Brazilian Coffee Industry
Counting with the world's largest production of coffee, Brazil is the most important player in the area. The grain produced in the country feeds an enourmous internal and external market. In this article, you will get important information about the Brazilian coffee industry, aside from knowing more about the importance of this product to the country's economy.
Coffee and the History of Brazil
Coffee took an essential part of the Brazilian history. The plant, originally from Etiopia, was first brought to Brazil by some French settlers who established in the state of Pará in the early 18th century. From the North of Brazil, the coffee fields started to spread along the country, concentrating in the areas along the shore. By that time, the sugar cane plantations represented the main economic activity in Brazil and coffee was only an experience that no one could imagine would become the great protagonist of the Brazilian contemporary history.
From 1820, coffee began to occupy the position of the most exported products from Brazil, after the sugar cane started to lose importance in the international markets. The production peaked when the coffee plantations gained the fertile soils of Vale do Paraíba - a region that comprehends part of São Paulo and Rio de Janeiro states.
Along the 19th century, the Brazilian coffee was the number one filling up the European an American cups and in 1840, Brazil became the largest coffee exporter of the world. The country enriched and a new society is formed, ruled by the so-called “coffee barons”, the wealthy owners of the grain’s plantations.
The “coffee barons” not only detained the economic power in Brazil, but also the political power, first contributing to the Proclamation of the Republic and then strongly influencing and even determining the direction of the country’s future presidents' elections.
During the coffee era, Brazil experienced a period of great progress, with the agrarian elite investing in bank institutions, infrastructure, railways, credit expansion and industrialization. The money earned from coffee exports was the essential capital that would bring about important changes in the country’s society, economy and culture.
After the abolition of slavery, in 1888, the coffee production almost collapsed. The solution for the lack of labor was the government programs that encouraged European immigrants to work in the Brazilian coffee fields. The European workers added new features to the Brazilian society, accelerating the country’s urbanization and increasing the internal market, what would decisively contribute to the growth of the national industries, changing the face of Brazil forever.
The young Republic was growing and developing by reaping the fruits of its beloved commodity. However, even the steadiest and most profitable economic activities couldn’t survive the Great Depression of 1929 and coffee was no exception. By that time, United States were the largest buyer of the Brazilian coffee, followed by the European countries. The prices plunged, and thousands of coffee bags were burned in Brazil, bringing an uncountable loss to its producers who would never recover.
The changes that Brazil would face during the Republic also contributed to the end of Coffee Era in the country, and together with it, came the decadence of the rural oligarchies’ influence. The commodity and its producers gradually lost its awareness and leadership in the Brazilian economy, preparing the ground for the growth of other economic activities.
Yet, coffee never left its role as an important product for the Brazilian economy. The product remains as one of the most valuable commodities of the country, what we will develop further.
Outlining the Brazilian Coffee Industry and Exports
Brazil is by far the largest producer of coffee in the world, controlling more than 30% of the international production. Coffee is one of the most important agribusiness commodity, maintaining steady and growing value in the stock market. The golden grain was reponsible for 10.2% of the Brazilian exported commodities in 2011. The exports of coffee from the 2011/2012 harvest invoiced USD 7,841 billion, a 5.6% increase compared to 2010. Around 10% of all the coffee exported was the Arabica type, followed by the Robusta variety with 5%.
The coffee industries are spread along 13 Brazilian states, but the largest ones are located in the states of São Paulo, Minas Gerais, Rio de Janeiro, Espírito Santo, Bahia, Paraná and Goiás (listed here in order of importance). It is estimated that there are around 300 thousand coffee plantations in the country, spread in 1950 cities.
The traditional element of competitiveness is the coffee production costs in Brazil, which determines the comparative advantages of this country compared to others. The Brazilian climate conditions seem to have been made for the plantation of the grain. But the Brazilian coffee production is based on quantitative parameters, what gave the country the image of a producer of a bad quality coffee.
However, influenced by the growing demand for the so-called special coffees, producers are currently investing in the production of a more elaborated variety, specially in the South of Brazil, where the weather is milder.
The Brazilian coffee is mostly exported as:
- Green coffee
- Soluble coffee
- Roasted and ground coffee
- Concentrated and essential extracts
- Coffee residues
The largest buyers of the Brazilian coffee worldwide are: Germany, United States, Italy, Japan and Belgium (in ascending order). An important institution regulating the coffee exports is the Cecafé (Coffee Exporters Council).
An ever-growing internal market
Numbers show that Brazilians never get tired of their coffees. Brazil is not only the first exporter of coffee worldwide, but it's also one of the drink’s largest consumer. The internal consumption of coffee is non-stop growing, what can be proved by some numbers. The population’s intake of coffee increased from 8.2 million bags, in 1990, to 20 million bags, by the first months of 2012.
A survey made by IBGE revealed that coffee is the most consumed product on a daily basis by the Brazilian population above 10 years old. That represents 79.7 liters of coffee drank per inhabitant during a year. Quite amazing no?
The coffee consumed inside the country is the worst of its production, as the finest crops are destined to exportation. Maybe that’s one of the reasons why the coffee Brazilians drink on a daily basis is cheap and popular, costing around BRL 2.00 a cup or BRL 5.00 half a kilo of the powder bought in supermarkets. Most of the people here find absurd to spend much more than that only to enjoy a cup of coffee.
Also, people here are resistant in leaving their day-to-day black coffee behind. The most accepted variation is adding some milk to make the super popular “média”. Even the machine coffee finds some resistance from Brazilians. Also, a lot of people still turn up their noses to the Frapuccinos, Mochas, Caramels, Fruited, Macadamia, Frozens, Iced, Cinnamon, Nuts, whip creamed coffees, among other creative (and strange) coffee recipes with odd names that are so popular abroad.
However, even though the massive majority of Brazilians don’t care about the type of coffee they are drinking, as long as it’s strong and black, the niche market of expensive high-quality coffees is growing in some parts of the country, revealing a promissing area, in which several companies are already investing and succeeding.
The gourmet coffee market is concentrated in the largest cities of the country, mainly fed by multinational franchises coffee machine sellers that managed to well-advertize their products, to the point of creating a new culture of coffee in Brazil, but still with restricted range to a specific profile of consumer.
A brief introduction to ABIC
Café: não basta ser puro, tem que ser de qualidade (Coffee: it’s not enough to be pure, it must be of high quality)
The ABIC (Brazilian Coffee Industry Association) was created in 1973 and represents the most important regulatory institution of the coffee industry. Its operations integrate industries, retail and consumption units. The institution counts with several programs focusing on the purity, quality of Brazilian coffee and, more recently, the sustainability in the coffee fields.
Currently, ABIC has approximately 500 roasting and grinding companies throughout the national territory with headquarters located in Rio de Janeiro. The institution is formed by a Deliberative Council, a Consulting Council and six Executive Boards: Management, Communications, Economics and Finance, Marketing, Quality and Institutional Relations. You can check all the ABIC’s associates in this file
ABIC provides to its associates a complete database with macroeconomic studies, opinion and market polls, aside from sectoral diagnosis, legal guidance in the areas of taxation, labor, constitutional and consumer protection, detailed register of companies, brands and products; statistical information production and consumption, financial advisory and business and technology development information.
The ABIC’s website contains a lot of information about the coffee industry in Brazil. It’s an important research tool for anyone interested in knowing about the segment. Unfortunately, all the information is in Portuguese.
It is interesting to quote that ABIC’s programs of quality, that started in 1989, were responsible for supervising the coffee sold in Brazil and abroad. One of the most successful initiatives was the creation of the “Selo ABIC” a seal stamped in coffee packages, attesting that the product was approved in the institution’s quality standards.