Brazilian Specialty Coffee Market Growing

By Joanna Hansford, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazil is the largest coffee producer in the world, producing around 1,350 million kilos of coffee per year, and is responsible for one-third of the world’s coffee production. Now changes in the local coffee culture are influencing the domestic market, and at the same time due to recent price declines, there may be world shortages in coffee over the next few years.

Brazil not only exports coffee, but imports it too. Last year, over 35,000kg was imported at a cost of US$37.6 million. Coffee expert Emilio Rodrigues, of Casa do Barista in Santa Teresa says, “Brazil is the world’s second largest coffee consumer, after America. Yet, while twenty percent of coffee consumption in the U.S. is specialty/premium coffee, only 5 to 7 percent of Cariocas drink quality coffee in Brazil.”

In recent years, an increase in coffee shops opening in Rio de Janeiro, such as Starbucks and Nespresso, has led to an increase in the awareness of specialty coffee products in Brazil, where traditional brands such as Pilão, Melitta and Café do Ponto have dominated domestic consumption for decades. “Nespresso has transformed coffee into a jewel,” says Rodrigues, “the coffee capsules facilitate hygienic coffee consumption.”

“For new Brazilian customers, coffee shops are one of the main drivers of change in attitude [towards coffee], and expand drinking habits,” says Lucas Marangoni, from research firm Mintel. “This is because generally speaking, coffee shops are where most customers make first contact with specialty coffees.”

“As Brazilians get more demanding about their coffee, the country’s better quality Arabica beans will be increasingly used to service its burgeoning domestic market, rather than merely sent overseas.” adds Jonny Forsyth, a global drinks analyst at Mintel also.

Santa Monica, Fazenda Juliana, Fazenda de Minas and Fazenda Caeté in Minas Gerais are some of the many examples of domestic gourmet coffee producers who are attempting to meet such demands. These small specialist coffee farms currently sell high quality coffee served in café chains, such as Kopenhagen.

The improvements in the quality of coffee are explained by Emilio Rodrigues, “All coffee produced in Brazil used to be bought by the Instituto Brasileiro do Café at a set price, regardless of the quality. After the IBC was abolished in 1989, a free market was created, giving rise to the increase in regulations on quality. Farmers started to improve the quality of their coffee and consider the profits gained by investing in the whole process. Selling the equivalent of a 60kg bag of coffee at around R$4 per cup started to make more sense.”

In 2013, Brazil exported 1.6 million tons of coffee, 95 percent of which was green. Instant coffee powder, roasted and ground coffee, coffee extracts and other coffee products make up less than five percent of the country’s coffee exports.

In almost every category, the U.S. is the largest importer of Brazilian coffee products. Therefore, if Brazil’s coffee production continues to decline, causing the global coffee shortage expected by 2014 into 2015, and a larger proportion of higher quality coffee is reserved for the domestic market, the U.S. may be the hardest hit.