Coffee Semi-annual 2012

An Expert's View about Coffee and Tea in Indonesia

Posted on: 21 Dec 2012

Post predicts that Indonesia’s coffee production will increase to 9.7 million bags green bean equivalent (GBE) in MY 2012/2013

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 11/27/2012 GAIN Report Number: ID1243 Indonesia Coffee Semi-annual 2012 Approved By: Ali Abdi Prepared By: Jonn Slette/Ibnu E Wiyono Report Highlights: Post predicts that Indonesia’s coffee production will increase to 9.7 million bags green bean equivalent (GBE) in MY 2012/2013 over 8.3 million 60 kg bags in MY 2011/2012. The increase is principally due to good weather during the harvest period. Indonesian coffee consumption is expected to grow from 2.36 million bags in MY 2011/2012 to 2.54 million bags in MY 2012/2013. Consumption growth is primarily driven by growth in instant and mixed coffee products, as well as significant national growth in the coffee shop sector. Indonesia’s higher coffee production will result in lower imports, higher exports, and increased ending stock in MY 2012/2013. Commodities: Coffee, Green Production: Post’s annual coffee report published on May 2012 predicted that Indonesian coffee production will grow by 17 percent to 9.7 million bags GBE in MY 2012/2013. Post maintains this prediction, due to supportive weather patterns during the harvest season. The persistently dry conditions during the harvest period in most of Indonesia’s coffee producing provinces helped coffee farmers to achieve higher yields and better quality of coffee beans. Good weather also supported farmers’ post harvest activities, such as drying the beans and getting them to market. (Please see appendix 1 for more complete rainfall charts.) Re Harvest Time gion Normal Period Peak Period Southern Sumatra (South Sumatra, Lampung, and Bengkulu) May 2012- September Java & Bali July 2012 – August 2012 2012 Southern Sulawesi (Toraja) East Nusa Tenggara (Flores) Nor September 2012 – December 2012 – thern Sumatra (Gayo and Mandheling) March 2013 January 2013 The above table reflects that only Northern Sumatra experienced a harvest period which overlapped with the rainy season. Normally, Indonesia’s rainy season runs from October to March. Rainfall data from Indonesian Weather Service (BMKG) reflects that Northern Sumatra received moderate rainfall in September and October 2012. BMKG forecasts that rainfall in Northern Sumatra will remain moderate through January. The rainfall situation suggests that coffee farmers in Northern Sumatra should have no significant disturbances in their harvest and post-harvest activities. Northern Sumatra accounts for approximately 15 percent of total Indonesian coffee production. Consumption: Indonesian coffee consumption is predicted to grow from 2.36 million bags GBE in MY 2011/2012 to 2.54 million bags GBE in MY 2012/2013. Continued growth in mixed and retail ready coffee products, (mostly instant coffee and related products) as well as growth in coffee shops around Indonesia is the primary drivers of coffee consumption growth. No. Brand Year Released Company/Producers Number of Variants as of 2012 1 Kapal Api 1992 2 2 ABC 1996 4 3 Ya! 1998 2 Santos Jaya Abadi 4 Good Day 2001 9 5 Grande Java Latte 2012 1 6 Fresco 2012 2 7 Nescafe 1979 Nestle Indonesia 11 8 Torabika 1980 Mayora 8 9 Indocafe 1985 Sari Incofood Corp 4 10 Top Coffee 2012 Wings Food 2 11 White Koffie 2011 Java Prima Abadi 2 12 Kuku Bima 2011 SidoMuncul 2 13 Kopi Singa 2011 Puji Surya Indah 2 Indonesian coffee consumption is made up of two major segments, which includes roasted and grounded (R&G) and soluble (instant) coffee. R&G coffee accounts for 70 percent of total consumption. 30 percent of total Indonesian consumption is instant coffee products. Mixed coffee products, or 3-in-1 coffee, are also a major driver of Indonesian coffee consumption growth. Mixed coffee products are a unique in that they are a hybrid between R&G and instant coffee segments. Powdered R&G and instant coffee powder is mixed with sugar and non-dairy creamer into small packets to make 3-in-1. The packets are sold at street kiosks and small stores throughout Indonesia and are consumed by every socio-economic level. One packet of mixed 3-in-1coffee sells for roughly $0.10 - 0.15 per packet. PT. Mayora, Nestle Indonesia, and PT. Indofood introduced 3-in-1 coffee products to Indonesian market in the late1980s. Other companies followed in the 1990's by introducing Kapal Api and ABC brands. The company introduced another two brands i.e. Good Day in 2001 and Grande Java Latte and Fresco in 2012. More recently, the Indonesian mixed coffee mix market has seen a number of new players that are introducing more premium products. These products tend to include other flavors and food ingredients such as vanilla latte, mocha, chocolate, cappuccino, cafe latte, ginger, ginseng, royal jelly, vitamins and artificial sweeteners. (Please see appendix 2.a and 2.b depicting several coffee mix products in Indonesian coffee market) The growing number of coffee shops in big and secondary cities around the archipelago is another strong driver of coffee consumption in Indonesia. Many coffee shops use local brand names and serve specialty Indonesian coffees, to include civet coffee, Toraja, Kintamani, Mandheling, Gayo, and Flores. International chains such as Starbucks and Coffee Bean are also popular. Post expects that Indonesia’s large young population, rapid urbanization and expanding middle class will continue coffee consumptions growth in Indonesia. Indonesian Coffee Export (GBE-1000 Bags) 1,794 1,800 1,257 971 Trade: Post expects Indonesia to see higher levels of coffee exports and lower levels of imports due to higher yields during the most recent harvest. Exports are expected to increase to 8.1 million bags GBE in MY 2012/2013 over 7.18 million bags GBE in MY 2011/2012. By contrast, import will decrease from 700,000 bags GBE in MY 2011/2012 to 350,000 bags GBE in MY 2012/2013. Stocks: A significant drop in Indonesian coffee production in 2011 resulted in low carry-over stocks in the first quarter (Q1) 2012 (Please see Indonesian Coffee Annual Report 2012 for further information on Indonesian coffee production in 2011). Consequently, Indonesian coffee exports sharply decreased by 45 percent from nearly 1.8 million bags GBE in Q1-2011 to 0.97 million bags GBE in Q1-2012. Q1-2010 Q1-2011 Q1-2012 Q1-2013 (Estimation) Source: GTIS According to Post contacts, higher coffee production in 2012 will result in larger carry-over stock in Q1-2013 at around 20 percent of total 2012 production (1.94 million bags GBE). Post predicts that Indonesia’s coffee export levels in Q1-2013 will reach similar level with that of Q1-2011 at 1.8 million bags GBE. Ending stocks of coffee in MY 2012/2013 will stand at roughly 148,000 bags GBE. Appendix 1 Monthly Rainfall in Southern Sumatra 2012 (mm) 350 300 Monthly Rainfall in Java 2012 (mm) 350 250 Monthly Rainfall in Eastern Indonesia 2012 (mm) 300 250000 250 150 400 200 100 150 300 50 100 0 200 50 Bengkulu Lampung Sumatera Selatan Jan Feb Mar Apr May Jul Aug Sep 10-0 West Java Central Java East Java Jan Feb Mar Apr May Jun Jul Aug Sep - Bali East Nusa Tenggara South Sulawesi Jan Feb Mar Apr May Jun Jul Aug Sep Appendix 2.a. List of Major Coffee Mix Products Appendix 2.b. List of New Coffee Mix Products Production, Supply and Demand Data Statistics: Coffee, Green 2010/2011 2011/2012 2012/2013 Indonesia Market Year Begin: Apr 2010 Market Year Begin: Apr 2011 Market Year Begin: Apr 2012 USDA Official New Post USDA Official New Post USDA Official New Post Area Planted 0 1,265 0 1,250 0 1,170 (1000 HA) Area Harvested 0 1,165 0 1,150 0 1,080 (1000 HA) Bearing Trees 0 1,230 0 1,215 0 1,140 (MILLION TREES) Non-Bearing Trees 0 105 0 105 0 95 (MILLION TREES) Total Tree Population 0 1,335 0 1,320 0 1,235 (MILLION TREES) Beginning Stocks 1,603 1,603 83 83 88 88 (1000 60 KG BAGS) Arabica Production 1,375 1,375 1,300 1,300 1,700 1,700 (1000 60 KG BAGS) Robusta Production 7,950 7,950 7,000 7,000 8,000 8,000 (1000 60 KG BAGS) Other Production 0 0 0 0 0 0 (1000 60 KG BAGS) Total Production 9,325 9,325 8,300 8,300 9,700 9,700 (1000 60 KG BAGS) Bean Imports 160 160 700 700 350 350 (1000 60 KG BAGS) Roast & Ground Imports 0 0 135 135 150 150 (1000 60 KG BAGS) Soluble Imports 375 375 400 400 500 500 (1000 60 KG BAGS) Total Imports 535 535 1,235 1,235 1,000 1,000 (1000 60 KG BAGS) Total Supply 11,463 11,463 9,618 9,618 10,788 10,788 (1000 60 KG BAGS) Bean Exports 7,375 7,375 4,675 4,675 6,100 6,100 (1000 60 KG BAGS) Rst-Grnd Exp. 0 0 0 0 0 (1000 60 KG BAGS) Soluble Exports 2,305 2,305 2,500 2,500 2,000 2,000 (1000 60 KG BAGS) Total Exports 9,680 9,680 7,175 7,175 8,100 8,100 (1000 60 KG BAGS) Rst,Ground Dom. Consum 1,225 1,225 1,955 1,955 1,840 1,840 (1000 60 KG BAGS) Soluble Dom. Cons. 475 475 400 400 700 700 (1000 60 KG BAGS) Domestic Use 1,700 1,700 2,355 2,355 2,540 2,540 (1000 60 KG BAGS) Ending Stocks 83 83 88 88 148 148 (1000 60 KG BAGS) Total Distribution 11,463 11,463 9,618 9,618 10,788 10,788 (1000 60 KG BAGS) Exportable Production 7,625 7,625 5,945 5,945 7,160 7,160 (1000 60 KG BAGS) TS=TD 0 0 0 Comments AGR Number Comments To Post
Posted: 21 December 2012

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