Updates in the Decaf Market
Joseph A. Rivera, Director of Science and Technology
At the annual SCAA conference in Atlanta this year, I was amazed to see a number of newly developed products being introduced into the market. But year after year there remains one category that is always under-represented. A category that is almost too taboo to discuss in public, not only in the specialty sector, but across all levels of the industry--decaffeinated coffee.
Although decaffeination technology has existed for over 150 years, its invention and continued development over the years has always had a tainted history. It would take the premature death of a German engineer's father to convince his son to develop an effective way of removing caffeine from within coffee beans to spark a new technological revolution. Though the process has improved significantly and done away with using toxic compounds such as benzene to strip away caffeine, the decal industry has since remained the underdog and a forgotten stepchild within the coffee industry. Fast forward some 200 years and today there are a number of chemical/chemical-free methods of decaffeination, along with a myriad of third party certification including organic, Fair Trade and ecological friendly labels to choose from. Decaf has come a long way both in technology and in reshaping the wants and needs of a rapidly evolving decaf consumer.
According to the latest consumption study by the National Coffee Association, national consumption of decaf increased slightly from a 9% position in 2008 to about 10% in 2009. Segmenting this data shows that the vast majority of these drinkers are those over the age of 60, accounting for approximately 19% of total consumption. While those in the 40 to 59 age range represented 9%, and another 9% for those in the combined 18 to 39 age range. The data is not surprising, since decaf consumption has typically always been the drink of choice for the "older generation," with colder-sweeter espresso based drinks popular amongst the younger crowd.
What's the driving force behind the decaf market? Well, historically decaf drinkers have always been that certain segment of the population that, for some reason or another, are hypersensitive to the stimulatory effects of caffeine. Others have simply been instructed by physicians or other medical personnel to cut coffee from their diets due to potential health risks. Although these two segments represent a significant portion of the entire decal demographic, market research by Swiss Water Decaffeinated Company has also identified another group of people that is a potent driving force--women.
According to the data, women in their late 30s to early 40s represent a significant portion of the population and play a key role in establishing and maintaining consumption behavior. Perhaps the biggest decisive factor for a woman to choose decaf is pregnancy: As such, it is quite common that during the nine-month period, these soon to be mothers chose decaf over regular in an effort to reduce any possible aversions to the unborn child. Interestingly; even after birth many mothers remain decaf drinkers well into their later years in life as their perception of diet and health evolve. But in many cases an even larger portion of mothers switch back to regular coffee, which is commonly seen amongst the younger more career driven women. Men on the other hand are a little more unpredictable and tend to be "dual drinkers"--or those that typically consume regular coffee in the morning and decafin the evening. According to Maximus Coffee Group, a Houston based decaffeinator, it has been estimated that roughly 70% of all decaffeinated coffee is consumed in the morning, with the remaining portion in the evening. This fact, although interesting, is one that has been not shared across all players in the coffee industry, namely the retail sector.
In a decisive move by Starbucks this past January, the company recently announced that they will no longer be brewing decaffeinated coffee past noon, unless specifically requested. A wise decision? Well that has yet to play out during this economic slowdown, but it is estimated that this cost-cutting strategy will save the struggling company and its investors an estimated $400 million. The unfortunate move, which has served only to infuriate many in the decaf community is a small testament to how the coffee industry, for the most part, sees the importance of the decaf consumer. True, according to industry estimates, the decaf market account for only 15-20% of all coffee sales, but within this small sector lies perhaps one of the most devoted coffee customers available. For this it is this consumer who seeks and consumes coffee, not for its stimulatory effects, but its pure sensorial pleasure. And from a biological perspective, preliminary data may prove that decaf consumers may consume even more coffee (per cup) than regular drinkers. Why? According to medical research, once a certain level of caffeine has been established in the blood, the desire to consume more coffee (ie. caffeine) quickly subsides. In the case of decaf,, the reduced caffeine content in decaf coffee would theoretically allow them to consume more coffee than regular. The theory, which has prompted a handful of research institutions to develop varieties of coffee with lower caffeine producing traits, has yet to be seen, but the development does hold a promising future in terms of global coffee consumption.
Perhaps one of the greatest challenges facing the decaf community has been the severe lack of choice available both at the retail and grocery level outlets. Want that limited edition Guatemalan Antigua or that rich, chocolatey Ethiopian Sidamo--sorry, these are reserved only for regular drinkers. For years, decal consumers have demanded more options in origins, but the demand has fallen on deaf ears, as the request has largely remained unaddressed. The truth is, that the issue here lies not so much at the retail level, but with players higher up on the supply chain, as decaf selections have typically been made at importer/roaster levels. But although this may be the source of grief with decal consumers, it also represents a significant opportunity for the growth with the specialty coffee industry. We've seen that as the quality of coffee improves, so does consumption. And when better to introduce higher quality origins than now, when consumers are everyday becoming more and more sophisticated in their palates. The introduction of Triple Certified decaffeinated coffees, this combined with higher quality origins by importers such as Card Ibis and Elan Organics, have all been very well received in recent years.
So how does the forecast of decaf drinkers look in the next 10 to 20 years? Quite promising! Latest figures by Census Bureau estimate that the current U.S. population is about 306 million people. Of this, one of the largest segments to grow since the early 1990s has been that of the 65 to 74 age group--a segment that is, or will become, decaf drinkers. This segment coupled by that fact that within this specific demographic, women have typically outnumbered men by a factor of 1.4--providing the perfect storm towards maintaining and expanding the all too forgotten decal drinker for years to come.