Local coffee sector set to face hurdles due to COVID-19

17:10 17/05/2021
Vietnamese coffee exports are anticipated to encounter a myriad of difficulties over the short term due to the complicated nature of developments relating to the novel coronavirus (COVID-19) pandemic, according to industry insiders.

Statistics compiled by the General Department of Vietnam Customs indicate that the country exported 453,000 tonnes of coffee worth US$808.8 million during the first quarter of the year, representing a decline of 9.8% in volume and 5.5% in value compared to the same period from the previous year.

Most notably, the nation’s coffee exports hit their lowest levels throughout the 2019 to 2021 period due to the negative impact caused by the COVID-19 pandemic, leading to reduced consumption demand and unfavourable conditions with regard to getting products through customs.

Furthermore, the blockage of the Suez Canal in March contributed to slowing the process of transporting Vietnamese coffee to markets in both Europe and the United States.

The nation’s coffee exports to Asia during the first quarter experienced an upward trajectory, while exports to other continents decreased against the same period from last year.

The proportion of local coffee being sent to Asia accounted for 45.33% of the total export value, higher than the figure of 33.11% recorded during last year’s first quarter. Meanwhile, the market share to Europe fell from 50.06% in the first quarter of last year to 41.12% in the first quarter of this year.

Moving forward, Vietnamese coffee exports are projected to face numerous difficulties due to the COVID-19 pandemic continuing to spread throughout several European countries, while some Asian countries continue to be at risk of becoming the latest epicentre of the pandemic.

Despite these predictions, the global high-quality instant coffee segment is forecast to enjoy an upward trend due to many people tending to work from home since the early stages of the pandemic, according to experts.

Industry insiders believe that although coffee exports to the EU face hindrances over the short-term, there are bright prospects ahead for the local coffee industry to exploit the potential market in the future.

This is the case following the enforcement of the Vietnam-EU Free Trade Agreement (EVFTA) which is expected to create favourable conditions for Vietnamese coffee enterprises to boost exports to the EU market moving forward.

Economists have therefore advised local firms to fully tap into niche markets in Eastern Europe, especially Poland, where there is a growing number of coffee shops.

Due to the positive developments brought about by the implementation of the COVID-19 vaccination programme in the US, coupled with favourable customs clearances, there continues to be a great potential for Vietnamese coffee exports to penetrate the demanding market in the near future.

Moreover, Japan’s coffee imports from the nation last year increased by 17.3% to US$169 million compared to 2019, with the country’s coffee market share making up 14.33% of Japan's total import value, marking a rise of 2.77% from the figure of 11.56% recorded in 2019.

Amid the recent decline in coffee exports to the both EU and US markets, the local coffee industry has strived to fully tap into markets throughout Asia, including the Japanese market, with export turnover to the fastidious market expected to rise in the future.