Coffee consumption continues to climb despite jump in retail prices and economic turmoil: ICO

  Coffee consumption is continuing to grow despite rapid rises in coffee retail prices and economic turmoil, the International Coffee Organisation (ICO) noted in a report released on 6 July. The ICO reported that coffee export values jumped by 49.1 per cent in a single year, increasing from US$16.7 billion in 2010 to $24.9 billion in 2011, when coffee prices hit record highs. The report noted, however, a slight drop in growth rates as consumption in 2010 rose by 3.5 per cent while in 2011 it rose by just 0.6 per cent. “This reduction in the estimated growth rate of consumption for 2011 may be attributable in large part to high retail prices of coffee,” the report noted. The ICO also stated that macroeconomic turbulence in some major importing countries may also be leading to the decrease in consumption growth rates, but that generally consumption was continuing to remain strong. “The current economic and financial crisis, which began in 2008, does not seem to have had a major impact on world coffee consumption, which continues to grow despite substantial increases in the retail prices of importing countries,” the report stated.  A look at retail prices show that averages in 2011 increased in all observed countries, with the highest jumps recorded in Finland (38.6 per cent), Lithuania (38.5 per cent), Latvia (34.4 per cent) and the United States (32.9 per cent). The lowest increases were observed in Germany (2.3 per cent), Portugal (3.5 per cent) and Japan (4.5 per cent). The ICO reported it’s not concerned that overall consumption will be adversely affected by these increases in retail prices. On the production end, the ICO dropped its projections for the 2011-12 crop year slightly, with their latest estimate sitting at 131.3 million, representing a slight decrease of 2.3 per cent compared with 2010-11. While Brazil is expected to increase its production by 16 per cent, the ICO echoed fears expressed earlier this month that adverse weather conditions may affect the quality of beans.  Meanwhile, coffee prices continue to drop, with the ICO composite indicator price falling by 7.8 per cent to 145.31 US cents in June, the lowest level seen in two years. The ICO noted that price volatility of Arabicas increased while it decreased in the case of Robustas.