The Argentinian tea and coffee markets are steadily growing this year thanks to generally improving economic situation in the region and stable domestic demand.

Argentina has rich traditions of tea and coffee drinking. While the Covid-19 pandemic and serious financial problems of the country had resulted in a serious drop of consumption of both drinks, the market has almost completely recovered, although the rise of coffee prices by almost 150 percent in the last year put a serious pressure on the market.

For many global coffee majors, the expansion into Argentina along with Brazil, is a priority due to the potential, which is associated with the Latin American region and the exodus of business from the markets of Russia and Ukraine — once the most important emerging markets for them.

With the population of more than 47 million people and a status of the second largest country in the Latin American region, Argentina has always been under the radar of some major tea and coffee producers.

Emanuele Uccellini, the Caribbean and Latin America BU Director for Lavazza Group BU Americas told T&CTJ in an exclusive interview, that Lavazza has been present in the Argentina for many years, and that the market represents a top priority within the Latin America region for two main reasons:

1. The growing interest of consumers in high-quality coffee brands. The demand for specialty coffees has been increasing significantly, especially during the pandemic, and we’ve seen the trend keep growing, mostly among younger consumers.
2. The relevant presence of people with Italian roots: they always feel at home when they sip a good Lavazza cup of coffee.

The Argentinian coffee market has always been of interest to other global majors as well.

One of them is JDE Peet’s, which in recent years has significantly strengthened its positions in the local market. A spokesperson for JDE Peet’s, said, “JDE Peet’s does sell a range of products across our brand portfolio in Argentina including NCC capsules. We anticipate that the demand for coffee and tea will only continue to grow globally. We recently signed an agreement to acquire Marata’s coffee and tea business in Brazil, and South America in general is an area in which demand for coffee and tea is increasing.”

The Argentinian market also attracts the interest of global coffee chains, many of which are considering accelerating expansion in the local market in years to come, which is primarily done through the expansion of the existing portfolio. One example is Starbucks, which considers the local market as a priority for its growth.

A Starbucks’ spokesperson told T&CTJ, “Starbucks entered Argentina in 2008 with our first store in Buenos Aires. Today, the brand operates over 130 stores in the market, providing employment opportunities to over 1,700 green apron partners,” noting that earlier this year, Starbucks celebrated its 15^th anniversary in Argentina, together with its licensed business operator, Alsea.

In April 2023, the spokesperson said that Argentina took a significant step toward a more sustainable future by certifying its first two Starbucks Greener Stores. “This is part of Starbucks global vision to have 3,500 Greener Store-certified locations worldwide, aiming to cut our climate, water, and waste footprints in half by 2030. Starbucks Argentina also continues to expand its plant-based menu offerings in an effort to deliver increased options for our customers.”

Furthermore, in collaboration with Alsea, Starbucks announced plans to operate 2,000 Starbucks stores in the 12 markets where Alsea operates the brand globally by the end of 2025.

Starbucks and other leading Western coffee chains operating in the country have faced strong competition with local players. An example of this is Café Martinez chain, a local chain that has almost doubled the number of its outlets within Argentina the last few years and which plans to continue its active expansion in years to come.

Coffee consumption is growing

A senior researcher at Euromonitor International said that in 2022, the total volume sale of coffee in Argentina is set to post a third consecutive year of growth, following a decline during the outbreak of Covid-19. “For the current year and beyond even though consumers have returned to pre-pandemic habits, total volume consumption is forecast to grow much slower. This is due to the long-term unstable economy, increased poverty, and high inflation, which is diminishing the purchasing power of middle and low-income consumers.”

However, coffee is set to post the highest total volume and current retail value growth in hot drinks, driven by the widening use of instant coffee, which began seeing consumption growth in 2021 and 2022. Instant coffee benefits from being affordable, while offering a widening variety of coffee mixes. New coffee consumers tend to start with lighter options, with less coffee flavour and with more milk content, with the inclusion of chocolate and other ingredients.

The coffee industry has suffered a major world price hike due to drought conditions in Brazil, which led to considerably lower production and higher freight costs. Coffee pod consumption rocketed as consumers prioritised high-quality coffee with a desire to replicate foodservice experiences at home. The coffee pod category was also stimulated by a continuous entry of new brands, including La Morenita, La Virginia, Jacobs, L’Or, Viaggio, and Nestlé Argentina’s latest novelty with Starbucks. Sales of coffee pods were fueled by the growth of ecommerce, the fastest-growing channel in the hots drinks industry in 2022.

According to Euromonitor’s spokesman, retail value sales of coffee in Argentina increased by 67 percent in current terms in 2022 to ARS 80.3 billion The instant coffee mix category was the best performing one in 2022, with retail value sales rising by 75 percent in current terms to ARS 5.4 billion. Retail sales in 2022 had a CAGR of 59 percent, hitting ARS 811 billion (CAGR of 15 percent over the forecast period 2022-2027).

Coffee does grow in Argentina; however, it is produced in only a single plantation in the Yungas — a bioregion of a narrow band of forest along the eastern slope of the Andes Mountains from Peru and Bolivia. It emerged in the early 1970s under the name of Café Baritú when authorities in the province launched an ambitious plan to make Northern Argentina a coffee-producing area.

Graciela Ortiz, the owner of Café Baritú in an interview with the Argentinian iProfesional business paper said that the coffee produced on the Salta farm is Arabica. “It is actually a mixture of two Arabicas, one Colombian and the other Brazilian,” he specifies. “It has a very subtle flavour, with fruity, perfumed notes.”

As for coffee, although Argentina is still far from countries like Norway, Finland or the United States in terms of coffee consumption – being stagnant for years at a per capita consumption of only one kilo per year – the sector has shown sustained growth recently, which is mainly due to the rise of popularity of coffee among local customers.

According to a study conducted by the Argentine Coffee Chamber in collaboration with the firm The Brand Bean, today, coffee in Argentina represents 45 percent of the beverages chosen compared to all other beverages and is consumed mostly by people between 25 and 44 years old.

Most local citizens prefer milder coffees instead of stronger roasts as in many European countries. According to some media reports, an average of one kilo of coffee per capita is consumed annually (208 cups) in the country, with the instant variety being the most consumed. Nine out of 10 Argentines prepare it at home and approximately 50 percent of consumers add milk.

Regarding the most chosen varieties, young people seek to customise it and choose to consume cold and instant coffees. On the other hand, those over 35 years of age choose the capsule format.

According to experts of La Nacion, local consumers are increasingly interested in knowing everything about the product: who makes it, what differential attributes it has, what extraction method enhances it, what the differences are between varietals and what the different types of filtering are like. In addition to choosing coffees from more exotic origins, such as Kenya, the Dominican Republic, Honduras or Haiti, they also turn to cold brew when the temperature rises.

Tea-growing & consuming are strong

In the case of tea, retail value sales grew by 62 percent in current terms in 2022 to ARS 21.3 billion. Green tea was the best performing category in 2022, with retail value sales rising by 73 percent in current terms to ARS131 million.

Retail tea sales had a CAGR of 41 percent in 2022, reaching ARS 118 billion (constant value CAGR of 2% over the forecast period).

Tea sales saw growth in total retail volume terms in 2022; resulting from the increasingly positive perception of tea as a healthy option. Argentinian consumers have always been very health conscious, but the outbreak of Covid-19 increased this, with consumers discussing and looking for ways to boost their immune systems. Greater interest has been given to specific functional benefits offered by different tea varieties, particularly those claiming to strengthen the immune system or provide a calming effect. Thus, green tea and herbal/fruit tea have seen strong growth, driven by their functional fortified options.

Argentina has a more robust tea production than that of coffee. According to Argentinian Mitre Y Elcampo business paper, tea production is in the southernmost part of Argentina, located between 26° and 28° South latitude, there are about 6,800 producers with an area of 40,500 hectares. About 94 percent of them are located in the province of Misiones, and the remaining 6 percent are in Corrientes. A characteristic of Argentine tea is its high concentration of polyphenols.

Approximately 90 percent of Argentine tea production is destined for foreign markets and its volume represents almost 2 percent of world consumption. The main destination is the United States, with 70 percent of the production. Currently, Argentina is the main exporter of tea to the United States of America. Other important destinations are Chile, Poland, Russia, Germany; followed by the United Kingdom, India, Malaysia and 30 other countries

The annual volume of tea exports from Argentina are varied in range of 70,000-75,000 tonnes mostly black tea for about USD $75 – $83 million in value terms. Nearly 64 percent of the cultivated area is certified with the RAS Standard (Sustainable Agriculture Network, triple impact).

Tea consumption in Argentina has been steadily growing with the biggest demand being observed in case of gourmet tea. This has even stimulated the development of tea tourism in the region, with the province of Misiones, which is located in the northeastern corner of the country in the Mesopotamia region, at forefront of this.

• Eugene Gerden is an international freelance writer, who specialises in covering the global coffee, tea and agricultural industries. He worked for several industry titles and may be reached at gerden.eug@gmail.com.

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Green Coffee Price
The ICO Composite Indicator Price (I-CIP) averaged 153.13 US cents/lb in September, posting a median value of 152.74 US cents/lb and fluctuating between 147.86 and 160.17 US cents/lb.

The Robustas remained at a near-record high in September, staying firmly above the 120.00 US cents/lb mark. The Colombian Milds and Other Milds decreased by 1.4% and 1.7%, to 184.98 and 183.52 US cents/lb, respectively, in September 2023. The Brazilian Naturals and Robustas both contracted by 0.3% and 0.6%, reaching an average of 154.19 and 123.89 US cents/lb, respectively. ICE’s New York market fell by 1.9%, whilst the London Futures market shrank by 2.0%, to 153.55 and 109.14 US cents/lb, respectively.

The Colombian Milds-Other Milds differential grew 79.1% to 1.46 US cents/lb. The Colombian Milds-Brazilian Naturals differential shrank 6.4% to 30.79 US cents/lb, whilst the Colombian Milds-Robustas differential also contracted 2.9% from August to September 2023, averaging 61.09 US cents/lb. Meanwhile, the Other Milds-Brazilian Naturals and the Other Milds-Robustas both contracted 8.6 and 4.0%, reaching 29.33 and 59.63 US cents/lb, respectively. However, the Brazilian Naturals-Robustas differentials expanded 0.9%, averaging 30.30 US cents/lb in September 2023.

In September 2023, the Colombian Milds-Other Milds Arabica differential fluctuated between positive and negative.

Arbitrage, as measured between the London and New York Futures markets, narrowed by 1.8% to 44.41 US cents/lb in September 2023. This marks the lowest point since October 2019, when arbitrage sat at 44.07 US cents/lb.

Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 6.3%, a 0.7 percentage point decrease between August and September 2023. The Robustas presented the strongest volatility decrease, with a 1.3 percentage point drop, averaging 7.4% for the month of September. The Colombian Milds’ and Other Milds’ volatility also contracted to 6.5% and 6.8%. Meanwhile, the Brazilian Naturals’ volatility dropped by 0.7 percentage points to 8.1% from August to September 2023, whilst the London futures market’s volatility also decreased by 2.1 to 7.3%. Lastly, the New York futures market’s volatility moved in the same direction as London, retracting by 0.9 percentage points and reaching 7.7% for New York.

The New York and London certified stocks moved in opposite directions, where London grew 25.7% to 0.73 million 60-kg bags, whilst certified stocks of Arabica coffee reached 0.49 million 60-kg bags, a 13.8% decrease.

The absence of market participants, as evidenced by the falling exports (see Exports by Coffee Groups – Green Beans), continued to prevail over the I-CIP, explaining the overarching trajectory of the I-CIP in September. However, currency movements, market sentiments, dwindling supplies, weather and the fundamentals all played their part in the coffee price movements in September, which saw the I-CIP rally, before falling once again due to foreign exchange movements.

From 22 August to 19 September 2023, the I-CIP recovered, increasing from a low of 148.79 to 160.17 US Cents/lb, ie, an increase of 7.6%. This came on the back of reports of heavy rain in Brazil and a continued fall in the certified stocks held at the New York ICE warehouses. Somar Meteorologia, a Brazilian meteorology company, reported on 5 September that Brazil’s Minas Gerais region, the country’s largest coffee producing region, received 22.8 mm of rain in the past week, or 308% of the historical average, leading to speculation regarding a delay in the completion of Brazil’s coffee harvest. Meanwhile, ICE’s Arabica inventories fell to a low of 0.49 million bags in September. The impact of these positive factors was more profound on the prices of the Arabicas, particularly the Brazilian Naturals which rallied by 5.3% and 81.%, respectively.

Nevertheless, this rally was halted and reversed by the sharp weakening of the real against the US dollar. From 19 to 29 September the real depreciated by 3.2%, from 4.87 to 5.03, while the I-CIP fell by 7.1% over the same period. Once again, the negative impact was felt relatively more by the Arabicas (-8.1%) and particularly the Brazilian Naturals (-9.3%) as compared with Robustas (-5.9%). The price of the Robustas fell at a relatively slower rate due to Vietnam’s current dwindling supply (see Exports by Regions – All Forms of Coffee), with supply from the 2023/24 harvest still at least two months away in November at the earliest.

Exports by Coffee Groups – Green Beans
Global green bean exports in August 2023 totalled 9.36 million bags, as compared with 9.07 million bags in the same month of the previous year, up 3.2%. As a result, the cumulative total for 2022/23 to August is 102.9 million bags, as compared with 108.26 million bags over the same period a year ago, down 5.0%.

Shipments of the Other Milds decreased by 9.7% in August 2023 to 1.99 million bags from 2.2 million bags in the same period last year. As a result, the cumulative volume of exports continued to fall, decreasing by 12.2% in the first 11 months of coffee year 2022/23 to 20.56 million bags, versus 23.42 million bags over the same period in 2021/22.

Green bean exports of the Brazilian Naturals increased in August 2023, rising by 10.2% to 3.06 million bags. For the first 11 months of coffee year 2022/23, green bean exports of the Brazilian Naturals amounted to 31.5 million bags, down 8.0% from 34.22 million bags over the same period a year ago. Changes to the fortunes of the Brazilian Naturals are mainly due to changes in Brazil’s total green bean exports, the biggest producer and exporter of the Brazilian Naturals, which also increased in August 2023 (27.6%) to 3.35 million bags from 2.63 million bags in August 2022.

Exports of the Colombian Milds decreased by 2.1% to 0.84 million bags in August 2023 from 0.86 million bags in August 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were down 5.6% in August 2023. This is the fourteenth consecutive month of negative growth for the Colombian Milds and, as a result, the exports of this group of coffee for October 2022 to August 2023 were down 12.5%, at 9.9 million bags, as compared with 11.32 million bags in the first 11 months of coffee year 2021/22.

Green bean exports of the Robustas amounted to 3.47 million bags in August 2023, as compared with 3.22 million bags in August 2022, up 7.3%. This is the fifth consecutive month of positive growth for the Robustas and, as a result, the exports of this group of coffee for October 2022 to August 2023 were up 4.2%, at 40.94 million bags, as compared with 39.31 million bags in the first 11 months of coffee year 2021/22.

Exports by Regions – All Forms of Coffee
In August 2023, South America’s exports of all forms of coffee increased by 13.0% to 4.98 million bags. This is the first positive growth rate for the region since the 0.3% expansion in June 2022. The source of both the positive and strength of growth is Brazil, which saw its exports increase by 24.4% to 3.67 million bags from 2.95 million bags in August 2022. More specifically, it was the Robustas from the origin, which in August increased by 388.1% to 0.7 million bags from 0.14 million bags, that drove the region’s positive growth. The August 2023 exports are Brazil’s highest on record for Robusta coffee, beating the 696,873 bags exported in December 2014.

Fundamentally, the region’s turnaround is due to the recent downturn in Asia and Oceania, especially in Vietnam, the world’s largest Robusta producer and exporter. Pointedly, Brazil is the largest producer and exporter of Robustas in South America, and it has been taking advantage of the reduced volume of Robustas coming out of Vietnam. It is pertinent to note that Brazil is the fifth biggest exporter of Robustas in the world, having shipped 1.87 million bags in coffee year 2021/22 as compared with the 25.44 million bags exported from Vietnam or the 4.89 million, 4.28 million and 4.03 million bags from Uganda, India and Indonesia, respectively, the second, third and fourth largest exporters. However, in August 2023, Brazilian Robusta exports were second only to Vietnam with 1.34 million bags. To put this into perspective, in August 2023 Brazil exported the equivalent of four-and-half months’ worth of Robustas in a single month (as measured against the total Robusta exports in coffee year 2021/22).

Exports of all forms of coffee from Africa increased by 10.9% to 1.37 million bags in August 2023 from 1.23 million bags in August 2022. For the first 11 months of the current coffee year, exports totalled 10.84 million bags as compared with 12.31 million bags in coffee year 2021/22, down 1.5%. This is the third consecutive month of positive growth rate for the region. The continued global demand for Robustas, as reflected in the latest cumulative positive growth rates for Robusta green bean exports, is the fundamental source of Africa’s positive export growth rate in August. However, like the situation in South America, the reduced volume from the Asia and Pacific region, and more pointedly Vietnam, explains this growth.

Uganda, the largest producer and exporter of Robusta coffee in Africa, took the opportunity to fill the gap in the market left by Vietnam, increasing its exports by 48.4% to 0.74 million bags in August 2023 from 0.5 million bags in August 2022. This represents the second largest monthly exports on record, just behind the 0.79 million bags exported in March 1973.

In August 2023, exports of all forms of coffee from Mexico and Central America were down 2.0% to 1.23 million bags as compared with 1.26 million in August 2022. As a result, total exports are down 2.6% from October 2022 to August 2023 at 14.57 million bags, as compared with 14.96 million bags for the same period a year ago. The relatively shallow negative growth rate of the region masked the dynamic changes at the individual country level.

Two origins experienced strong positive growth rates (Honduras and Nicaragua), with a combined 37.2% increase in August 2023, while three others experienced sharp negative growth rates (Costa Rica, Guatemala and Mexico), with a combined 20.5% decrease. Honduras and Nicaragua outperformed both the region and group of coffee (Other Milds) to which they predominantly belong in August. This may reflect their competitive edge over other origins in Mexico and Central America – the average export unit value of Arabica green beans for Honduras and Nicaragua was 157 US cents/lb for coffee years 2017/18–2021/22, while it was on average 63 US cents/lb higher for the others (excluding Cuba, Haiti and Jamaica) at 220 US cents/lb.

Exports of all forms of coffee from Asia and Oceania decreased by 14.9% to 2.72 million bags in August 2023 and but were up 1.3% to 41.28 million bags in the first 11 months of coffee year 2022/23. August’s downturn was mainly due to Vietnam, with exports down 23.6% to 1.44 million bags from 1.98 million bags. This is the lowest month of August exports since the 1.4 million bags shipped in 2012. The decrease can be attributed to the depletion of available supply, reflecting the strength of its exports in the first 10 month of the current coffee year, where between October 2022 and July 2023 Vietnam shipped 25.98 million bags –3.3% higher than the same period in coffee year 2017/18, a record exporting year when the origin shipped 29.73 million bags over the full year.

Exports of Coffee by Forms
Total exports of soluble coffee decreased by 4.6% in August 2023 to 0.89 million bags from 9.3 million bags in August 2022. In the first 11 months of coffee year 2022/23, a total of 10.46 million bags of soluble coffee were exported, representing a decrease of 5.7% from the 11.09 million bags exported in the same period during the previous coffee year.

Soluble coffee’s share in the total exports of all forms of coffee for the year to date was 8.6% in August 2023, down from 9.2% for the same period a year ago. Brazil is the largest exporter of soluble coffee, having shipped 0.32 million bags in August 2023.

Exports of roasted beans were down 39.9% in August 2023 to 58,226 bags, as compared with 96,937 bags in August 2022. The cumulative total for coffee year 2022/23 to June 2023 was 0.66 million bags, as compared with 0.77 million bags in same period a year ago.

Production and Consumption
Under the current circumstances, the estimates and outlook of production and consumption for coffee years 2021/22 and 2022/23 remain the same.

World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23. The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year.

Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%.

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand built up during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22. Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22.

As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags.

The outlook is taken from the newest publication of the Statistics Section of the Secretariat of the International Coffee Organization (ICO), the Coffee Report and Outlook (CRO). The full CRO can be downloaded from the ICO website: icocoffee.org. For further information, contact the Statistics Section at stats@ico.org.

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Despite strengthening of the BRL, where conventionally Brazilian Naturals might see an uptick in price, they contracted 11.4% in the month of June, hinting that the current and upcoming favourable weather in the region outweighs the USD/BRL variation. The Robustas, on the other hand, have been supported by a strong London market, where the arbitrage has declined to a two-and-a-half-year low, as the rate of growth outpaces that of the Arabicas. 

Average prices for all group indicators decreased in June 2023, with the Robustas being an exception, gaining 7.8% and averaging 132.13 US cents/lb. The Colombian Milds and Other Milds decreased by 6.6% and 5.8%, to 211.85 and 207.39 US cents/lb, respectively, in June 2023. The Brazilian Naturals contracted by 5.5%, reaching an average of 176.48 US cents/lb. ICE’s New York market fell by 4.7%, whilst the London Futures market grew by 5.9% to 174.54 and 119.23 US cents/lb, respectively. 

The Colombian Milds-Other Milds differential contracted by 34.5% to 4.46 US cents/lb. The Colombian Milds-Brazilian Naturals and Colombian Milds-Robustas differentials both contracted 11.9 % and 23.6% from May to June 2023, averaging 35.36 and 79.72 US cents/lb in the latter month, respectively. The Other Milds-Brazilian Naturals differential presented a more moderate loss of 7.3%, averaging 30.90 US cents/lb. However, the Other Milds-Robustas and Brazilian Naturals-Robustas both contracted by 22.9% to 75.26 US cents/lb and by 31.0% to 44.36 US cents/lb, respectively. 

In June 2023, the Colombian Milds-Other Milds Arabica differential has been narrowing considerably where, in the latter third of June, the differential averaged -2.57 US cents/lb. The Colombian Milds declined at rate of 13.4% in June, whilst the Other Milds contracted at the rate of 9.6% for the same month. The faster rate of decline of the Colombian Milds compared to the Other Milds had a knock-on effect for the last seven business days of the month. The Colombian Milds-Other Milds differential turned negative, making the Other Milds more expensive than the Colombian Milds. This trend feeds into a wider phenomenon, where the Arabica and Robusta prices have been decoupled, with the Robustas benefitting from a price-driven demand substitution for cheaper coffee versus the higher-quality and priced Arabicas. However, it is important to note that only Colombia, Kenya and Tanzania produce Colombian Milds, thereby making any shifts on the demand side more noticeable due to the smaller share of the total Arabica production. Thus, due to strong demand for Robustas in the month of June, they lost a marginal 1.8%, albeit exhibiting the highest monthly average since February 1995. 

The current Arabica-Robusta differentials are at their lowest point since October 2020, where demand for higher end qualities has waned in favour of more competitively priced coffees. Groups of coffee with varying qualities are seeing their differentials tighten throughout the board. This convergence marks a three-and-a-half-year low for the Colombian Milds-Brazilian Naturals, Colombian Milds-Robustas, Other Milds-Brazilian Naturals and Other Milds-Robustas differentials. The tightening of the spread between different growths can be attributed to the global increase in interest rates, actioned by the European Central Bank, the Bank of England and the US Treasury. 

This has the direct effect of making money more expensive to borrow, thereby limiting extensive leverage to coffee supply chain stakeholders as interest rate repayment fees eat disproportionately into operations profits. In turn, this limits how big purchasing budgets can be, with buyers focusing on more competitive origins and shying away from the more expensive growths. The trend of consumers and manufacturers shifting towards cheaper Robustas, due to the high cost of living, and the greater availability of coffee due to the ongoing harvest of the world’s largest Arabica producer (Brazil), may together explain the Arabica differentials being at a three-and-a-half-year low, in addition to a continuous rise in the price of Robustas. 

Arbitrage, as measured between the London and New York Futures markets, contracted by 22.6% to 50.31 US cents/lb in June 2023 as the Robusta growth rate outstripped the New York Market. This marks the lowest point since November 2020, where arbitrage sat at 52.66 US cents/lb. Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 8.1%, a 0.5 percentage point decrease between May and June 2023. The Other Milds and Robustas presented the strongest volatility increases, with a 0.8 percentage point expansion, averaging 11.1% and 8.2% for the month of June. Whilst the Colombian Milds’ and Brazilian Naturals’ volatility contracted to 8.2% and 9.5%, the Robustas’ volatility expanded by 0.8 percentage points to 8.2% from May to June 2023. However, the London and New York futures markets’ volatility moved in the opposite direction from one another, retracting by 0.8 percentage points and reaching 9.6% for New York, whilst the Robusta contraction averaged 8.2% in June 2023, a 0.7 percentage point increase. 

The New York and London certified stocks decreased in tandem by 8.5% and 9.7%, respectively, closing in at 0.60 million 60-kg bags, whilst certified stocks of Robusta coffee reached 1.25 million 60-kg bags.  

Exports by Coffee Groups – Green Beans 

Global green bean exports in May 2023 totalled 9.56 million bags, as compared with 9.61 million bags in the same month of the previous year, down 0.6%. The downturn was driven by the Colombian Milds and the Brazilian Naturals. This is the sixth consecutive month of negative growth for total exports of green beans since the start of coffee year 2022/23. As a result, the cumulative total for 2022/23 to May is 74.59 million bags, down 5.6% from the year-ago period to 79.01 million bags. 

Shipments of the Other Milds increased by 8.7% in May 2023 to 2.57 million bags from 2.36 million bags in the same period last year. This is the second month of positive growth for green bean exports of the Other Milds since March 2022, when it increased by 1.9%. Despite the rebound, the cumulative volume of exports continued to fall, decreasing by 10.5% in the first eight months of coffee year 2022/23 to 13.77 million bags versus 15.38 million bags over the same period in 2021/22. 

Green bean exports of the Brazilian Naturals fell in May 2023, falling by 14.8% to 2.43 million bags. For the first eight months of coffee year 2022/23, green bean exports of the Brazilian Naturals amounted to 23.4 million bags, down 9.8% from 25.93 million bags over the same period a year ago. Changes to the fortunes of the Brazilian Naturals are mainly due to changes in Brazil’s green bean exports, the biggest producer and exporter of the Brazilian Naturals, which also fell in May 2023 (-16.2%) to 2.12 million bags from 2.53 million bags in May 2022. 

Exports of the Colombian Milds decreased by 7.2% to 0.91 million bags in May 2023 from 0.98 million bags in May 2022, driven primarily by Colombia, the main origin of this group of coffee, whose exports of green beans were down 10.3% in May 2023. This is the eleventh consecutive month of negative growth for the Colombian Milds and, as a result, the exports of this group of coffee for October 2022 to May 2023 were down 14.1%, at 7.28 million bags, as compared with 8.48 million bags in the first eight months of coffee year 2021/22. 

Green bean exports of the Robustas amounted to 3.65 million bags in May 2023, as compared with 3.42 million bags in May 2022, up 6.8%. In the first eight months of coffee year 2022/23, 30.13 million bags of Robustas were exported as compared with 29.22 million bags in the same period in 2021/22. 

Exports by Regions – All Forms of Coffee 

In May 2023, South America’s exports of all forms of coffee decreased by 11.5% to 3.47 million bags, driven by the three main origins of the region, Brazil, Colombia and Peru, which saw their combined exports fall by 12.29%. The two major origins of the region, Brazil and Colombia, saw their respective shipments of coffee decrease by 12.2% and 10.6% in May 2023, falling to 2.46 million and 0.85 million bags. In both countries, the availability of supply is the reason behind the decreases in their respective exports. Heavy rain led to a 21% fall in production in May 2023 in Colombia, while Brazil’s supply is relatively tight due to the two consecutive years of below-par harvests, especially in the current 2022/23 season which has been hampered by both frost and droughts. 

Peru is continuing to see its exports fall at a significantly faster rate, plunging by 24.9% in May 2023. Again, erratic weather played a part in Peru’s downturn, in addition to continuing social unrest which began in December 2022. However, the main reason behind the exceptional rate of decrease in May 2023 is mechanical. The May 2022 growth rate was up 54.7% at 137,948 bags, while the average volume of exports for May in 2014–2021 was 97,969 bags and 103,649 in May 2023, a 5.7% increase when compared against the average. 

Exports of all forms of coffee from Africa decreased by 7.2% to 1.14 million bags in May 2023 from 1.23 million bags in May 2022. For the first eight months of the current coffee year, exports totalled 8.1 million bags as compared with 8.6 million bags in coffee year 2021/22, down 5.8%. Côte d’Ivoire and Ethiopia are the main drivers behind the fall in the region’s exports, with their combined shipments decreasing by 19.4% to 0.45 million bags as compared with 0.56 million bags in May 2022. In Ethiopia, contract disputes arising out of a mismatch between the local purchasing prices and global market prices have been affecting the volume of exports since the early months of 2023, with exporters withholding the coffee until the disputes are resolved. 

In May 2023, exports of all forms of coffee from Mexico and Central America were up 12.4% to 2.14 million bags as compared with 1.91 million in May 2022. This latest month of positive growth is the third in the first eight months of the current coffee year. As a result, the rate of decrease of the cumulative total has decelerated sharply, up to 2.1% in the first eight months of the current coffee year, totalling 10.03 million bags, as compared with 5.4% rate of fall for the first seven months. Honduras was the main driver of the positive growth in May 2023, up 58.0%, to 0.83 million bags from 0.52 million bags in May 2022, the biggest rate of growth for the month of May since its 80.4% increase in 2000. This large jump in exports was mainly due to two factors. The first was mechanical, reflecting the 37.3% year-on-year (YOY) decrease in exports in May 2022, while the second was logistical, where deliveries scheduled for April 2023 were delayed to May. In the first eight months of the current coffee year, Honduras has exported 3.58 million bags, as compared with 3.33 million bags in 2021/22, up 7.5%. 

Exports of all forms of coffee from Asia and Oceania increased by 13.1% to 3.94 million bags in May 2023 and rose 3.2% to 31.73 million bags in the first eight months of coffee year 2022/23. Indonesia is the main source of the strong positive growth rate of the region, with exports increasing by 171.7% in May 2023, which in turn is a reflection of the 52.8% YOY fall in May 2022. Indonesia’s average exports for May amount to 0.54 million bags (2017–2021), though these fell to 0.23 million bags in May 2022 before leaping back up to 0.62 million bags in May 2023, the fourth highest volume for the month on record. Measured against the average (2017–2021), the May 2023 exports are up 14.9%, more in line with the year-to-date growth rate of 8.1% (October–May 2022/2023 vs 2021/22). 

Exports of Coffee by Forms 

Total exports of soluble coffee increased by 24.6% in May 2023 to 1.07 million bags from 0.86 million bags in May 2022. In the first eight months of coffee year 2022/23, a total of 7.93 million bags of soluble coffee were exported, representing a decrease of 0.4% from the 7.96 million bags exported in the same period during the previous coffee year. Soluble coffee’s share in the total exports of all forms of coffee was 9.6% (measured on a moving 12-month average) in May 2023, up from 9.0% in May 2022. Brazil is the largest exporter of soluble coffee, shipping 0.32 million bags in May 2023. 

Exports of roasted beans were down 4.8% in May 2023 to 72,925 bags, as compared with 68,003 bags in May 2022. The cumulative total for coffee year 2022/23 to May 2023 was 0.48 million bags, versus 0.52 million bags in the year-ago period. 

Production and Consumption 

The estimates and outlook for production and consumption for coffee years 2021/22 and 2022/23 remain the same. 

World coffee production decreased by 1.4% to 168.5 million bags in coffee year 2021/22, hampered by the off-biennial production and negative meteorological conditions in a number of key origins. However, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. Increased global fertiliser costs and adverse weather conditions are expected to partially offset the positive impact of biennial production from Brazil, explaining the relatively low rate of growth in coffee year 2022/23. The impact of biennial production is anticipated to drive the outlook for Arabica, which is projected to increase by 4.6% to 98.6 million bags in coffee year 2022/23, following a 7.2% decrease in the previous coffee year. 

Reflecting its cyclical output, Arabica’s share of the total coffee production is expected to increase to 57.5% from 55.9% in coffee year 2021/22. South America is and will remain the largest producer of coffee in the world, despite suffering from the largest drop in output for almost 20 years, which fell by 7.6% in coffee year 2021/22. The recovery in coffee year 2022/23, partly driven by biennial production, is expected to push the region’s output to 82.4 million bags, a rise of 6.2%. 

World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22, following a 0.6% rise the previous year. Release of the pent-up demand accumulated during the Covid-19 years and sharp global economic growth of 6.0% in 2021 explains the sharp bounce back in coffee consumption in coffee year 2021/22. Decelerating world economic growth rates for 2022 and 2023, coupled with the dramatic rise in the cost of living, will have an impact on the coffee consumption for coffee year 2022/23. It is expected to grow, but at a decelerating rate of 1.7% to 178.5 million bags. 

The global deceleration is expected to come from non-producing countries, with Europe’s coffee consumption predicted to suffer the largest decrease among all regions, with growth rates falling to 0.1% in coffee year 2022/23 from a 6.0% expansion in coffee year 2021/22. As a result, the world coffee market is expected to run another year of deficit, a shortfall of 7.3 million bags. 

For the ICO’s full Coffee Report and Outlook (CRO), visit: icocoffee.org. 

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The tea and coffee markets in Greece are steadily developing this year despite traditional economic problems of the country caused by high debts and soaring energy costs. In general, drinking coffee is a strong modern Greek tradition, with 95 percent of Greek consumers buying coffee. 

The lifting of pandemic restrictions has provided an impetus for growth for many segments of the Greek national economy and industrial sectors, including tea and coffee, however, a number of serious problems, along with the ongoing hostilities in Ukraine, continues to put a serious pressure on the industry, preventing its more active growth. 

According to global market research firm Euromonitor International, price hikes are currently the main factor that impacted hot drinks sales in Greece. 

Ilaria Abagnale, a senior consultant at Euromonitor, said that coffee manufacturers being unable to absorb costs (and therefore passing on via higher retailing prices to consumers) combined with disposable incomes decreasing has created a significant demand challenge. She said this has negatively affected consumption, since decreasing disposable incomes and higher prices are forcing consumers to cut back on their purchases. 

“Discounting activities have been increasingly being used by retailers as companies seek ways to prevent losses. For example, more companies are introducing economy ranges to appeal to cash-strapped customers,” said Abagnale. “Thanks to these activities, volume sales recorded a mitigate decline for overall hot drinks, as consumers are choosing to migrate to cheaper products rather than avoiding them altogether. However, coffee and tea registered a 0.2 percent and 0.7 percent growth respectively.” 

Greece is attractive to coffee chains 

In the meantime, major global players have been interested in the Greek coffee and tea markets. One of them is Coca-Cola HBC, which in recent years has significantly strenghthened its position in Greece’s coffee market. 

Athina Popof, coffee, premium spirits and snacks director, Coca-Cola HBC Greece & Cyprus, told T&CTJ that the company has distributed the Costa Coffee at-home range, which includes five different propositions of roasted and ground espresso and seven different varieties of espresso capsules. 

“Through our distribution network, we are serving Costa Coffee in independent cafés all over Greece. We are also addressing new channel opportunities with our own close system and capsule solutions,” Popof said. “In 2022, we strengthened our proposition with the launch of Caffè Vergnano, which offers authentic Italian espresso, in Greece, following an exclusive distribution agreement with the family-owned Italian coffee company.” Headquartered in Santena, Italy, Caffè Vergnano is one of the oldest coffee roasters in Italy with roots dating back to 1882. 

Popof noted that it is a super-premium and high-quality coffee that represents Italian heritage and authenticity at its best. “Caffè Vergnano’s products focus exclusively on the HoReCa (hotel, restaurant and café) channel, targeting premium customers. It matches perfectly with our strategic priority to create value and support our customers in this sector.” 

Furthermore, Popof shared that the two brands are highly complementary, which enables Coca-Cola HBC to address an even wider range of consumer tastes and segments. “Caffè Vergnano allow us to recruit consumers loyal to the Italian coffee taste, while Costa continues to be our mass premium global coffee proposition with broad consumer appeal across multiple platforms.” 

“Our focus in 2023 and beyond is to continue building distribution and appeal in these two great coffee propositions. Together with our partners, it is our passion to respond to all our customer and consumer needs with top quality coffee propositions for all occasions,” she explained. 

According to Popof, in general, in Greece, coffee is not just a product, it is part of the culture, and part of daily lives. She added this is also evident by the category growth both in HoReCa and in supermarkets in Greece. On a year-to-date basis, espresso coffee is growing by almost 10 percent, and this trend is expected to continue. 

Popof believes that modern coffee consumers are typically very well informed and have high standards. They are also diverse in their preferences. “This is why we have evolved our portfolio to offer two different brands, each with a unique proposition within the category.” 

Local player Kafea Terra is expanding its interests in Greece, with investments of EUR €6 million over the next two years and a 28 percent stake in the HoReCa market. Owned by local businessman, Yiannis Iosifidis, Kafea Terra, which produces Greek espresso under the Dimello brand and exclusively distributes illy coffee in Greece, is nearing €100 million in sales. 

Although it is estimated that coffee will show a decline in the Greek market in the next five years, Nikos Kougioumtzis, the commercial director of Kafea Terra, said in a press conference that the company plans to continue its expansion, particularly with its flagship Greek Dimello ground espresso, which now accounts for 20 percent in the Greek retail. 

Still, according to some Greek media reports, the ever-rising prices force Greeks to drink less coffee as well as tea. 

In general, the Greek coffee market is characterised by intense competition and saturation, especially in HoReCa segment (with, per Greek business paper, Capital, more than 70,000 bakeries, cafés, restaurants, and hotels throughout the country), which has forced some leading local players to expand in abroad. 

According to Greek Total Business magazine, in recent years many leading Greek coffee chains such as Coffee Lab, Mikel Coffee Company, Coffee Island, Grigoris and Coffee Berry have begun active foreign expansion. 

Economy options

In terms of coffee consumption, annually, at-home consumption is estimated at €300 million, while the out-of-home market reaches €3 billion in consumer prices. In volume terms, consumption hits 40,000 tonnes per year, 40 percent of which is consumed in restaurants and 60 percent at home and in workplaces. Per the Capital, the annual per capita consumption of coffee in Greece is estimated at 500 cups per year. 

According to the Hellenic Coffee Union, ground coffee in Greece accounts for 78 percent of sales, while 18 percent is capsule sales, which have shown growth in recent years. 

Euromonitor noted that given the strong price increases in the coffee category, more expensive segments (such as fresh ground coffee pods) slowed their growth. Since there aren’t many economy options, consumers switched to less expensive coffee categories such as standard fresh ground coffee. Likewise, the value growth in tea (which has been driven by premiumisation) slowed as fewer consumers can afford to purchase premium products on a regular basis. 

In response, retailers have undertaken major discounting activities and allocated more space to economy ranges. For instance, AB Vassilopoulos introduced a new private label coffee in 2022 under the name of Perla. The Perla range is comprised of fresh ground coffee pods (compatible with both Nespresso and Dolce Gusto machines) as well as filter coffee and espresso products. Domestic company, NutCo, introduced the Buon Gusto economy brand; compatible with Dolce Gusto coffee machines. 

Tea, a small market with potential 

Thanks to the healthy living trend and the strong marketing of the wellness and immunity-strengthening benefits of certain types of tea, these categories have attracted a lot of investment from both domestic and international players, leading to greater product variety, and grocery retailers are allocating more shelf space to such products. As such, visibility of herbal and green teas is growing and encouraging more people to purchase it. 

Caffeine-free infusion teas are particularly well-positioned to gain share in Greece as they do not compete with coffee – the most popular hot drink in the country. Instead, infusion teas are positioned to meet different consumption occasions, such as the evening time. The relaxation and sleep aid qualities of infusion teas make them more appealing to consumers and is stealing share from black tea. 

Over the forecast period, the consumption of tea is set to grow due to the expected persistence of the healthy living trend and the increase in product variety and availability. This has resulted in an increase in consumer awareness and attracted new consumers to the category, many of whom will continue to purchase tea in the coming years. Nevertheless, once dynamic, tea’s market penetration is low given the cost of living crisis and because there is not a strong tea drinking culture in Greece, consumers have reduced spending on non-essentials. 

Dimitris Siandris, COO of Lux, a Greek beverage company based in the city of Patras, speaking to Greek media, confirmed consumers’ shift to healthy tea options, including iced tea. “The past year was a pivotal year for businesses in the sector. We have witnessed a shift in the purchasing public to products with high nutritional value that harmonise with a balanced diet. The long-term confinement due to the pandemic and dealing with health issues created a completely different situation, to which we were called to respond in the best possible way”. 

Positive outlook ahead 

Euromonitor analysts believe Greece is set to remain a coffee dominant market when it comes to hot drinks and per capita consumption of this category will remain high. Coffee will remain the largest category in both the off-trade and on-trade channels. 

The share of fresh ground coffee is set to grow further at the expense of instant coffee. Most notably, Greek-style fresh ground coffee is anticipated to retain a loyal audience, with this already the largest category in terms of volume sales. Meanwhile, coffee pods appear to not yet have reached maturity and thus have plenty of space to grow. This category will continue to benefit from the strong increase in investment by leading players as well as the entry of new companies capitalising on this trend. 

Within the off-trade channel, value will perform better than volume across all hot drinks categories thanks to the continuing rise in average unit prices and the ongoing premiumisation trend. Although people in Greece will experience a decline in disposable incomes, this is set to affect volume sales more than value because it is higher-income consumers who purchase premium products, and they tend to be less affected by economic turbulence than lower-income consumers. Furthermore, consumers have become more demanding and are more likely to consume fewer items than to trade down to cheaper products. 

The ‘home barista’ trend (which gathered pace during the lockdown period of the pandemic) is set to remain relevant over the forecast period, with consumers expected to continue investing in premium coffee experiences at home. Whilst such experiences are more expensive than buying and preparing instant coffee, they remain less expensive than purchasing coffee through on-trade channels. As such, the decline in disposable incomes will drive some consumers towards premium at-home experiences whilst reducing the amount they spend out-of-home on foodservice. 

In case of tea, given that the consumer base of tea in Greece is largely comprised of higher income people, many of whom are health conscious, the decline in disposable incomes is not set to have a strong impact on tea-purchasing behaviour. Instead, such consumers are likely to prioritise quality over quantity, allowing premium brands to continue to gain share and add value to the category. 

Unfortunately, consumers must deal with escalating coffee prices because of a Special Consumption Tax on coffee in Greece.  

The president of the Hellenic Coffee Union, Yannos Benopoulos recently said in an interview with Greek media, that “not only does there exist a Special Consumption Tax on coffee, but it has been a constant request of the Hellenic Coffee Union in recent years to abolish it.” He added that “this specific tax measure burdens the operating costs of businesses as well as the price of the coffee that the consumer buys.” 

• Eugene Gerden is an international freelance writer, who specializes in covering global coffee, tea and agricultural industry. He worked for several industry titles and can be reached at gerden.eug@gmail.com. 

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66% of Americans now drink coffee each day, more than any other beverage including tap water and up by nearly 14% since January 2021, the largest increase since NCA began tracking data.

The Spring 2022 National Coffee Data Trends (NCDT) report prepared by Dig Insights on behalf of the NCA found that Americans have increased coffee consumption away from home by 8% since January 2021.

At home coffee consumption remains above pre-pandemic levels. Some 84% of coffee drinkers now have had coffee at home in the past day, compared to 80% in January 2020.

Consumption of espresso-based beverages, typically prepared away from home, have shot up 30% since the start of the pandemic, signaling recovery from the Covid-19 pandemic and also indicating new growth.

NCA president and CEO William “Bill” Murray commented: “Given decades of independent scientific evidence that coffee drinkers live longer than people who never drink coffee, it’s fitting to see America’s top beverage emerge from Covid-19 more popular than ever at home, on the go, in the office, and in coffee shops around the country.”

Other key NCDT findings include:

• Specialty coffee consumption hit a five-year high. 43% of coffee drinkers chose specialty coffee in the past day, up 20% since January 2021.
• Cappuccinos and lattes are tied for America’s most popular coffee beverage, followed closely by plain espresso and cafe mocha.
• 41% of coffee drinkers use a drip coffee maker, followed by single-cup systems (27%), cold brewing (9%) and espresso machines (8%).

For more information, including media highlights, and to purchase the complete NCDT, click here.

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The coffee market in the Nordic region, which is comprised of Sweden, Finland, Iceland, Norway, and Denmark, is steadily growing due to the traditional love local customers have for coffee. And as Covid restrictions in the region are easing, representatives of some leading local producers and independent analysts report that out-of-home consumption is growing again.

While the pandemic and its consequences have not resulted in a significant drop of coffee consumption in the Nordic region – of which each country is among the top-10 coffee-consuming nations in the world – it led to the change of structure of demand.

Such a trend, for example, is currently observed in Denmark, which is confirmed by some leading market research firm analysts.

“No negative effects have been noted, but a shift in demand has occurred. We’ve seen office spaces close, sending many home to work. This meant a decline in demand from B2B customers and an increase in B2C demand. The consumption was moved home from work,” said Christian Juul Andersen, chairperson of SCA Denmark, the Danish Coffee Association, in an exclusive interview. “Specialty coffee is becoming more sought after, as customers are becoming increasingly aware of all links in the supply chain are being treated fair, as well as a general heightened focus on higher quality. We at the SCA expect a shift from a high intake of inferior coffee to a higher quality coffee and a small decrease in consumption.”

In the meantime, in neighbouring Norway, the Covid outbreak has even led to growth of coffee consumption among local customers. Bjørn Grydeland, an official spokesperson of the Norwegian Coffee Association, said, “We have had a total growth in coffee consumption. The decline in the professional market (out-of-home) because of the pandemic has been more than compensated by the growth in the home market.”

According to Grydeland, coffee habits of Norwegians, however, do not change that quickly. “I cannot point to a particular segment that stands out. All kinds of coffee for the home market increased, both instant, capsules and roasted fresh coffee,” he explained. “When society returns to normal conditions, I think we will also return to the way we consumed coffee before March 2020. It is difficult to say whether this exceptional year will lead to lasting changes. Black filter coffee has for decades been our favourite. There is one trend that seems to last; sale of whole beans has been increasing continuously for several years. That will probably continue.”

The Finnish love their coffee

Representatives for roasters also confirm maintaining stable demand for coffee in the region, which creates conditions for their further development. Lenita Ingelin, senior vice-president of Paulig Business Area Finland & Baltics, said 2020 was an extraordinary year – especially in the HoReCa channel – due to the Covid-19 pandemic.

In Finland and the Baltics, the total coffee sales were slightly below the previous year. “However, during 2020 people were experimenting with new coffee tastes that had a positive effect on the sales of our premium coffee segment,” said Ingelin. “In Finland, our City [Coffee] product range, where each blend of coffee represents the coffee culture of a certain city, saw the most significant increase in sales — not being able to travel meant that customers bought 68 per cent more coffee in terms of the various ‘City’ blends than in 2019.”

Paulig Juhla Mokka, a light-roasted coffee, has been popular in Finland since it was introduced in 1929.

Paulig is especially optimistic for its traditional Juhla Mokka coffee — the light roasted ground coffee, launched in Finland for the first time in 1929, and its popularity and consumption have significantly increased since that time. According to Ingelin, today, almost every other cup of coffee enjoyed in the country is Juhla Mokka coffee.

She added that also last year, the iconic Presidentti coffee celebrated the 70^th anniversary of the coffee ambassador, a tradition of Paulig in which the company selects special ambassadors annually to promote the brand. This tradition dates back to the 1920s.

Furthermore, a new variety for the City Coffee range, Café Reykjavik, was introduced in Finland and Estonia, and Classic Cremoso in the Baltics. “In 2020, we also opened a Paulig Café & Store (a Paulig flagship coffeehouse) in Moscow, Russia. It´s a unique place for coffee lovers, inspired by the Finnish Paulig Kulma, which opened in in the heart of Helsinki five years ago,” said Ingelin. “At the moment, we don’t have any expansion plans in our coffee category. We’ll focus on our current markets and nurture the coffee culture in the Baltics, Finland and other Nordic states.”

Paulig Presidentti coffee brand celebrated the 70th anniversary of its ‘coffee ambassador’ in 2020.

Ingelin confirmed that Finland is an important market for Paulig as its coffee culture is one-of-a-kind, and the Finnish people consume the most coffee in the world per capita. She noted that Finnish coffee consumption is almost 10 kg per person yearly and the figure has been stable for years. In 2020, the consumption declined slightly due to exceptional times. The drop in consumption in the HoReCa channels did not shift fully to the retail channel.

Market analysts confirmed these statements. Sneha Varghese, senior research consultant at Fact MR shared that as with many countries, Covid-19 has had a negative impact on the coffee industry of the Nordic region. “As an immediate response to Covid, various government bodies of the region have introduced country-wide risk management services such as social distancing, travel restrictions, and partially lockdown in various countries. This has significantly impacted the countries’ economies and their coffee industry.”

According to Varghese, there was a disruption in various activities such as labour supply, trade operations, logistics networks as well as import-export infrastructure, which has resulted in shipment delay and transaction costs in the coffee industry of the Nordic region. “Thus, the price of coffee has been highly volatile due to disruptions in the supply chain and the production of coffee. This also affects small-scale coffee roasters that primarily supply hotels, restaurants, and cafés. Moreover, Finland, Sweden, and Norway are predicted to remain the most lucrative markets by the end of 202.

Echoing Ingelin’s comment, Varghese said that based on per-capita consumption of coffee, Finland is the biggest consumer across the globe. “The per capita consumption of coffee in Finland is around 12 kilograms. On the other side, per capita consumption of coffee Norway and Iceland is 9.9 kilograms and nine kilograms, respectively. In addition, the consumption of coffee at home has been increased as people restricted to work from home and has limited options to go outside, consume coffee is one of the few ways for them to take a break from work.”

According to a study of the Centre for the Promotion of Imports from developing countries (CBI), which is affiliated with the Netherlands Ministry of Foreign Affairs, imports traditionally account a small share of the Nordic coffee market (especially compared to other European countries), considering that most coffee is packed and produced at local processing factories.

In Denmark, Sweden and Norway coffee is predominantly consumed black, meaning without milk and sugar, so the quality of the actual coffee is especially important in these markets.

CBI analysts point out that coffee in Scandinavia is generally considered to be of high quality, which despite the pandemic, creates conditions for the development coffee chains and micro-roasteries, with the biggest number being observed in Sweden and Denmark.

Paulig achieved Carbon Neutral certification for its roastery in Vuosaari, Finland and aims to make all its production sites carbon neutral by the end of 2023.

In recent years, local coffee roasters and global majors operating in the region have started to pay greater attention to the issues of sustainability. For example, according to Ingelin, Paulig achieved CarbonNeutral® building certification for its Vuosaari coffee roastery. “Our ambition is to reduce the greenhouse gas emissions from our own operations by 80 percent by 2030, and the plan is to make all of our production sites carbon neutral by the end of 2023. Paulig has been a pioneer in the coffee industry’s sustainability work. As one of the few large roasteries in the world, the company uses coffee beans from only verified sustainable sources.”

Specialty tea on the rise

In addition to coffee, the demand for tea in the Nordic region remains also strong, with the biggest being observed in case of specialty teas.

Alexis Kaae, an official spokesperson of Simply Tea ApS, one of the largest tea importers in the Nordic region, based in Denmark, in an exclusive interview commented: There is a huge interest regarding specialty tea in Denmark and some other Nordic states and a decline in supermarket commodity tea. Since the outbreak of Covid19, we are experiencing more and more restaurants and fermented tea companies looking for sustainable specialty tea. The demand for a healthy beverage seems to be on everyone’s agenda.”

She said that quality is always an issue as most Scandinavians know very little about tea or its production. “In order to meet the demand for education we have now planted five acres of Camellia sinensis plants in our own tea garden in Denmark. I suppose this can be defined as our major achievement for this year.

As the demand for tea in the Nordic region remains strong, some leading Western European tea manufacturers and marketers are considering accelerating their expansion into this market. Mike Harney, vice president of New York-based Harney and Sons, said, “We as a family-run company do well in the Norway region and have started distribution in Sweden. In terms of expansion in the next year, we are hoping 2022 takes our company to a whole new level amongst consumers in the Nordic region.”

• Eugene Gerden is an international freelance writer, who specializes on covering of global coffee, tea and agricultural industry. He worked for several industry titles and can be reached at gerden.eug@gmail.com.

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The report from the National Coffee Association states that Americans have increased coffee consumption at work by 55% and at cafés and restaurants by 20% since January 2021, driving an overall 16% increase in out-of-home coffee consumption as Covid-19 restrictions have eased around the country.

The report also shows that more Americans (60%) drank coffee in the past day than drank any other beverage (including tap water), continuing coffee’s decade-long reign as America’s favourite beverage.

NCA president and CEO William “Bill” Murray commented: “It’s no surprise that home remains the most popular place to drink coffee, and that the Covid-19 pandemic drove Americans to drink more coffee at home than ever.

“As Covid restrictions ease, coffee drinkers are returning to pre-pandemic routines but also keeping their favorite new coffee options like drive-through and app-based ordering. Wherever Americans go, they keep America’s favorite beverage with them.”

Additionally, through NCA’s collaboration with the Specialty Coffee Association (SCA), the NCDT gives new insight into consumer preferences within the specialty coffee segment. Young coffee drinkers continue to drive the segment’s growth, with nearly half (49%) of 25-to-39-year-olds surveyed drinking at least one cup of specialty coffee in the past day.

Other key findings of the report include:

• Coffee consumption among 25-39 year olds is at a record high – 65% drank coffee in the past day.
• The NCDT’s first-ever summer polling finds cold brew in the top three coffee preparation methods for the first time. Consumption of cold coffee is up 50% since January 2021, surpassing even the expected seasonal levels and continuing to show the increasing popularity of cold brew which was virtually unknown when first surveyed in 2015.
• Consumption of espresso-based beverages typically consumed away from home increased 9%, returning to January 2020 levels.

For media highlights or to purchase the complete NCDT, click here.

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Consumption held relatively steady (around 33 million liters) due to retail purchases, per Euromonitor. However, aside from the decrease in foodservice sales, ready-to-drink (RTD) coffee sales dropped slightly because of their tendency to be high impulse sales, which were hindered due to lockdowns during the pandemic. Currently, only bottled water outperforms RTD coffee.

According to Barry, coffee has strong retail prospects in 2021, particularly in RTD. He added that standard ground coffee sales had been declining but as more people started brewing at home, it became a growth category in 2020. Instant remains the only declining coffee category in the US market despite a slight spike in 2020 due to the Dalgona coffee fad (not a trend as it disappeared almost as quickly as it appeared).

Sales at chain coffee and tea shops fell 3.6% between 2019 and 2020 (many had the advantages of contactless, mobile ordering, even drive-thrus during lockdowns) while independent coffee and tea shops faired much worse with sales dropping 15% (most of which didn’t have the aforementioned benefits). “We don’t expect to see growth in independent coffee and tea shops until 2022,” said Barry.

He identified four key trends that will occur during the “new normal”:

Trend #1 — Slowing Down
Working remotely
Investment in the home (appliances, pets, etc.)
Lingering limitations on travel

Trend #2 — K-Shaped Economic Recovery
Some sectors exceed 2019 levels by early 2021; others may take years
Growing inequality, pressure on the middle price tier

Trend #3 — Digital Reliance
Massive acceleration of e-commerce adoption
Physical/digital lines get blurrier

Trend #4 — The Unwell Well
Interest in immune products falling
Mental wellbeing becomes a higher priority
A caffeine ceiling.

Regarding the “slowing down” trend, Barry pointed out that social distancing will last through at least most of 2021. More people are expected to continue working from home in the future – maybe not full time, but at least part of the time – which will affect on-premise coffee consumption. People will continue to spend more time at home because they invested in their homes during the lockdowns with home renovations, exercise equipment (like Peloton), pets, coffee machines (many consumers upgraded), etc.

In terms of the “k-shaped economic recovery,” Euromonitor expects the American economy will near recovery by Q4 2021. “The US is outperforming most of its comparable economies except Sweden,” said Barry, adding, “keep in mind that the recovery is not recovery for all people, it’s a fragmented recovery — a lot of people are still out of work or under-employed and will continue to be in 2021.

Amid this, there will be continued premiumization for consumers who were generally unaffected by the pandemic, although the foodservice channel will continue to be impacted. Barry explained that there will be economization for consumers who were affected by pandemic such as purchasing lower-priced or private-label brands, bulk sizes, etc. “There will be continued pressure on the middle tier, which will struggle in a polarized market.”

As the economy and markets recover, Barry said the foodservice/coffee shop sector recovery will splinter in two directions:

1-Efficiency oriented — fast, digital, personalized, contactless
2-Human oriented — slow, educational, sense of community

The reliance on digital (Trend #3) will continue as, once adopted it tends to stick around, said Barry, noting in particular, e-commerce adoption. “There is a huge and permanent shift to e-commerce.” [E-commerce sales of coffee, and tea, surged during lockdowns.]

Regarding the final trend, “the unwell well,” mental well-being appears to be replacing immunity as the key functionality of the future. “Americans are generally very stressed people, women and younger generations even more so,” shared Barry, noting that decaf sales are not doing as well in this environment as one would think. ‘Coffee mitigation,’ (functionality) not decaf will be key — there are lot of adaptogens out there that can be used in coffee. Products that add, rather than subtract, in order to create a less anxiety inducing coffee will be particularly popular, such as: cannabis, L theanine, cordyceps, rhodiola and Holy Basil (Tulsi). “This [mental well-being] is an exciting category as we move forward,” he said.

Summing up, the outlook for coffee in the US in 2021 is favourable for a variety of reasons, notably:

• Retail prospects will stay strong
• RTD coffee remains a growth category — expect cold brew to outgrow overall category
• Mental well-being is emerging as the hot functionality
• Habits that consumers picked up during pandemic will not go away (e.g., online shopping, brewing at home) — which is good for some sectors (coffee machine sales, retail coffee) and bad for others (foodservice/coffee shop channels, OCS, etc.)

Given these trends and outlooks, it will be quite intriguing to see how 2021 actually unfolds.

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com
  Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

The post US coffee sales remained steady in 2020, perking up in 2021 appeared first on Tea & Coffee Trade Journal.

Although a small group (515 respondents), the survey, which was released in September, showed that home coffee consumption has risen compared to 2019, naturally, with 22% of respondents indicating an increase in brewed coffee using pre-ground beans versus other methods. While online sales were on the rise – 21% of respondents said they are buying more coffee online compared to 2019 – consumers reported buying less coffee for in-home brewing from coffee shops (18%) and specialty stores (15%).

With most consumers spending more time at home due to lockdowns, 45% of survey respondents tested a new brewing method to make coffee at home versus 2019. Those consumers primarily gravitated towards simple or basic systems such as single serve pod coffee makers (22%) and automatic drip coffee makers (20%). However, many consumers have been more adventurous with 33% of respondents experimenting with new coffee techniques and recipes at home during 2020. The majority of respondents also said that they would like to improve their home barista skills with 46% indicating a desire to know more about how to brew better coffee at home, and another 23% expressing interest in learning more.

Most respondents currently employed said that coffee was very important or important to their workday routine. However, more than half (54%) admitted that they are somewhat apprehensive about communal coffee options at work. Hence, about 45% of respondents planned to bring their own coffee or coffee brewing materials to work moving forward. (See Facts, Figures & Findings in T&CTJ’s November 2020 issue for more details on Covid-19’s impact on office coffee systems.)

Approximately 56% of survey respondents said they were planning to travel this year, with 35% sharing they already had vacation plans for this year. In contrast to coffee trends at work, only 16% of travellers planned to bring their own brewing equipment with them. While travelling, respondents said they would buy coffee on-the-go from their traditional stops, including coffee shops (69%), restaurants (58%) and hotels (54%).

Perhaps most noteworthy, is that many of the respondents planned to bring their own brewing equipment with them on their vacations. Of those respondents, about 41% said that they were planning to take a drip machine rather than more portable options such as a French press (18%) or pour-over (18%). (Although, this could be a reflection of the types of trips consumers planned to take such as renting cabins or recreation vehicles rather than staying in hotels.)

• Vanessa L Facenda, editor, Tea & Coffee Trade Journal.
  Keep in touch via email: vanessa@bellpublishing.com
  Twitter: @TCTradeJournal or LinkedIn: Tea & Coffee Trade Journal.

The post Covid is changing coffee consumption habits appeared first on Tea & Coffee Trade Journal.