Nov. 16 - The quality of Vietnamese coffee continues to remain poor overall but tight global supply of robusta beans is expected to override quality concerns this crop year, said a report by global research company Euromonitor.
"Due to poorer harvests in Brazil and Vietnam there is likely to be a shortfall in global supplies of raw robusta beans and despite the quality issues, most manufacturers will have to continue to procure from Vietnam," said Christopher Davey, Euromonitor industry watch managing editor.
Global robusta output this crop year starting Oct. 1 is projected to fall to 50.5 million bags from 52 million in the previous crop year, according to German-based commodities analyst F.O. Licht.
Vietnam has delayed the implementation of stricter export quality standards, slated to start this month, by another crop year as too little notice was given this year.
The stricter tests involve lower moisture levels in the coffee beans and allows less defects for various grades.
"It was likely that around 200,000 tons, or close to 30% of their produce, would not have passed the quality test," said Davey.
Around 37,000 tons of Vietnamese coffee was rejected by warehouses belonging to the London Euronext.liffe exchange in the 2006-07 crop year, up 19% on year.
Nevertheless, Vietnam's coffee export revenue is projected to reach $1.8 billion for the crop year ended Sept. 30 - an increase of over 80% - on higher volumes and prices.
Vietnamese robusta coffee is mainly used to fulfill demand for lower-priced instant blends, which make up 40% of the total coffee sold globally by value.
"While it might be difficult to market poor quality coffee in other more mature markets like Europe and America, manufacturers might look towards Asia which generally has a lower awareness about coffee quality to sell cheaper blends," said Davey.
Roasters have also started sourcing from other markets such as India and Indonesia for better quality robusta beans.
"Indian domestic demands have been low this year and this could be advantageous for international coffee manufacturers to stock up good quality raw robusta from India at low prices," said Davey.