Success of Mocha Mix Spilling Over Into Marketplace : Trends: Liquid non-dairy creamers are a $40-million business because of cholesterol and other health concerns. Carnation’s entry debuts in January.

Half of all cups of coffee in the United States get creamed, but who’s counting?

Presto Food Products, for one. And Carnation, for another.

Presto, a small City of Industry company, has had the West Coast market for liquid non-dairy creamers much to itself since introducing Mocha Mix in 1962.

The soy-based creamer, which for 15 years was promoted by Steve Allen and Jayne Meadows and is valued by many as a no-cholesterol alternative to milk products, last year outsold half-and-half in Southern California, according to Presto. And company sales have been rising 20% annually as Presto has embarked on a gradual coast-to-coast rollout of Mocha Mix, a “cash cow” that accounts for about 25% of the company’s sales.

But giant Carnation, a Los Angeles-based subsidiary of the Swiss company Nestle, is getting set to challenge Mocha Mix come January, when it goes nationwide with a new liquid version of its powdered Coffee-mate creamer.

At stake is a product category that industry observers estimate could grow within four years from its current $40 million in annual sales at retail to more than $150 million as Americans become increasingly aware of cholesterol intake, milk allergies and other health concerns.

Presto officials liken Carnation’s move to Goliath going after David. After all, noted Bruce Coffey, Presto’s aptly named chairman and chief executive, Carnation has the marketing oomph and the distribution system to make a national expansion a piece of cake.

Presto, on the other hand, has been painstakingly pushing into new markets outside its Western region since 1986, attempting to develop a national following. Mocha Mix is now in Kansas City, Denver, Chicago, St. Louis, and several cities in Texas and Florida. By year-end it should be in Minneapolis, Milwaukee, Detroit and Grand Rapids, Mich.

“Our success obviously attracted others,” Coffey said in an interview at Presto’s headquarters.

Since its founding in 1937 as a manufacturer of aerosol whipped cream for the food trade, Presto has grown by getting into profitable product segments with limited competition. It projects $83 million in sales this year.

In addition to making Mocha Mix creamer, it packages and sells frozen desserts under the Mocha Mix and Jon Donaire labels and packages private-label non-dairy creamers and whipped toppings for such merchants as Vons and Ralphs. It is the largest producer of individual creamer packets in Southern California and has a sizable food service division that sells creamers, toppings, dressings and seasonings to restaurants.

Key to Presto’s success, Coffey said, has been finding “special niches where we could do a good job.” Although the company does not disclose earnings, Coffey said profit growth “has kept up with sales,” which have ratcheted up at a 20% rate since 1985’s $40.4-million level.

The privately held company is owned by relatives of founder Melvin S. Morse, who died in 1983. Coffey, who has an MBA from UCLA and was formerly a vice president of Chase Manhattan Bank, is married to Morse’s daughter Marty and has been with Presto since 1980.

Spearheading much of Presto’s growth is Glynn Morris, a 20-plus-year Carnation veteran who joined Presto last January and was recently promoted to president and chief operating officer. Morris hastens to note that he never worked on the Coffee-mate team at Carnation.

But he has followed that product’s progress closely as it has undergone testing in Denver and Dallas this year.

“Our experience . . . shows that they have been able to gain significant market share very quickly due to their name and our pioneering work,” Morris said of Carnation’s marketing effort. “Even so, we have continued to gain share at a significant rate ourselves.”

In other words, he said, Carnation’s Coffee-mate is creating a bigger market and more awareness of the product, which Presto acknowledges is scarcely bad news. (Less significant contenders in the market include Borden’s Cremora and Rich Products Co.’s Farm Rich liquid creamer.)

Carnation seems undaunted by Mocha Mix’s established position in the West and elsewhere.

“I think it will be a win-win situation for everybody,” said John J. Harris, vice president and general manager of the Carnation Products division. “To knock off Mocha Mix corporately would not be worthwhile for us.”

Harris said Carnation, which has $2.6 billion in annual sales, expects to begin shipments of the new liquid Coffee-mate this month, in preparation for “a heavy marketing thrust” in January. By the first week of 1990, the product will be in more than 90% of U.S. grocery stores, Harris added.

In his office at the stark-white Carnation building on Wilshire Boulevard, Harris invites visitors to taste the liquid Coffee-mate straight from a cup. “We wanted something that replicated half-and-half,” he said. “We’ve developed a product that has a clean taste and masks the flavor of soy.”

Getting to that stage took nearly 15 years and millions of dollars. But, given the potential for liquid non-dairy creamers, Carnation thought the effort worthwhile.

So far, it seems to be paying off. Harris said testing in Dallas has resulted in a 500% growth of the category, with Carnation’s product capturing 65% of the market. In Denver, Carnation’s entry doubled the market for the category, and liquid Coffee-mate has 40% of the market.

“Our goal long term is to make this into one of the major categories in the grocery store,” Harris said.

If Presto is playing David to Carnation’s Goliath, it does not appear to be overly concerned.

“We’ve anticipated somebody coming into the market for a number of years,” Coffey said. “So we have continued to strengthen our program over the years. We’re going to keep doing what we think we’ve done well.”