Indonesia craves Vietnamese coffee

In a bid to sate Indonesia’s growing thirst for coffee, the nation’s coffee firms are rushing to Vietnam to seek partners in order to secure a stable input of raw materials.

Indonesian coffee firms are seeking co-operation with Vietnamese producers to meet growing demand, Photo Le Toan

Pranoto Soenarto, director of Indonesian company PT. Asia Mina Sejahtera, flew from Jakarta to Hanoi in early February with only one goal in mind: seeking Vietnamese partners to co-operate in potential coffee projects, which are focused on imports and expanding marketing networks.

“We’re expanding production and we need to seek more suppliers of input materials. Vietnam is our best market,” Soenarto said.

PT. Asia Mina Sejahtera is one of 16 Indonesian coffee firms that came to Vietnam for the first time in early February to look for Vietnamese partners to import Vietnamese coffee and forge partnerships. They include big names, such as Harro Coffee Group, PT Sabani Internasional, Gabungan Perusahaan Petani Indonesia, and PT Pamora Coffee Indonesia.

They directly met with many Vietnamese firms such as Me Trang Coffee, Minh Tien Coffee, Thai Hoa Coffee, IDD Vietnam, Cuong Anh Import-Export, and Hapro Distribution. Several deals were agreed on, without details being revealed.

The Indonesian firms also came to the central highlands region, which produces 90 per cent of Vietnam’s coffee output, to meet with farmers and enterprises.

Ibnu Hadi, Indonesia’s Ambassador to Vietnam, told VIR that Indonesian coffee firms want to further their co-operation with Vietnamese partners in trade, expanding marketing networks and learning experiences, and even establishing partnerships or joint ventures.

“The quality of Vietnamese coffee is very high and can meet the demands of Indonesian enterprises,” Hadi said. “While Vietnam is the world’s second-largest coffee exporter and Indonesia is the world’s fourth-largest coffee exporter, and both nations are also ASEAN member states and produce 80 per cent of global robusta coffee volume, there is a need for further co-operation for the benefit of both countries.”

According to the Specialty Coffee Association of Indonesia (SCAI), which represents more than 500 firms from Indonesia and other countries, coffee has taken a strategic role in Indonesia’s economy, as it is a source of livelihoods for millions of small-scale producers and their families. However, the nation’s coffee production has failed to meet growing demand for specialty coffee within Indonesia and overseas for many years.

“Vietnam is now considered a great market, from which Indonesian firms can purchase high-quality coffee materials to meet their demand,” said SCAI’s chairman A. Syafrudin.

In 2017, Indonesia produced 10.9 million 60-kilogramme bags of coffee and exported 8.04 million bags, which is expected to rise to 8.2 million bags this year. Indonesian coffee consumption is forecast to grow from 3.32 million bags of coffee last year to 3.4 million bags in 2018.

According to the Vietnam Coffee-Cocoa Association, Indonesian firms spent more than $33 million importing coffee from Vietnam in 2017. It is expected that with rising demand from Indonesia, the figure may reach $40-45 million this year.

Last year, Vietnam produced 28.6 million 60-kilogramme bags of coffee and exported 26.55 million bags – an increase from 26.05 million bags in 2016 – to earn $3.21 billion.

The country also imported one million bags in 2017, up from 640,000 bags in 2016. It is expected that the figure will be 1.06 million bags this year.

Vietnam’s domestic consumption is expected to climb from 2.32 million bags last year to 2.93 million bags this year, due to the rapid expansion of coffee shops.