Many of the United States' iconic coffee chains are still closed, but that does not mean that demand is falling, according to Olam International, one of the largest commodity traders in the world.
The rush of consumers to stock up on their favorite coffee brand has boosted sales in supermarkets and even online, said Vivek Verma, responsible for the company's coffee division, based in Singapore.
The trend more than made up for the drop in the food service sector: coffee consumption rose by 1.5% to 2% in the three months through May in the United States, according to Olam estimates.
With the spread of the new coronavirus, measures of social isolation reduced sales. Many coffee shops are still closed, and although chains like Starbucks have a few stores open, consumers can only buy to go or drive-thru in most states. The expectation of lower demand for coffee contributed to the fall in future grain prices.
“At first, everyone thought Covid would kill the demand,” said Verma by phone from Singapore. "For countries that do not drink coffee, where it is more part of socialization, there may be some drop, but in consuming countries, consumption so far seems stronger in the annual comparison."
Sales of coffee in US supermarkets increased 31% in March, 6% in April and 11% in May, compared to the previous year, said Verma, citing data from analyst Nielsen.
With concerns about the impact of the coronavirus and the exchange rate devaluation in Brazil, the largest coffee producer in the world, Arabica prices have fallen by 11% since the end of February.
In the robusta market, the drop is only 3% in the same period, since the variety is more used in instant coffee and blends taken at home.
Despite falling prices, Olam expects the global supply to fall short of demand by 3.3 million bags in the season ending September 30.
Although the operator projects a arabic grain deficit of 6.8 million bags, the robust market may show a surplus of 3.5 million. Currently, the forecast is that the world market will have a surplus of 5.7 million bags next season, according to Verma. One bag weighs 60 kg.
Out-of-home consumption must have dropped by 50% to 85%, said Verma. In Europe, data from Germany, the largest consumer, shows an increase in consumption of 3% in April and May.
Olam operates its two units of instant coffee in Vietnam and Spain with 100% of capacity, and the company is concerned about interruptions in supply, as the Covid-19 crisis worsens in the main producers.
The company created a fund to help farmers in countries like Peru, Colombia, Uganda and Brazil, where the harvest is already underway.
The funds will be used to provide training, as well as to secure medical supplies, hygiene kits and protective equipment, said Verma. Some of Olam's biggest customers, like Nespresso and JM Smucker - owner of the Folgers brand - are also contributing.
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