Brazilian Instant Coffee Exports Rise by 24.5% Due to Elevated Robusta Prices

Elevated prices have dominated the market over the past year due to a substantial increase in production costs owing to the effects of the Black Sea conflict. The rising cost of fuel elevated the cost of production throughout Brazil’s supply chain, impacting transportation and machinery utilised in harvesting and crop management. As a result, Brazilian coffee prices rose to record levels in 2022. The CEPEA/ESALQ Arabica coffee price index reached USD 286.16 per 60-kilo bag in Feb-22, a 126% increase compared to the USD 126.35 per bag in Feb-21 and the highest price in over 23 years. Additionally, Robusta coffee, commonly used in instant coffee, rose to USD 171.3 per bag in Apr-22, a 114% YoY increase. Prices remained bullish throughout 2022, resulting in a substantial increase in Brazilian instant coffee export revenue.

Source: Tridge, CEPEA

In 2022, Brazilian instant coffee exports rose to record levels due to elevated prices throughout the year. According to the Brazilian Association of the Soluble Coffee Industry (ABICS), instant coffee shipments totalled USD 705.7 million, a 24.5% increase compared to the USD 566.7 million obtained in the previous year. Brazilian instant coffee reached 100 countries in 2022, with the US remaining the top destination, receiving 768,951 bags, an 8.4% YoY increase owing to growing coffee consumption in the country. In 2022, American coffee drinkers downed 3.1 cups of coffee per day, a 55% increase over the past three years, with over 66% of the American population now consuming coffee, 14% more than the previous year. Tridge has been tracking the growing instant coffee market in the US here.

Prior to Russia’s invasion of Ukraine in 2022, both countries were leading destinations for Brazilian instant coffee. However, shipments to the Black Sea region plummeted in 2022 owing to the effects of the conflict between both countries. Instant coffee shipments from Brazil to Russia fell by 64.5% to 135,108 bags, while a significant decline in exports to Ukraine caused the country to drop from 7th to 15th in rankings. Despite the reduction in Brazilian instant coffee shipments to Russia and Ukraine, gains in other markets, such as the US, Finland and Germany, more than made up for the deficit. Shipments to Finland increased by 432.5% to 157,276 bags, while the Germans purchased 97,844 bags of instant coffee from Brazil in 2022, a 149.4% YoY increase due to rising demand.

Despite the export gains made in 2022, current prices are stable, trading below the USD 150/bag, and may continue on that trend for the coming months. The current price trend remains below the elevated heights of the past year. Robusta coffee in Brazil is trading at USD 134.24 per bag, 17% lower than in Feb-22, and 21.6% below the record price of USD 171.3 per bag set in Apr-22. This has led to a reluctance amongst coffee producers to sell their coffee supplies as they wait to see if prices will move up to take advantage. This scenario has resulted in a slow start to exports so far this year, with reports from the Conselho dos Exportadores de Café do Brasil (CECAFE) stating that January exports of both green and instant coffee dropped to 2.84 million bags, a 16.8% decrease compared to 2022.

The drop in exports in January hasn't significantly rattled coffee markets so far and another price influencing factor could shift dynamics in the industry. Tridge expects instant coffee demand to improve in the US and for Brazil to ramp up production of robusta which may improve instant coffee exports this year. Read more here.