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Germany: high stocks with no consumption increase in sight.

The German Kaffee Verbund re-issued its statement concerning the International Coffee Organization and its Agreement during the Fall meeting of the ICO. The statement, which was originally issued earlier this year, said it supported an export quota system aimed at raising coffee prices.

The most efficient solution to achieve the goal of higher coffee prices is an export quota system proposed at a recent ICO meeting in London. The quota would limit the amount of coffee that producing nations would be allowed to export and thus, force prices higher. If the ICO quota system is approved and is adhered to, the world market price of Arabica coffee could more than double from current levels of around 60 [cents] per pound, the Kaffee Verbund said. This would increase income of coffee exporters by about $5 billion, the report said.

Hamburg coffee trader Bernhard Rothfos GMBH expects 1992/93 (Oct/Sept) world coffee exports to undercut estimated consumption of 73 million 60 kg bags by several million bags, it said, Knight Ridder Financial reports. This will substantially reduce 'Blown up' stocks in consumer countries to normal levels, Rothfos said. At the end of June, coffee stocks in consumer countries totaled 19.4 million bags, far above the normal level of 11 million, which was reached in 1988/89, when export quotas were in effect, it said. Rothfos estimated coffee production for export in 1991/92 (Oct/Sept) to total 65.2 million bags, compared with 71.6 million the year before, while 1991/92 exports will reach 71.6 million, down from 73.3 million the year before. Coffee demand in 1991/92 is seen at 72 million bags, part of which has to be covered from stocks.

European roasters are able to cover a 10-week demand period with stocks, almost unchanged from 1989, when the ICA collapsed and the quota regime went out of effect. During the 3-year period without a quota system, the U.S. and Canada increased their stocks from a 5-week consumption period to 24 weeks, and Japan from 11 weeks to 13, Rothfos said. Unwashed Arabicas and Milds account for the increase of stocks, while Robusta coffee stocks remain unchanged, it said, according to the report.

Imports of green coffee into Germany reached a trade peak of 12,704,466 bags (762,268 tons). The equivalent figure for 1990 was 12,543,283 bags (752,597 tons).

Gross imports include quantities destined for re-export after processing.

Customs statistics show that not all imports of green coffee were intended for consumption within Germany. In 1991, 2,048,144 bags of green coffee in EV trade and 493,444 bags in LV trade were destined for processing and subsequent re-export.

The total volume of 2,541,588 bags must be deducted from the gross imports to give net imports figure. Net imports show the volume of coffee available for the free market in the FRG.

In 1991, net imports reached 10,162,878 bags (609,773 tons). This was 5% up on the 1990 net import figure of 9,679,053 bags. The increase from 1989 to 1990 was 16.1%

Colombia was the main supplier in 1991 with a market share of 35% (34.7% in 1990). Brazil followed in second place with 9.1% (10.3% in 1990). El Salvador remained third on the list with 6.9% of the market 7.2%), followed by Indonesia with 6.4% (6.1%). Kenya stayed on in fifth and reached a market share of 5.4% (5.3%).

No criticism can be made of the high quality the Federal Republic of Germany maintained in its green coffee imports in 1991. Some 84% of coffees were Arabicas. Washed Arabicas of the Colombian Milds category again had a good result with a 44% share of the market. The Other Milds share decreased slightly and dropped to 28%. Unwashed Arabicas fell from 13% in 1990 to 12% in 1991. These figures are evidence of the coffee market in the new East German Bundesland maintaining the usual high quality standards of the Federal Republic after reunification.

The comparison of non-decaffeinated green coffee net imports during the past three years poses some statistical differentiating problems. In 1989, when Germany was still divided, net imports of green coffee amounted to 8.34 million bags into the FRG and to 1.3 million bags into the GDR. According to the Federal Statistics Authority's figures, 9.68 million bags were then imported into unified Germany in 1990. During the first six months of 1990, the former GDR registered imports of 400,000 bags plus about 250,000 bags from the dissolved GDR state reserves. As reported, 1991 net imports reached 10.6 million bags.

Average per capita consumption in the FRG has dropped through reunification. In 1989, the figure for the old Bundeslander was 7.93 kgs of green coffee, in 1990 this dropped to 7.13 kgs for the old and new Bundeslander. In 1991, consumption went up again to 7.4 kgs.

As in previous years, the development of pre capita consumption is calculated from the net imports of non-decaffeinated green coffee. Taking imports of non-decaf green coffee for the free circulation and the corresponding green exports into account, 9,835,010 bags of green coffee were available for German consumption in the old and new Bundeslander. This was 4.7% more than in the previous year. Divided by a population of 79.753 million citizens at the end of 1990 (no new figures available), the theoretical per capita consumption for 1991 amounts to 7.4 kg of green coffee.

In 1991 the new Bundeslander were the pillars supporting the increase in coffee consumption. During this year, both parts of Germany consumed 474,000 tons (1990: 469,000 tons) of roasted coffee and 13,000 (1990: 12,500 tons) of soluble coffee. The total market volume calculated to the green coffee equivalent amounted to 597,800 tons which was 1.3% up on the previous year (590,500 tons). Green coffee imports did not increase as much. Stock shifts and especially net imports of soluble coffee amounting to 2,680 tons have caused these divergent developments. Growth in coffee consumption has only effectively taken place in the new Bundeslander. After having deducted purchases made by Eastern citizens, the old Bundeslander in the Federal Republic have 1.5% lower consumption, whereas there is a considerable growth rate in the coffee consumption in the new Bundeslander.

In 1991, household purchases in the new Bundeslander increased to 80,000 tons of roasted coffee. A further 9,000 tons were sold in wholesale packs for the non-household sector in the East of the country. Soluble coffee also began to establish its position in the market.

All in all, a total of 416,000 tons of roasted coffee were sold in household packs and 58,000 tons in wholesale packs throughout the Fed Rep. Soluble coffee achieved a slight increase in comparison with the previous year with 13,000 tons sold.

The astonishing acceptance of coffee products is still an important characteristic of the coffee market in the new Bundeslander. The people prefer strong coffee. About 92% of the coffee sold in this part of the county was untreated, and only 6% was naturally mild. Only 8% of the coffee bought was treated, whereby this includes 4% decaffeinated coffee and 4% treated special mild coffee. The picture in the West is somewhat different. Treated coffees now make up 1/3 of the market, with special milds accounting for 19%. Natural milds have reached 23%, meaning that this leading position has become even stronger.

Total sales in the coffee markets in the old and new Bundeslander in 1991 are estimated at 7.4 billion DM, with the household sector accounting for 5.8 billion DM. Presumably, the East German's coffee consuming habits will soon have reached the high level already established in the West. In 1991, the coffee industry's advertising expenditure was 318 million DM, of which 285 million DM was used for roasted coffee advertising and 33 million DM for extract coffee.

Market researchers put the non-household consumption at about 20-25% of the total market, however, these figures are difficult to pinpoint statistically. Sales of roasted coffee packs intended for wholesale amount to about 58,000 tons. But a large proportion of the non-household market is covered by household packs. There are no exact figures on the number of household coffee packs being consumed in the non-household sector.

Another important segment with substantial growth rate in the non-household sector is the espresso market. In 1991 approximately 5,200 tons of espresso coffee were sold. Imports of Italian roasted coffees reached 3,675 tons in the year under review.
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Title Annotation:coffee
Publication:Tea & Coffee Trade Journal
Date:Nov 1, 1992
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