Coffee Market Outlookwith a Focus on the USACoffee Market Outlookwith a Focus on the USA

Ramacafe September 2009

Judith Ganes-ChasePresidentJ Ganes Consulting, LLC

US Coffee Market Still Global LeaderUS Coffee Market Still Global Leader

n The United States in any given month imports between 20%-26% of total world coffee shipments.

n USA coffee imports reached 24.3 million bags last year, two million more than the year before. Shipments in the first half of 2009 were running about 267,000 bags less in 2009 but this is not necessarily a reflection of a slow down in end user demand. Some roaster destocking occurred

n The United States in any given month imports between 20%-26% of total world coffee shipments.

n USA coffee imports reached 24.3 million bags last year, two million more than the year before. Shipments in the first half of 2009 were running about 267,000 bags less in 2009 but this is not necessarily a reflection of a slow down in end user demand. Some roaster destocking occurred a slow down in end user demand. Some roaster destocking occurred and it also reflected a reduction in Mild availability.

n Since 1975 the volume of imports each year into the United States has climbed about 6 million bags.

n Brazil is catching up with use of more than 18 million bags per year and growing between 3%-5% annually.

a slow down in end user demand. Some roaster destocking occurred and it also reflected a reduction in Mild availability.

n Since 1975 the volume of imports each year into the United States has climbed about 6 million bags.

n Brazil is catching up with use of more than 18 million bags per year and growing between 3%-5% annually.

Competition in US Beverage Market is FierceCompetition in US Beverage Market is Fierce

n Marketers are continuing to launch new products at an alarming pace.

n Drinks that offer vitality and boost healthful benefits are leading the pack as are energy drinks.

n Water War Waged: Consumers are faced with a wide array and confusing amount of choices of what they want the water they drink to do

n Marketers are continuing to launch new products at an alarming pace.

n Drinks that offer vitality and boost healthful benefits are leading the pack as are energy drinks.

n Water War Waged: Consumers are faced with a wide array and confusing amount of choices of what they want the water they drink to do confusing amount of choices of what they want the water they drink to do for them, aside from having multiple flavors, which mostly are of the berry and citrus varieties.

n Tea Time: Flavored teas are promoting more varieties with white and green tea aimed at health conscious guzzlers.

n Coffee remains a flavor of choice, but marketers are seeking continued ways to gain shelf space and keep pace with proliferation of other beverage choices.

confusing amount of choices of what they want the water they drink to do for them, aside from having multiple flavors, which mostly are of the berry and citrus varieties.

n Tea Time: Flavored teas are promoting more varieties with white and green tea aimed at health conscious guzzlers.

n Coffee remains a flavor of choice, but marketers are seeking continued ways to gain shelf space and keep pace with proliferation of other beverage choices.

What Does Your Coffee Mean to You?What Does Your Coffee Mean to You?

n Coffee lovers describe their daily perk me up as:

n As an old friend

n Something that gets me up in the morning

n An extension of the dessert experience

n Ritualistic

n Coffee lovers describe their daily perk me up as:

n As an old friend

n Something that gets me up in the morning

n An extension of the dessert experience

n Ritualistic

n Non-avid coffee drinkers are interested in RTD flavors infused with good for you fruit tastes.

Catering to these tastes are:

� Barista Premium Coffee Coolers

� Fruit “n” Java with B-vitamin and ginseng with coffee flavors

n Non-avid coffee drinkers are interested in RTD flavors infused with good for you fruit tastes.

Catering to these tastes are:

� Barista Premium Coffee Coolers

� Fruit “n” Java with B-vitamin and ginseng with coffee flavors

Emerging Trends to Sustain CategoryEmerging Trends to Sustain Category

n The US coffee market continues to undergo transformation with marketers continually seeking new product innovations to sustain demand.

n Earlier this decade and last consumers couldn’t get enough of flavored coffees, especially hazelnut, French vanilla, and chocolate mocha which were offered through convenient packaging on the retail level and at

n The US coffee market continues to undergo transformation with marketers continually seeking new product innovations to sustain demand.

n Earlier this decade and last consumers couldn’t get enough of flavored coffees, especially hazelnut, French vanilla, and chocolate mocha which were offered through convenient packaging on the retail level and at were offered through convenient packaging on the retail level and at cafes.

n Marketers are now faced with the need to balance conflicting demands:

n Weight, health, energy booster, indulgent treat, functionality, natural caffeine

n Tweaking milk and sugar ratio will no longer due in trying to gain stomach share in today’s hard fought market place.

were offered through convenient packaging on the retail level and at cafes.

n Marketers are now faced with the need to balance conflicting demands:

n Weight, health, energy booster, indulgent treat, functionality, natural caffeine

n Tweaking milk and sugar ratio will no longer due in trying to gain stomach share in today’s hard fought market place.

US Marketers Follow Japanese TraditionUS Marketers Follow Japanese Tradition

n Ready-to-Drink (RTD) is expected to be the fastest growing category in the United States.

n These premade beverage formulations are for retail shelves and chilled storage. Japan was the birthplace of RTD coffee, but now North America and Europe are actively pursuing this category to compete against energy drinks and teas.

n Ready-to-Drink (RTD) is expected to be the fastest growing category in the United States.

n These premade beverage formulations are for retail shelves and chilled storage. Japan was the birthplace of RTD coffee, but now North America and Europe are actively pursuing this category to compete against energy drinks and teas. energy drinks and teas.

n The RTD market is driven by strategic partnerships and licensing agreements.

n By 20011, North America is expected to capture 11% of the RTD market place.

energy drinks and teas.

n The RTD market is driven by strategic partnerships and licensing agreements.

n By 20011, North America is expected to capture 11% of the RTD market place.

Impact of the Weak Economy on ConsumptionImpact of the Weak Economy on Consumption

n Coffee sales likely to decrease in dollars more than actual volume.

n The demand for coffee is fairly inelastic, but there are many cheaper alternatives to higher priced cafes that don’t compromise much on taste to the average Joe coffee drinker.

nMcDonald’s expects its new coffee beverage program to generate $1 billion in sales annually.

n More consumers are preparing coffee at home, leading to greater sales

n Coffee sales likely to decrease in dollars more than actual volume.

n The demand for coffee is fairly inelastic, but there are many cheaper alternatives to higher priced cafes that don’t compromise much on taste to the average Joe coffee drinker.

nMcDonald’s expects its new coffee beverage program to generate $1 billion in sales annually.

n More consumers are preparing coffee at home, leading to greater sales n More consumers are preparing coffee at home, leading to greater sales of instant and drip coffees as well as coffee making equipment.

n Slowing sales may lead to a greater consolidation of coffee retailers.

n End-user demand is expected to be maintained but tight credit and fears of a slow down have had an impact on the supply chain this past year.

n More consumers are preparing coffee at home, leading to greater sales of instant and drip coffees as well as coffee making equipment.

n Slowing sales may lead to a greater consolidation of coffee retailers.

n End-user demand is expected to be maintained but tight credit and fears of a slow down have had an impact on the supply chain this past year.

2009 NCA USA Drinking Study Shows Only Minimal Impact from Recession2009 NCA USA Drinking Study Shows Only Minimal Impact from Recession

n Winter Drinking Trend consumption survey compiled by the National Coffee Association showed United States coffee use has been largely sustained this past year even with the downturn in the economy. n Respondents showed past day consumption as stable compared to

2008 but down from the 2007 peak, although gourmet coffee sales have declined; traditional coffee didn’t.

n Winter Drinking Trend consumption survey compiled by the National Coffee Association showed United States coffee use has been largely sustained this past year even with the downturn in the economy. n Respondents showed past day consumption as stable compared to

2008 but down from the 2007 peak, although gourmet coffee sales have declined; traditional coffee didn’t.

n There was some reduction in consumption among infrequent coffee drinkers while frequency and penetration amongst regular consumers held, showing that despite the turbulent economy, consumption was fairly resilient.

n The number of cups consumed per day is 3.3 overall and 2.3 cups per day for gourmet coffee.

n Consumers are not likely to increase frequency of consumption by much, new consumers need to continue to be introduced to coffee to grow usage.

n There was some reduction in consumption among infrequent coffee drinkers while frequency and penetration amongst regular consumers held, showing that despite the turbulent economy, consumption was fairly resilient.

n The number of cups consumed per day is 3.3 overall and 2.3 cups per day for gourmet coffee.

n Consumers are not likely to increase frequency of consumption by much, new consumers need to continue to be introduced to coffee to grow usage.

The Fast Food Big PictureThe Fast Food Big Picture

n Coffee offerings and healthy eating options have become increasingly important in the “Breakfast Wars.”

n The current economic environment has led more consumers to McDonald’s and Dunkin’ Donuts, which now offer high quality coffee drinks at prices around $1 cheaper than Starbucks.n Starbucks is solidifying its reputation for quality, while McDonald’s

and Dunkin’ Donuts are perceived as offering greater value.

n Coffee offerings and healthy eating options have become increasingly important in the “Breakfast Wars.”

n The current economic environment has led more consumers to McDonald’s and Dunkin’ Donuts, which now offer high quality coffee drinks at prices around $1 cheaper than Starbucks.n Starbucks is solidifying its reputation for quality, while McDonald’s

and Dunkin’ Donuts are perceived as offering greater value.and Dunkin’ Donuts are perceived as offering greater value.

n Effect of McCafe on Starbucks still unclear.n Starbucks CEO Howard Schultz claims that McDonald’s entry has

had a positive effect on Starbucks.n Market share has been unaffected, while the promotional campaign

has “created unprecedented awareness for the coffee category overall”

n Starbucks is going incognito in some areas, testing out new stores without sporting the Starbucks logo to capture down market sales.

and Dunkin’ Donuts are perceived as offering greater value.

n Effect of McCafe on Starbucks still unclear.n Starbucks CEO Howard Schultz claims that McDonald’s entry has

had a positive effect on Starbucks.n Market share has been unaffected, while the promotional campaign

has “created unprecedented awareness for the coffee category overall”

n Starbucks is going incognito in some areas, testing out new stores without sporting the Starbucks logo to capture down market sales.

McDonald’s Just Getting StartedMcDonald’s Just Getting Started

n The chain is continuing to roll out McCafes at a relentless pace and launched a midyear national advertising campaign.n More than 70% of McDonald’s 14,010 U.S.A. restaurants are now

serving the new beverages, up from about 50% in January.n Drinks are priced from $2.39 to $3.29 depending on type and size

and franchisee discretion.

n The chain is continuing to roll out McCafes at a relentless pace and launched a midyear national advertising campaign.n More than 70% of McDonald’s 14,010 U.S.A. restaurants are now

serving the new beverages, up from about 50% in January.n Drinks are priced from $2.39 to $3.29 depending on type and size

and franchisee discretion.and franchisee discretion.n “Second Wave” began in mid 2009 through 2010 adding smoothies,

frappes and bottled beverages.n McDonald’s even provided McCafe as the “official coffee” of the 2009

New York Fashion Week in an attempt to catch the attention of those who follow fashion trendsetters and celebrities.

and franchisee discretion.n “Second Wave” began in mid 2009 through 2010 adding smoothies,

frappes and bottled beverages.n McDonald’s even provided McCafe as the “official coffee” of the 2009

New York Fashion Week in an attempt to catch the attention of those who follow fashion trendsetters and celebrities.

College Crowd Goes for FlavorCollege Crowd Goes for Flavor

n Young drinkers continue to be attracted to coffee with a wide variety of flavored offerings.

n These new coffee beverages aren’t viewed as an “old person’s drink”.

n Peer pressure: friends are drinking it.

n Young drinkers continue to be attracted to coffee with a wide variety of flavored offerings.

n These new coffee beverages aren’t viewed as an “old person’s drink”.

n Peer pressure: friends are drinking it.n Peer pressure: friends are drinking it.

n As these young consumers become accustomed to the taste of coffee and become intrigued about the story behind the cup, their taste preferences will mature and become bolder.

n Peer pressure: friends are drinking it.

n As these young consumers become accustomed to the taste of coffee and become intrigued about the story behind the cup, their taste preferences will mature and become bolder.

Retail Round upRetail Round up

n Many coffee retailers enjoyed strong sales in 2008 as ground and whole bean coffee sales grew 8.2% and 3.2%, respectively.

n Despite increased offerings and wider variety, the RTD coffee market

unexpectedly shrunk nearly 4%.----(functionality over $$ in recession)

n Ground coffee segment boosted by new products and brand

reformulations.

n Many coffee retailers enjoyed strong sales in 2008 as ground and whole bean coffee sales grew 8.2% and 3.2%, respectively.

n Despite increased offerings and wider variety, the RTD coffee market

unexpectedly shrunk nearly 4%.----(functionality over $$ in recession)

n Ground coffee segment boosted by new products and brand

reformulations.reformulations.

n Continued emphasis on sustainable and certified coffee.

n Organic Coffee imports to North America rose 12% in 2008.

n Consumers sensitive to value.

n After Consumer Reports recently rated it as a best buy, Eight O’Clock

Coffee sales have jumped.

n Market share increased roughly 30% to 5.5% in the last few months.

reformulations.

n Continued emphasis on sustainable and certified coffee.

n Organic Coffee imports to North America rose 12% in 2008.

n Consumers sensitive to value.

n After Consumer Reports recently rated it as a best buy, Eight O’Clock

Coffee sales have jumped.

n Market share increased roughly 30% to 5.5% in the last few months.

Starbucks Sales SlumpingStarbucks Sales Slumping

n Starbucks Reacts to Quarterly Losses.n Starbucks is furthering its cost cutting efforts by laying off 6,700 workers.

n In addition to the 600+ domestic stores that it began closing last summer, the chain plans to close another 300 locations in the U.S. and abroad.

n Starbucks Reacts to Quarterly Losses.n Starbucks is furthering its cost cutting efforts by laying off 6,700 workers.

n In addition to the 600+ domestic stores that it began closing last summer, the chain plans to close another 300 locations in the U.S. and abroad.

An Instant Fix to the Problem?

and abroad.n The company has just recently begun to roll out its new Via Ready Brew instant coffee, which should become widely available in 2010.n Will this move and the new breakfast value meals cheapen the Starbucks brand, or boost sales and “reinvent the industry” as CEO Howard Schultz claims?

n Via will likely be more successful abroad than domestically, and offers Starbucks a greater potential for international brand access.

and abroad.n The company has just recently begun to roll out its new Via Ready Brew instant coffee, which should become widely available in 2010.n Will this move and the new breakfast value meals cheapen the Starbucks brand, or boost sales and “reinvent the industry” as CEO Howard Schultz claims?

n Via will likely be more successful abroad than domestically, and offers Starbucks a greater potential for international brand access.

Starbucks Tackles Price Perception ImageStarbucks Tackles Price Perception Image

n For the first time, Starbucks is cutting prices.n While the prices for complex drinks will rise by as much 30 cents in

some markets, simpler brewed coffees and lattes will become 5-10 cents cheaper.

n As part of a new breakfast promotion, for $3.95, customers can either get a 12 ounce coffee and a breakfast sandwich, or a 12 ounce latte and

n For the first time, Starbucks is cutting prices.n While the prices for complex drinks will rise by as much 30 cents in

some markets, simpler brewed coffees and lattes will become 5-10 cents cheaper.

n As part of a new breakfast promotion, for $3.95, customers can either get a 12 ounce coffee and a breakfast sandwich, or a 12 ounce latte and a 12 ounce coffee and a breakfast sandwich, or a 12 ounce latte and oatmeal or a coffee cake.

n The company is also fighting back against its “$4 cup of coffee” image by training baristas to tell customers that 90% of its drinks are under $4, with the average beverage price under $3.

n A William Blair & Co. survey found that since August 2007, the price gap between Starbucks and its key competitors has narrowed.n Some Starbucks sizes and varieties are now technically cheaper than Dunkin’ Donuts, but not McDonald’s.

a 12 ounce coffee and a breakfast sandwich, or a 12 ounce latte and oatmeal or a coffee cake.

n The company is also fighting back against its “$4 cup of coffee” image by training baristas to tell customers that 90% of its drinks are under $4, with the average beverage price under $3.

n A William Blair & Co. survey found that since August 2007, the price gap between Starbucks and its key competitors has narrowed.n Some Starbucks sizes and varieties are now technically cheaper than Dunkin’ Donuts, but not McDonald’s.

Starbucks Continues to Cut and ExperimentStarbucks Continues to Cut and Experimentn The company is implementing Japanese inspired “Lean” production

techniques to reduce beverage making time and improve employee efficiency.n The techniques are already said to be a success in terms of higher

customer satisfaction and may help the company further trim its expensive workforce.

n The company is implementing Japanese inspired “Lean” production techniques to reduce beverage making time and improve employee efficiency.n The techniques are already said to be a success in terms of higher

customer satisfaction and may help the company further trim its expensive workforce.

n Starbucks is also discontinuing its Pinkberry-like Sorbetto icy summer beverage.

n A new ad campaign targeting younger consumers was recently launched, involving full-page print ads and a social networking site based photo contest that challenges people to find and take pictures of new posters in six major cities.

n Starbucks is also discontinuing its Pinkberry-like Sorbetto icy summer beverage.

n A new ad campaign targeting younger consumers was recently launched, involving full-page print ads and a social networking site based photo contest that challenges people to find and take pictures of new posters in six major cities.

Dunkin’ Donuts: You Kin’ Do It Dunkin’ Donuts: You Kin’ Do It

n Dunkin’ Donuts is reacting to the recession with its $100+ million “You Kin’ Do It” advertising campaign to encourage consumers and reinforce the chain’s everyman appeal.n Select markets began offering 99 cent lattes.

n New additions to the Breakfast Wars arsenal include the Waffle Breakfast Sandwich and DDSmart Angel Food Muffin.

n Dunkin’ Donuts is reacting to the recession with its $100+ million “You Kin’ Do It” advertising campaign to encourage consumers and reinforce the chain’s everyman appeal.n Select markets began offering 99 cent lattes.

n New additions to the Breakfast Wars arsenal include the Waffle Breakfast Sandwich and DDSmart Angel Food Muffin.Breakfast Sandwich and DDSmart Angel Food Muffin.

n Dunkin’ is actually fairing relatively well in the recession and is even looking to add several dozen franchises domestically in the near future.n Priority markets include Atlanta, Miami and St. Louis as well as a few

southern states.n In Dunkin’ Donuts’ ground coffee’s first year in the market, the new

product line drew $115 million in sales and carved out a 4% market share.

Breakfast Sandwich and DDSmart Angel Food Muffin.n Dunkin’ is actually fairing relatively well in the recession and is even

looking to add several dozen franchises domestically in the near future.n Priority markets include Atlanta, Miami and St. Louis as well as a few

southern states.n In Dunkin’ Donuts’ ground coffee’s first year in the market, the new

product line drew $115 million in sales and carved out a 4% market share.

Keurig to Become King of Coffee Brewers?Keurig to Become King of Coffee Brewers?n Green Mountain’s Keurig single-cup brewers are rapidly increasing their

share of the growing market for brewers.n Analysts estimated that Keurig brewers accounted for 7.5% of new

brewer sales in June, and expect this share to rise to 15-18% by 2010, if not the 2009 holiday season.

n Competition unlikely to curb growth for a number of reasons:

n Green Mountain’s Keurig single-cup brewers are rapidly increasing their share of the growing market for brewers.n Analysts estimated that Keurig brewers accounted for 7.5% of new

brewer sales in June, and expect this share to rise to 15-18% by 2010, if not the 2009 holiday season.

n Competition unlikely to curb growth for a number of reasons:Competition unlikely to curb growth for a number of reasons:n Increased popularity of single-cup brewingn Wide availability and selection of brewers, which are sold to retailers

like Wal-Mart, Costco, Macy’s and Bloomingdale’s at costn Increasing variety of K-cupsn Unmatched presence and exposure in home, office, hotel and other

settings

Competition unlikely to curb growth for a number of reasons:n Increased popularity of single-cup brewingn Wide availability and selection of brewers, which are sold to retailers

like Wal-Mart, Costco, Macy’s and Bloomingdale’s at costn Increasing variety of K-cupsn Unmatched presence and exposure in home, office, hotel and other

settings

K-Cup the New Industry StandardK-Cup the New Industry Standard

n The higher margin K-cups are set to become an even bigger player in the market and moneymaker for Green Mountain.

n Customers are increasingly getting the opportunity to sample K-cups are work, the doctor’s office, hotels, car dealerships and in-store demonstrations.

n Green Mountain signed deals in June with Conair Corp and

n The higher margin K-cups are set to become an even bigger player in the market and moneymaker for Green Mountain.

n Customers are increasingly getting the opportunity to sample K-cups are work, the doctor’s office, hotels, car dealerships and in-store demonstrations.

n Green Mountain signed deals in June with Conair Corp and n Green Mountain signed deals in June with Conair Corp and Jarden Corp, manufacturers of market leaders Cuisinart and Mr. Coffee brewers, respectively, to allow these companies to produce K-cup compatible brewers.

n Green Mountain signed deals in June with Conair Corp and Jarden Corp, manufacturers of market leaders Cuisinart and Mr. Coffee brewers, respectively, to allow these companies to produce K-cup compatible brewers.

Smaller Coffee Companies Enjoying Big GrowthSmaller Coffee Companies Enjoying Big Growthn Coffeehouses and coffee retailers like Peet’s, Tim Hortons and

Caribou Coffee have experienced increased sales and profits, despite the recession.n Peet’s has entered the medium roast and flavored coffee

segments through the introduction of Godiva Chocolate branded coffees, which will be sold in mass merchandisers.

n Coffeehouses and coffee retailers like Peet’s, Tim Hortons and Caribou Coffee have experienced increased sales and profits, despite the recession.n Peet’s has entered the medium roast and flavored coffee

segments through the introduction of Godiva Chocolate branded coffees, which will be sold in mass merchandisers.

n Tim Hortons has recently expanded into New York City and is increasing its US presence through strategic partnerships including co-branded stores with Cold Stone Creamery and locations in Tops supermarkets.

n Tim Hortons has recently expanded into New York City and is increasing its US presence through strategic partnerships including co-branded stores with Cold Stone Creamery and locations in Tops supermarkets.

Other Retail NewsOther Retail News

n Kraft Foods’ Tassimo brewing system had 2008 sales of nearly $300 million.

n Kraft’s Maxwell House line, the No. 2 ground brand, was also reformulated and includes 100% Arabica beans as well as new blends and container sizes.

n Starbucks announced its intention to double Fair Trade certified coffee

n Kraft Foods’ Tassimo brewing system had 2008 sales of nearly $300 million.

n Kraft’s Maxwell House line, the No. 2 ground brand, was also reformulated and includes 100% Arabica beans as well as new blends and container sizes.

n Starbucks announced its intention to double Fair Trade certified coffee n Starbucks announced its intention to double Fair Trade certified coffee purchases in 2009.n It will buy 40 million pounds and become the largest purchaser of

Fair Trade coffee in the world.n Wal-Mart will expand its Colcafe offerings to include several new 100%

Colombian blends to be made available at 3,500 of its stores.n 6-7 players represent around 70% of Fair Trade volume in the United

States. So far for 2009, high volume licensee’s expectations are that demand will be at least sustained if not increase despite the weak economy.

n Starbucks announced its intention to double Fair Trade certified coffee purchases in 2009.n It will buy 40 million pounds and become the largest purchaser of

Fair Trade coffee in the world.n Wal-Mart will expand its Colcafe offerings to include several new 100%

Colombian blends to be made available at 3,500 of its stores.n 6-7 players represent around 70% of Fair Trade volume in the United

States. So far for 2009, high volume licensee’s expectations are that demand will be at least sustained if not increase despite the weak economy.

US Certified Coffee Stocks MinimalUS Certified Coffee Stocks Minimal

5.5

6.0

6.5 Non-Certified Certified

Millions of 60Millions of 60--kg bagskg bags

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09

Origins with Highest Premiums See Cert Stock DisappearOrigins with Highest Premiums See Cert Stock Disappear

1000

1100

1200

1300

1400Costa Rica

Guatemala

Honduras

Nicaragua

El Salvador

Thousands of 60Thousands of 60--kg bagskg bags

0

100

200

300

400

500

600

700

800

900

Dec-98 Oct-99 Aug-00 May-01 Mar-02 Dec-02 Sep-03 Jul-04 Apr-05 Feb-06 Nov-06 Aug-07 Jun-08 Mar-09

El Salvador

Cash Differentials Surged on Tight SupplyCash Differentials Surged on Tight Supply

6472808896 CR SHB

Guat SHB

El Salvador SHG

Colombia ugq

Cents per PoundCents per Pound

-80816243240485664

Jan-04 Sep-04 May-05 Feb-06 Oct-06 Jun-07 Feb-08 Nov-08 Jul-09

Colombia ugq

Consumer Stocks Increased this Year Consumer Stocks Increased this Year

12

15 Europe

United States

Japan

Millions of 60Millions of 60--kg bagskg bags

0

3

6

9

Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09

2009-10:Global Stocks Expected to Shrink2009-10:Global Stocks Expected to Shrink

40

50

importer producer

Millions of 60Millions of 60--kg bagskg bags

0

10

20

30

1996/97 1998/99 2000/01 2002/03 2004/05 2006/07 2008/09

Global Stocks Record Low Relative to DemandGlobal Stocks Record Low Relative to Demand

0.4

0.45

Global stocks/use ratioGlobal stocks/use ratio

0.2

0.25

0.3

0.35

1996/97 1998/99 2000/01 2002/03 2004/05 2006/07 2008/09

Production Possibilities for 2010-11Production Possibilities for 2010-11

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Brazil 33.2 43.6 36.1 46.7 39.1 51.5 43.5 55.0Brazil 33.2 43.6 36.1 46.7 39.1 51.5 43.5 55.0

Vietnam 15.0 14.5 16.4 19.5 18.3 19.7 18.4 20.5

Colombia 11.0 11.5 11.9 12.2 12.5 9.2 12.2 14.0

Global Balance Headed to SurplusGlobal Balance Headed to Surplus

03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11

Production 111.38 122.47 116.78 133.31 122.69 134.61 127.28 144.46

Use 117.46 119.27 124.18 129.08 127.79 132.27 132.05 135.00

Ending Stocks 42.81 46.01 38.61 42.84 37.73 40.06 35.29 44.75

Stock Change

-6.08 3.20 -7.40 4.23 -5.11 2.33 -4.77 9.46

Stocks/Use Ratio 0.36 0.39 0.31 0.33 0.30 0.30 0.27 0.33

Price Scenarios Based on Production Surplus for 2010-11Price Scenarios Based on Production Surplus for 2010-11

New York C Minimum Price Production Surplus

$1.25 2-4 million bags

$1.15 4-7 million bags

$1.00 7-10 million bags

$0.85-.90 10+ million

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