Louis Dreyfus Company acquiring Cacique shows that soluble coffee isn’t going anywhere

soluble coffee in supermarket
  • Louis Dreyfus Company recently acquired Brazilian instant coffee exporter Cacique, further consolidating its position in the soluble sector
  • The soluble coffee segment is a reliable one for investors, accounting for 25% of the coffee consumed in the world and growing year-on-year
  • Commodity trading companies expanding into value-added, soluble coffee production is a move that is just as much about hedging as it is about ensuring successful market growth

IN A STRATEGIC move, Louis Dreyfus Company (LDC) recently announced its acquisition of Companhia Cacique de Café Solúvel (Cacique), a prominent Brazilian instant coffee exporter. This ties into LDC’s strategy to diversify its revenue streams through value-added product lines.

Known for trading agricultural commodities, consolidating its presence in the soluble coffee segment will allow the company to capitalise on the growing demand for instant coffee products. This is an opportunity further enhanced by the Brazilian location of the acquisition. 

Cacique is one of South America’s largest instant coffee exporters, operating two production facilities in Brazil and with a portfolio of 65 instant coffee products, which it exports to more than 70 markets globally.

By integrating the Brazilian company’s expertise in instant coffee production with its own global reach and distribution network, LDC aims to strengthen its position in the coffee market and tap into the increasing consumer preference for convenient and high-quality coffee products.

“Cacique is the largest soluble maker in Brazil, and soluble has reached one million bags of consumption there – still under 5% of total consumption, but rapidly growing” says Carlos Brando, Founder and Director of P&A, a Brazilian consulting, trading and marketing company. “Cacique’s second plant is also strategically located near the major robusta-producing areas of Brazil.”

Already part of a joint venture since 2023 with Polish private label coffee manufacturer Instanta, to construct a freeze-dried instant coffee plant in Vietnam, LDC seems set on scaling up its soluble coffee business to position itself as a world class leader in the segment.

The secret to the soluble coffee market’s longevity   

The soluble coffee market, characterised by products such as instant coffee and coffee capsules, is a solid industry staple that has maintained quiet exponential growth over the years. 

The Brazilian Soluble Coffee Industry Association (ABICS) maintains that instant coffee accounts for 25% of the coffee consumed in the world, and its consumption has been growing over 2% per year.

Last year, Americans consumed over 1.3 billion cups of Nescafé alone – making instant coffee Nestlé’s largest coffee segment. The brand performs with equal success abroad, with sales in over 180 countries. Reportedly, one in seven cups of coffee consumed worldwide is Nescafé

It might not be new or fancy or even great, but it’s a reliable market product to invest in. The convenience, ease of preparation, price point and consistent quality of soluble coffee products make it accessible to most consumers – the enduring appeal that drives the segment’s expansion.

“It’s convenient, and it costs less per cup, so it appeals to lower income populations,” says Carlos. “Another crucial factor is that in markets that traditionally drink tea, instant coffee is the door of entry. Both are prepared in a similar way and require just hot water.”

He explains that in markets like China, Indonesia, India, and African tea-consuming countries, there is tremendous opportunity for instant coffee for this reason – combined with low cost and convenience. 

“The soluble market with the largest growth today is the Far East and Southeast Asia, and India may be a huge market in the future as well,” says Carlos.

Despite the emergence of new coffee trends and innovations, consumer demand for convenience and quality remains strong, and soluble coffee products are likely to remain a staple in households worldwide.

Meanwhile, ABICS just released a white paper on the quality assessment of instant coffee, proposing a new segmentation methodology that could further develop the segment. Recent years have also sparked an increasing number of specialty coffee brands to launch their own soluble coffee products, making specialty instant coffee an emerging trend in the specialty segment.

Why are commodity traders venturing into soluble coffee production?  

LDC’s move to acquire Cacique reflects a broader trend of green coffee traders expanding into soluble coffee production. It allows green coffee traders to diversify their offerings, mitigate risks associated with price fluctuations in the green coffee market, and capitalise on the growing demand for instant coffee products.

“Cacique sold all of their operations to LDC, which includes spray-drying and freeze-drying, access to the Brazilian market, and exports,” says Carlos. “Brazil is the largest exporter of soluble coffee in the world today, with a yearly volume of 4 to 5 million bags of green coffee equivalent, so it does seem like a golden opportunity.”

By investing in soluble coffee production, companies like LDC are adapting to evolving consumer preferences and an uncertain green coffee sector, positioning themselves for long-term growth and sustainability in a competitive market.

Competing commodity trading companies ECOM and Olam International have also diversified their operations to include coffee processing and production, including soluble coffee manufacturing. This allows them to vertically integrate their coffee business and capture more value along the coffee supply chain, while leveraging the growing demand for instant coffee products.

Green coffee traders entering the soluble coffee segment underscores the resilience and potential of the soluble coffee market, and shows it won’t be fading any time soon. 

Consumer preferences continue to evolve, with convenience remaining a solid trend to bank on across segments. As a mass consumer product, soluble coffee products continue to play a central role in shaping coffee industry dynamics.

Coffee Intelligence

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