Local consumption saves coffee from erratic prices

KENYA – Increased coffee consumption in East Africa is providing a respite for farmers from erratic prices in the global market.

The International Coffee Organisation (ICO) says East African countries are among those experiencing an increase in local demand, a trend that if maintained would stabilise local coffee prices despite the glut in the international market.

The Coffee Board of Kenya said local consumption had increased from 288 tonnes in June 2010 to 700 tonnes in June last year on the back of public education on the importance of coffee, as a cash crop and a beverage.

“The prices of coffee are still good and we hope things will remain that way. We should also continue encouraging our local consumers to drink more coffee,” said Daniel Mbithi, chief executive officer of the Nairobi Coffee Exchange.

The board recently announced it would start licensing coffee factories to roast and package their produce to boost local consumption.

The changing tastes of the growing middle class are driving demand for better beans, a trend ICO says could help stabilise international prices. The prices for both Arabica and Robusta have remained stable at more than $0.100 per pound this year in the major markets of US and Europe.

The increased number of coffee shops and restaurants in East Africa, some even roasting and packaging their own products, reflects this demand.

In Kenya, coffee houses like Java and Dormans, which recently entered a joint venture deal with Artcaffe, roast and package their own coffee.

Nairobi Java House marketing director Angelique Libese said the local coffee market in Kenya seems to have grown by between 4 and 5 per cent in the past few years.

“The growth has been largely based on the growing urban population, which has a preference for brands and is willing to spend more of its disposable income on products that enhance and reflect their lifestyle,” said Ms Libese.

She added that this had seen more coffee brands available at retail outlets offering consumers more choices. She declined to give figures on the company’s growth in sales.

“Yes, coffee consumption has indeed increased but it is still a small percentage change. We want it to increase even further to bring about meaningful change in the sub sector,” said Ken Teyie, sales manager of Dormans Coffee Ltd.

Mr Teyie said consumption of the beverage increases sharply during the cold June to August season and also during the December holidays when most companies close for the festive season.

“Dormans has seen its local coffee sales increase by about 5 per cent compared with last year. We are working harder to achieve higher sales,” said Mr Teyie.

In Uganda, among the companies roasting and processing coffee are Good African Coffee, Nile Coffee and Volcanic Coffee.

Data from the Uganda Coffee Development Authority shows that roasting of coffee for local consumption has increased fourfold from 50,000 to 200,000 bags. In Rwanda, Bourbon Coffee Ltd is also leading the way in promoting the consumption of locally produced coffee.

However, there are still challenges EAC countries need to overcome. Ms Libese says a significant knowledge gap among consumers regarding how to choose between the various roasts and blends of coffee and how to use coffee grinds to brew coffee at home undermines demand.

“Tea is intrinsically woven into our culture socially. Coffee is associated with high caffeine content especially by the 45-plus generation who grew up on tea,” said Ms Libese.

August 25, 2014; http://www.theeastafrican.co.ke/business/Local-consumption-saves-coffee-from-erratic-prices-/-/2560/2428540/-/r6kfgv/-/index.html

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