Vietnam’s coffee exports are facing challenges in 2023 due to unpredictable fluctuations of the US dollar, despite the country’s successful coffee export performance in 2022. The country exported 1.78 million tons of coffee, generating a total turnover of over $4.06 billion, the highest in over a decade, due to the promotion of exports and a favorable USD/VND exchange rate.
However, Vietnam’s coffee industry faces difficulties in early 2023 as massive exports caused domestic supply to drop to its lowest level, which will affect coffee exports in the early months of the year. Moreover, the coffee output harvested at the end of 2022 is forecast to decrease by 10-15% due to heavy rain, resulting in lower coffee supply compared to last year, making it challenging to maintain the coffee industry’s exports at the same rate as in 2022.
In addition, the EU issued a decree in late 2022 banning the import of coffee produced after deforestation, which makes it difficult for Vietnamese coffee farmers to export to Europe. Also, the EU’s stricter regulation on pesticide residues for nuts, including coffee, creates difficulties for Vietnamese coffee farmers.
Despite these challenges, the coffee industry of Vietnam still has new bright spots. China is opening up its economy after the Covid-19 pandemic, contributing to the global economy, and the International Monetary Fund (IMF) has adjusted its forecast of global economic growth in 2023. Along with the growth resumption, the demand for coffee will increase.
Vietnam has the opportunity to expand its export market as the supply from other major exporting countries such as Brazil and Indonesia is showing signs of shrinking. According to the Brazilian Institute of Geography and Statistics, Robusta coffee production in 2023 is likely to decline by nearly 9% over 2022 in Brazil, while Indonesia’s output will fall to the lowest level in nearly a decade according to Volcafe.
The coffee industry in Vietnam still faces challenges to maintaining its previous upward momentum, but positive signals exist. The export volume and turnover may be less than 2022 but still higher than that of 2020 and 2021, with a turnover of above $3 billion in 2023 likely.
To source Vietnamese coffee products, buyers should look for reputable exporters and manufacturers who prioritize sustainable production methods and comply with EU regulations on coffee quality and origin. Vietnamese coffee has a leading position, not only in terms of output but also quality and scale of the industry.
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