GENET archive


2-Plants: GE decaf coffee researcher in search of capital

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TITLE:  Waialua firm developing decaf plant
SOURCE: The Honolulu Adviser, USA, by Sean Hao
DATE:   Jul 14, 2003

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Waialua firm developing decaf plant

John Stiles, director of research for Integrated Coffee Technologies Inc.
in Waialua, has worked since the early 1990s trying to develop a
genetically engineered, caffeine-free coffee plant that could
revolutionize how decaf coffee is made and tastes.

Stiles' decaf plants, which he had hoped to plant in the next year, would
eliminate the need to chemically remove caffeine from coffee beans.

But his plans have been pushed back at least a year as Integrated Coffee
Technologies seeks money to continue his research into shutting down the
gene in coffee that triggers caffeine production. Once the decaf coffee
plant is developed, it will take another two or three years before it
starts producing a good crop of beans.

The company suffered a setback when technology and financial partner
ForBio Ltd. of Brisbane, Australia, was liquidated in 2001. Integrated
Coffee was able to secure needed patent licenses to continue its research
since then, but like many private biotechnology companies, it has had
problems attracting venture capital, Stiles said.

Stiles said the capital climate is improving and the company soon hopes
to land at least a portion of the approximately $5 million needed to
bring the plants to market. Based on prior work, Stiles said he's
confident the company can overcome the technical challenges involved; the
key concern is how will coffee produced from decaffeinated trees taste?

"You can't say for sure until you have the beans in the cup, but
everything we've done so far tells us we can be successful," he said. "I
think it's going to taste pretty good. Caffeine has a bit of a bitter
taste to it."

If successful, Integrated Coffee would try to profit by selling farmers
caffeine-free coffee plants and by licensing coffee houses and others
looking to serve caffeine-free java. Integrated Coffee's caffeine-free
products would target the upper-end of the market where gourmet and
specialty coffees command premium prices.

That segment of the coffee market, which represents less than half of all
coffee sales, increased from $7.5 billion in worldwide retail sales in
1999 to $8.4 billion last year, according to the Specialty Coffee
Association of America.

A caffeine-free product would allow those who can't tolerate caffeine, or
who are under doctor's orders to avoid caffeine, the pleasure of a good
cup of joe, said Ted Lingle, executive director for the association.

"A certain percentage of the population really has an intolerance in
their system to caffeine -- any amount of caffeine impacts their nervous
system," he said. "Definitely a caffeine-free product would appeal to
these people."

Sales of instant decaffeinated coffee in the United States only
represented 3.6 percent of the $6 billion U.S. coffee market in 2002.
However, instant decaf sales are expected to rise steadily over the next
year, from $223.4 million last year to $244.7 million in 2007, according
to New York market researcher Datamonitor.

Integrated Coffee isn't the only company looking to tap that market by
creating caffeine-free coffee plants. Researchers at the Nara Institute
of Science and Technology in Japan announced last month that they've been
able to engineer a robusta-variety of coffee plant to create beans with
70 percent less caffeine than normal.

Stiles said his work, which involves the more commercially viable arabica
bean, so far is not under threat by similar work being done in Japan.

"That's more of an academic project than a commercial project," he said.

At Cornwell Estate Kona Coffee in Kailua, Kona, decaffeinated Kona coffee
represents just 2.5 percent of sales. The company started offering the
product for sale in 1999 and interest has increased slightly each year,
said Bruce Cornwell, owner of Cornwell Estate.

The coffee, which is shipped to Switzerland for decaffeination then back
to Hawai'i, sells for about a $4-a-pound premium over regular Kona
coffee. While the decaf version tastes good, it doesn't match the full
flavor of regular Kona coffee, Cornwell acknowledged.

He said farmers would be interested in a decaffeinated coffee tree if it
were cheaper and resulted in better-tasting decaf coffee. Cornwell said
he didn't see an aversion to genetically-altered foods as a factor.

"Farmers would grow it and it would save money as long as the flavor is
there," Cornwell said.

Dick Petersen, director of marketing for the Hawaii Coffee Association,
agreed that Stiles' techniques could help lower coffee production costs,
but flavor will determine whether caffeine-free trees are a success.

"The jury is out on how well it tastes in the cup," he said.

Stiles' passion to develop a caffeine-free coffee started while he worked
as a researcher at the University of Hawai'i College of Tropical
Agriculture and Human Resources around 1991.

Hawai'i is the only state in the United States with a commercial coffee
industry. Based on a mid-season survey of growers the state's coffee
production is expected to increase 6 percent to 8.5 million pounds and
$19.6 million in farm-level sales during the 2002-03 growing season,
according to the Hawai'i Agricultural Statistics Service.

Stiles said he wanted to find a Hawai'i-oriented application for the
growing field of genetic research. Integrated Coffee also is exploring
methods of designing coffee plants that are more resistant to disease and
that can be triggered to ripen on demand.

Coffee research "just seemed like an obvious thing to do with biotech,"
Stiles said. "When you put together the technology with the interest and
expertise of Hawai'i coffee growers, I think it's the natural thing to do."


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