Changing coffee trends, especially in Asia, should spell good news for Colombia’s coffee industry, according to the head of operations at the International Coffee Organization (ICO).
“We are seeing the dynamism of emerging markets and economies in the coffee trade,” Mauricio Galindo of the ICO told Colombia Reports. This will give a boost to the industry, which in Colombia has been suffering from low prices and a flooded market.
“Consumption trends in Asia: India, China, South Korea and Indonesia, are changing. They are organizing themselves and establishing structures for consumers, growers, buyers – imitating what we have here,” said the head of operations.
The average consumption growth in these regions is increasing by around 4% per year, said Galindo. Not only are these emerging economies seeing such huge growth, but demand from these countries will reach 50% of global coffee consumption by 2020.
Some 2.5 million bags are being added to global consumption each year, with around 80% of this growth in the emerging markets. Rising incomes and a growing middle class are the factors driving this growth.
Coffee experts have targeted young Asian urban professionals as the key to success for the industry. China and India have seen a boom in coffee shops opening up, and Indonesia and Vietnam are also seeing a local growth in the cafe culture.
The consensus among coffee experts that young professionals are looking for the “coffee experience,” which gives status, yet is affordable.
“The attitudes towards coffee in these countries is changing. Drinking coffee is seen as a trendy, cool, western habit and it is very attractive to young people there,” said Galindo.
Growth in these mainly tea-drinking countries is however mainly driven by instant coffee, according to Galindo. This is because people are reluctant to change their hot-drink ritual from simply boiling water and drinking, but also because low income prevents them from buying specialized equipment for coffee-drinking, according to the ICO head of operations.
This preference for instant coffee is bad news for Colombian coffee growers, as instant coffee is made mostly from lower quality robusta beans, rather than the high-quality arabica beans grown in Colombia.
However the trend seems to be that the taste for coffee in these regions will change in the future. South Korea, where the total number of coffee shops has gone from 1,600 in 2006 to 12,000 in 2011, has seen a shift from instant to fresh-roasted as consumers begin to be concerned about coffee quality, which should spell good news for Colombia in the future.
Coffee consumption tends to grow in an “S” shape with very fast growth as seen in Asia, and then a flattening out, as currently evident in the United States.
According to the Wall Street Journal at around 23 gallons a year, Americans consume less than half the amount of coffee than they did 65 years ago. In mature markets the trend seems to be showing that younger generations are drinking less coffee, and are less likely to step into their parents multiple-cup-a-day habit.
However as mature markets are flattening out, emerging economies are continuing to flourish. The first Asia Coffee Summit was held in March boasting 150 exhibitors from 10 countries, and also this month Singapore hosted the Tea and Coffee World Cup, a three-day exhibition with growers, traders and buyers.
“They are scaling up the game. We expect much more from there,” said Galindo.
Sources
- Interview with Mauricio Galindo, head of operations, International Coffee Organization
- ICO seminar on consumption (ICO)
- ICO March outlook (ICO)
- Coffee cup consumption (Wall Street Journal)
- Asia Coffee Summit (cafeasia.com)
- Tea and coffee world cup (singaporeexpo.com)