Lao Coffee – big deal or niche market?

Lao coffee is well known: for its superb taste and excellent quality. But still: the number of connoisseurs seems to be very limited. What is for Laos a big business is for the big coffee markets not more than a mere drop in the cup.

Mr. Viengkham Sinsangouane smiles. He just moved into the brand new office of the Lao Coffee Association (LCA), overlooking the riverbank of the Sedon in Pakse. Also the business outlook provokes the smile of LCA’s office director. “The harvest this season was good, we estimate about 25,000 tons.” This is good news for the Lao coffee sector after two years of very small production. The smile becomes even wider when he speaks about prices. Coffee prices are high; in February 2007 the composite price was around 104 US-Cents per pound. Compared to just 60 cents in 2004 a sweet improvement.

The Lao Coffee Association improves also in other matters. Traditionally an organization of coffee exporters LCA has now besides the 20 trading companies also 6 members in the field of coffee processing. So also the composition of export changes. 2006 saw for the first time exports of 3-in-1 instant coffee worth nearly 30,000 US-Dollars. Not very much compared to the 8.4 million dollars generated from green coffee beans... read more

The main customer of Lao coffee remains Poland accounting for roughly one third of all Lao exports. The second largest buyer is Vietnam, itself one of the worlds leading coffee exporters.

The two top positions among the buyers of Lao coffee are undisputed for the last three years, but the rakings behind changed dramatically. Switzerland, in 2004 and 2005 third largest customer, dropped from the 2006 list as did France and Spain.

Internationally coffee is traded in 60 kilogram bags. World production in 2006/2007 reached about 224 million bags; the estimated 25,000 tons of Lao coffee are equivalent to 470,000 bags or 0.19 percent of the world’s coffee. This amount is comparable that of Burundi or Madagascar. The biggest difference is that Laos is not yet member of the International Coffee Organization, a specialized UN agency overlooking the production, trading and promotion of coffee worldwide, including prices. ICO, which encourages a sustainable coffee economy, has currently 77 members, 45 of them coffee exporting and 32 importing countries. Only six coffee exporting countries, Guyana, Liberia, Malaysia, New Caledonia, Yemen and Lao PDR, are not party to the Coffee Agreement 2001 and the ICO. The London based organization was founded in 1963 and brings producers and customers together with the target to stabilize the coffee market. Coffee farming is the basis of livelihood for about 25 million families worldwide. Retail sales of coffee add up to about 70 billion USD yearly. ICO exporting members account for more than 97% of the world coffee production; its importing members represent 80% of the final market.

The prominent appearance of two coffee exporting members of ICO among the biggest buyers of Lao coffee leads to the conclusion that both Vietnam and Thailand are re-exporting the Lao coffee to other markets. Thailand’s production in the 2006/2007 crop is estimated at 1 million bags, its export of 376.000 bags (Feb. 06 to Jan. 07) was slightly lower than the total actual Lao crop. The efforts of leading Lao coffee companies to brand Lao coffee is the only way to make the quality of this Lao product internationally known and to give coffee lovers the opportunity to get a pure Lao brew in their cups.

Source: Targetlao magazine

Posted by samakomlao on 12:51 PM. Filed under Association, brand, business, Coffee, cup, drink, good, lao new year, Laos, LCA, mobile vientiane, office, Ppakse, product, taste., traditional . You can follow any responses to this entry through the RSS 2.0. Feel free to leave a response