In January 2022, shortly after the European Commission approved Nestlé´s application “to place on the market cherry pulp from Coffea arabica L. and Coffea canephora Pierre ex A. Froehner as a traditional food from a third country” I spoke to one of the most experienced people in this field: Joel Jelderks. Here´s the interview:
Hello Joel, for those who don't know you, can you quickly introduce yourself in a few words?
Sure! Professionally, I'm a former “Red Bull” executive who found himself eventually in the coffee/cascara business thanks to my wife who, after we lived in Panama, came back to Europe and started a coffee import company.
Which was “Panama Varietals”…
Yes. Cascara was really a side project that turned into a full time project.
So she was your “motivator”?
More like the instigator!
Instigator! Okay; I´ve heard this happens! But today we are not looking backwards, today we are talking about the future, the perspectives that cascara has or might have in the European Union after the approval. It was a long process, and a bit of a painful process for some people in your field, since the ban of cascara happened. There's a lot written about you and from you. And the funny thing, or not so funny thing, is that the ban actually started because of you. So can we say you were the troublemaker?
I think it may look that way. When we started developing cascara products we ran into a roadblock in Austria, where we were informed that cascara was considered a novel food. Some of the facilities we wanted to work with to develop our products wouldn't work with cascara because it was novel.
So, we didn't write the law that caused the ban; we merely ran into it. We decided to pursue the novel food application because we wanted to legally sell our products in the EU. When we submitted the application, that got every health professional´s attention in each EU country, and that's when they actively started enforcing the novel food law.
Before that point, the cascara that was available flew under the radar because it was mostly available in the specialty coffee channel, which nobody really notices from the Health Authority standpoint. But as soon as an application came in, then it was right in front of them. And the first thing they did was go to Google, type in cascara and the name of their country and the city, to see who's selling it. And that's nearly what happened. We simply were following the process because we ran into that roadblock, and that just triggered the enforcement of a law that was already there.
Got it! But now, due to the approval of Nestlé´s submission, everybody's on the safe side. Now with that we should look to the future and talk about the prospects that Cascara might have in the European Union. A number of companies are sitting already in the starting blocks. When will they start running?
I think you're going to see the first cascara beverage products in the EU sometime this spring, at least in terms of introductions, soft launches maybe. You'll see the real push start spring of 2023 because for most companies, spring is typically the time that you would release new beverages. Since we're already up against that cycle, I think you'll see most of the launches that are being planned occur during that time.
Also, Europe along with the rest of the world is having some supply chain issues, and this includes packaging. And that will particularly affect startup companies. Some of the smaller companies might have trouble getting access to cans or bottles or other packaging materials. This is also going to slow down the process.
Okay, now we know when they start running, but in which directions will they run? I mean, your application was very different and deliberately more limited in scope than those of Nestlé or Lavazza for instance. What kind of cascara products can we expect?
I think the approval is very wide in terms of what types of beverage product it allows, whether in tea form or Ready To Drink beverages. I don't know everyone who's developing, but I think the majority of the activity will be around Ready To Drink beverages. I think you'll also see the raw product available in the independent coffee shops and whatnot.
And then I believe that'll be followed by perhaps other kinds of tea and coffee type preparations of the product. Maybe any way that you see coffee or tea being prepared, there's experimentation going out in the market around all those different preparation methods. The question is who will launch when. And that's the open question of when people actually enter the market.
But without good marketing it will not be easy to sell a novel product…
I think consumer demand is key for any product to be successful. Businesses in the EU have to realize that 99.9% of the consumers don't know what cascara is. Most don't even know that coffee comes from a fruit. So there's a lot of education that has to happen and that takes time. People want to know what they're drinking, where it comes from, what it does.
More importantly, it has to taste good. And sometimes new brand founders forget this. They get so excited about the story that they forget that whatever you're serving has to taste very good, particularly if that's the first time the consumer is trying it, so I don't think it'll be a fast process. I think there's a natural, organic development that needs to happen. It will probably happen faster in Europe. Part of that's because of the ban and built up demand. You also have quite a number of companies in Europe working on it, both small and large. All those companies will be spending time and money to educate consumers about what cascara is, and that should help create a lot of momentum.
Indeed, because as soon as people hear or read “it´s made from coffee fruit”, they have coffee in their mind and might be disappointed because it doesn't taste like coffee! Will it be a challenge to bring in people's mind that cascara tastes different from a cup of coffee?
Yes, the biggest benefit and challenge with cascara is that it´s related to coffee. Coffee, over hundreds and hundreds of years, continues to be a growing topic, but cascara also needs to have its own identity away from coffee, particularly when we talk about flavour. The marketing people have a good challenge about how to create an association with coffee but also disassociate from coffee from a flavour standpoint.
The more talented marketing people out there will devise some creative ways to get the point across of what cascara is, and then make sure that there's a proper expectation of flavour. Because people who are tasting good cascara, they immediately have that surprised look on their face that says, “It doesn't taste like coffee! Or, is it coffee that really does taste like fruit?” It's really fun to watch people at a trade show try a good cascara for the first time, because they all have the same look on their face: "Oh wow!". That's what the marketing people need to capture, they need to capture that pleasant moment of surprise. There's such a good background story to cascara, but it still needs that initial moment of kind of the “wow” factor.
Sounds like a plan! Please allow me to have a quick look back in the past. After the ban happened you launched Caskai, a cascara drink in bottles, but in the US. What is the status quo?
We sold Caskai in the US through August of 2019. Shortly after that it became untenable because of difficulties with COVID. We were mostly selling in coffee shops, many of which closed, particularly in the New York area. Our shipment costs went through the roof as our a product was exported from Austria and imported into the US. We basically decided to stop in the US, focus on getting cascara approved in Europe and then revisit the US market later.
Got it! Regarding the US market, Caskai is kind of “on hold”. But let's go back to the future. You mentioned that we will see more RTDs on the shelves of supermarkets in the next couple of years. Besides this: based on their approved application, what do you think Nestlé has up on its sleeves? What can we expect?
I don't know that much about what Nestle's doing other than what I have seen them doing on the regulatory side. Of course they have their NATIV cascara drink that they launched in Australia, but I don't know what they have planned for Europe. They obviously have something planned, otherwise they wouldn't have spent time doing the regulatory work. I think it's good to see a big company like that be so involved. That's additional investment coming into the marketplace that will help educate the broader consumer marketplace on what cascara is.
And Lavazza, do you know anything about their plans?
I don't know specifically what they're planning. We'll have to wait and see. I think these bigger companies with strong brands have a lot of different directions they can go with cascara. And I hope we see them go in several different directions because that will also help the marketplace.
That's a good lead into my next question: there are companies in the US like AFS (Applied Food Science), that produce a cascara powder extract, or like Javo Beverages that makes a liquid cascara extract. Olam is also on the rise. Can we expect extract production in the EU too?
For sure, it’s already happening. There are several companies that either have developed cascara extract or are working on that now. Part of the reason is also that when you deal with a filling company or a co-packer only a few of them can actually take the raw product and brew it or process it at their facilities. Most prefer it in a concentrated form that they can just blend with water and other ingredients.
Having said this, how would this collide with the Kraft Foods patent for the EU and US which is called “Methods of making a beverage derived from extract of coffee cherry husk and coffee cherry pulp”. It's a patent from 2006 for the US, and 2007, if I remember right, for the European Union.
That’s a good question for an attorney who specializes in patent law. I'm of course aware of it and read it. There's the question if they want to aggressively try to defend that against other players. There's also the question if it is a defensible patent.
There's different methods of producing concentrates and different processes. The companies that are doing that, I assume, have done their homework and said, “well, the way we're doing it is different.”
The interesting thing is the early date of the patent, at a time when no one had cascara on their agenda.
When nobody's watching, it's a good time to file trademarks and patents. Smaller companies might not be thinking that far ahead.
What about cascara flour? Like the one made by The coffee cherry company. Or could that company, which has grown quite a bit, even take over that segment in the EU?
I don't see anybody having an advantage in the EU because of their size per se. I think it's early enough in the market. Two things will come into play: quality and price. And there are companies to whom we provide cascara who want a very, very high grade cascara, one which we call “premium sundried cascara” and which tends to be a naturally processed one from specialty grade coffee grown at high altitudes. And there's other companies who might not need that high flavour quality, who might just be after the name, but also the nutritional aspects of cascara, and might be able to deal with more of a commercial grade cascara.
I think there's room for everybody in the market. Again, everybody might be jockeying for early positioning. The market is very small in the beginning; and so you know, you're fighting over something really for the future, until some products really get out there and get momentum and consumer demand grows. The cascara market in Europe is currently extremely small, and will be for a few years. I know almost all the players who are trying to sell cascara, I don't see anyone taking over the market per se.
I tasted The coffee cherry company's flour. 15-20% added to regular flour works fine. But if you buy it in small quantities it´s quite expensive. So, who are their (wholesale) clients?
The only thing approved in the EU right now are cascara beverages. If you're selling cascara you're limited to providing it to somebody who's making a beverage.
This means “The coffee flour company” cannot sell its product in the EU?
You're not allowed to sell any cascara or cascara products to consumers right now, except for beverages. That was the only approval. It'll take another novel food application in order to get it approved for other uses.
What about compounds that are extracted from cascara, bio actives like antioxidants for example?
That's different. If you're extracting let's say caffeine, from what I understand that's not covered under this because the final format is no longer cascara, it´s caffeine. I think you'll see some experimentation in the extraction business for sure. But they are after single components; it might be a certain polyphenol, caffeine etc.
That could be applied in sunscreens for example…
Exactly. But the cosmetics industry has a whole another set of approvals they have to go through, another set of regulations.
But if someone extracts caffeine, then it's a new product. It's not cascara, it's caffeine. This should be no problem.
I think as long as it's chemically caffeine, you're probably fine.
So which will in your opinion become the main cascara strains?
Companies will have to decide on what their marketing message is. But I think the functional aspects of cascara will be a big topic which would put you into the health, functional and energy drinks.
I also think we´ll see it in lighter concentrations – Nestlé uses the term “Adult Social Beverage” for its “NATIV” cascara RTD in Australia – or in other non-alcoholic beverages. I think cascara can, as an ingredient, fit into multiple categories, which is why it's so interesting. And again, the clever marketing people are gonna have to figure out how they want to position their drinks, and a lot will come down to concentration. Obviously, if you're doing a highly concentrated cascara beverage you have a stronger functional story.
Some extract companies offer cascara extract as a sweetener. I tasted some of them. I'm not so sure if I personally would use them as sweeteners.
The ingredients industry is trying to find its way, trying to find the selling points of it. It will fall into place and it'll morph over time. At the end of the day, it's the consumers who are going to make the decision on what types of products they like with cascara in it. It'll be very interesting to see because you'll see so much interesting innovation to try to address that.
Absolutely. And now with all the new fermentation methods in coffee, from anaerobic to thermal etc., all this creates new flavours in coffee. Will this happen with cascara too?
Yes, there's some people working on that. Some farmers who I know are not only fermenting but also adding bacteria to the cascara itself to try to develop more flavours, reduce contaminations, etc. And I'm sure that will, like in coffee, open up a whole new flavour spectrum. And those are all really positive things. It may take a while before a final product is ready, but from my perspective, it's what you like to see.
It's why it concerns me when patents could affect people's ability to put products on the market. Because when you want to see a healthy market, you want to see a lot of innovation and experimentation. And 90 plus percent of it won't work out in a final product, but that's okay. It's all part of the creative process to find out what consumers respond to. I'm a big proponent of sharing information and even trying to help younger people or startup companies. We're at the early stages of a new ingredient. And you don't want to kill innovation at this point. You want to nurture it.
That's something we all hope for! And to pick up on startups: will young and small companies have a standing against the “big guys” like Nestlé, Lavazza, and whoever will jump on this train?
Well, you have to think that the RTD business in general is an extremely, extremely competitive business with 1000s of new drinks coming out every year. So what I tell new companies or young people wanting to enter the space is: Yes, you have something very new and exciting with cascara. And you're entering into a very entrenched industry that still has lots of room for innovation. But you're going to run into the same hurdles that everyone else does like fighting for shelf space etc. That's not going to change.
The only thing it's going to change with cascara is that you have a fairly new story that hasn't been told before. There's room for you, but it won't be easy. I think there's always room for smaller, more innovative players, and sometimes it's better to start off small and do something really well in your home market, and then if you gain traction with the local consumer base, then decide if you want to go bigger.
Traditionally, the bigger companies aren't great at innovation, they're just too big. I think the beverage industry has taken notice and that it's why you see so many startup programs in the food sector and beverage sector because the bigger companies need these new ideas to fuel the innovation.
Many of these big food and beverage companies have their own acceleration hubs and labs, where startups can develop their products; and where the bigger company gets a share of its creativity from.
Exactly. So if people have an innovative idea, I wouldn't be discouraged that the bigger companies are involved. That might actually be creating an opportunity. The bigger companies have recognized that a new product like cascara could be a significant category or ingredient in the beverage market.
That strategy can definitely turn into a win-win situation. But I want to shift the view to coffee growing countries, will they continue to be suppliers of raw materials? Or will they start to upscale cascara themselves to more profitable products?
You'll see both, I believe. For the EU the first hurdle the coffee farmer has to address is: can he meet the specifications? The specifications are broad in some areas and narrow in others, and specifically conforming to the microbiological specifications and the pesticide residue limits will be very difficult for some farms.
There's a lot of cascara being produced right now that will not get into the EU or into EU based products. The question is how can they produce a food safe cascara that meets the requirements?
But I think you'll see an upscaling in the coffee growing countries too. It will come down to farmers' access to capital to produce a more finished product and other resources that they would need to make that happen in their community.
In some cases, it won't make any sense; it's probably more economical to produce the raw product and export it. So, I would say regarding cascara, right now, the lower hanging fruit is just to ship the product that you're producing. You're not having to spend a lot of extra time and money. The question is: what will it take for you to produce a finished product? And that's a lot more difficult than it might seem.
It depends on the price that we are willing to pay for finished products. On the other hand, the prices for a quality cascara are quite good so far, although there is a wide price range.
We basically told the farmers that we will pay them a specific price, but we need consistent quality from year to year. And we're willing to pay a little bit higher price to guarantee that they are hitting that quality because it's for our drinks. We don't do a lot to our cascara; we fresh brew it. So we're relying on the flavor and food safe quality of that cascara without really any additional treatment.
So I think you'll see a wide range of pricing based on quality and, of course, the size of the farms. And there are clients who will be looking for the very, very best cascara and there are clients who might be looking for commercial grade cascara. There's room for both, it's like coffee.
But wouldn't we need a grading system for cascara?
Yes, there should be a grading system applied to cascara. I know there's different people talking about it. Some people have spurred some early work on that. But yes, there should be a grading system. I think both coffee graders and tea graders could work well together on it.
We actually applied for a cascara project that includes the creation of such a grading system. But it's too early to give any details. We are still waiting for approval. Ok, last but not least: how many stars out of five would you give for a prosperous future of cascara in the EU - no matter in which form, as beverage, extract and whatnot.
Definitely a five! There's a lot of potential and excitement and innovation happening.
And how many stars would you give yourself for Caskai, your own product?
Four. There's always room for improvement.
I expected a six! Joel, thank you so much for this interview!