20 ■ ICO REPORT
C&CI
Faster consumption
March 2010
rather than production
Stats confirm growth
growth and the increas-
ing dominance of sup-
ply by just two countries
in production lagging
– Brazil and Vietnam –
are the two big trends
of recent years that
behind consumption
emerge from an
Capable of producing 50
analysis of International
million bags, Brazil is
also now one of the
Coffee Organization
world’s leading
consumers
(ICO) statistics
A
s Robin Stainer reports, both have
bullish implications for prices, the first
by highlighting the risk of shortages
ahead and the latter the extreme vulnerability
of supply lines should both countries have
poor crops in the same season. Current lev-
els of production are sufficient to meet exist- demand growth, on the other hand, has In the 2000s, however, the driving force
ing demand, according to the ICO, but not been much more robust, averaging 2.4 per has been emerging markets, where the
the expected rise in consumption if the cent a year in the period 2000-08, against 2 upturn has been led by the soluble variety,
recent annual growth rate is maintained, per cent in the 1990s and less than 1 per because of its simplicity of preparation and
meaning that "major financial investments cent in both the 1980s and 1970s. longer shelf-life. In these markets, which
are required." Increasing domestic consumption in pro- include Russia, Asia’s Newly Industrialised
However, even before the global econom- ducing countries – another of the significant Countries (NCOs) and North Africa, the
ic crisis, which has made the situation trends of recent years – has been the main scope for expansion was great, because of
worse, the ICO was warning that investment factor behind the better overall performance low per capita figures, and was helped on its
in increasing production and productivity in the 2000s. Here the annual average way by historically low prices at the start of
was inadequate, pointing out that, even at growth rate in 2000-2008 was 3.8 per cent, this century and increasing wealth. The ‘west-
the high prices prevailing until the shake-out about double that of the 1990s, lifting the ernisation’ of taste was a further stimulus.
last year, growers, but especially those of producers’ share of world consumption in
mild Arabica coffee (which is the most costly the period to 26 per cent from 23.2 per cent
Demand for specialty
to produce), were hard put to cover their in the previous decade.
costs and so had little incentive to invest in
coffee increasing
new plantings.
Brazil leads the way
In traditional importing countries, positive
developments in the 2000s have included ris-
Helping smallholders
The performance of Brazil – which today ing demand for specialty coffee, the increase
accounts for roughly half the total consumed in sales outlets, thanks to the rising number
"Of special concern," the ICO said in a recent in producing countries and has overtaken of vending machines selling canned and bot-
report, "is the development and implementa- Germany as the world’s second biggest tled coffees (which has enabled the bever-
tion of financial mechanisms to help small- consumer in terms of volume and the US in age to compete effectively with soft drinks)
holders cope with increased risk and volatili- per capita use – in recent years has been and the expansion of the branded coffee bar
ty in the context of a contraction of credit in truly astounding, with last year’s estimated sector. But while innovation – the latest being
producing countries, particularly during the figure 42 per cent up on 1999. Big improve- coffee pods and machines allowing drinkers
harvesting season." ments in the quality on sale locally, heavy to recreate at home concoctions available in
World production can vary sharply from promotion and rising spending power pro- coffee bars - has its positive side, it also has
season to season, mainly because of the vided the stimuli. a downside.
vagaries of the weather, but also the biennial In importing countries growth so far in the Surveys show that more people may be
yielding cycle of Brazil’s Arabica trees. The 2000s has averaged 1.8 per cent - better drinking coffee, but that some of the new
underlying trend, however, has been upward than the 1990s’ 1.1 per cent and equalling products popular with younger people in par-
since the start of the 2000s, although aver- the rate achieved in the 1980s, when a move ticular are soluble mixtures containing very lit-
age annual growth has been a very paltry to quality in consumer tastes in traditional tle coffee, as sweetener, creamer and flavour-
0.5 per cent, compared with 3.7 per cent in importing countries at a time of increasing ing can often account for up to 90 per cent
the 1990s and 3 per cent in the 1980s. World spending power drove the advance. by weight. "Their gain has been at the
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