Australian coffee arena rich in prospects for exporters

Australians are more likely to experiment with various types and origins of coffee

Last year, coffee-exporting VietGo Co., Ltd. held talks with a medium-sized Australian company interested in buying Vietnam’s green coffee beans, as the firm was looking for appropriate ingredients for its brand.

The Australian’s representative said that priority would be given to suppliers who are direct coffee growers. The company asked specifically for arabica green coffee beans to be delivered directly to the Australian port of Melbourne.

Coffee culture has begun to flourish in Australia over the past 10 years, especially in Melbourne. The pandemic has further boosted Australia’s demand for coffee, and the island nation now consumes a variety of coffees, from whole beans and grounded coffee to instant and capsules.

However, coffee made from roasted beans remains the most popular there, while the consumption of instant coffee in Australia is increasing because of its convenience.

Data from the Trade Promotion Agency under Vietnam’s Ministry of Industry and Trade (MoIT) showed that Australia does not produce much coffee, but its domestic consumption increased to about 1.87 million 60kg bags as of 2021, expected to achieve an average growth rate of 2.19 per cent per year in the next five years.

In 2021, Australia consumed around 2kg of coffee per person on average, of which 600g were roasted and ground coffee and 1.4kg instant coffee. Meanwhile in 2019, Australians consumed about 1.91kg of coffee per person and year, of which 1.39kg was roasted coffee and about 530g instant coffee. This consumption level is low compared to European countries but with the current increase in coffee consumption, Australia could soon be among the 30 leading coffee consuming countries in the world.

Meet More – a flavoured coffee brand that approaches production and marketing with technology in agricultural product processing from Vietnam – is increasingly popular in Australia. However, the process of conquering the market remains difficult.

Nguyen Ngoc Luan, founder of Meet More, said, “Agricultural products entering the Australian market need to meet many standards, some of which are even stricter than from some fastidious markets such as Japan, the US, and Europe. Meanwhile, many consumers remain slightly prejudiced about the quality of Vietnamese products and are concerned about fluctuations.”

Nevertheless, Australia is becoming increasingly important on the coffee export map of Vietnam, despite its small population. According to Nguyen Phuc Nam, deputy director general of the Asian Market Department under the MoIT, Australian importers often maintain long-term relationships with familiar partners to ensure business continuity.

“They do not accept products that have not met the quality control standards. Currently, quite a few retailers in Australia are busy with large-scale refunds or exchanges as goods have had quality problems,” Nam said.

In addition, Australian importers don’t like to haggle much. “However, they are willing to negotiate for discounts of around 20 per cent. If suppliers offer unrealistic prices, Australian importers will often consider other offers,” he explained. Thus, when quoting Australian importers, Nam advised, the most important thing is to offer a reasonable price, lower than the price offered to buyers in the US and Europe.

The Australian food and beverage market is one of the most competitive and dynamic in the world. The import regulations into that market are tough, and not all Vietnamese coffee businesses can pass these if they do not adjust their standards to international ones.

“When exporting to this market, it is very important to ensure product specifications. In addition, the seasonality and adaptability of the product must also be considered to ensure the quality also in accordance with delivery time and changes in climate,” Nam said.

Australia is a major producer of agricultural products, but imports in this country still account for a significant proportion and are increasing. Nguyen Phu Hoa, deputy consul general and head of the Vietnam Trade Office in Australia, has the impression that Australians love the taste of European coffee.

“But in recent years, young Australians have been experimenting with new trends such as blended coffee products. This is a very good opportunity for Vietnamese businesses to boost coffee exports to this country,” Hoa claimed.

Vietnam’s coffee exports to Australia in September increased by 41 per cent compared to August. In addition to Hoa’s prediction about the changing taste, many Australian businesses want to promote investment and cooperation with Vietnamese agricultural enterprises, he said. “Businesses of both countries can fully exploit each other’s advantages to boost exports to Australia, or even third countries.”