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Single-Cup Coffee Reduces ‘Waste,’ Bean Demand, Illy Says

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March 21 (Bloomberg) -- Expanding sales of single-cup coffee packets may trim bean consumption by reducing the amount that typically ends up as beverage “waste” from a larger pot, according to Illycaffe SpA.

Demand for coffee may decline 1 percent in the long term as the single-cup servings allow consumers more control over bean usage than traditional drip-coffee makers, Chief Executive Officer Andrea Illy said yesterday in an interview in New York. Coffee drinkers using drip machines may make a whole pot, while only having one or two cups, throwing the rest out and using more beans than they needed, he said.

“Depending on how fast portion systems penetrate households, we could see a drop in per-capita consumption of about 5 percent,” Illy said. “Overall, demand may only drop 1 percent because coffee drinkers who used to take two or three cups a day will drink more.”

Illycaffe, based in Trieste, Italy, will announce a partnership soon that involves the design of a new machine to compete in the single-cup market, the CEO said. The closely held company, which makes specialty coffee and sells the brand in 140 countries, had revenue of $434 million in 2010, according to its website.

Arabica coffee for May delivery gained 2 percent to $1.8725 a pound at 10:33 a.m. on ICE Futures U.S. in New York. Before today, the price declined 19 percent this year.

In 1933, Francesco Illy, the grandfather of the current chief executive, developed the modern espresso machine.

Sales of coffee by U.S. retailers climbed 19 percent to $4.52 billion in the 52 weeks ended Dec. 25 from a year earlier as demand increased for ground beans and single-cup packets, SymphonyIRI Group, a Chicago-based research company, said on Jan. 24. Single serve accounted for 11 percent.

To contact the reporter on this story: Marvin G. Perez in New York at mperez71@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net