Sun, May 29, 2011 - Page 11 News List

World craves ever more coffee despite soaring price

Global demand for coffee is growing by about 2.5 percent per year, in part thanks to the increasing amount of the beverage consumed in China and other Asian nations

By Nigel Hunt  /  Reuters, LONDON

A Spanish farmer harvests coffee beans in the Agaete Valley on the Spanish Canary Island of Gran Canaria on April 4. Only about 4,000kg of Agaete coffee is produced a year. It is the only coffee grown on European soil, apart from one farm on European territory in the Caribbean.

Photo: AFP

Global demand for coffee is set to keep climbing and even a doubling in the cost of the commodity over the last 12 months has failed to quench consumers’ thirst for the beverage.

Faster paced lifestyles in China and other Asian economies where economic growth has been strong have helped to keep consumption of coffee firmly on an upward path.

The International Coffee Organization (ICO) estimates that global coffee consumption rose 2.4 percent to a record 134 million 60kg bags last year and it sees the upward trend continuing despite the rise in prices.

“There’s no impact [from high prices] in terms of a reduction in demand. Demand is still very dynamic,” ICO chief economist Denis Seudieu said.

“We base our estimates on what’s happened in the last 10 years and the average growth rate is 2.5 percent per annum. We think that trend will continue,” he added.

The growth in demand in China, where coffee is drunk chiefly in cafe chains or restaurants, is not expected to slow.

“Drinking coffee is a custom, and people who get used to ground coffee won’t change [that custom] just because of prices,” said Fu Jingya (付靜雅), secretary-general with the Coffee Branch of the China Fruit Marketing Association.

President of Starbucks Coffee International John Culver said this month that the world’s largest coffee chain plans to more than triple its cafes in China, from 450 currently to 1,500 by 2015.

“I started drinking coffee two years ago when I graduated from university as I feel much more pressure from the fast pace of work and life,” a saleswoman, who gave her name as Mrs Yu, said outside a coffee shop at Chaoyangmen in Beijing.

A rise in prices has also failed to deter consumers in India although some blends have substituted cheaper robusta supplies for more expensive arabica coffee.

“We have not noticed any significant drop in demand. The only change would be greater use of robusta in the blends to offset the higher prices of mild arabica,” said Sahadev Balakrishna, chairman of the Karnataka Planters Association.

Nandkumar Palkar, a telecoms engineer based in Mumbai, said his coffee consumption had gone up in the past two years mainly at the expense of tea.

“For years I was taking tea. Actually I was taking excessive tea. So I have cut down tea intake; that’s why I started coffee,” he said.

Scandinavian countries are the world’s top coffee drinkers on a per capita basis, led by Finland, while the US and Brazil are the top consumers in absolute terms.

Demand for coffee has also remained strong in mature markets such as Germany, where consumers have been largely shielded from price rises by fierce competition between retailers.

“Rising futures are largely being absorbed by roasters because retailers will not accept price rises,” one German coffee trader said. “The roasters are simply having to take the pain.”

Elsewhere as well, only a small portion of the rise in the cost of the commodity has filtered through into retail prices. Nestle’s Nespresso, for example, earlier this month announced a rise of about 6 percent.

Germany’s largest coffee roaster, Tchibo, said last month that surging coffee futures are likely to cut its profits this year.

Coffee production has struggled to keep pace with the steady growth of demand. Supplies of high quality arabica coffee have been particularly tight with key supplier Colombia suffering three consecutive below-par crops.

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