The Dragon in the Room November 14, 2015...November 14, 2015 Coffee in Asia-Per Capita Demand Growth...
Transcript of The Dragon in the Room November 14, 2015...November 14, 2015 Coffee in Asia-Per Capita Demand Growth...
The Dragon in the Room
November 14, 2015
Coffee in Asia-Per Capita Demand Growth in coffee consumption has been strong on solid economic expansion.
Per Capita Consumption
Per Capita Demand KG
Japan 3.80
Costa Rica 3.66
Hong Kong 2.46
South Korea 2.35
Singapore 2.16
Vietnam 1.97
Thailand 1.67
Malaysia 1.64
Laos 1.63
Philippines 1.53
Taiwan 1.34
Indonesia 1.14
Burma 1.00
India 0.10
Sri Lanka 0.08
China 0.06
Pakistan 0.01
Nepal 0.01
Afghanistan 0.00
Bangladesh 0.00
Coffee in Asia – Demand Share The region now accounts for nearly a fourth of global coffee consumption.
EU-28 27%
Other Europe 6% Total North America
18%
Asia 23%
Africa 7%
Latin America 19%
Share of Coffee Consumption - Four Year Average
Coffee in Asia - Demand However relative to the population, the consumption is still very low.
Europe 10%
Americas 13%
Asia 61%
Africa 16%
Share of Global Population
0
0.5
1
1.5
2
2.5
3
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KG/Y
Per Capita Use by Region, 2015
Europe
Americas
Africa
Asia
Global Demand
0%
1%
1%
2%
2%
3%
3%
4%
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90
100
110
120
130
140
150
160
98/99 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15
Mio Bags
Total Consumption
Growth Rate (RHS)
The global rate of demand growth has averaged 2.3% since 98/99.
Next Decade Mio Bags
With 2% growth 29.0
High 2.5% 37.9
Low 1.5% 21.9
Growth in Demand Incremental global demand growth on an annual basis. Asian share of growth has increased from 6% 15 years ago to nearly 60% in 15/16.
0.0
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2.0
2.5
3.0
3.5
4.0
4.5
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16
Mio Bags Latin America
Africa
Asia
Total North America
Other Europe
EU-28
Asian Coffee - Production The production of coffee has also increased rapidly in Asia.
0
20
40
60
80
100
120
140
160
180
60/61 70/71 80/81 90/91 00/01 10/11
Mio Bags
Production by Region
C. America S. America
Africa Asia
Coffee Producers
Asian Coffee Balance A consistent surplus (based in Robusta), and one that is trending higher despite the growing demand.
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5
10
15
20
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15
20
25
30
35
40
45
50
55
99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16
Mio Bags Balance (RHS)
Demand
Production
Asian Economic Growth Asia will remain the growth engine for the global economy
0
1
2
3
4
5
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8
DevelopingEurope
East Asia Latin Americaand the
Caribbean
Middle Eastand N. Africa
South Asia Sub-SaharanAfrica
High-incomeeconomies
Real GDP % Growth (IMF)
2013
2014e
2015f
2016f
2017f
China The world’s largest country and second largest economy is 15th in coffee production, and in absolute terms is 21th in consumption.
Map; ICO
China - Trade In the past five years mainland trade is up, 125% for imports and 85% for exports. .
-1,500
-1,000
-500
0
500
1,000
1,500
Dec-04 Jan-06 Feb-07 Mar-08 Apr-09 May-10 Jun-11 Jul-12 Aug-13 Sep-14
'000 Bags
Green Bean Roasted
Soluble Roasted Imports
Soluble Imports Green Bean Imports
Net Trade
China - Trade
Vietnam 67%
Indonesia 18%
United States
4% Brazil
3%
Colombia 1%
Italy 1%
Others 6%
Imports
Germany 40%
Malaysia 12%
Belgium 9%
France 5%
Vietnam 3%
United States
8%
Others 23%
Exports
Import partners suggest Robusta makes up the majority.
China - Demand The market is dominated by soluble mixes, but with a small and growing fresh coffee business.
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
09/10 10/11 11/12 12/13 13/14 14/15
Mio Bags
Soluble Fresh
Per Capita Coffee Demand On a per capita basis China barely registers.
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0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
01/02 03/04 05/06 07/08 09/10 11/12 13/14
Costa Rica
Japan
Hong Kong
South Korea
Vietnam
Thailand
Malaysia
Philippines
Taiwan
Indonesia
India
China
Per Capita Consumption The per capita consumption of the urban population gives a better picture of demand.
-
0.05
0.10
0.15
0.20
0.25
0.30
01/02 05/06 09/10 13/14
China (Urban) China
Per Capita GDP
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5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
95/96 97/98 99/00 01/02 03/04 05/06 07/08 09/10 11/12 13/14
GDP Per Capita Current Prices (IMF)
China
Hong Kong
Japan
South Korea
Taiwan
China also below major coffee consumers in GDP
Per Capita GDP and Coffee Demand
0.0
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0
2000
4000
6000
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10000
12000
14000
1999 2001 2003 2005 2007 2009 2011 2013
Mio Bags
GDP per capita, PPP(current international $)Coffee Demand
The relationship between economic growth and coffee consumption is clear.
R² = 0.97
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1,000
2,000
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6,000
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Population and Coffee Demand The growth in the urban population and the growth in coffee consumption also has had a strong relationship in the past 15 years.
R² = 0.97
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150
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250
300
99/00 03/04 07/08 11/12
Mio Bags
Demand Outlook Demand at 3 mio bags in 2025 represents an increase of 126% from current levels. This would be 11th in consumption today (the size of the UK).
0%
5%
10%
15%
20%
25%
30%
35%
96/97 99/00 02/03 05/06 08/09 11/12 14/15 17/18 20/21 23/24
China GDP % Growth (OECD)
0%
5%
10%
15%
20%
25%
00/01 05/06 10/11 15/16 20/21
Urban Population Growth
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
99/00 03/04 07/08 11/12 15/16 19/20 23/24
Mio Bags
China Demand
Demand (GDP)
Demand (Pop)
Production
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1996 2000 2004 2008 2012
Tho
usa
nd
s
Thousand HA
Area harvested
Production (RHS)
Output has increased 300% in the past ten years as area has grown 200%. Further production growth in the short term is likely as new area comes into production. However, the cost of production is relatively high, and further area expansion will have to be at the expense of other crops (tea). For further growth government support will likely be necessary. Quality improvements may result in more of the local crop being used for fresh coffee consumption.
Keith Flury Head of Coffee Research
ED&F Man Holdings Limited
Cottons Centre, Hays Lane, London, SE1 2QE Direct: +44 (0)20 7089 8357 Mobile: +44 (0)7912 083547 [email protected] | Skype: keith.flury | www.edfman.com
Thank you
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