president.
If you’re a native Rhode Islander, chances are you’ve squirted a glob of coffee syrup into an ice-cold glass of milk at least once in your life.
If you’re not a native, however, there’s a good chance you’ve never tried coffee milk – and you might even think it’s an odd choice for the official state drink, as designated by the state legislature in 1993.
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That’s always been the problem for Autocrat, the Lincoln coffee and syrup maker: How do you convince the rest of the world that cold coffee isn’t a bad thing?
“We sell the equivalent of 20 million servings of coffee syrup a year in the greater Rhode Island area, in a population of 1.5 million,” said Richard M. Field Jr., the fourth-generation president of Autocrat. “Imagine what you can do with a population of more than 260 million in the United States and the rest of the world. But the question has always been ‘How do you get beyond the traditional greater Rhode Island market?’”
That question, however, has been answered – and not by Autocrat, but by the broader marketplace, in the form of ready-to-drink coffee beverages such as Starbuck’s Frappuccino.
Dozens of bottled cappuccino drinks have flooded the beverage market, with heavy hitters such as Folger’s and even Coca-Cola entering the fray with new brands. What was nearly a non-existent market just five years ago has blossomed into a $300 million industry, according to Beverage Marketing Corp., which tracks the global beverage industry.
Autocrat has seized the opportunity – but not via the bottles of coffee syrup so affectionately known by many Rhode Islanders. Instead, the company has shifted its emphasis to tap the rich vein of the coffee-extract market, supplying coffee flavoring to those same companies making bottled cappuccinos.
“We don’t make iced cappuccinos; we make them taste better,” Field said, borrowing from the well-known slogan from chemical company BASF.
Autocrat’s flavorings also are found in many well-known brands of coffee ice cream, frozen yogurt and even snack bars. (Autocrat will not disclose its customers, saying only that it supplies “the country’s largest dairy companies.”)
The coffee-flavoring strategy has thrust the 107-year-old company into growth mode. Autocrat plans to break ground next month on a new warehouse in northern Rhode Island that will double its distribution capacity. It also plans to double the size of its coffee-extraction facility at its Lincoln headquarters, and it expects to boost its roasting capacity by 30 percent next year.
Field says the company’s work force will grow to 150 workers next year – up from 100 employees just three years ago. It also has moved aggressively into the Asian market, particularly South Korea and Japan, where Field said there has been a big influx of cold-coffee beverages.
Autocrat’s strategic shift has not come overnight. It began experimenting with cold cappuccino drinks in the early 1990s, “before anyone else,” Field said. But the emergence of the ready-to-drink coffee market provides Autocrat with a lucrative niche that Field said will drive the company’s growth in coming years.
“We’ve been very successful in finding the niche market – cold coffee drinks – in a coffee industry that is otherwise fairly flat,” Field said.
Sales of ready-to-drink coffee beverages jumped 23 percent in 2001, after growing more than 20 percent the year before, according to Beverage Marketing Corp.
Large dairy producers and soft drink companies are zeroing in on the high-growth segment, partly because they see the chance to capture the large 18-to-24-year-old demographic. That age group consumes twice as many cold coffee drinks as any other age group, according to the National Coffee Association’s Drinking Trends 2002 survey.
“We see the ready-to-drink coffee beverage market as a tremendous opportunity,” said Charles Kinsolving, brand manager for the coffee-milk brand Folgers Jakada, which was launched in February by Morningstar Foods, a subsidiary of Dallas-based Dean Foods.
Kinsolving said Folgers Jakada’s biggest competitor is the Starbucks Frappacino brand, which has a stranglehold on the ready-to-drink coffee market, with more than a 70 percent market share. Other beverage companies that have moved into the space recently include Arizona Beverage Co. and Coca-Cola, which acquired the Planet Java brand.
Autocrat’s strategic shift marks the latest metamorphosis for the company, which was founded in 1895 by Field’s great-grandfather, Frank O. Field, as a wholesaler of “the most delicious coffee you ever tasted.”
During the 1950s through the 1970s, Autocrat’s main business was retail sales of coffee, tea and syrup. It then switched its focus to the food-service industry in the 1980s, targeting a booming restaurant business, and later bought out Warwick-based Eclipse Syrups.
While Autocrat has spent much of the past decade building its coffee-extract business, the company hasn’t abandoned its other lines. It still is very much a coffee roaster, selling gourmet coffee – including its own Newport Coffee Traders brand – to more than 1,500 restaurants in southern New England.
And, of course, plastic bottles of coffee syrup – the product that Rhode Islanders identify with most – still line the shelves of stores throughout the state.
“That’s a very small portion of the total business,” Field said, “but there’s a lot of tradition behind it.”
