‘Brazil. The Coffee Nation’: Establishing an image as the global coffee leader
The project began in 2008 focusing on the commercial production of Brazilian specialty coffees and exporting them to foreign target markets such as the US Canada, Japan, South Korea, and China, among others. The project includes 177 national companies, 55 of which exported coffee to 78 countries in 2016.
Brazil is the largest producer of coffee in the world, according to the National Coffee Association, and one of the country’s most valuable exports bringing in $2bn in 2017, primarily from the US which spent $388.2m on Brazilian coffee, followed by Germany ($271.4m).
For this new stage of the project, Apex-Brasil president, Ambassador Roberto Jaguaribe, stressed the importance of highlighting the Brazilian origin of it coffee by creating a dedicated symbol of origin.
"Brazil has dominated the coffee market for 200 years, but it does not have its own established identity…the fundamental element to have greater added value in the coffee is the Brazil origin recognized world-wide, " Jaguaribe said.
Jaguaribe added that the Brazilian coffee industry should focus on stepping up efforts in underpenetrated markets outside of it’s the US and Europe where Brazilian coffee is less well known.
He identified China, as the biggest emerging opportunity as it is home roughly 1.4 billion people with a specialty coffee culture that is just starting to form.
Is production healthy to keep up with global demand?
According to BSCA, since the project was implemented ten years ago, Brazil has grown production by an average of 15% per year, reaching approximately 8.5 million bags last year.
However, Rabobank’s predictions for coffee crop production levels in 2018 is falling slightly behind market expectations of over 60 million bags due to dry weather conditions that favored the spread of “mealybugs” (cochonilla de roseta) on many farms in Central Brazil resulting in an average loss of almost 30%.
“Even though we had expectations for a very good crop in Espirito Santo [main coffee producing region of Brazil], the reality was actually quite different,” Carlos Mera, Rabobank senior commodity analyst, said.
And because there is no effective treatment against the plague of harmful insects such as mealybugs, the situation has put Brazil behind meeting market demands which will likely result in price volatility and declining stock prices for Brazilian coffee in consumer countries.
“The market will then be faced with an off-cycle in Brazil in 2019/20, consumption growing by >3 million bags per year and the current arabica prices not incentivizing production growing anywhere outside of Brazil,” Mera added.
