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Commodities

Cinnamon prices rise in a world thirsty for chai and lattes

Beloved spice also finds its way into skin care products and toothpaste

Growth in demand is outstripping that of production, putting upward pressure on cinnamon prices.   © Reuters

TOKYO -- Cinnamon is growing costlier as consumers across the globe sip more specialty teas and coffees.

In Japan, import prices of cinnamon averaged 499 yen ($4.56) per kilogram in 2019, more than doubling from a decade earlier. High-grade cinnamon for Japan now trades at around 4,000 yen per kilogram, up 30% over five years, according to an official at a specialized trading house.

Global demand is climbing. Consumption totaled around 220,000 tons in 2016, up about 30% from a decade or so earlier, by an industry estimate.

This owes partly to population growth and a stronger appetite for a diverse range of foods, including curries and baked goods. Sales of cinnamon for use in beverages are also on the rise as "cafes have been opening up around the world and people are drinking more coffee and tea," an official at the trading company said.

Global consumption of black, green and other teas hit 5.68 million tons in 2018, up 20% or so from five years earlier, according to the International Tea Committee. Worldwide coffee consumption has been growing 2% to 3% a year, U.S. Department of Agriculture data shows.

Sales in Japan doubled to about 700 million yen over four years through fiscal 2018, according to market research firm Intage.

Beyond beverages, businesses in cinnamon-producing countries are eager to create new offerings that incorporate the spice.

"We're exporting skin care products and toothpaste with cinnamon to such markets as Europe," a representative of a Sri Lankan purveyor said at an exhibition in Tokyo last year. A company that sells 100%-cinnamon teas said it is working on incorporating the spice into non-tea products to add value.

But production is losing steam. Global output came to roughly 224,000 tons in 2017, up 0.3% on the year, according to the Food and Agriculture Organization. It had logged roughly 3% annual increases until 2015.

Farmers have been switching to different crops in light of past price declines in Indonesia, where cinnamon production fell 5% on the year to about 87,000 tons in 2017. Uncooperative weather also factors in. Continuous rainfalls made harvesting tricky during the peak season of March to May in China last year.

Of the two widely available types of cinnamon, the Ceylon variety comes from major producer Sri Lanka and accounts for about 10% of global output. Cassia cinnamon makes up about 90% of worldwide production and is produced in China, Vietnam and Indonesia.

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