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«We’re certainly seeing a change in the blends to include a higher percentage of robusta than they did in the past,» said DeAldecoa.
Victor Garcez, chief executive of Italian-based Cafeco, which steams robusta beans on behalf of roasters to improve their quality, says demand for steamed robustas doubling at Cofaco’s Vietnamese facility during the coffee rally as roasters tried to squeeze more out of lower-quality beans.
Massimo Zanetti USA, a mid-sized roaster that makes brands including Chock full o’Nuts and Hills Bros., was one of the only companies to discuss the blending issue publicly.
In November, it said it had increased its robusta usage by over a quarter year-to-date in order to reduce the impact of soaring Arabica prices and keep its retail prices as low as possible.
Arabica futures have since dropped nearly 50 percent to two-year lows at $1.561 per lb on Thursday, while Liffe robusta futures rallied on surging demand to an 8-1/2-month high at $2,269 per tonne at the end of May. They have since eased back to around $2,100.
Meanwhile, Liffe certified arabica stocks in Europe have seen an uninterrupted decline for 10 straight months, falling nearly 60 percent since mid-July 2011, indicating firm demand.
PRICE VS PALATE
So far many consumers have been more sensitive to prices than their palates, drinking less premium coffee or buying cheaper brands last year as coffee companies hiked prices multiple times, according to Garima Goel Lal, beverage analyst for consumer analyst Mintel, in Ithaca, New York.
Those who cut prices in response to the falling futures market won market share. Folgers’ share retail volume climbed to 21.6 percent in 2011 from 19.7 pct in 2010 and Maxwell House rose to 10.5 percent from 10 percent in 2010, Euromonitor International data showed.
«If they didn’t see any impact on their consumer from a quality standpoint, they might not change it because ultimately their total blend cost is going to be lower than it was years ago,» DeAldoca said, speaking in general terms.
And without any resistance to the new blends, there is little incentive for roasters which have aided their profit margins with the new brew to switch back.
Some traders have taken steps preparing for the change to be long term.
COEX, which trades 3-1/2 million 60-kg bags annually, recently opened offices in Vietnam, the world’s biggest grower of robusta, and Holland, strategically located for West African imports, to source robusta beans.
«We used to be an arabica house completely. Five, six years ago we traded no robustas. Now it’s 40 percent of what we do,» said Alvarez.
Source: reuters.com/article/2012/06/11/us-coffee-arabica-robusta-idUSBRE85A05420120611
