Taking a dip: How UN award-winning Philippines firm is challenging instant coffee’s market dominance
According to Varacco Co-Founder and COO Ariestelo Asilo, the firm’s coffee brand, Circa 1740, is different from regular instant coffee as it is made of pure coffee – but offered in a bag.
“When we were starting the business, our market analysis showed that some 90% of Filipinos drink instant coffee regularly and the market is worth some US$3.2bn, making the Philippines one of the largest instant coffee drinking markets worldwide,” Asilo told FoodNavigator-Asia.
“Locally though the instant coffee market is mostly monopolised by Nestle, and to us we’d be glad to get just 1% of this market from them with our better-quality coffee.
“Our coffee is pure coffee, not instant coffee that contains lots of sugar and other additives – every item is at least 90% coffee and a maximum 10% of milk or spices, depending on the flavour.
“This is packaged in our patented dip pyramid bags which offers all the convenience of instant coffee – so consumers can have the aroma and taste of rich, full-bodied coffee in a matter of seconds by just adding water, without needing to use a coffee machine.”
The dip bags are currently made of food-grade nylon, which is not 100% biodegradeable, but Asilo told us that work is in progress to improve the sustainability credentials of the firm’s star invention.
“We wanted to use paper to make it more sustainable but could not, as we discovered that it would affect and decrease the taste of the coffee,” he said.
”So now we are venturing into looking for other types of dip bag materials as we strive to make the dip bag 100% eco-friendly in the future.”
Lower income consumers were the firm’s original target demographic, but as their sales grew, they eventually found that the consumers most interested in their dip coffees were middle-income professionals from professors to businesspeople.
“This is likely because this is the group willing to pay a bit more for better quality – each packet of our dip coffee is about PHP50 (US$1), and here you could get five packets of Nestle instant coffee for that price, but for us, maintaining the purity and focusing on the coffee is the most important,” said Asilo.
“As the popularity of the coffee rises, we have also taken the opportunity to promote Filipino culture and heritage on the packaging – e.g. our Pure Black Coffee is named Gabriela Dip Coffee, after Gabriela Silang who was the Joan of Arc of Ilocos in Philippines, the leader of the independence movement from Spain.”
Varacco currently has six different coffee products: Pure Black (Gabriela), White Chocolate (Teresa), Sweetened with coconut sugar (Melchora), Peanut (Marcela), Natural 3-in-1 (Josefa) and Chili (Gliceria).
Its products are available at its own restaurant Timplado, various corporate shops, online platforms including Shopee and Lazada, and will also be launching into supermarkets after the impacts of COVID-19 settle down.
UN Small Business Award win
Varacco was recently named one of the 50 Best Small Businesses in the United Nation’s Good Food For All competition, which selects winners for how the business contributes to healthier, more sustainable and equitable food for the communities they serve.
Apart from its healthier coffee creation, the firm has also been involved with coffee research to help the farmers they work with in Batangas, Philippines, particularly in using digital technology such as IoT to improve productivity and quality using remote sensing.
“We work with local farmers to collect their coffee, then after blending, grinding and roasting this is brought to communities such as the disabled or mothers, which we hire and train to package so as to help them with income,” said Asilo.
“All of this is then brought back to our own manufacturing plant for final packaging and quality assurance before going to retail.
“There is a very real concern here in the city of Batangas that coffee production is going down, because Batangas used to be the top coffee producer in the country and is now only in the top 12 – but there is a lot of historical significance for coffee in this area, as the first coffee in Philippines arrived via Batangas back in 1740 (hence the brand name) – and it would be such a pity to let that slip away.
“That’s why so much more research is needed to keep coffee production in the area going, to increase productivity and quality so we can compete with other coffee nations like Vietnam, Indonesia or Colombia.”