Coffee Supplier: Vietnam Now Ranks As Japan’s #1. Previously, Brazil used to be Japan’s top supplier of coffee. But given that more and more individuals are working from home due to the COVID-19 pandemic, Vietnam has overtaken all other countries due to the rising consumption of instant Robusta coffee in Japan.
Japanese market for coffee
For many Japanese people, drinking coffee has recently been ingrained in their culture. However, the majority of the coffee drunk in Japan is imported.
Japan imports between 400,000 and 500,000 tons annually on average. In Brazil and Vietnam account for more than half of all coffee imported into Japan. Prior to 2018, Brazil and Vietnam were the two biggest coffee exporters to Japan.
The majority of the coffee from Brazil that is imported into Japan is made from arabica beans, which are prized for their high quality and wonderful flavor by businesses like Starbucks.
Vietnamese coffee beans
Vietnam is one of the world’s major producers of robusta beans. In contrast, Brazil is famous for cultivating and exporting arabica beans. Robusta is thought to be of inferior quality and has a more bitter flavor than arabica.
Robusta coffee is easier to grow and has a larger yield, nevertheless. Even if arabica beans are more popular in chains of coffee shops like Starbucks. Robusta beans are the primary raw material used to produce instant coffee.
Coffee is one of the key agricultural exports from Vietnam because of the favorable natural circumstances.
Vietnamese coffee’s annual export value of 3 billion USD puts it on the level with high-value goods like cashew nuts, timber, and seafood. Vietnamese coffee beans have so far been available in more than 80 nations, including important and discerning markets like the US, Germany, Korea, and Japan.
The success of Vietnamese coffee in Japan
In recent years, Japan has expanded its imports of Vietnamese coffee while tending to purchase less coffee from Brazil and Colombia. The amount of coffee imported into Japan from Vietnam and Ethiopia has significantly grown in the first quarter of 2022, according to a study by the Import-Export Department (Ministry of Industry and Trade).
Japanese coffee imports rose by 32% in volume and 91% in value over the same period in 2021, totaling more than 35,000 tons, or 71 million USD. Vietnam became the biggest coffee supplier to the Japanese market as a result.
When compared to the same period in 2021, the volume of imports from Vietnam climbed in the first quarter from 24.3 percent to 30.3 percent. While the volume of coffee imported from Brazil declined to 27.9 percent.
Vietnam shipped 45,000 tons of coffee to Japan in the first four months of the year, bringing in more than 110 million USD, a 45 percent increase in value over the same time the previous year, according to the General Department of Customs 2021.
In the first four months of 2018, the cost of coffee sold to Japan grew by 28% from 2021 to reach $2,440/ton. More than 10.5 thousand tons of coffee, or 26 million USD, were sold to Japan in April 2022 alone, a 62 percent increase over April 2021. The price of coffee rose by 16 percent in April 2022 to 2,458 USD/ton.
The reason why Vietnam has become the no 1 coffee supplier in Japan
Japanese consumers’ changing spending habits
The rising popularity of Japanese coffee culture not only boosts the profits of coffee shops but also encourages consumers to buy more instant coffee at home. People started buying instant coffee to sip at home when the COVID-19 pandemic epidemic drove coffee businesses to close.
Due to this, there is less demand for imported Brazilian arabica beans, the main component of retail coffee. The import of Robusta beans, which are widely utilized in instant coffee products, is also increasing quickly.
COVID-19 has severely harmed nations that produce arabica beans. But it has greatly benefited nations that produce robusta, such as Vietnam. Vietnam swiftly overtook Brazil as the top supplier of coffee beans to the Japanese market because of this as well.
Consequences of the economic impact of COVID-19
In addition, the COVID-19 pandemic’s economic impacts have forced many customers to make spending cuts. Due to the lower price, a lot of customers have turned to utilize mixed coffees between arabica and robusta in order to save money. In recent years, this has also led to a sharp rise in demand for robusta coffee beans.
Ideal distance from a location
The geographical separation between Vietnam and Japan, on the other hand, also favors the import and export of coffee beans. Only half as much is spent on shipping coffee from Brazil to Japan as it is from Vietnam.
In addition, compared to other Southeast Asian nations, Vietnam has a substantially more consistent coffee supply and quality. This is a contributing factor in Vietnam’s rise to prominence as Japan’s primary coffee supplier.
The future of Vietnamese coffee beans
Robusta bean market share has climbed from 20% to up to 40% over the past four decades thanks to the traits of robusta coffee varietals. Such as lower susceptibility to pests and diseases, excellent yields, and rising demand for robusta beans by 40 percent.
In the distant future, a rise in output could result in an oversupply that would cause coffee prices to fall. However, the price of coffee in Japan would continue to rise over the next few years due to the country’s growing affluence and demand for it.
The experts recommend that Vietnamese coffee exporters should benefit from Free Trade Areas (FTAs).
For instance, the ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Vietnam-Japan Free Trade Agreement (VJFTA) can all be used to speed up export to challenging markets.