium of $2,000 a tonne currently against a little over $1,700 for Vietnam and Indonesian coffees.

The making of instant coffee

Instant coffee’s USP is its ease and convenience compared to the coffee that can be freshly brewed, including through the filter process.

Instant coffee manufacture begins with brewing of the beans in highly efficient extraction equipment. Softened water is passed through a series of five to eight columns of ground coffee beans. Finally, the extract is passed through a heat exchanger to cool it to about 5°C. By the end of this cycle, the coffee extract contains 20-30 per cent solids.

Once the solids, which are soluble, are removed, they are dried either through the freeze drying method or spray drying and converted into instant coffee.

The advantages of instant coffee over regular coffee are its long shelf life and the simplicity of its use. The major disadvantage of instant coffee is that it can be easily spoilt if not stored in a dry, air-tight container.

Since instant coffee’s quality is derived from its process, usually low quality beans are used for its manufacture. The first soluble “instant” coffee was invented in 1901 by Japanese-American chemist Satori Kato of Chicago. But, it was not marketed commercially until the launch of Nescafe in 1938.

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