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Forecast for coffee production.

Cofee production and sales are expected to remain healthy for most of the remainder of the centry. Coffee to 1995, a special report by the London-based Economist Intelligence Unit (EIU), a division of Business International Corp., shows prospects will remain good and gives coffee industry executives the information needed to succeed in what will, nevertheless, be an increasingly competitive market world-wide.

"In the absence of any major climatic or other disaster, the outlook is for world exportable production to increase slowly over the forecast period," states the comprehensive report, "reaching a total of 77.5 million bags in 1995/96". An overview of producing nations shows Brazil is likely to remain the world's major supplier of the bean and, if world assumptions discussed in the report prove to be accurate, the South American nation will account for 24.5% of the world's exportable coffee output in 1995/96.

While international output of Robusta coffee is expected to register a drop over the forecast period, the EIU book predicts exportable production of Arabica coffee will rise from 70.4% of total coffee output in 1989/90 to 72.6% by 1995/96. Dynamic growth in Arabica crops are forecast particularly for Kenya and Mexico. The special report includes supply and production forecasts for 24 individual countries, with data ranging from 1980/81 to 1995/96.

However, while the coffee industry, which accounted for $6.5 billion in trade in 1989/90, shows optimistic prospects for growth, executives will need to plan for an ever changing international consumer market. According to the EIU study, soft drinks will pose a considerable degree of competition for the coffee industry, especially among younger consumers. This, despite increased coffee advertising.

In the U.S., traditionally the world's principal coffee consumer market, soft drink consumption has shown a steady increase since the 1960's when coffee drinking appears to have reached its peak. Althoug consumption is rebounding marginally among American coffee drinkers, soft drinks are now reportedly more popular. In Germany, the world's second most important market for coffee, beverages such as herbal teas and fruit juices are competing strongly with coffee for a share of the market.

Interestingly, the report shows coffee consumption increasing steadily in Japan at the expense of other popular beverages. In fact, the fastest growth in coffee consumption over the forecast period is predicted to occur in several Asian and European countries, for which marketing efforts will likely concentrate on those regions.

Although distribution networks may have improved in Eastern Europe, with the end of restrictive socialist regimes and the return to free market economies, coffee executives should not expect an instant windfall in that region. A severe shortage of hard currency, it appears, will keep Eastern European coffee cups empty for several more years.
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Title Annotation:production and sales anticipated to remain healthy through the end of the 1990s; international aspects evaluated
Author:Fittapaldi, Santiago
Publication:Tea & Coffee Trade Journal
Date:Apr 1, 1992
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