Thanks to the local product’s wide appeal, the former IBC (Brazilian Coffee Institute) encouraged exporters to seek out new markets. Manufacturers expanded their capacity and Russia became our main customer. In 1990, however, the extinction of the IBC, and the consequent end to incentives, led to massive idle capacity and many firms found themselves in extreme difficulties, recently exacerbated by Russia’s economic problems.

In 1998, manufacturers will be paying less for their raw material and some of the savings may be passed on to prices. However, given sluggish economic growth worldwide, not to mention the chaos in Russia, we expect export volume to drop by around 15% to 45,000 t, generating US$ 290 million (-16.8%) at an average price of US$ 6,310/t (-6%).

In an attempt to offset the decline in overseas sales, producers are likely to turn their attention to the home market, although any increase in demand against a background of extremely modest GDP growth and soaring unemployment will largely depend on attracting consumers of the ground roast variety, in turn requiring heavy marketing expenditure. We expect domestic consumption to move up by 5% (with retailers accounting for around 6,300 t), aided by competition from new brands, which should keep prices down. ABICS (the soluble industry association) expects the local market to increase by 25% to 2002, from the current 12,000 to 15,000 t p.a.

In the coming years, export performance will depend strongly on negotiations with countries which currently impose punishing import tariffs on the Brazilian product, the conquest of new markets and the installation of a marketing board in the importing nations.