Market Trends for Coffee, Tea and Cocoa – Part Four

European market is dependent on different economic factors. Investors who want to make it in Europe must be aware of a multitude of market drivers. Players in the sector of coffee, tea and cocoa are most likely to encounter potential obstacles not only in their country of origin, but also on the EU market. Before undertaking the arduous though challenging task of participating in this harsh competition, investorsmust plan ahead and consider all the possible obstacles.

GDP (Gross domestic product) is just one of the economic factors that can make the difference between a success business story and a sad fiasco. CBI (Center for Promotion of Imports from developing countries) advises investors in the coffee, tea and cocoa sectors who want to become successful players on the EU market to be aware of the fact that poor GDP figures can have a negative impact on their enterprise. Attention must be paid to other indicators such as consumer trust. Low consumer trust is most likely to affect their business. ESI (Economic Sentiment Indicator) has become nowadays a valid means of evaluating a future market to be tackled, therefore investors should always look for it before deciding to invest in a certain country. During economic recession, consumers tend to favor in-home consumption. Bulk products are the most requested ones and the search for high quality is not a priority.

An important document released by CBI warns investors to be aware of the supermarket price wars. In the coffee sector this economic driver has become lately a very acute problem. The tendency is for the supermarkets to sell coffee at incredibly low prices. Costumers find it appealing and everybody is happy. Top quality products are at risk of “becoming extinct”. The CBI recommendation is clear: “Exporters dealing with retailers directly should focus on clear cost benefit calculation.” Another advice is for potential investors to look for financial capital in their country of origin since this is no longer an impossible task, thanks to the development of the financial system in many parts of the world.

In the foreseeable future the price for certified commodities is expected to rise. CBI concludes that “there are clear opportunities for exporters in facilitating the export of certified products, minimizing potential risks for EU industry at relatively low cost.” All along investors must take into consideration the evolution of European currency, the Euro.

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