Demand for soluble coffee trade changes

The continuous growth of the global consumption of coffee, especially soluble and in emerging countries, has caused major changes in the trade of the product. Keeping an eye on these expanding markets, producer countries with export including Arabian tradition, of better quality, comes increasing imports of robusta coffee, less valued and basic raw material of instant drink. The strategy serves both for these countries to continue to meet its domestic demands, while preserving the most expensive variety shipments for rich countries, and expand exports of soluble.
A survey published this week by the International Coffee Organization (ICO) shows that shipments of instant drink by producing countries to grow at a rate of 7.5% per year since 2000. These exports rose from 4.7 million sacks in the past decade, to 10.5 million in 2011, pulled by Brazil India, Colombia and Ecuador. Research indicates that, in this context, many exporting countries have encouraged the creation of soluble processing units, mostly in partnership with the few multinationals which dominate this market.
The movement became possible because the trade in green coffee beans and industrialized between the exporting countries increased almost 12 times from 2000 to 2012-from 861.8 million for 10.174 million sacks, according to the ICO. If also considered traditional re-exports of countries importers who buy raw materials and sell products with higher added value for producing Nations, the volume increases to 11.374 million bags in 2012, or 10% of total global exports of coffee in the year (113.1 million sacks, 41% robusta).
Only Viet Nam and Indonesia, major producers of robusta, embarked for other Nations exporting 3 million and 3.6 million bags in 2012, respectively. These countries are, by far, the largest exporters on this front. The third position in this ranking went to Brazil, but with less than 1 million bags shipped in 2012, according to ICO statistics.
Among the destinations of shipments from exporters for exporters in 2012, 3.1 million bags have not had their fates identified due to the lack of reliable statistics. Other 3.1 million bags landed in the Philippines, while 1.1 million were bought by Colombia. The Brazil received only 42.7 million sacks, according to the ICO, but the number is disputed by Guilherme Braga, General Director of Brazil's coffee exporters (Cecafé), which estimates between 5 000 and 6 thousand bags.
Barnard confirms that the expansion of the global exports of robusta in the world have direct connection with the purchase of the product by producing countries. Therefore, States that the growth of this market not only involves the substitution of Arabica in "blends" of coffee roasted and ground, but the supply of demand for instant drink. In addition to the lower price, consumption growth of soluble occurs in many consumer countries. According to Carlos Brando, Managing Director of P&A International Marketing, the snapshot is migrating more "direct" from tea to coffee.
"Even among producing countries, consumption is especially soluble", says Brando. However, he says, does not see a trend of significant increase in consumption of soluble in traditional consuming countries. What happens in these markets is the increased use of robusta in "blends" with the Arabic for the roasted and grinded, says Brando. The P&A estimates that the growth of coffee consumption in emerging countries will be of 3% to 4% over the next two to three years, driven mainly by the soluble, compared with less than 1% (between 0.4% and 0.7%) in traditional consumers like United States, Europe and Japan.
In this changing tray, India is one of the countries that extend the production and export of instant coffee. The Asian country exports best quality robust and imports the grain of Viet Nam and Indonesia to manufacture the instant drink, as Brando. In Mexico, the soluble represents 80% of the volume of coffee consumed. In Central America, in Arabic, the soluble consumption is greater than that of toasted and ground, according to P&A. In Brazil, this consumption is down 5% to 10% of the total.
Brazil, the largest exporter of Arabica in the world, but that also produces robust, can stay out of this "new market", in the evaluation of William Barnard, as exports only about 10% of the production of less valued species, with strong demand from local industry. Brando already believes Brazil can, Yes to growth of world consumption of robusta coffee. "Brazil will have to turn the exporter and must align international prices". Over the past two years, the robusta has been trading on the domestic market by about 20% higher values those on the London Stock Exchange.
On the other hand, attractive home prices can be a boost to the expansion of production in Brazil in the coming years. For the 2013/14 season, the average projection of the national supply company (Conab) for the Brazilian crop robust indicates 12.3 million bags, compared with 12.5 million from 2012/13 cycle.