Brazil's coffee consumption to grow at more moderate rate: industry group

SAO PAULO: Brazil's coffee industry expects a more moderate consumption growth rate in the local market in 2019 after a jump of almost 5 percent in 2018, an industry group said on Monday.

Brazil is widely known for being the world's No. 1 coffee producer and exporter. But it is also a very large consumer, trailing behind only the United States, with a smaller population of around 200 million people.

Ricardo Silveira, head of Brazilian coffee industry group Abic, which includes local units of the world's largest processors such as Jacobs Douwe Egberts and Melitta, said that the expectation for slower growth could change if the local economy recovers faster than expected.

Abic projected local coffee consumption at 21 million 60-kg (132-pound) bags in 2018.

Speaking on the sidelines of an event that gave awards for the best coffees produced in the previous Brazilian crop, Silveira said that the premium coffee segment helped boost growth last year. In 2019, however, it could be lower prices that drive up sales and help industry growth.

"If prices are falling for the coffee producer, they are falling in the supermarket shelves as well," he said. "Maybe not as much, but they are."

Global coffee prices are hovering around the lowest levels in 13 years, due to oversupply. Brazil produced a record crop in 2018 and another good harvest is expected this year.

The Abic head said that some producing areas are already harvesting coffee in 2019, mainly robusta fields. He said the expectation is for another year of good quality coffee in Brazil, similar to 2018, and played down possible problems from  a dry spell in December and January.

"There were good rains in February that helped coffee fields to recover," he said.

Brazilian coffee producers are, in general, handling the current cycle of low prices well, Silveira said. But he expects a reduction of investment by farmers in the crops.

Silveira said that producers focusing on high-quality coffee are having a better time, securing price premiums for their production.