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Could the EUDR Steer Demand More Towards Soluble?

By: Alexis Rubinstein, Managing Editor - Coffee Network

Could the EUDR Steer Demand More Towards Soluble?

 

CoffeeNetwork (New York) – While there are still many unknowns surrounding the upcoming European Union Deforestation Regulation (EUDR), one of them being whether or not the European Commission will delay the date in which the regulation goes into effect, it is certain that it will impact the coffee sector globally.

As many origins struggle to find ways to comply with the EUDR that are both efficient and affordable, larger producers, such as Brazil and Colombia have the upper hand when it comes to resources, funds and larger coffee farms easier to assess for deforestation.

While green and roasted coffee that is imported into the EU after the regulation goes into effect will have to show that the coffee was grown on land that was not deforested after 2020, soluble coffee is noticeably exempt. Europe is currently the world’s largest consumer of instant coffee, with an estimated 37% of the market share.

According to Falcon Coffee, a specialty green coffee trader, “the reason for exclusion is found in HS (Harmonized System) Codes. These codes standardize names and numbers for all products traded globally.” For the purpose of the EUDR, just one of these HS codes was included in the regulations- 0901 Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion. However, soluble coffee is traded under heading 2102, not 0901, therefore excluding it from the regulation.

A report from the European Coffee Federation (ECF) noted that soluble coffee imports were following a downward trend before the pandemic (47,584 tonnes in 2018), but changes in consumer behavior boosted at-home coffee consumption to record levels. Soluble coffee benefited from this trend and imports of soluble coffee rocketed to 63,577 tonnes in 2020. Imports of soluble coffee to the EU27 area in 2020 were also somewhat distorted by the effects of Brexit, since the United Kingdom instantly became the bloc’s largest supplier with more than 22,000 tonnes. After returning to closer to average levels in 2021, imports of soluble coffee picked up in 2022 and again in 2023 when they have reached 64,534.3 tonnes with yoy growth at 8.7%

Interestingly enough, data shows that the top exporter of soluble coffee into the EU is the United Kingdom, which is also at this time, unaffected by the EUDR. Vietnam, India, Ecuador and Brazil round out the other top four spots.

So, with the assumption that increased costs associated with EUDR compliance will eventually trickle down to the consumer, exempt soluble coffee will remain the much more affordable option.

Will this mean that soluble coffee will grow in demand? Will we see a shift from green coffee imports to soluble imports? Will the UK’s imports of green coffee rise? Stay tuned…

Alexis Rubinstein

 

  • Coffee

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