Vietnam, the world's largest robusta coffee grower, needs to harvest at least 26 million bags in the marketing season starting this month to ensure supplies of the variety will meet demand, according to Volcafe Ltd.
Output in the nation was 27 million bags last season, up 35 percent from a year earlier, the Winterthur, Switzerland-based coffee unit of commodities trader ED&F Man Holdings Ltd. estimates. Production rose as farmers expanded the growing area and planted new coffee varieties, said Jan Kees van der Wild, Volcafe's managing director. Early indications are for a crop of 26 million bags in 2012-13, he said.
Demand for robusta coffee jumped 14 percent last year, Volcafe estimates. Some roasters increased usage of the cheaper beans used in instant coffee and espresso after the arabica variety, favored by Starbucks Corp., climbed to a 14-year high. Robusta beans' share of global consumption is set to reach a record 46 percent this season, Volcafe forecasts.
"If the Vietnam crop is 26 million bags, we don't believe there will be a shift back to arabica," van der Wild, who has traded commodities for 25 years, said in an interview in Geneva on September 28. "If the crop is smaller than that, then they will have to shift back to arabica," he said, referring to roasters.
Global coffee demand grew 3.4 percent to 3.5 percent last season and a similar rate of expansion is forecast for 2012-13, van der Wild said. An 11 percent gain in robusta supplies last year allowed the market to remain balanced, he said. Slowing economies have resulted in consumers buying cheaper coffees, which usually contain more robusta.
"When we have an economic stress and high unemployment, specifically in the south of Europe, people will go for value," van der Wild said. "You will see a tendency to shift from out-of-home to home consumption in those areas and for sure you will see the consumer being more critical of price."
Coffee consumption growth is polarized, with the lower and the top end of the market expanding, he said. That's reflected in rising robusta usage and stable consumption for mild beans, while the share of arabica coffee from Brazil, the world's largest coffee producer, is falling, he added. Mild arabicas are produced in countries including Colombia and Central American nations and are usually of higher quality than those in Brazil.
"For quality coffees, which are the mild arabicas, there is a continued desire to use them in blends," van der Wild said. "I don't think you can expect the market, that just started to get used to better coffees, to give that desire back, as on the shelf it is a relatively small price increase. We still see spectacular growth in the single-serve high quality coffees."