United Nations Conference on Trade and Development

10th MULTI-YEAR EXPERT MEETING ON COMMODITIES AND

DEVELOPMENT

25-26 April 2018, Geneva

State of the global coffee market

By

Dr Christoph Sänger

Senior Economist

International Coffee Organization

The views expressed are those of the author and do not necessarily reflect

the views of UNCTAD.

State of the global coffee

market

Dr Christoph Sänger

Senior Economist

International Coffee Organization

Supply &

Demand

World coffee production

• 159.7 million bags in crop

year 2017/18

• 1.2% increase on 2016/17

• Arabicas ↘ 4.6%

• Robustas ↗ 12.1%

0

20

40

60

80

100

120

140

160

180

14/15 15/16 16/17 17/18

Arabica Robusta

149.1 152.1 157.7 159.7

Demand for coffee by market

• Large potential for further

growth in exporting countries

and emerging markets

• Per capita rates still well below

those in traditional markets

• Particularly in countries with

large populations (China, India,

Indonesia)

• Brazil as the model for other

countries to emulate (domestic

consumption)

Global demand

• Increasing by 1% in

coffee year 2017/18

• Still strong demand in

many countries,

particularly some

traditional markets

• But biggest potential is

in emerging markets and

exporting countries

158.9157.4155.8151.7

0

20

40

60

80

100

120

140

160

180

13/14 14/15 15/16 16/17 17/18

mill

ion

60

-kg b

ags

Importing Exporting

148.9

Supply/Demand Balance

142

144

146

148

150

152

154

156

158

160

162

13/14 14/15 15/16 16/17 17/18

mill

ion

60

-kg b

ags

Production Consumption

Prices

Daily ICO indicator prices

50

75

100

125

150

175

200

225

Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18

US

cen

ts/l

b

Colombian Milds Other Milds Brazilian Naturals Robustas

Market

trends

Development of coffee trade flowsAvg. 1992-1996 Avg. 2012-2016

60-kg bags

5 m

illio

n

10 m

illio

n

60-kg bags

5 m

illio

n

10 m

illio

n

Domestic consumption increases

77%

72%

0

50

100

150

1992-1996 2012-2016

Mill

ion

60-k

g b

ag

sTotal production

Exportable production

Value-added

94%

91%

0.1%

0.3%

5.9%

8.7%

0

20

40

60

80

100

Mill

ion

60-k

g b

ag

s

1992-1996 2012-2016

Green Roasted Soluble

Outlook

Impact of climate change on coffee

production

• Global warming affects coffee production via two

pathways:

1. Changes in rainfall patterns & temperatures

make regions unsuitable for production

2. Change in climatic conditions facilitates spread

of pests and diseases (e.g. Coffee Leaf Rust)

• Both Arabica and Robusta are negatively affected by

climate change

Suitability of current Arabica area in 2050

Source: Bunn et al. 2015

Suitability of current Robusta area in 2050

Source: Bunn et al. 2015

Investment is required to meet rising

demand for coffee

Conclusions

Conclusions

• Demand grew by more than 50% since the 1990s

• Coffee remains primary commodity with most of value-added generated in importing countries

• Market in surplus for 2nd consecutive year

• Prices remain low affecting profitability and investment

• BUT: threat of climate change is looming and investment in adaptation is required

Top-10 coffee producers

0

10

20

30

40

50

60

Brazil Vietnam Colombia Indonesia Honduras Ethiopia India Uganda Peru Mexico

mill

ion 6

0-k

g b

ag

s

2014/15 2015/16 2016/17 2017/18

Concentration on exporting side

PIE CHART

1

2

3

4

5

6

7

8

9

10

11

1992-1996 2012-2016

Brazil23%

Colombia17%

Indonesia7%Côte d'Ivoire 4%

Uganda 4%

Vietnam 4%

India 3%

Costa Rica3%

Other25%

Brazil29%

Vietnam20%

Colombia9%

Indonesia7%

India5%

Honduras4%

Peru3%

Uganda3%

Guatemala3%

Ethiopia3%

Other14%

Guatemala 5%Mexico 5%

Diversification on importing side

2012-2016 1992-1996

3 countries 47%

Other10%

18 countries

43% of imports

4 countries47%

Other10%

36 countries

43% of imports

Arabica vs. Robusta

69%

62%

31%

38%

0

20

40

60

80

100

Mill

ion

60

-kg

ba

gs

1992-1996 2012-2016

Arabica Robusta

Breakdown of total exports by form (2015)

Growth in global demand by region (CAGR)

+0.15%

+2.16%

+0.67%

+0.72%

+1.90%+1.10%

Growth in global demand imp/exp (CAGR)

+1.28%

+1.26%

World shares of consumption

Coffee production in China by type

Development of coffee production and

exports in China

Exports

CAGR 14.9%

Production

CAGR 17.5%

Will positive supply trend continue?

0

20

40

60

80

100

120

140

160

mill

ion

60-k

g b

ag

s

Average annual production

0

200

400

600

800

1000

1200

1400

0

2000

4000

6000

8000

10000

12000

14000

kg

/ha

tho

ush

an

d h

ecta

res

Area Yield

Consumption in China

CAGR 14.7%

Consumption in China (2004-16) vs. Japan (1964-76)

Market size in selected Asian countries

Source: Euromonitor International, Hot Drinks, 2016 Research Edition

Market size China (by form)

Source: Euromonitor International, Hot Drinks, 2016 Research Edition