Coffee price increase forecast in Russia
New York, after prices increased by 40 per cent over the last two
months. Angela Drujinina examines the future for Russian
coffee lovers.
According to forecasts, the production of coffee in 2005 will be lower than the demand for it, writes Bloomberg. The worldwide production of coffee in the next season will be between 106 and 108 million sacks, in contrast with the current season's 114 million.
Coffee production in Brazil, the world's largest producer, is predicted to decrease by around 5 to 8 million sacks alone.
As a result, many Russian specialists have forecasted that the price for coffee beans is inevitably set to increase. They point out that as coffee does not grow in Russia, the cost of a cup depends upon the price of raw coffee beans. So if world prices are increasing, it means that prices in Russia will have to go up as well.
However, others disagree, pointing out that Russians rely heavily on instant coffee, which is less affected by price fluctuations than 'real' coffee. Research figures show that about 80 per cent of the Russian population consumes instant coffee, a higher percentage than any other country in the world.
"The growth of stock exchange prices does not influence the instant coffee prices," Ramaz Chanturia, president of Roschaicoffee association told www.ceefoodindustry.com.
The quota of green coffee (which is traded at the world stock exchanges) in the instant powder in Russia is no more 15 per cent. "The 4 to 7 per cent or even 10 to 15 per cent price fluctuations are very small and, therefore, cannot influence the prime cost of the product," said Chanturia.
Alexei Popovichev, general director of the Association of Coffee Producers of Russia, agrees with Chanturia's opinion.
"The cost of the raw material does not influence the price of the final product a lot, just about 20 per cent, and if one takes into account the fact that the final product is instant coffee, then one can see that the effect is minimal. About 85 per cent of the Russian market is instant coffee. Besides that, most companies work by long-term contracts with suppliers, which will help to keep the prices stable."
According to market research conducted by TNS MIC, the most consumed brands of instant coffee in Russia are Nescafe Classic, Nescafe Gold and Nescafe 3 in 1.
Nonetheless, ground coffee and coffee beans are bought by 37.8 per cent of Russians and in St. Petersburg and Moscow the figures are higher - 56.7 per cent and 50 per cent respectively. Three corporations dominate the Russian natural coffee market: Nestle, Kraft Foods and Tchibo.
