According to the National Coffee Association, specialty coffee consumption in the US reached a five-year high in 2021, with 43% of coffee drinkers choosing specialty options the day before the survey – up 20% between January 2021 and January 2022.
At the same time, cold drinks and iced coffee and ready-to-drink options all gained traction with consumers turning to beverages for a variety of reasons, ranging from function, to a desire for a different kind of drinking experience. , convenience and many more.
To better understand how these shifts are creating opportunities and challenges for stakeholders in the coffee segment, Westrock Coffee’s executive vice president of global knowledge and innovation Kyle Newkirk joined us on this episode of the “Sup-To- Nuts” of FoodNavigator-USA from IFT’s FIRST annual conference in Chicago earlier this summer.
As one of the largest providers of coffee, tea, flavors, extracts and increasingly ingredients, Westrock Coffee is uniquely positioned to spot emerging opportunities for industry players ranging from in-store CPGs grocery and convenience to food service and restaurants. Among the trends Newkirk says he’s most excited about is a growing demand for better-for-you options, including zero-sugar energy drinks, new formats like iced coffee, prepackaged options and opportunities to use more much of the coffee factory to produce. new recycling options.
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From an exporter outside of Rwanda to serving 20 million cups of coffee a day,
When Westrock Coffee was first launched in Rwanda in 2009, it was with a belief that “Growth is an inevitable byproduct of infrastructure investment, farmer development, product and supply chain innovation, and technological advancement.”a premise that has held true over the past 10+ years and especially in recent years as it has dramatically expanded its operations and beverage capabilities through mergers and construction of new facilities.
Newkirk explained that by expanding its North Carolina extraction facility, operations and beverage capabilities with a new facility in Conway, Ark., and establishing new operations in Malaysia, Westrock Coffee is now better able to supports innovators in both the foodservice and CPG spaces as they face the unique challenges presented first by the pandemic and disrupted supply chains and now increasingly by economic uncertainty.
“We really started as exporters from Rwanda,”but have grown and evolved to include innovative capabilities around product development, packaging, traceable sourcing and more, Newkirk said.
He added that Westrock Coffee’s fastest-growing segment is its ingredient and extracts business, as more CPG players look to incorporate functional ingredients, including from coffee, tea and botanicals into their products.
In addition, he said, as the company builds new capabilities to become more vertically integrated, it is able to create products more sustainably since ingredients and components don’t need to be shipped back and forth between players and locations. different.
Products positioned as the best for you and the planet boom,
These developments are allowing Westrock Coffee to help partners pursue two of the most promising areas of development Newkirk sees for coffee and tea – better-for-you beverages that are also better for the planet.
“We’re seeing a lot of people coming to us in the better-for-you beverage space … ranging from things like nootropics and how you mix them into coffee platforms … to the proliferation of plant-based beverages,As well as the natural functional benefits of coffee associated with a lower incidence of heart and liver disease, Newkirk said.
While some of the developments are “very far”,Some are more logical, including healthier, natural energy drinks that incorporate coffee and tea extracts for tasty, functional, and low-sugar options.
As for products that are better for the planet, Newkirk said Westrock Coffee is innovating ways to use byproducts from the coffee plant to make new drinks and ingredients. For example, drying and grinding leaves from coffee trees for one “Fantastic tea”that has a unique flavor and about one-third the caffeine of regular coffee, Newkirk said.
The company also has improved coffee and cocoa extracts from the husk of the cocoa bean, which Newkirk says is beautiful in a cold drink.
Pre-packaged drinks hold steady after pandemic boom,
Specialty beverages, including cold drinks and ready-to-drink packaged options, are also gaining traction in both retail and foodservice, Newkirk said.
“The growth of iced coffee just isn’t stopping.”at a compound annual growth rate of 15%, he said, noting that much of the activity is focused on the ready-to-drink space, which took off during the pandemic when people favored packaged options over the case of cold when distributing options were limited, Newkirk said.
“This trend is here to stay. We saw somewhere between 10% to 15% of use cases going from non-use to cold case.wich is “very significant”,he said.
He explained during the pandemic many people stocked up on packaged specialty coffees and cold drinks to drink in the safety of home while trying to replicate the experience outside. Now these items are suitable not only for consumers, but also for food service, as they seek to balance limited work and take care of orders for take-out and delivery.
Overcoming ongoing pandemic problems,
Because Westrock Coffee is vertically integrated and is significantly expanding its manufacturing capabilities, Newkirk notes that it is well-positioned not only to help innovators seize new opportunities, but can also help CPG and foodservice overcome some of the challenges accelerated by the pandemic, including around supply and labor chains, and now inflation.
“During COVID we saw a lot of menu simplification” to balance changing demand and limited manpower, but while recruiting and retaining employees remains challenging, food service providers are now looking for less labor-intensive options, Newkirk said.
For example, instead of brewing fresh tea or making cold drinks in the back of the house, food service providers are looking for concentrates that they can quickly pump or pour over ice and simply add water to order, he said.
In addition, he said, Westrock Coffee is innovating around concentrates to help reduce shipping costs in the face of inflation. It is also exploring alternative blends and ingredients that could be swapped out for more expensive options.
And finally, he notes, Westrock Coffee is working to ensure it can offer contingency plans in order to ensure a stable supply and meet demand despite challenges across the chain.
The demand for turnkey solutions increases,
Westrock Coffee’s diverse portfolio of services and ingredients illustrates another trend that Newkirk predicts will continue to grow in the coming years – the need for turnkey solutions.
And to ensure that Westrock Coffee can provide the best level of service and solutions, he explained that the company recently announced its intention to go public through a $1.1 billion merger of the acquisition company for special purposes ( SPAC) with Riverview Acquisition Corp.