Why do Germany and Switzerland make more business with coffee than Colombia, if they do not plant it?

Colombian coffee, known for its exceptional quality and distinctive flavor, is a jewel of the country’s agroindustry. It is therefore paradoxical that, in spite of being one of the main producers in the world, it is not the largest consumer of its own product.

Our country exports between 90% and 95% of its production. This phenomenon is due to the international trade treaties that allow the free importation of coffee. Most of the imported coffee is used as raw material for the elaboration of the final product that is consumed in the country. For those in the world of entrepreneurship, who are looking to grow in the domestic market, and even expand into international markets, it is vital to use tools such as Free Online Invoice Generator to enhance their business.

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The underlying reason why Colombia imports so much coffee despite being an outstanding producer is that Colombian exported coffee is of an exceptional quality. This confers a higher price in both the international and domestic markets, as compared to imported coffee.

Furthermore, countries such as Switzerland, which do not produce coffee, have been able to capitalize better on the business of this precious beverage, thanks to the fact that they add value through the transformation of the product.

Who are the main coffee producers in the world?

Latin America stands out as the main coffee producing region, representing more than 70% of the world production. According to Statista, most of the world production is covered by Brazil (38.6%) and Vietnam (21.3%), which put 56.3 million and 31.1 million 60 kilogram bags on the market in 2021.

In the Top 10 coffee producers, the leaders are followed by two countries with productions of more than 10 million bags, Colombia (13.8 million) and Indonesia (10.5 million), and 6 countries with productions above 5 million bags: Ethiopia (7.6 million), Honduras (6.8 million), Uganda (6 million), India (5.5 million), Peru (4 million) and Guatemala (4 million).

All are low/middle income countries, with high poverty rates, especially in rural areas. However, among the largest exporters are Switzerland, Germany and Italy, three middle/high income countries.

While Switzerland and other nations obtain a lucrative profit margin by processing and marketing coffee, producers face economic difficulties and an unequal distribution of the income generated by their own cultivation.

The main consumers of coffee are the Nordic countries

In spite of the fact that it is a crop that requires very specific climatic conditions, such as a certain type of soil, temperature, rainfall or altitude, coffee production does not correspond directly with consumption.

According to Cafemalist’s 2021 Ranking of countries by coffee consumption, the inhabitants of the planet that consume the most coffee are located in Finland (11.6 kg per year), Norway (10 kg), Iceland (8.9 kg), Denmark (8.7 kg), Netherlands-Netherlands (8.4 kg), Sweden (8.2 kg), Switzerland (8 kg), Austria (7.2 kg) and Belgium (6.9 kg).

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This prominent preference for coffee in European countries is due, to a great extent, to the climatic conditions of the northern hemisphere, where an authentic need to enjoy hot beverages has taken root due to its climate.

Therefore, it is natural that among the main importers of coffee at world level the countries belonging to the European Union stand out, surpassing the rest of the world with an impressive ratio of 2 to 1. For example, Spain surpasses Brazil and Colombia with an average daily consumption per inhabitant of 4.5 kg per year.

In Latin America, among the countries with the highest per capita coffee consumption are Brazil, Costa Rica and Colombia. In 2021, each Colombian consumed an average of 2.8 kg of coffee, according to the FNC.

As a curiosity, among the countries that have least incorporated coffee consumption in their diet are Uzbekistan, Pakistan, Kenya, Azerbaijan, China and Nigeria.

Who are the main coffee exporters?

According to Statista, Brazil is the main coffee exporter worldwide in terms of value, as it exported 8,543 million dollars of coffee to other countries in 2022.

Contrary to the ranking of producers, in second and third place in the ranking of coffee exporting countries are Germany and Switzerland, with astronomical exports valued at 3,486 million and 3,419 million dollars.

Colombia is the fourth largest exporter measured in terms of value, with sales exceeding US$3,180 million.

Between $2 billion and $3 billion in coffee exports are Italy and Vietnam in fifth and sixth position, followed by France, Honduras, the United States, Ethiopia and Guatemala.

Why Europeans get the most out of the coffee market: the case of Switzerland

Switzerland occupies the surprising second place as a world coffee exporter, surpassing even Colombia. The key to its success lies in importing green (unroasted) coffee at an economic price, and then exporting it roasted and packaged at a significantly higher value.

However, this lucrative commercial operation disproportionately benefits the intermediaries, such as the United States, Germany or Italy, while the producing countries receive only a minimal portion of the profits.

An example that illustrates this situation is that for each cup of coffee that a consumer pays in cities such as Berlin, London or New York at 4 dollars, the coffee grower, who is the true artisan of the product, barely receives 4 cents.

Colombia must diversify its export basket and support its producers

It is evident that there is a huge disparity between the final price paid by the consumer and the fair remuneration that reaches the hands of producers.

This commercial dynamic poses important challenges for coffee growing countries since, in spite of their significant contribution to world coffee production, they do not manage to benefit adequately from the value chain of this valuable product.

In Colombia the sector faces difficulties that jeopardize its importance in the international market. Coffee is Colombia’s third most important export product, but 87% of exports are green coffee without further processing.

Furthermore, the United States was the largest market for Colombian coffee products, followed by Canada, Japan and South Korea, which shows that the main markets of the world are not being attended.

It is essential to promote measures and policies that seek to diversify the export basket of coffee products of national companies, as well as greater equity in the supply chain, ensuring that producers obtain a fair and remunerative treatment for their hard work.

In this way, profits could be equitably distributed among all parties involved in the coffee industry, undoubtedly a rounded business.

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