Here's a WSJ article on the US roasting market, mostly focusing on the big guys, but it's an interesting read nonetheless.
This is the URL, but you need to be a member to get into it that way, so I've also cut-and-pasted the article below.http://online.wsj.com/article/SB118231023971341663.html-AdkMike
U.S. Roasts Fewer Coffee Beans
By SUSAN BUCHANAN
June 20, 2007; Page B5F
Top U.S. coffee companies aren't processing as many beans as last year when the nation's roasting pace reached a 30-year high, but with Americans still drinking lots of java, small roasters are thought to be picking up some of the slack, industry members say.
Beans roasted nationally as tracked by Coffee Publications Inc. -- which doesn't reveal the companies it surveys -- are down slightly from last year. In the latest figures, 5.980 million bags had been roasted from the start of 2007 to April 14, compared with 6.010 million in the same 2006 span. Those numbers are believed, however, to cover only about 80% of all U.S. processing -- missing many of the newer specialty coffee companies. Specialty or gourmet beans now account for over 15% of U.S. java demand as increasingly sophisticated drinkers sip their favorite lattes and cappuccinos.
Procter & Gamble Co., maker of Folgers, and Kraft Food Inc., producer of Maxwell House, together control about 68% of the U.S. retail coffee business in supermarkets, grocery stores, drug stores and food clubs, with Folgers' share greater than Kraft. Segafredo Zanetti Group's Massimo Zanetti Beverage USA, owner of Chock Full o'Nuts, Hills Brothers, MJB, and Chase & Sanborn, is another leader. Big roasters offer traditional brands, along with newer specialty-type products.
Lars Atorf, spokesman for Procter & Gamble, said the decline in U.S. roastings into mid-April reflects a slight market contraction for those companies surveyed. He said the dip may be related to "sustained green-coffee price increases in July-December 2006 and resulting list-price increases that we and competition had to take in October 2006 and January 2007." Folgers raised ground prices by 10 cents a can, or about 4%, in early January and raised prices for its gourmet-line by 5%. Maxwell House and Chock Full o' Nuts quickly followed with similar increases.
To explain lower national roastings, Mr. Atorf said, "relatively high shelf prices of coffee might have played a role," meaning customers may have reduced purchases. "But it would be speculation right now to view this as an ongoing trend, or something that will continue through the year," he said. "We have to closely observe the figures, and should have a better understanding of them within the next 6 to 9 months."
Last year was a banner one for U.S. roasters, hurrying to meet strong demand. Moreover, the New Orleans hub -- home to over 20 roasters -- had just rebounded from Hurricane Katrina, which struck in August 2005. Folgers' New Orleans plant, the world's biggest roasting facility, was shut after the storm but was fully operational again in November 2005, Mr. Atorf noted.
Ted Lingle, executive director of the Coffee Quality Institute, said that to get a handle on this year's roastings and consumption, the industry has to look beyond the under-reported roastings to U.S. imports, which are rising, and to the National Coffee Association's drinking survey. Adults in the U.S. now consume more coffee per day than soft drinks, as java returns to its pre-1990 dominance, according to NCA survey results released this spring. An estimated 57% of U.S. adults drink the brew daily, while 51% consume soft drinks, the NCA found. In early 2007, 82% of U.S. adults drank coffee compared with 80% in 2005 and 79% in 2004.
Mr. Lingle says another aspect of the demand story is that the U.S. imports roasted coffee from Canada. He noted Mother Parkers Tea & Coffee Inc., which roasts beans in Toronto for shipment to private-label and food-service customers in the U.S. The company also operates a large roasting plant in Fort Worth, Texas.
Don Schoenholt, president of Gillies Coffee Co. in New York, America's oldest roasting firm, said that changing consumer tastes have allowed specialty coffee roasters to flourish. He said their roastings are undercounted in the Coffee Publication Inc. figures.
The cost of starting a roasting business, which begins with expensive machinery, has always been very high, but the endeavor has become profitable, he said, attracting new entrepreneurs. Two decades ago, the U.S. industry consolidated as giant coffee companies gobbled up smaller ones, and while buyouts continue, hundreds of small roasters who opened this decade have seen good returns on their investments. That's because Americans are willing to pay up for their favorite cup of joe now. In the 1970s, it was unheard of to spend more than $1 a cup, except at an expensive restaurant, but today's consumers don't mind shelling out $3 to $4 for their designer pick-me-ups.
Mr. Schoenholt said he was staggered by the May turnout of over 10,000 attendees at the Specialty Coffee Association conference in California, which attracted a number of new entrepreneurs. Fledgling coffee roasters have been helped by workshops on every aspect of the craft run by the Specialty Coffee Association and the National Coffee Association, he noted.
In the past 15 years, Starbucks Corp. swelled from a regional roaster to the specialty-coffee leader, while Caribou Coffee Co. in Minneapolis jumped to the No. 2 specialty chain. Peet's Coffee & Tea Inc. in California and Green Mountain Coffee Roasters Inc. in Vermont grew from small specialty firms to be among the nation's fastest-growing, publicly traded companies in recent years, according to Fortune Small Business magazine.
U.S. specialty roasters use mostly arabica beans, but big roasters use between 30% and 70% robusta beans in their commercial-arabica blends. Prices of robustas, a hardy type grown mostly in Asia, reached 9-year highs in London recently. Arabicas, the milder variety cultivated in Brazil and Central America, have eased from a 1½-year high of $1.2975 a pound touched late last year and were recently hovering near $1.15 a pound on the New York Board of Trade.
But Mr. Atorf said "continuously strong robusta prices have not caused any unusual blend changes for Folgers. Recent developments in green-coffee prices haven't caused a shift" at P&G. Folgers isn't allowed to say how much robusta coffee it uses.
Mr. Schoenholt said if robusta prices continue to rise, roasters who normally use them in blends might begin to upgrade to lower-end arabicas. Robustas are still cheaper than arabicas.
Robustas now account for a fourth of the beans consumed in the U.S. -- up from about 13% in 1990, according to the International Trade Center, a U.N. agency. U.S. roasters stepped up robusta purchases in the 1990s as Vietnam's exports of the hardier variety swelled, making them inexpensive. U.S. robusta usage, however, lags many other countries, where espresso or instant coffee are often made with robustas. In France for example, robustas account for over 45% of coffee demand.
The U.S., the world's top single-country coffee consumer, roasted 20.6 million bags in 2006, up from 19.92 million in 2005, according to Coffee Publications Inc.