The proportion of Vietnam's coffee exports to the EU accounted for 38% of the country's total export turnover of this product in the first 7 months of 2024. In July 2024 alone, Vietnam's coffee exports to the EU reached about 28,000 tonnes, valued at 137 million USD; increased by 14% in volume and 27% in value compared to the previous month and it decreased by 33.45% in volume but increased by 23% in value over the same period last year. Vietnam's coffee exports to the EU decreased in volume due to low reserves and insufficient supply.

Vietnam's average coffee export price to the EU in July 2024 reached 4,958 USD/tonne, up 12% compared to June 2024 and up 84,5% compared to July 2023. In the first 7 months of the year, the average export price reached 3,586 USD/tonne, up 55.6% over the same period in 2023.

Vietnam's coffee exports to the EU decreased in volume due to low reserves and insufficient supply. The first is due to the impact of climate change, causing drought to occur in many places, especially in the Central Highlands, a key coffee-growing region of Vietnam. Increased rainfall in August is very beneficial for crops, it is expected that the rainy season will continue through October before the new harvest begins around October and November every year. Secondly, in recent years, the price of coffee has been very low, only about 40,000 VND/kg, so farmers do not invest much in this crop. Many households have converted the area of coffee trees to other crops with higher economic efficiency such as durian, avocado, and passion fruit. In addition, some coffee planting areas are old but have not had time to replant, which greatly affects production. Meanwhile, the new coffee crop does not start harvesting until October and November. Therefore, supply for export is very limited.

According to the Vietnam Coffee and Cocoa Association (VICOFA), Vietnam's coffee production in the 2023-2024 crop is estimated to decrease by 20% compared to the previous crop, to 1.47 million tonnes, the lowest in 4 years, putting pressure on the supply of Robusta in the world market.

According to the General Department of Vietnam Customs, in the first 7 months of 2024, Vietnam's coffee export turnover to major markets in the EU tends to increase sharply compared to the same period in 2023 thanks to rising prices.

Of which, coffee exports to the German market were the largest with 427.7 million USD (equivalent to 121.5 thousand tonnes), up 42.2% in value but down 11.6% in volume over the same period in 2023, accounting for 31.2% of Vietnam's total coffee export turnover to the EU market, lower than the proportion of 32% in the same period in 2023. Export prices reached an average of 3,520 USD/tonne, up 61% over the same period last year. Particularly in July 2024, coffee exports to Germany reached thousand tonnes, valued at 44.3 million USD, up 23.3% in volume and 38% in value compared to June 2024 and up 15.3% in volume and 103.6% in value compared to June 2023. Coffee prices exported to Germany this month reached an average of 4,791 USD/tonne, up 12% compared to the previous month and up 76.6% over the same period last year.

In second place is the Italian market, exports reached 295.58 million USD (equivalent to 91 thousand tonnes) in the first 7 months of the year, down 14.5% in volume but up 47.3% in value over the same period in 2023, accounting for 21.3% of Vietnam's total coffee export turnover to the EU market. The price of coffee exported to Italy during this time reached an average of 3,245 USD/tonne, up 47.3% over the same period last year. In July alone, coffee exports reached 19.3 million USD (equivalent to thousand tonnes), down 9.3% in value and 22.5% in volume compared to June 2024 and down 41% in value and 67% in volume compared to July 2023. Coffee prices exported to Italy this month reached an average of 4,298 USD/tonne, up 17% compared to the previous month but up 78% over the same period last year.

In 3rd place is the Spanish market, reaching 273.3 million USD (equivalent to thousand tonnes), up 81% in value and 17.7% in volume over the same period in 2023, accounting for 20% of Vietnam's total coffee export turnover to the EU market. The export price of coffee during this period reached an average of 3,809 USD/tonne, up 53.6% over the same period last year.  Particularly in July, exports reached 34.1 million USD (equivalent to 6.4 thousand tonnes), up 87% in value and 81% in volume compared to June 2024 but down 9.2% in volume and up 58% in value compared to July 2023. The price of coffee exported to this market reached an average of 5,287 USD/tonne, up 3.4% over the previous month but up 74% over the same period last year.

Bulgaria is the country with the strongest export growth rate in the first 7 months of the year over 100%.

On the contrary, in the first 7 months of 2024, coffee exports to some markets decreased compared to the same period in 2023 such as exports to Ireland decreased by 91.14% to 169,939 USD; to Latvia decreased by 69.02% to 774,743 USD; to Finland decreased by 61.39% to 958,722 USD...

In terms of product types, Vietnam's coffee exports are still mainly coffee beans. Although the proportion of deep-processed coffee is still very low. It has increased sharply compared to previous years.

Unroasted and decaffeinated coffee was ranked first with a turnover of 1.200 million USD, up 31% over the same period last year, accounting for 88.9% of the total export turnover of coffee products of Vietnam, lower than the proportion of 91.1% in the same period in 2023. The EU always imports raw coffee from coffee-growing countries including Vietnam, then processes, packages, and re-exports to other EU countries.

Ranking 2nd in this group is extract concentrate from coffee with a turnover of 96.9 million USD in the first 7 months of 2024, up 84.6% over the same period in 2023. This group of products accounts for 7.1% of the total export turnover of Vietnam's coffee products, higher than the proportion of 5.2% in the same period in 2023.

In 3rd place is decaffeinated coffee with export turnover in the first 7 months of 2024 reaching 61.7 million USD, up 79.2% over the same period in 2023. This product accounts for 4.5% of Vietnam's total coffee exports, higher than the proportion of 3.4% in the same period in 2023.

Trends of coffee consumption in the EU

According to a report from Gll Global Information,  Europe is the world's largest consumer of green coffee. Coffee is one of the most consumed beverages. The European coffee market is influenced by a number of factors including the increasing demand for certified coffee products, changing weather conditions that play a decisive role in coffee production in producing countries, and have an impact on the supply chain of coffee imported into European countries.

According to the European Coffee Federation, Europe consumed 31% of global coffee consumption in 2022, making the region an important and attractive market for coffee. The European Union also has the world's highest per capita coffee consumption capacity, although consumption capacity varies from country to country. Coffee is considered one of the most popular beverages in Western Europe due to the culture that is ingrained in the subconscious and is widely used in the daily habits of consumers. In addition, the demand for coffee is also increasing in the region due to the number of newly opened coffee shops, the growth of coffee chain stores, and the increasing number of coffee machine buyers. According to the Cafe Europe 2022 Project, the European coffee chain market grew by 3.2% in 2022 to reach 40,675 stores.

The prospect of Vietnam's coffee exports to the EU will be greatly affected by the European Union's Anti-Deforestation Regulation (EUDR) officially taking effect on December 31, 2024. Accordingly, only products that do not cause deforestation and are legal will be imported into the EU market. This will greatly affect Vietnam's coffee exports in 2025. Accordingly, from December 31, 2024, this regulation will begin to apply to individuals, organizations as well as competent agencies of EU member states and in June 2025 apply to small and medium-sized enterprises.

The cost of exporting to the EU will also increase, potentially posing a risk for small and medium-sized companies: The EUDR's traceability and certification procedures will require technologies, processes, and administrative costs for compliance.

Vietnamese coffee will have to compete for exports and lose market share in the EU because competitors are ready for full compliance with the EUDR. In addition, the difficulty of determining legal planting areas affects the results of the EU's risk assessment and classification of planting areas by country and production region.

The EUDR's requirement is strict traceability of goods to the land plots and forest lots where such goods are produced, 100% of the product must have GPS/polygon positioning to each garden plot. However, Vietnam's production area is due to its low positioning area, high positioning cost, small and fragmented scale; and complex value chains with multiple intermediate layers.

In addition, the EUDR requires monitoring the development of forest loss by remote sensing tools, coffee produced on land causing forest loss after December 31. 2020 is not cleared, but we are not clear about the reference forest map that correctly reflects the current situation at the milestone of December 31, 2020. Areas that have switched to coffee cultivation before 2020 have not been shown on the forest map, some have not coincided between forest maps and cadastral maps.

Although there are many challenges, the opportunities for businesses are equally great if they know how to take advantage of these requirements. Products that comply with EUDR requirements and are certified by the World Forest Stewardship Council (FSC) will increase the competitiveness and credibility of the business in the international market.

Moreover, EUDR helps businesses form a sustainable product supply chain according to a methodical strategy of planting areas and legal sources of raw materials (origin and location of land, traceability, information sharing and coordination to receive support from regulatory agencies, etc...), to improve product quality, meet supply and ensure is the preferred choice for European customers.

At the same time, enterprises that meet the EUDR will build a green business image, contributing to reducing greenhouse gas emissions, building a green living environment, mitigating climate change, and building a foundation to be ready to meet other EU green regulations (such as CBAM).

   T.Huong

Source: Vitic