Guatemala City, Feb. 12 - Guatemala aims to convince China, South Korea and Australia to pay top prices for its gourmet coffee after finding new buyers in Russia, but supply could be tight with no plans to plant more trees.
Guatemala has worked to promote its mild arabica beans by mapping distinct coffee growing regions in the country where different climates and altitudes produce unique coffee tastes.
Growers group Anacafe now wants to sell the pricey beans in tea-drinking Asia, where the coffee-drinking markets are expanding and more buyers are willing to pay for quality.
"We don't have enough volume to meet demand in all the markets, so what we are doing is focusing only on the ones where they can pay a high price," Anacafe President Christian Rasch told Reuters.
Arabica coffee prices are already at record levels, reaching a 10-1/2-year high Monday in New York, with the ICE benchmark May contract closing at $1.50 a pound.
But Guatemala believes there are still premiums to be won and its strategy has been to try to lock down more long-term contracts with gourmet roasters who are willing to pay prices above the market.
The country has already used this approach to find new buyers in Canada, Russia and Taiwan. In February, a group of 14 Russian importers came to Guatemala to sign coffee buying contracts.
"In every market you find high, medium and low quality coffee ... we are only looking for niche buyers who want the highest quality," Rasch said.
TINY BUT LUCRATIVE
Although many of these markets are tiny compared to the more traditional coffee destinations like the United States and Europe, they can still be lucrative and help Guatemala, Central America's biggest coffee producer, deal with stiff competition from other quality growers like Colombia and Ethiopia.
The annual per capita coffee consumption in Russia, for example, is less than 2.2 pounds, compared to 13 pounds in Germany and up to 20 pounds in Finland, according to Orimi Trade, a Russian coffee and tea company.
But Guatemala sees plenty of room for growth, while last year Russia's coffee consumption increased 15 percent.
Guatemala plans to export 20,000 bags to Russia in the 2007/8 season, compared to some 9,000 in the 2006/7 season.
Indeed, in the past five years coffee shops have sprung up around Russia as a new generation of young professionals pick up on western trends, said Dmitri Fetodov of Orimi Trade.
Asia has seen similar growth in coffee consumption.
China has seen double-digit growth in coffee sales in the past couple of years. In 2006, sales hit $2.4 billion and are predicted to climb to $3.6 billion by 2011, according to market research firm Euromonitor International.
Guatemala's main issue appears to be whether production can keep pace with niche demand, as few farmers are planting more trees and new coffee trees take several years to reach quality production.
"We are not predicting there will be more areas planted," said Rasch. "Right now we are in a phase where the prices are so good that new producers might want to enter into the market, but we haven't seen that yet," he said.