Processed coffee in export expansion

Processed coffee in export expansion

Processed and instant coffee for export is experiencing robust growth in both quantity and value at a time when raw material prices are at record levels and exports are decreasing in volume.

In early December, the Vietnam Coffee Corporation announced the export of the first batch of deeply processed coffee products under the Vietnam Coffee brand to China. The exported products include roasted coffee beans, ground coffee, and instant coffee with various flavours. The company aims to increase the proportion of processed products in its total export revenue.

Processed coffee in export expansion, Source: freepik.com

At the same time, the Miss Ede brand of Ede Farm Trade Service Ltd. in the Central Highlands province of Dak Lak also announced its first shipment of a roasted and ground coffee container to the US.

The 20-foot container, comprising 18,000 finished packs of roasted coffee, represents a fully processed product packaged in Vietnam, rather than raw materials or rebranded exports. The coffee was fermented to meet the US Food and Drug Administration’s standards, with beans sourced from sustainable farming regions with the European Union Deforestation Regulation certification.

Managed by Simexco Dak Lak, Miss Ede’s strategic partner and export trustee, the shipment was destined for Illinois, where it will be distributed through local supermarket networks. This opens the door for broader US consumer access and helps elevate the global profile of Vietnamese coffee.

Hoang Danh Huu, founder and CEO of Miss Ede, said, “With support from authorised agencies and the Buon Ma Thuot People’s Committee, the company has participated in national and international trade promotion programmes and established connections with global buyers and entered markets such as Thailand, South Korea, and now the United States.”

Dak Lak’s agricultural products currently reach over 70 countries and territories worldwide. However, the share of processed coffee exports remains low, contributing little value to Dak Lak’s coffee industry. Miss Ede’s first shipment is a crucial milestone, paving the way for expanding the locally processed coffee exports and increasing value for the sector.

The export activities are promoted in the context that the price for Arabica beans, which account for most global production, has topped $3.44 a pound (0.45kg), having jumped more than 80 per cent this year. The cost of robusta beans hit a fresh high in September.

It comes as coffee traders expect crops to shrink after the world’s two largest producers, Brazil and Vietnam, were hit by bad weather and the drink’s popularity continues to grow.

Coffee is the world’s second most traded commodity by volume, after crude oil, and its popularity is increasing. For example, consumption in China has more than doubled in the last decade.

“The demand for the commodity remains high, while inventories held by producers and roasters are reported to be at low levels,” said Fernanda Okada, a coffee pricing analyst at S&P Global Commodity Insights.

Do Ha Nam, CEO of Intimex Corporation, stated that the high coffee prices are creating better conditions for the processed coffee of new brands.

“In conditions of low price levels, importers tend to prioritise sourcing processed coffee from well-established brands. However, currently, new enterprises have the opportunity to sell due to their lower prices. Furthermore, many coffee processing plants in Vietnam have been operating below capacity, so when the market opens up, they have been able to seize the opportunity without requiring additional investment,” Nam said.

The company’s processed coffee products, which used to mainly serve the domestic market, now have international customers as well. Currently, Intimex is among the top 50 leading processed coffee exporters in Vietnam, with a growth rate of up to 50 per cent.

“Our factory is currently operating at full capacity and is in the expansion phase,” Nam added. “Intimex is striving to become a top producer and exporter of processed coffee in Vietnam, with a capacity of around 20,000 tonnes of instant coffee per year. Currently, Intimex’s processing capacity for instant coffee is about 4,000 tonnes and will double in the coming year.”

According to the Ministry of Agriculture and Rural Development, in 2024, coffee exports reached a record high of $5.4 billion. Coffee is also the fastest-growing export product in the agricultural group, with a growth rate of up to 56.9 per cent.

Coffee exports to the US decreased by nearly 30 per cent in volume but increased by 11 per cent in value compared to 2023.

Coffee exports to the Chinese market have shown significant growth both in volume and value. The coffee volume has increased by 34.3 per cent, while the value has surged by 65 per cent compared to last year.

Additionally, coffee exports to ASEAN countries have also increased significantly compared to the previous year, with a volume growth of 41 per cent and a value climb of up to 83 per cent.

VIR