Key points
Banbury is Mondelēz’s largest global coffee production facility and is set to get even bigger, following a £40M investment plan this year.
I’ve been here as plant director for three years, but joined the company as a management accountant 20 years ago, when it was called Cadbury Schweppes.
Over the years, I have slowly worked my way into the supply chain and operations side of food and drink manufacture. Before working in food, I worked in finance at PricewaterhouseCoopers.
Just before I came to Banbury, I was responsible for the reorganisation of Cadbury’s confectionery manufacture, following the company’s acquisition by Kraft in 2010. I built two new factories in Poland after we closed the Cadbury factory in Somerdale, near Bristol. We moved a load of products to Poland.
That was the first 100% supply chain management role I took on and the opportunity to come into coffee and work here followed.
This is mainly an instant coffee factory and one of the largest in the world, behind Nestlé. Here, we pack around 90M jars of instant coffee each year, which is either spray-dried or freeze-dried. Our biggest brand is Kenco.
However, we’re about to go into coffee capsule production following the announcement of a major investment in two new Tassimo lines late last year. The Tassimo lines will produce coffee-filled capsules, which go into Tassimo home brewing machines.
Over 700M capsules will be produced on the two lines each year. It’s a huge project for us. More than 80% of the capsules made here will be exported to western Europe, which will dramatically increase our exports, and the rest will be sold in the UK. About 70% of our £300M business comes from the UK, so the Tassimo lines will shift that balance.
It was really tough to win that investment. We were up against other plants in the company, mainly in Germany, but we were able to set out the best business case.
Competitive rates (Return to top)
Our ability to provide a competitively paid workforce, with flexible shift patterns, worked in our favour. But, it also helped that we could achieve very competitive rates on exports across the channel. We found it was more cost-effective for us to ship the Tassimo capsules from our site to Mondelēz’s distribution centre in France. It was cheaper to do this than to manufacture and export the same product from our sister site in Berlin, which supplies central and eastern Europe with Tassimo coffee capsules already.
There are 80 new jobs to come out of the investment and we will need to grind an additional 5,000t of coffee beans to supply the two new lines, which will be online in September and October this year.
The lines rapidly fill capsules before sealing them and packing them, however, that’s all I can say about the process at the moment.
Tassimo also presents the company with the opportunity to encourage consumers to trade up. For a cup of instant coffee, for example, consumers pay about 3p, but for a Tassimo coffee, it's about 27p. However, there's a long way to go before the UK coffee capsule market is as big as instant is. As a whole, products like Tassimo are a very small part of UK coffee sales. About 10% of UK households have a capsule machine of some sort, so there’s lots of work to do.
That said, the company’s revenues from capsule coffee grew by 70% last year and the market for capsule coffee is the fastest growing in the sector. This growth counteracts the 4% volume decline in the UK instant coffee market, which hit our business, giving it a 10% boost.
Although we’re working to up our product portfolio at this site with Tassimo, the majority of our business will still come from instant coffee. We produce 18,000t of instant coffee here each year and do that in two different ways – freeze-dried (6,000t) and spray-dried (12,000t).
Manufacturing process (Return to top)
The process for the two lines starts out the same. We truck in 36,000t of coffee beans a year – that’s a mix of Arabica and Robusta. The coffee is roasted and ground and then put into giant percolators. By using varying amounts of pressure and temperature, the soluble part of the coffee bean is extracted into a weak liquor, which we evaporate into a concentrated liquor. It’s at this point the two processes divide.
On the spray-dried line, the liquor is sprayed through hot air in a giant unit, where it dries and falls to the ground. We sometimes carry out a secondary process before packing where the powder is passed through steam to create granules for more premium brands. We use this process for our Kenco, Maxwell House and other standard instant coffee brands.
The concentrated liquor on the freeze-dried line goes onto a belt, is frozen, crushed and then put through a vacuum to extract the water in a process called sublimation. This is done without the coffee going from a solid to a liquid. It’s a gentler process because the liquor doesn’t come into contact with the same amount of heat used in spray-drying and produces a very premium product for our Millicano brand.
We’re also doing a lot of work on aroma management during the extraction process. When you make instant coffee its aroma weakens between the grinding and packing stages. But, we’re able to strip out the aromas during the percolation process, hold on to them and then put them back into the coffee before it’s packed. A piece of technology borrowed from the wine industry called the ‘spinning cone’ is used to capture the volatiles [smells] while the coffee is being brewed, so they are not degraded during the rest of the process.
Emerging Markets (Return to top)
While I said the instant coffee market is in decline, we’ve managed to slow it by tapping into new markets in Europe. For instance, we export 4,000t of our spray-dried instant coffee to emerging markets in Poland and Czechoslovakia to be used in a product called crema, which is an instant coffee with a foam on top.
Emerging markets have allowed us to keep our spray-drying assets more or less intact. The site is operational 24 hours-a-day, seven days-a-week. There are 400 people working here at the moment. In processing, we run a 6am2pm and 2pm10pm shift pattern, while in packaging we do a double-day shift Monday to Friday.
Manufacturing instant coffee is energy intensive and there’s a lot of steam production and water use. So, in the past five years, we’ve invested £4M in energy saving equipment. Methane gas is generated in our effluent plant, which is burnt for energy. The spent coffee grounds are also burnt for energy. Surplus high-pressure steam is sent through a let-down steam engine to produce additional energy.
In the future, I would like to see Banbury become one of two long-term global hubs for Tassimo with Berlin. If we manage to sustain growth, we could install up to four more Tassimo lines, which would mean more investment akin to what's going on right now.
The Tassimo capsules were actually invented at Banbury, so, for me, it's important we keep them in production at home.
Listen to our podcast in which Sinclair reveals how he will boost the site’s head count by 100 members of staff this year.
Factory facts (Return to top)
Location: Ruscote Avenue, Banbury OX16 2QU
Staff: 400
Products: Instant coffee and Tassimo coffee capsules
Output: 18,000t of instant and 700M capsules
Customers: Leading supermarkets
Size of site: 169,968 m2
Personal
Name: Paul Sinclair
Age: 49
Job title: Plant director
Domestics: Wife and three teenage children
Outside of work: I’m a Watford Football Club fan. I liked running and have run five marathons, but now I'm a massive fan of cycling
Biggest achievement: The job I’ve most enjoyed is this role at Banbury. We’ve improved the team and boosted the site’s efficiencies.