TOKYO -- Asians' love for "3-in-1" instant coffee is fueling heated competition in growing Robusta beans as Brazil ups production to rival Vietnam, the biggest grower in the world.
Vietnamese output of Robusta beans, used in the individually packed instant coffee with creamer and sugar, is expected to grow an annual 0.3% to 29.1 million bags in the 2019-2020 production year, according to the U.S. Department of Agriculture. That figure marks a 10% rise from five years ago. Each bag contains 60 kg of coffee beans.
Production in India is also predicted to rise 8.1% to 4 million bags, up 4.9% from five years ago. Brazil, the No. 2 producer of Robusta beans is set to produce 10% more this fiscal year to 18.3 million bags, accounting for 25% of the global output versus Vietnam's 40%.
Indeed, coffee traders say that Brazilian exports are now highly sought after. "The cheapest Robusta beans available now are from Brazil," said Nobuaki Abe, president of Singapore-based specialized trading company Ecom Asia.
He said he had lately been receiving more inquiries and sample requests for Robusta beans produced in Brazil, the top producer of the pricier Arabica beans with 40% of the market.
Indeed, Brazilian Robusta exports have increased. According to Brazil's coffee exporters' association, the country exported 2.7 million bags between January and August, an approximate 10% increase over the full 2018. This was due to stronger global demand, coupled with the depreciation of the Brazilian real against the dollar to a one-year low.
Robusta beans produce a strong, slightly bitter coffee that is well-liked in Asia and growing popular in Brazil. The crop also takes to the low altitudes in Vietnam and Indonesia. Arabica beans, on the other hand, are richer in flavor and cost more to produce, as they can only be cultivated at higher altitudes which attracts less pests. Apart from Brazil, Colombia and Honduras are its main producers.
One of the reasons Brazil is increasing its Robusta bean production is the surge in domestic consumption. The USDA expects Brazil's domestic coffee consumption for the year 2019-20 to expand to 23.53 million bags, up 15% compared with five years ago. An expansion in the population and a rise in income levels are driving domestic consumption.
Despite the difficulty in growing Arabica beans, China's Arabica coffee output is expected to grow 4.5% to 2.3 million bags in the year 2019-20, up 8% from five years ago. In fact, Arabica beans produced in Yunnan Province, China's main growing area, is being sold as high-quality coffee.
Vietnam also cultivates Arabica in Da Lat, a southern highland city. Production in 2019-20 is expected to be flat from last year at 1.4 million bags, but up 33% from five years ago.
Arabica coffee produced in China and Vietnam is exported to developed countries, including Japan, and is also consumed domestically. In the two countries, where income levels have risen, cafes have increased in numbers and coffee consumption has surged 15-30% over the past five years.
But in the mid- to long-term, climate change will likely be a game changer. Arabica beans face the risk of losing about half its production areas by 2050 due to climate change.
Given this trend, Robusta could become the main coffee drunk in the future. "In the past 36 years, global market share of Robusta beans increased from around 20% to around 40%, while that of Arabica beans decreased from around 80% to 60%," said Shiro Ozawa, an adviser for Tokyo-based specialty coffee trader Wataru and Co.