Hip Coffee at $4 a Cup Revives African Industry Left Behind

By Publications Checkout
Hip Coffee at $4 a Cup Revives African Industry Left Behind

Julien Ochala can’t live without his morning cup of Joe.

But not just any coffee will do. For the past five years, the 37-year-old physiology lecturer at King’s College London has visited the same store every week to grab a pack of his beloved Kenyan brew. And he’s not put off by the cost: at 37 pounds a kilogram ($22 a pound), it’s more than double a similar supermarket product.

"I take Kenyan coffee every morning," said Ochala, who buys his beans from Monmouth Coffee Company in Borough Market. "I love it because of the relatively higher acidity level. It keeps me active in the afternoons."

Customers willing to pay a premium for African brews, known for their floral, fruity flavors, are driving purchases of coffee from the continent where the drink is said to have originated. One legend has it that Ethiopian goat herders discovered the plant more than a thousand years ago. Today, a cup of Kenyan coffee at Monmouth costs roughly $4, compared with about $3 for a standard Americano from Starbucks Corp. in London.

The renewed interest may be a blessing for farmers in Africa, where output is about three-quarters of what it was four decades ago. Growers of robusta, the cheaper variety favored for instant drinks, have found it hard to compete as major producer Vietnam boosted output at much lower cost. Brazil also provided more competition for medium-quality arabica beans.

“Ethiopian beans have been known in the West for a long time, but now we are seeing more Rwandan, Kenyan and even beans coming from Burundi, Uganda and Congo,” said Karl Weyrauch, the founder of Seattle-based Coffee Rwanda, a supplier of Rwandan beans to the American market. “ African beans may also seem exotic to some coffee drinkers and that piques their curiosity.”

But output isn’t what it once was. In 1975, four African nations were among the world’s 10 biggest producers. Now, only Ethiopia and Uganda make the list.

“African production is under threat,” said Keith Flury, head of coffee research at Volcafe Ltd., one of the world’s top coffee traders. "In countries like Kenya, Nairobi is urbanizing fast and expanding into areas that were previously used for coffee. In other countries such as Rwanda and Burundi, coffee is being replaced with subsistence crops as population grows."

Younger Africans are shunning coffee farming for more profitable careers, according to the International Coffee Organization. It pegs the average age of an African coffee grower at 60. Political conflicts have also made farming difficult. Nestle SA’s Nespresso brand last year halted operations in South Sudan due to the civil war.

In Nairobi, farmers can make more money selling their land for property development than working the coffee trees, said Martin Maraka, program manager at the African Fine Coffees Association. Population growth and urbanization show little signs of slowing - the continent will account for more than half of the world’s population growth by 2050, adding 1.3 billion people, according to the United Nations.

While demand is rising, Africa’s coffee exports have mostly been flat since the early 2000s. In comparison, global shipments jumped about 37 per cent in the period as world consumption grew by a similar amount.

Robusta coffee futures have climbed 17 percent in London in the past year to $2,132 a metric ton. Arabica, the type favored for specialty drinks such as those made by Starbucks, has declined 2.3 percent in New York to $1.3805 a pound.

Demand for African beans used in blends - the regular products sold in supermarkets that are a mix of supplies from anywhere in the world - has largely been steady, and the prospects for growth lie in so-called single-origin coffees that only use beans from one specific place.

That potential for niche brews is attracting trading houses to African markets, where margins are much wider than in Brazil or Vietnam. Singapore’s Olam International Ltd., one of the largest food merchants, last year paid $7.5 million for East African coffee specialist Schluter S.A., which had been family-owned since the 19th century. Neumann Kaffee Gruppe, Volcafe, Louis Dreyfus Co. and Ecom Agroindustrial Corp. are present in Africa.

Higher demand from western consumers for some African products is evident to Lars Pilengrim, who buys coffee for Swedish roaster Johan & Nystrom.

“The African taste profiles are very popular in and around Scandinavia,” Pilengrim said. “We are seeing growing interests for coffee from Africa and not only the classic origins such as Ethiopia and Kenya. We are increasing our presence and buying in and from Burundi.”

 News by Bloomberg, edited by Hospitality Ireland