If life in the eurozone's economically
embattled periphery was not bad enough, now the coffee culture emblematic of
southern Europe is under siege. Italians are having to cut back on their
cappuccinos and espressos and Spaniards are dropping their cortados,
contributing to a sharp drop in wholesale coffee prices.
The
coffee industry has long seen demand for the drink as inelastic and protected
from economic fluctuations. But now coffee consumption per capita is down in
Italy and Spain to levels last seen five to six years ago, largely because of
the impact of the sovereign debt crisis.
The
cost of the high-quality arabica coffee in New York, the global benchmark, is
down 43 per cent from a 34-year high set last year to $1.75 per pound. Arabica
coffee prices last year surged to $3.089 per pound after Colombia, the largest
producer of high quality beans had a poor harvest due to bad weather.
In
Italy, Europe's second-biggest importer of coffee by volume, demand fell last
year to 5.68 kilograms per person, the lowest in six years, according to the
London-based International Coffee Organisation, the group that represents the
major producing and consuming countries.
"The
four-year economic downturn is hitting the amount of coffee Italians
drink," said Alessandro Polojac, president of Italy's industry association
Comitato Italiano Caffé and chief executive of the Trieste-based coffee trader
Imperator.
The
story is striking different in less distressed parts of the eurozone. In
Germany and France, the first and third-largest coffee importers in Europe
respectively, consumption is on the other hand rising strongly. Spain, the
fourth-largest European importer and another country that has been hard hit by
the crisis, has seen per capita consumption back to the level of five years
ago.
The
impact of the economic downturn in southern Europe is compounding the negative
effect of new brewing technologies, including the single-portion coffees like
Nespresso, which cuts coffee wastage.
Mediterranean
people are drinking more coffee at home, said Max Fabian, chief executive of
Demus, an Italian decaffeinated coffee producer. "A lot of consumption was
out-of-home, which was expensive, but people have switched," he said. The
shift to brewing coffee at home has also prompted consumers to opt for cheaper
blends, with a lower content of premium arabica beans. In turn, demand for
lower-quality robusta beans, which have a bitter taste, have increased.
The
realisation that coffee demand is not insulated from economic woes is to be one
of the key topics at this week's meeting of the International Coffee
Organisation, the annual gathering of the industry in London.
By Emiko Terazono, FT.com September 25,
2012
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