Agri Business

Tata Coffee’s Vietnam plant to hit full capacity in two years

Sangeetha Chengappa Bengaluru | Updated on March 17, 2019 Published on March 17, 2019

Sanjiv Sarin, Managing Director and CEO, Tata Coffee

Tata Coffee’s $50-million freeze-dried coffee plant, which was inaugurated in Vietnam last week, is expected to start production at full capacity within the first couple of years, fuelled by demand from Eastern Europe, East Asia (Japan and Korea) and EU markets, a top executive told BusinessLine.

Located in the Binh Duong Province of Vietnam, the plant, which is capable of producing 5,000 million tonnes (MT) of freeze-dried coffee per annum, was set up within 19 months after the ground-breaking ceremony in August 2017. It will employ 48 locals to start with, which will further rise to 100 when production ramps up.

“Globally, consumer preferences are shifting from spray-dried coffee to agglomerate to freeze-dried coffee, which is a premium and most profitable instant coffee product with double-margins,” said Sanjiv Sarin, Managing Director and CEO, Tata Coffee Ltd.

“The market for freeze-dried coffee will continue to grow as disposal incomes increase and people move to more premium coffees. We are tapping this fast-growing, profitable segment, and are expecting to ramp up production and start producing at capacity in the first few years,” he added.

The global freeze-dried market, which stood at approximately 200,000 MT in 2017, has been growing at 1.8 per cent Y-o-Y over the past five years, and has been estimated to grow at a rate of 1.9 per cent over the next five years. Freeze-dried coffee is a more aesthetically pleasing form of coffee with larger granules and stronger aroma, and the closest to roast and ground coffee. Tata Coffee has, over the years, adapted a disintermediation strategy, where more and more sales are directly sent to end customers in the value chain. The Vietnam plant’s location, and access to markets in Europe and Asia, gives Tata Coffee a strategic advantage.

Pilot plant

“Vietnam is a compelling location, especially because it produces Robusta, the favoured variant of instant coffee. It is one of the few plants equipped with a pilot plant facility, which is a smaller operation apart from our main unit. This can be used to develop and create new blends for customers without having to run a larger batch in the main plant. This allows us to develop new blends much faster while maintaining the quality,” said Sarin.

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Published on March 17, 2019
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