Coffee brewing on the decline

While coffee drinking has become a fad particularly to the young, the total coffee category in the country is struggling to keep on a stable track. A study by research group AC Nielsen showed a 13 percent decline in sales during the first four months of the year compared with the same period in 2003 for the total coffee category. Annual coffee consumption of Filipinos has been on a downtrend. The Nielsen data reported that in 2005, total coffee sales was just over 10,000 metric tons.

However there has been an increase in the sales of coffee mixes and out-of-home segments due to changing consumer behavior towards coffee. Coffee mixes are popular among call center agents who work on a graveyard shift while out-of-home coffee served in coffee shops and internet cafés are in-demand from young professionals and students.

The sales increase from this segment however is still not enough to offset the decline in industry sales. One critical issue affecting the coffee industry in the country is the volume of green coffee produced annually. For the past few years, green coffee harvest of local farmers fell short of the industry's demand-particularly the robusta variety. With farmers eyeing short-term results of their crops, coffee harvest becomes highly dependent on its market value. The standard world trade price for green coffee is fairly unstable-between P40 per kilogram and P80 per kilogram in a period of one year.

When the world trade price for green coffee is low, the local crop production of coffee goes down with it, and when prices are high, farmers are encouraged to plant more coffee. In the past five years, the crop production of robusta coffee in the Philippines exhibited an erratic movement-going up and down by as much as 20 percent. This scenario leaves coffee makers no choice but to import their remaining green coffee requirements from other coffee-producing nations like Vietnam. This is a sad reality for a nation that was once known as the third biggest producer of coffee in the world, next only to Brazil and Columbia.