Charles Goulding and Andressa Bonafe of R&D Tax Savers discuss 3D printing amidst the restructuring in the coffee business.
As the beverage market is inundated with a myriad of new and alternative products, coffee remains a high-growth category. One important attribute of the coffee segment is constant innovation, which includes cold brew, lattes, flavored coffees, seasonal offerings and life-style branding. This article describes the ongoing global restructuring of the coffee market and suggests that the 3D printing industry should endeavor to ride the coffee wave. 3D printing coffee applications can be supported by R&D tax credits available in many countries, including the United States.
The Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
New or improved products, processes, or software
Technological in nature
Elimination of uncertainty
Process of experimentation
Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum Tax and startup businesses can utilize the credit against $250,000 per year in payroll taxes.
The Restructuring of the Coffee Industry
The coffee segment is going through a major wave of acquisitions that promise to transform what has traditionally been a fragmented market. Despite continuous efforts to develop new and alternative beverage products, coffee has consistently experienced high-growth demand. Recent transactions indicate that legacy players and big names in the food and beverage industry are turning to successful coffee companies in order to diversify their portfolios. Examples include:
1. Coca-Cola Co.: In its biggest acquisition in eight years, Coca-Cola Co. has stepped into the coffee market with the purchase of U.K. chain Costa for $5.1 billion. The deal was announced on August 31, 2018, and has been seen as a strategy to face changing consumer preferences, which increasingly shift away from sugary soda.
2. JAB Holding Co.: Owner of high-end coffee brands including Peet’s and Stumptown, Reimann family’s investment company JAB has recently expanded its presence within the food and coffee market. In May 2018, JAB acquired U.K. food-and-coffee chain Pret A Manger for $2 billion. With over 530 locations around the globe, Pret A Manger markets organic coffee as well as sandwiches and salads. JAB’s growing coffee empire includes Keurig Green Mountain Inc., Espresso House, in Sweden, Baresso, in Denmark, and Balzac, in Germany.
3. Nestlé SA: Over the last couple of years, Nestlé has been actively striving to strengthen its position in the coffee business, particularly in the U.S. In May 2018, the Swiss company acquired the rights to market, sell and distribute Starbucks packaged coffee and tea products globally. The $7.15 billion deal is expected to significantly expand the international reach of Starbucks brands in Consumer Packaged Goods (CPG) and Foodservice while considerably enhancing Nestlé’s presence in the global coffee market, which already represents its largest high-growth category. In November 2017, the food and beverage giant bought Chameleon Cold-Brew, an Austin, Texas-based manufacturer of organic coffee concentrate and ready-to-drink coffee. This move not only tapped into the growing U.S. premium java market but also equipped Nestlé to better respond to the rising demand for cold coffee. Only a couple of months prior, the company took a majority stake at Blue Bottle, an artisanal coffee roaster and retailer headquartered in Oakland, California. Blue Bottle has been an important player in the so-called third wave specialty coffee, a growing market segment that already accounts for 15 to 20 of the U.S. coffee demand.
Restaurant Brands International Inc.: Purchased by Brazilian investment firm 3G Capital for $11.4 billion in 2014, Canadian-based coffee-and-doughnuts chain Tim Hortons was merged with Burger King to form Restaurant Brands International. Since then, Tim Hortons has expanded internationally, adding locations in the Middle East and the Philippines. In July 2018, it unveiled plans to open 1,500 stores in China over the next decade.
Coffee and 3D printing
3D printing companies should target their innovative efforts towards taking advantage of the growing coffee market. Previous experiences from the companies referred to above shed light on wide-ranging business opportunities.
Coca-Cola has utilized 3D printing for personalized marketing and sustainability efforts. Aiming to promote its “mini” bottles in Israel, the company set up a 3D printing lab where visitors were scanned and then offered 3D-printed miniature versions of themselves. The soda giant also launched the EKOCYCLE Cube 3D Printer, developed in partnership with 3D Systems and designed to make additive manufacturing technology more accessible for home users. The innovative machine prints with a filament cartridge partly made from recycled 20oz PET plastic bottles, allowing consumers to transform discarded plastic into a variety of functional items.
Nestlé has been researching strategies to advance the use of 3D printing technology in the food industry. Major potential areas for application include mass customization, eco-efficiency, packaging, and processing. Initial efforts included 3D printing with chocolate. Similarly, Starbucks has explored inventive additive manufacturing applications, including a partnership with start-up Dream Pops to market 3D printed ice cream. The coffeehouse chain also included a 3D printed tea bar in the Starbucks Reserve Roastery in Shanghai.
The growing number of 3D print models for Keurig and Nespresso accessories available online also points to a significant market potential. Examples include various designs of capsule and k-cup holders, drip trays, and dispensers. Headquartered in Cheyenne, Wyoming, Brewista combines advanced technology with the craftsmanship and know-how of brewers and roasters from around the world. It has recently launched “Brewista Printables”, a series of coffee-related products that can be created with a 3D printer. Free downloadable files include a portafilter stand, espresso cup platforms and drip tray support for Brewista’s Smart Scale machines.
Yet another innovative example of 3D printing in the coffee market comes from Israeli company Ripples, manufacturer of 3D printing machines that create images and messages on the top layer of frothy beverages. The Ripple Maker prints high-resolution designs in just 10 seconds and can be used in a number of caffeinated drinks, including lattes and nitro cold brew coffee.
As the coffee market undergoes major restructuring, the opportunities for 3D printing applications multiply. Coffee has traditionally been a high-growth segment, a trend that could be intensified as food and beverage giants invest in acquiring and globalizing successful coffee businesses.