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Intra-EU trade dissolves single country soluble markets: soluble coffee, with its convenience and popularity throughout Europe is still a front-runner. However, with new additions to the European Union, it is becoming more difficult to track coffee imports, exports and consumption.


Trade in processed coffee is a fast moving booming business and nowhere more so than within the European Union (EU), through so called "intra EU trade" between 27 member states. But strictly speaking, and in accordance with formation of the single European market in 1992, there is no trade between EU member states, just movement of goods. Be that as it may, one country is receiving goods (in this case processed coffee) from another country that receives payment for the coffee.

Trade, it may or may not be, more prevalent and noticeable following creation of the single market in 1992, but has made it increasingly difficult to distinguish between individual EU country markets. Extent of the increase can be seen in Germany, by far the single biggest EU producer and trader in soluble coffee. Germany's re-exports of processed coffee (roasted and soluble) rose from just 45,000 bags (GBE green bean equivalent) in 1964 to a massive 5.5 million bags in 2005. In 2006, four-fifths of Germany's exports and imports of processed coffee were accounted for by intra-EU trade. I Others including Italy and Belgium have recorded equally massive increases Ii with most and increasingly so destined for other EU countries.

It is impossible to brush the whole thing aside purely on the grounds of terminology. Why and how intra-EU trade massages the figures and "muddies" the water is clear to see by looking at the mechanics behind this trade or movement of goods, whichever you prefer to call it. In practice, virtually all imports into the EU are declared at the port of entry into the single market and not at the point of destination for those goods. This tends to artificially enhance gross import figures for those countries with major points of importation, which for coffee means seaports.

Furthermore creation and existence of the single market essentially means that documentary requirements for cross border traffic no longer exist. Operators are required to report cross-border traffic to the statistical bodies but only when they breach a particular monetary value or volume. Eurostat (the EU statistical office) has developed models to extrapolate total intra-EU movement of goods on the basis of reported data, but according to the Coffee Exporters Guide (International Trade Centre, Geneva) these have their limitations.

Recent admission of 12 new Eastern European members into the EU (10 countries on March 1, 2004 and two countries on January 1, 2007) illustrates problems that arise for those wishing to investigate individual country markets in detail and draw comparisons with earlier years. Ten countries including the big coffee markets of Poland, The Czech Republic and Hungary saw their considerable import of soluble coffee from the EU change literally overnight (March 1, 2004) from classical imports into "goods moved" within a single "common" market. This sudden change makes attempts to compare figures pre and post EU entry of these countries extremely difficult.

The Soluble Situation

Confusion reigns for all processed coffees, including semi-processed (green) coffee, now moved freely from one EU country to another. Ease, convenience and economy of packing, storing and handling of concentrated soluble coffee formulations and products, which make instant coffee a popular choice for hard pressed consumers, also make it one of the most cost effective and efficient types of coffee in which to trade.

The EU soluble coffee market with its well-established countries for manufacture and consumption should have been relatively easy to sort out. According to European Coffee Federation there are three established and sizable soluble coffee manufacturing nations, being Germany, the UK and Spain in that order. Production of soluble coffee (solid and liquid formulations) in tons during 2006, were 141,484, 56,166 and 40,407 respectively, but with widely different soluble consumption--high, moderate and low for respectively UK, Spain and Germany.

But that is where clarity stops. All three countries export soluble coffee as you would expect but also import a considerable bulk tonnage for packing and re-export, although there is no way of knowing where exactly the soluble coffee has come from. Thus, a German export consignment of soluble coffee imported by Russia, or "moved" to neighboring EU member country Austria, may have been manufactured in Germany using a blend of beans from several origin countries or be (for instance) soluble manufactured in Brazil from Brazilian Robusta (Conilon) and shipped to Germany in bulk for packing and re-export.

The only thing that can be said with certainty is that the beans are produced outside of the EU, because no EU country grows coffee in commercial quantities. Coffee plants are being grown and beans harvested and used to make drinkable coffee within a huge greenhouse structure in the southwest of England but that is another story.

You only need to look at the soluble coffee import and export figures for Germany, UK and Spain and where available, sources and destinations, to see how much packing and re-export takes place, and just how much of this trade is simply the movement of coffee goods within a single "common and free" market. In 2005 Germany exported 51,841 tons of soluble coffee but imported 31,678 tons. Percentage breakdown for soluble import origin and soluble export destination in 2006 shows even more interesting trends (Table 1). Over 66% of soluble imports were coming from fellow EU member countries with most derived from neighboring Netherlands and Belgium. Germany and the UK appear to swap soluble coffee imports and exports with impunity.

These German figures clearly show how the proportion of intra-EU trade in soluble coffee is high and increasing all of the time, as further indicated by a breakdown in the UK figures for 2005 and 2006. In 2006 the UK exported 18,062 tons of soluble coffee and imported 7,676 tons. The 2006 import figure was down 1086 tons (12%) on 2005 but non-EU exporters suffered way beyond that. Three traditional South American suppliers of soluble into the UK (Brazil, Ecuador and Colombia) saw their combined tonnage fall by 2795 tons, the balance being filled with soluble "imported" from other EU member countries.

Most of the UK's soluble coffee exports now come within intra-EU trade. Indeed the UK supplied virtually all neighboring Ireland's 3,112 tons of soluble coffee imports in 2006. Ireland's position in the soluble coffee market is reasonably straightforward, a small country with a correspondingly small coffee consumption although, like the UK consuming an extremely high proportion of soluble. Ireland's exports of soluble coffee are negligible at just 120 tons.

Portugal provides a close parallel here also being a small country with correspondingly small consumption but a reasonable proportion of soluble all the same. Like most EU countries, Portugal did not have to go far to secure its 850 tons of soluble coffee imports, 75% of which came from big soluble producer Spain next door with the remainder sourced from France. Portugal exported a miserly 17 tons. Around 75% of Spain's 24,145 tons of soluble exports in 2006 was accounted for by intra EU trade. On top of its large soluble production, Spain imported 5024 tons soluble coffee in 2006 much of which would be destined for packing and re-export.

The situation was clearly far from simple even before the EU enlarged to 27 with an extra dozen countries mostly from Eastern Europe. The picture is even more complicated now because within just a few years a huge chunk of EU exports to non-EU members (in Eastern Europe) became intra-EU trade, making pre and post EU entry comparisons for these countries difficult to say the least and a lot less meaningful. Be that as it may, this new "block" has added considerably to the EU soluble market. Most consume a good proportion of soluble even though some overall coffee consumption like that of the tiny Baltic States is correspondingly small.

A breakdown of soluble coffee imports for 2006 into the three biggest country markets of Poland, Hungary and Czech Republic in Table 2 shows a very high proportion of intra-EU trade.

As with previous examples (e.g. Spain and Portugal; UK and Ireland) the nearest big producer (in this case Germany) appears to be the overwhelming supplier. Furthermore, there is considerable intra-EU trade even between these three countries, only EU members since March 1, 2004.


Some non-EU soluble producing countries still have individually high export volumes to these countries, e.g. Ecuador into Poland and India into Hungary. But reference to 2005 figures (first full year after entry into EU) shows that some non-EU soluble producers are being squeezed out as direct exporters into particular EU country markets. For example Brazil (1,251 tons) and Colombia (1,164 tons) were third and fourth suppliers to Czech Republic in 2005 but do not even get into the top five for 2006. There may be no loss of market as such because the same South American origins may well be entering the EU market at another point for packing and movement to The Czech Republic under, for instance, a "Polish" label. Poland was the second biggest supplier of soluble coffee to neighboring Czech Republic in 2006 although did not even figure in the top five for 2005.

Dr. Terry Mabbett has been covering the tea, coffee and cocoa industries for decades. He resides in England.
Table 1
Soluble coffee Germany 2006: imports and exports, origins and

Soluble imports Soluble exports

Origin country Percent Destination country Percent
Belgium 25.6 Russian Federation 13.0
Netherlands 21.1 France 11.3
UK 11.6 UK 10.3
Ecuador 10.1 Hungary 8.9
Spain 8.0 Netherlands 8.4
Brazil 6.8 Ukraine 7.7

Sources: European Coffee Federation; International Trade Centre

Table 2
Soluble coffee imports (tons) into Poland, Hungary and Czech
Republic for 2006

Poland Hungary Czech Republic

Germany 5002 Germany 5034 Germany 2129
Ecuador 3355 India 1349 Poland 1198
Hungary 2695 Poland 855 Hungary 686
UK 1618 Spain 635 UK 441
Brazil 1345 Netherlands 340 Slovakia 408
Others 4958 Others 362 Others 1491
TOTAL. 18973 Total 8574 Total 6353

Sources: European Coffee Federation
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Title Annotation:Soluble Coffee
Comment:Intra-EU trade dissolves single country soluble markets: soluble coffee, with its convenience and popularity throughout Europe is still a front-runner.
Author:Mabbett, Terry
Publication:Tea & Coffee Trade Journal
Date:May 1, 2008
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