Brazilian currency sinks coffee exports

(VOV) -A decline in the currency of Brazil, the world’s largest coffee exporter, has made it more attractive for Brazilian farmers to sell their beans than to stockpile them, resulting in a glut in the market and tumbling sales prices.

Though coffee exports have plummeted in both volume and value for 2015, the nation’s share of the global instant coffee market continues to percolate higher, according to the Ministry of Agriculture and Rural Development (MARD).

In its most recent statistics, MARD has reported that in the eight months leading up to September overall coffee exports fell sharply 32.7% in volume and 33.1% in value year-on-year to 874,000 metric tons tallying in at US$1.79 billion.

Despite the declined figures, however, Vietnam coffee growers have managed to carve out a niche in the instant coffee market, accounting for nearly 80% of global demand in the eight months January-August.

The era of instant coffee

“Despite the fact that the USDA reports world demand for instant coffee has remained unchanged at 146.26 million coffee bags (each bag of 60 kg) for the past four years, Vietnam’s market share has steadily risen,” a MARD spokesman said.

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In 2014, the output for coffee growers in Vietnam was 28.16 million bags (90% of which was exported and sold under foreign brand names), accounting for 45% of global market share.

The MARD spokesman said for the eight month period, the nation’s share of the global instant coffee market ballooned to 9.1% up significantly from just 1.8% five years ago.

Instant coffee is winning over more fans globally because it is cheaper and more convenient to prepare than regular filtered coffee said the spokesman. “Vietnam’s market share has also been rising as a result of its improving quality.”

The latest consumer trends in instant coffee are for functional coffees, which add ingredients for health benefits such as green coffee extract for weight loss, the spokesman noted.

Managing Director Ganesan Ampalavanar of Nestlé Vietnam in turn reported that in 2014 the company purchased slightly more than 20% of the 1.7 million metric tons of coffee beans harvested in Vietnam.

He said the beans were exported to the Nestlé Vietnam’s sister companies located in 22 countries around the globe, principally for the instant coffee market and the company has plans to substantially increase output over the next decade.

Opportunity to exports Robusta coffee

Vietnam’s coffee exports may rise significantly over the next decade if the nation’s producers can tap growing demand from emerging markets including China, according to the International Coffee Organization (ICO).

The ICO has forecast the world demand for coffee consumption in 2025 will increase by 20% compared to 2015.

Despite the fact that Vietnam is the leading producer of Robusta coffee, the nations’ coffee growers can expect stiff competition from other countries in the Asian region such as India, Laos and Indonesia.