Gourmet Coffees

World coffee production in 2006-07 is expected to rise to 123.1 million bags, up from 110.1 million in 2005/06, analyst F.O. Licht said in their latest report. Licht forecast that Arabica output would climb 13 % to 78.7 million bags while Robusta production was seen rising 9 % to 44.4 million. Brazil`s crop was seen at 43.5 million bags while Vietnam was expected to produce 15.0 million bags. Licht concluded that the anticipated rise in Vietnam...is likely to end tight supplies in the Robusta sector. Moreover, consumer stocks are still more than adequate so that consumers have no real reason for concern. They see consumption reaching some 117 to 118 million bags thereby reversing the deficit situation seen last season. They also mentioned that recent rains in Brazil`s coffee growing areas had alleviated stress caused by an extended dry spell earlier in the year.

This has aided the flowering of the 2007-08 crop which could be higher than had been predicted so far. So currently, Licht see a surplus of around 5 million bags. However, if we put the Brazilian (45 million bags) and Vietnamese crop (16 million bags) at the levels that some expect then a surplus of 7.5 million bags is seen. If this turns out to be the case then current levels for 2007 look expensive.

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Around 800`000 tons of coffee is produced in Vietnam annually, and 95%of this finds its way overseas. However, the export price of Vietnamese coffee is way below that of other countries and one reason why is the lower quality. Ho Van Son, director of the Dak Nong Coffee Company, says another reason is the lack of state-of-the-art technologies, a major shortcoming of Vietnamese coffee exporters.

There are now 30 brands of instant coffee and three-in-one combinations of coffee, sugar and artificial whitener. It s the latter that puts Vietnam under the control of foreign traders because domestic enterprises import instant coffee, add sugar and whitener, and package it. Companies outside Vietnam pay low prices for imported coffee beans and sell instant coffee back to Vietnam at high prices. If this goes on, Vietnam will lose out in a big way. Above all, it will leave the country dependent on price and technology.

Bui Xuan Thoa, director of the well-known Bien Hoa Vinacafe Corporation in Dong Nai province, says that the demand for instant coffee is enormous; however, Vietnamese exporters must be aware of quality and price if they are to compete. His company is planning to build a coffee factory next year, one that will produce 3`200 tons of instant coffee annually, 70% of which is for export. What Vinacafe and the entire Vietnamese coffee industry must do is improve the quality of their coffee and engage in some serious brand-building.