Coffee prices are high, what should businesses do to seize the opportunity?

The low prices are over.

Coffee prices are high, why do businesses need to stay calm in the face of opportunities? According to the general assessment of the Vietnam Coffee and Cocoa Association (Vicofa), in 2023, Vietnam's coffee export industry reached an unprecedented milestone in its more than 30-year export history due to high coffee prices. Thanks to that, by the end of the year, we reached a turnover of nearly 4.2 billion USD, an increase of 3.1% compared to 2022.

Looking at the 2024 market, Vicofa believes that this year will continue to be a favorable year for coffee exports and output may decrease but export turnover will increase, expected to reach about 4.5-5 billion USD.

Vietnam's coffee output to fall in 2023 due to reduced acreage

Notably, according to Mr. Thai Nhu Hiep, Vice President of Vicofa, the time when domestic coffee prices were 30,000 - 40,000 VND/kg is over, and the trend of Vietnamese coffee prices in 2024 and the following years will continue to maintain the level of 60,000 - 70,000 VND/kg.

Mr. Hiep said that one of the evidences for this is that it is currently the peak of Vietnam's coffee harvest. Normally in previous years, coffee prices fell sharply this season due to abundant supply, but this year it is still at a record high.

There are many reasons for the record high coffee prices, the first of which is that the quality of Vietnam's robusta coffee has been improving over the years and is now the best in the world. Next is the increasing demand for this product both domestically and internationally. Finally, the supply of robusta is limited (in 2023, the supply of coffee will decrease by about 20%).

One notable thing, according to Vicofa, is that the coffee situation has reversed and the world is depending on the coffee supply from Vietnam. In particular, for Vietnam, although the output has decreased, the price has increased sharply and doubled compared to previous years, so we do not worry about the export turnover decreasing.

Be calm in the face of opportunities

Affirming the positive opportunities for the coffee industry in 2024, Mr. Do Ha Nam, Vice Chairman of Vicofa, Chairman of the Board of Directors of Intimex Group, said that the demand for coffee products from countries such as Europe, America, etc. is very large and Vietnamese coffee is considered indispensable in the global market because of its taste suitable for world consumers. Therefore, coffee prices tend to increase gradually and coffee prices have never been as high as they are now at the beginning of the season. This also partly reflects the huge demand of the market while the supply is in short supply.

Specifically, in Vietnam, coffee production has decreased due to low coffee prices in recent years, many farmers have gradually switched to other crops with higher economic value (durian). That is not to mention the extreme dry weather factor due to the ongoing El Nino phenomenon.

From these factors, Mr. Nam predicts that Vietnam's coffee exports will still be alone in the market until the end of April and the beginning of May 2024 because at this time Indonesia and Brazil are just entering the harvest season.

However, according to Mr. Do Ha Nam, it is important that export enterprises stay calm in the face of opportunities, and assess and analyze the market thoroughly. "As long as enterprises do not sell off, we do not have to worry about losing value," Mr. Nam advised.

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