Rising Tide Lifts Another Boat: Maxwell House drops robusta

[Marshall]

Maxwell House is dropping robusta:

"NEW YORK, July 23, 2007 (Reuters) - Kraft Foods Inc. (KFT.N: Quote, Profile, Research) is changing the blend of its flagship coffee brand, Maxwell House, to give "mainstream America" a richer, less bitter cup of coffee, a spokesman said on Monday. Maxwell House, Kraft's biggest coffee brand in the United States, will be made of 100 percent arabica beans starting this autumn, with the exception of its instant coffee and Master Blend, Kraft's senior vice-president and general manager of coffee in North America, John LeBoutillier, told Reuters in a telephone interview.

"She may not know arabica by name, but this is a flavor that has a pronounced impact," LeBoutillier said about the average consumer."

[Ryan Willbur]

So, does that mean that the instant stuff and the master blend will always have robusta, or that at some point after this autum they aim to move completely to arabica?

Either way, this is exciting and will hopefully be an eye opener to the average consumer palate...

[onocoffee]

Ah, good news!

Now I know what to use as my espresso blend for USBC 2008.

[Mark Prince]

That's great. Now what about their biggest profit margin coffees these days - the cans of flavoured powders?

(rhetorical question).

I guess I should applaud this - but one has to wonder about their source and pricing for Arabica. I'd like it even more if they were transparent about a) the source, and b) price per lb the farmers get.

Mark

[Jim Schulman]

Isn't there a shortage of Vietnamese robusta this year?

[roger]

I just read an article about the rising cost of robusta coffees in "tea and coffee asia" mag. Right now robusta costs 70% of arabica(vs 30-50%). Maybe they are expecting the gap between the two to narrow even more, eliminating the attraction of the lower priced "rubber bean".

[Marshall]

I just read an article about the rising cost of robusta coffees in "tea and coffee asia" mag. Right now robusta costs 70% of arabica(vs 30-50%). Maybe they are expecting the gap between the two to narrow even more, eliminating the attraction of the lower priced "rubber bean".

Or maybe they noticed the dramatic improvement in McDonalds sales since they upgraded their coffee. Or maybe they finally figured out why their sales have been declining for so many years?

Marshall

[Sean Starke]

Well, I know a lot of arabicas that make some robustas taste pretty damned good in comparison so I wouldn't get too excited by this. They can't make too drastic a change to the flavor profile without losing a lot of customers, so the change will have to be gradual. It will be interesting to see how it evolves. I'll have to buy a few cans now and hang on to them for a few months to compare with the new version.

[phaelon56]

Well, I know a lot of arabicas that make some robustas taste pretty damned good in comparison so I wouldn't get too excited by this. They can't make too drastic a change to the flavor profile without losing a lot of customers, so the change will have to be gradual. It will be interesting to see how it evolves. I'll have to buy a few cans now and hang on to them for a few months to compare with the new version.

But do you know of many or even any arabica's that make the Vietnamese robusta taste good in comparison? Just curious. I've never tasted the Viet robusta straight up knowing that's what I was drinking but I've been operating under the assumption that the marked decline in taste quality of cheap supermarket coffees in recent years is specifically because of this bean.

[Sean Starke]

Oh sure. There are some very nasty arabicas about. Many Central American natural coffees can curl your toes, and I've had some Kenya m'Bunis that took my breath away...along with my lunch. Peru Segundas, Dominican Trillas, Mexican Desmanche, Group 2/Rio Zona Brazilians. Really, the problem is not the flavor of the Viet robs per se; in fact the cup quality has improved in Vietnam in the past 15 years. The problem is when you make the robustas 30 or 40 percent or higher of your blend.

[Jim Schulman]

But do you know of many or even any arabica's that make the Vietnamese robusta taste good in comparison?

I once got a sample of both Vietnamese Robusta and Arabica. The Arabica was worse by a long way, hot dog vendor's water at the end of a busy week.

[Sean Starke]

... hot dog vendor's water at the end of a busy week.

I love dirty water dogs!

[123coffee]

Mega coffee can always be relied upon to act in their own self interest. It is self interest that moved Proctor & Gamble to buy Millstone to get into the specialty-like business, and self interest that suggested the exploitation of the Gevalia name to US consumers by Maxwell House, and for Kraft to become the licensee/distributor of Starbucks to grocers. It is self interest that has focused NCA interest toward small specialty roasters, and self interest that now urges P&G and Kraft to put the Rainforest Alliance logo on some of their product, and Kraft to change the Maxwell House to an arabica blend in a can.

The Robusta market in London (LIFFE Robusta #406 Contract) has been particularly strong in recent months, making lower end arabica coffees appear attractive relative to robustas.

The folks at Maxwell House understand that they have been losing market share slowly since P&G purchased Folgers from the Folger and Atha families in 1963, and went national with the brand a few years later. Folgers is an arabica/robusta blended product, as is MH. The consumer has decided over many years that either Folgers coffee tastes better, or they have a better jingle, or red rather than blue is their favorite color.

The Maxwell House switch to an all arabica blend permits MH to make a statement of quality that appears on its surface to appeal to many consumers who now understand the word 'arabica� but have believed that they could not afford the arabica luxury on their own breakfast table, or who considered specialty coffee an elite yuppy product category. The Maxwell House branding makes 'pure arabica� all American. It is in Kraft's self interest to get the MH brands moving upward in market share as there are rumors that they are interested in selling the brand, and a brand on the move upward, even at the expense of the bottom line may be more interesting to a potential buyer than a moribund brand.

Should Maxwell House succeed as an all Arabica blend the removal of MH from the Robusta market will put downward pressure on Robusta values while sucking much of the lower end Arabicas from competitors driving them toward better grades in turn supporting better grade arabica prices.

There are risks in this product reconfiguration for Kraft as this may give Folgers a price edge as P&G has said that it intends to keep its arabica/robusta profile. Kraft has deep pockets and can afford to buy coffee for future delivery far out into the calendar. This will have to be part of their strategy as any unsuspected jolt to the arabica equilibrium could spike arabica prices leaving the Kraft people with Cheez Whiz all over their faces.

-Donald Schoenholt