Coffee Statistics Report 2015

Introduction The main goal of this report is to present the scope and scale of the UTZ coffee program in 2015. The statistics report is written in order to inform our stakeholders and is part of our commitment to transparency. The statistics report focuses on the key indicators related to: • Market uptake: sales of UTZ certified coffee • Program reach: UTZ certified coffee production, premiums being paid and multi-certification of this production This report is part of the UTZ monitoring and evaluation system. Most of the data in this report is collected via our online traceability system, the Good Inside Portal. We recognize that there may be shortcomings with the reliability of the data. We look forward to receiving your feedback. For more information, please contact the Monitoring & Evaluation Department at [email protected] ©2016 UTZ Information presented here is for informative purposes only. UTZ grants permission to use information for personal, non-commercial use, without any right to resell or redistribute information or to compile or create derivative works therefrom.

Table of Contents 1.Reach 2.Sales 3.Premiums 4.Estimated production

5.Supply-demand ratio 6.Multi-certification 7. Conclusions & Outlook

1. Reach UTZ coffee is produced in 23 countries and consumed in 87 countries

UTZ CERTIFIED GLOBAL PRESENCE Consuming countries Producing countries Producing & consuming countries

UTZ coffee is produced in

23 countries

… and consumed in 87 countries

1. Reach UTZ coffee certified area grew over 2015, along with the number of certificate holders and coffee farmers UTZ Certified Coffee Area (Ha)

UTZ Coffee Producing Countries 21

21

22

23

21

24

15 0 2009

2010

2011

2012

2013

2014

2015

UTZ Certified Coffee Farmers

x1000 Farmers

200

  

100

163 161 166 166 163

300

320

476

549

348

2009 2010 2011 2012 2013 2014 2015

800

400

-

261

474

UTZ Certified Coffee Certificate Holders

189

97

509

600

23

x1000 Hectares

30

340

400

450

2009

2010

2011

570

582

563

612

2012

2013

2014

2015

0 2009 2010 2011 2012 2013 2014 2015

The UTZ coffee program grew last year. We saw an increase in the amount of certificate holders from Mexico* and Colombia; demand for Colombian coffee has increased in last year This resulted in a growth in amount of UTZ Certified coffee farmers and coffee area in 2015 Bolivia did not produce UTZ Certified coffee in 2015 anymore, which resulted in 23 producing countries

*At 31-12-2014 many licenses from Mexico were expired (not calculated in 2014 report) but a few months later recertified (calculated in 2015 report)

2.1 Global sales UTZ coffee sales decreased by 7% in 2015; sales in Latin America and Asia declined Global UTZ Certified 1st Buyer Coffee Sales 300 255 -7%

224

238

188

X 1000 MT

150

121

137

0 2010

2011

2012

2013

2014

2015

% change vs year ago

 



UTZ first buyer sales have continuously increased between 2010 and 2014, in 2015 however we saw a slight decline in sales by 7% to 238,392 MT (3,973,193 Bags) The largest part of UTZ Certified coffee sales comes from Latin America; in 2015 the sales from Latin-America and Asia decreased (-2% and -19% respectively) Of the Top 10 UTZ coffee buyers, 3 buyers reduced their sales; this decrease was for a large part balanced by higher demand from the other 7 Top 10 buyers (and also from other buyers)

*Sales are ‘First Buyers Sales’ from the producer to the first buyer

2.2 Sales per origin country Sales from Brazil and Vietnam declined in 2015; largest volume growth in sales from Colombia & Honduras UTZ Certified 1st Buyer Coffee Sales**- Per origin

120 100

60

2012

2014

2015

51 28

x 1000 MT

2013

22

21 7

5

5

-





Brazil

Vietnam

Colombia

Honduras

India

Peru

Mexico

OTHERS*

The UTZ coffee program saw a decrease in sales from the two main origin countries  One buyer purchased less from Vietnam which had an affect on the sales from this country  Brazil sales declined by 11%***; during the 2014 drought year coffee stocks were sold to keep up with the demand. In 2015 Brazil faced thinned out stocks & increase in domestic demand for conventional coffee. Due to stable and increased sales from other origins, the decline in coffee sales remained modest  There was an increasing interest in UTZ coffee from Colombia and Honduras (+36 and +37% respectively) as these origins were used in specific blends for new products last year.  Sales from India, Peru and Mexico remained stable compared to 2014  UTZ Ethiopian first buyers sales increased. Currently the sector is investing in increasing transparency at source level

* Other countries in 2015 were Ethipopia, Guatemala, Indonesia, Kenya, China, Tanzania, DR of Congo, Costa Rica, Papua new Guinea, Rwanda, Burundi, Dominican Republic, El Salvador, Panama **Sales are ‘First Buyer Sales’ from the producer to the first buyer *** ICO data shows that Brazilian exports decreased with 12% between 2014 and 2015

2.3 Sales per coffee quality classification Robusta sales decreased while Arabica sales stabilized UTZ Arabica / Robusta 1st buyer coffee sales* 116

120

103

93 78 70

60

54

53

53

55

49

45 38 29 22

X 1000 MT

21 11

0 2012

Colombian Milds





2013

Other Mild Arabicas

2014

Brazil and other Natural Arabicas

2015

Robustas

Arabica sales remained stable, whilst the Robusta sales decreased  Arabica sales remained stable at 183,000 MT (3,145,913 Bags) in 2015 (same as in 2014)  Brazil & other natural Arabicas decreased somewhat while Colombian Milds & other mild Arabicas grew  Robusta sales decreased by 22% compared to 2014, mainly due to a decrease in Vietnam sales (Total 1,168,542 Bags sold) We now have Monsoon coffee available in our online traceability system; in 2015, 981 MT of this new product was sold as such from India

*Sales are ‘First Buyer Sales’ from the producer to the first buyer *Arabica sales consists of Colombian Milds, Other Mild Arabicas & Brazil & other Natural Arabicas

2.4 Market uptake Increase in number of newly registered supply chain actors reflects increased market uptake of UTZ coffee in the market

Region

# New supply chain actors 2014 2015

Europe

69

72

Africa

14

20

Asia

39

35

Oceania

6

3

South America

66

83

North America

10

7

Total

204

220

Approved UTZ labeled products** (SKUs) 1000

872

561



In 2015 there were 220 new supply chain actors* registered  SCA’s can be manufacturers, traders, exporters, importers, retailers, etc.  In 2015 70% of the new SCA’s were based in Europe and South America

500

419 338 228

0 2011



 

2012

2013

2014

2015

Market uptake of UTZ coffee products is reflected in increase in consuming countries and UTZ labeled products UTZ labeled coffee is now available in 87 countries Most approved UTZ labeled products in 2015 were beans and ground coffee, around 10% were coffee cups/pads and soluble coffee

*Supply Chain Actors, excluding producers (can have multiple roles such as exporter, roaster, manufacturer etc.) ** Approved UTZ labeled products (SKUs) in specific year

3.1 Premiums UTZ average coffee premium remained stable at 2.74 $c/lb UTZ premium distribution

Global average UTZ coffee premium* ($cents/lb)

4.294.44

3.56

3.80 3.49 3.13 2.72

3.03 2.74

2.28 1.82

1.68

2012

2013 Global

2014 Arabica

2

3

2015

Robusta

 The average premium paid for a pound of UTZ coffee remained stable, at 2.74$cents per pound  Although the Arabica premium slightly decreased, the average Robusta premium increased  This Robusta premium increase is mainly a result of declining Vietnam sales, because Robusta coffee from Vietnam has an average lower premium (see 3.2 Premium per country)

* Extreme outliers were not included in the analysis.

1

 The UTZ traceability system reflects cash payments of the premium from the first buyer to the certificate holder  For groups, the IMS of the certificate holder divides the received premium for the benefit of the group and its members  The premium in GIP is not always the same as the premiums charged to international buyers

3.2 Premium per country The average UTZ Coffee premium was highest for Mexican and Colombian coffee, and lowest in Ethiopia and Vietnam

UTZ Coffee Premium Distribution

PREMIUM ($C/LBS)

20.0

10.0

2.8 0.0

4.3

3.1

1.2

2.4

3.1

2.5

4.1

4.9

3.4

3.7

3.3

1.8

Weighted average premium ($c/lbs)



 

The UTZ premium ranges from 1.8 $cents/ lb to 4.9 $cents/ lb; Vietnamese certificate holders, producing Robusta, receive a significantly lower premium on average than Colombian certificate holders In Ethiopia the average premium decreased compared to 2014 as coffee prices were low. In India the average premium also decreased, although premiums for Monsoon and Robusta coffee were higher than Arabica varieties

* Extreme outliers and countries with low sample size were not included in the analysis.

4.1 Global estimated production The UTZ Certified coffee volume (estimated production) has grown in the past year Global UTZ Certified Coffee Volume (MT) 900

+13%

x1000MT

600

716

727

730

2012

2013

2014

821

477 366

394

2009

2010

300

-

 

2011

2015

In 2015* 612 certificate holders were active in the UTZ coffee program and 821,399 MT of coffee was UTZ certified** (13,689,979 Bags) UTZ certified coffee volume has grown in 2015  The growth in the number of certificate holders was 9% between 2014 and 2015. This resulted in a growth of the UTZ certified coffee volume by 13%  10% of the total certified estimated production derives from new certificate holders joining the program in 2015; new members are from Latin-America (Brazil, Peru Colombia) and Ethiopia and Kenya  Especially the number of Mexican certificate holders increased, but this was mainly caused by the cut-off date of the statistics report and not due to new members entering the UTZ coffee program***

*We use a cut-off date of 31-12-2015 to calculate the active certificate holders at that day. ** Certified volume is an estimation of the production of the license year *** At 31-12-2014 many licenses from Mexico were expired (not calculated in 2014 report) but a few months later recertified (calculated in 2015 report)

4.2 Estimated production per origin country Certified coffee volume increased in almost all origin countries UTZ Certified Coffee Volume (estimated production) per Origin Country 300 2012

249

2013

2014

2015

225

150

81

73

x1000MT

39



36

25

21

41 18

13

-

The countries Brazil, Vietnam and Colombia produced 68% of the UTZ certified coffee  In Brazil the total certified coffee volume was stable at 2% with 249,126 MT certified in 2015  In Vietnam the certified volume increased by 17% to 224,579 MT, with 20% of the volume accounted for by a few large certificate holders that joined in 2015. The availability from Vietnam is not expected to grow in 2016 as the demand in the past year has declined  Over 2015 there was 81,379MT of UTZ coffee available from Colombia, which was an increase of 18% compared to 2014. This was caused by a strong increase in certificate holders

* Other countries in 2015 were Guatemala, Indonesia, Kenya, China, Tanzania, DR of Congo, Costa Rica, Papua New Guinea, Rwanda, Burundi, Dominican Republic, El Salvador, Panama

4.3 Estimated production Arabica/Robusta Proportion of Arabica/ Robusta certified volume remained stable in last years Certified volume - Arabica/ Robusta (2015)

Certified coffee volume- Arabica/ Robusta

40%

73%

27%

70%

30%

70%

30%

72%

150 28%

2012

 

241

262 228

91

-

0%



300

x 1000 MT

80%

2013

2014

Arabica

Robusta

2015

Colombian Other Mild Brazilian& Robustas Milds Arabicas other Natural Arabicas

Over the past years, the proportion of certified Arabica and Robusta coffee has remained relatively stable with approximately 70% Arabica and 30% Robusta (9,886,248 Bags Arabica, 3,803,731 Bags Robusta) While certified volume of ‘Other mild Arabicas’ is almost as high as certified volume of Brazilian Natural Arabicas, ‘Other mild Arabicas’ are sold less as UTZ than Brazilian Natural Arabicas (see Chapter 2.3) In line with global distribution, most UTZ Arabica volume originates from Latin America while most UTZ Robusta volume orginates from Asia

5. Supply-demand ratio Demand of UTZ coffee grew less than the available volume on the market, resulting in a decreased supply-demand ratio % of UTZ Certified Coffee sold as UTZ: Global

% of UTZ Certified coffee sold as UTZ: Regional 50%

50%

39%

31%

32%

34% 33%

35% 31%

29%

25%

34%

33%

31%

18%

25%

32%

26%

21% 16%

34% 22%

19%

8%

0%

2011

0% 2011 2012 2013 2014 2015





2012 Latin America

2013 Asia

2014

2015

Africa

The percentage of UTZ Certified coffee being sold as UTZ has decreased in the last year; on average the supplydemand ratio is 29%. This is a consequence of an increased amount of UTZ coffee volume being available on all three continents, whilst sales in the past year decreased in Latin America and Asia  The percentage of available coffee sold from Africa was relatively stable  A decrease can be seen in Asia, due to the decline in sales from Vietnam  Latin America’s Supply-Demand ratio decreased, but this was for a large part due to an increase in available volume in Mexcio and Nicaragua We have also observed that S/D ratios are slightly higher for certificate holders that are not multicertified. This indicates that multi-certified certificate holders sell a part of their volume under another sustainability label

6. Multi-certification Multi-certification of UTZ Certified coffee declined slightly; double certification with RA is predominant % Multi-certified 2015*

% Multi-Certified 100% 80%

68%

67%

66%

Africa Latin America Asia Global

61% 50%

40%

41%

16% 0%

 

13%

0% 2012



15%

2013

2014

2015

RFA

Organic

FT

Other

Overall, multi-certification decreased slightly  Of the UTZ certified coffee volume, around 61% was multi-certified with at least one type of certification. Farmers favor this in order to create greater market access  This percentage decreased compared to 2014 (66% )  Most of the certificate holders that were new in 2015 were not multi-certified In Africa multi-certification of UTZ / Organic remains high, while globally RFA/UTZ is the predominant multicertification The slight increase in Organic / UTZ certified volume (16% in 2015 vs. 15% in 2014) is in line with the interest of the coffee market in this combination

* % of multi-certification is based on a weighted average of the certified volume (estimated production) RFA= Rainforest Alliance, FT= Fair Trade, Other= AAA, Naturland, ISO, Café Practices, Bird Friendly

7. Conclusions Increased availability and lower sales have led to a lower supplydemand ratio over the past year Stabilization of market demand for UTZ Certified coffee…

We see a stable demand for UTZ Certified coffee: 





Of the Top 10 UTZ coffee buyers, only 3 reduced their sales, which was largely compensated by higher demand from the other 7 Top 10 buyers Market uptake grew, which is reflected in the increase in new UTZ supply chain actors in Europe Demand for UTZ coffee in Brazil and Vietnam decreased, while demand from other (mainly Latin American) origins increased

... and a continuous increase in volume and reach of farmers…

…led to a decrease in supplydemand ratio

Despite the decrease in demand over the past year, the UTZ coffee program has been able to grow and increase its reach:

Lower supply-demand ratio and multicertification:





In 2015 the UTZ coffee program has grown due to an increase in certificate holders, area and thereby also in certified coffee volume UTZ reached more farmers - both in terms of farm estates and group members



The gap between supply and demand of UTZ coffee volumes has increased; 29% of UTZ coffee is sold as UTZ



The average premium paid for a pound of UTZ coffee remained stable, at 2.74 $cents per pound



Multi-certification has slightly declined to 61% of the volume; especially new certificate holders are less often multi-certified

7. Outlook Coffee sales will stabilize We expect sales to stabilize or slightly increase due to demand in Europe and US

New era in coffee market

UTZ starts a regional approach

In addition to certification, companies increasingly address sustainability in other ways

UTZ is setting up offices in the Americas, Africa and Asia, to strengthen regional support

Production will stabilize

Growing demand for East African Coffee

We do not expect many new certificate holders to enter the program in 2016

We anticipate growth in sales of East African UTZ coffees due to increased demand from this region

El Niño will affect production…

… but not the availability of UTZ coffee

Brazil and other Latin American countries expect reduced yield due to El Niño

Due to large scale of UTZ program, lower production will not affect availability of UTZ coffee

*See information in Chapter 2.1 Global Sales

Coffee Statistics Report 2015

Annex 1: UTZ first buyers coffee sales (MT)

Annex 2: UTZ Certified volume (estimated production potential) (MT)