By Business & Commerce
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Vietnam continues to be a source of supply. coffee second largest in the EU
According to data from the General Department of Customs, the EU was Vietnam’s largest coffee consuming market in the first half of the year, accounting for nearly 40% of the market share. export with a volume of 353,468 tons and a turnover of over 1.2 billion USD. Although the export volume decreased by 8.5% compared to the same period last year, the turnover increased by 40.7%.
According to data from the European Statistical Office (Eurostat), by the end of May, the EU had spent 5.35 billion EUR to import 1.3 million tons of coffee of all kinds (HS 0901 and 2101) from the world, up 4.8% in volume and 8.7% in value over the same period last year.
The main coffee supplying markets for the EU include: Brazil, Vietnam, Honduras, Uganda, Colombia and India…
Of which, imports from Brazil led with 489,115 tons, up 28.6% over the same period last year. However, the average export price of Brazilian coffee to the EU decreased by 7.8% in the first 5 months of the year, down to 3,509 EUR/ton.
Vietnam continued to rank second with a volume of 340,598 tons and a value of more than 1 billion EUR. Compared to the same period last year, the export volume increased by only 1.5%, but the turnover increased by 42.4%, thanks to the export price of Vietnamese coffee to the EU skyrocketing by 40.3% to an average of 3,136 EUR/ton.
With this result, Vietnam’s market share in the total value of EU coffee imports increased from 15.2% to 20%.
Source: Hoang Hiep compiled from Eurostat data
The global supply of robusta coffee has been shrinking, pushing prices up steadily in the first months of the year. Vietnam, the world’s largest producer and exporter of robusta coffee, is said to have benefited from this trend.
In addition, the Vietnam – EU Free Trade Agreement (EVFTA) which took effect in August 2020 also helped the Vietnamese coffee industry increase its value and expand its market share in the EU. In particular, for roasted coffee, instant coffee and other coffee products, when the tax rate has been reduced to 0%, it creates favorable conditions for processing and increasing the value of Vietnamese coffee, thereby increasing export turnover to the EU.
Vietnam has now surpassed many other leading producing countries such as India, Switzerland, Brazil… to become the leading supplier of processed coffee (instant coffee, coffee blends) to the EU, second only to the UK market.
Vietnam’s exports of instant coffee and coffee extracts (HS 2101) to the EU in the first five months of the year increased by 86% compared to the same period last year, reaching 64.5 million EUR. This is double the 40% growth rate of 1 billion EUR of the green coffee group (HS 0901).
However, green coffee (HS 0901) still accounts for a large proportion of about 94% of Vietnam’s total export turnover to the EU compared to 6% for instant coffee and coffee extracts.
Source: Hoang Hiep compiled from Eurostat data
Market demand is high but Vietnam has no more goods to sell
According to the Import-Export Department (Ministry of Industry and Trade), the demand for coffee from European importers is currently increasing due to the trend of stockpiling inventory ahead of the deadline to comply with the European Union Deforestation Regulation (EUDR) standards.
The EUDR was introduced to reduce the import of products linked to deforestation and to require strict traceability and verification measures for commodities including coffee.
Last year, EU coffee imports from the world market decreased by 10% due to the economic recession, the Import-Export Department said. inflationary remain high, causing people to tighten their spending. However, when the economy recovers, Europeans’ demand for coffee will increase again.
The European Union has the highest per capita coffee consumption in the world, although consumption varies across member markets. The European coffee market size is estimated to reach $47.88 billion in 2024 and is forecast to reach $58.14 billion in 2029, growing at an average rate of 3.96% during the period 2024-2029.
Coffee is one of the most popular drinks in Western Europe due to its deep cultural roots and widespread use in consumers’ daily lives. In addition, the demand for coffee is also increasing in the region due to the opening of new coffee shops, the growth of coffee shop chains, and the increasing number of people buying coffee machines.
Therefore, Europe is considered a large potential market that any coffee producing country wants to exploit.
According to the US Department of Agriculture (USDA), the EU is currently the world’s largest coffee consumer, accounting for 24-25% of global coffee consumption. EU coffee imports in the current crop year are estimated to increase by 1 million bags to 25.5 million bags, and this figure is expected to increase by 2 million bags to 47.5 million bags in the 2024-2025 crop year.
Although market demand is high, the amount of coffee available for export from Vietnam is currently not much.
Estimated figures from the General Statistics Office show that Vietnam’s coffee exports in July reached only about 70,000 tons, down 35.7% compared to the same period last year. This is the 6th consecutive month of decline compared to the same period last year and the 8th month since the beginning of the crop year.
Accumulated to the end of the first 7 months of 2024, the export of this item is estimated at 964,000 tons, worth over 3.5 billion USD, down 13.8% in volume but up 30.9% in value over the same period in 2023 thanks to a sharp increase in export prices.
The Import-Export Department forecasts that Vietnam’s coffee exports will decrease in the remaining months of the third quarter due to low supply. Only in October, when the 2024-2025 coffee harvest begins, will coffee supply increase again.
In the 2023-2024 crop year, Vietnam’s coffee output is estimated at 1.47 million tons – the lowest level in 4 years, down 20% compared to the 2022-2023 crop year according to statistics from the Ministry of Agriculture and Rural Development. Coffee output in the 2024-2025 crop year is likely to continue to decrease due to unfavorable weather factors.
Thus, if not counting the inventory carried over from last year, Vietnam will only have about 200,000 tons left to export from now until September. However, the Vietnamese coffee industry will benefit in terms of price because global robusta coffee prices will fluctuate in a strong and prolonged upward trend due to concerns about scarce supply from Vietnam.
