(Photo: Reuters/Amanda Perobelli)
Chinese coffee chain Luckin Coffee to sign $2.5 billion deal to buy café Brazilian, with an announcement expected during the G20 meeting in Brazil in November, said this Tuesday (17) the president of the Brazilian Trade and Investment Promotion Agency (ApexBrasil), Jorge Viana.
“We have already negotiated the next announcement from Luckin Coffee. They want to announce the purchase of 2.5 billion dollars of coffee from Brazil at the G20,” said Viana, alongside President Luiz Inácio Lula da Silva, during an event to encourage exports by small businesses at the Planalto Palace.
The value cited by the president of ApexBrasil is significant, when compared with the revenue of 7.23 billion dollars obtained from all coffee exports from Brazil, to all destinations, from January to August, according to data from the Brazilian Coffee Exporters Council (Cecafé).
It was unclear what the timing of Luckin's purchases and the volumes involved in the deal mentioned by Viana were. Luckin could not immediately be reached.
The Asian country has been increasing its purchases of coffee from Brazil, the world's largest producer and exporter, as consumption in Chinese coffee shops grows. In the 2022/23 season, total demand from China increased by 15%, to more than 3 million 60-kg bags, according to data from the International Coffee Organization (ICO).
Meanwhile, China's purchases of Brazilian coffee also more than tripled in 2023, to 1.48 million bags, making the Asian giant Brazil's sixth-largest coffee buyer, up from 20th the previous year, according to Cecafé.
In the accumulated period from 2024 to August, however, Brazilian coffee exports to China increased by just 2.9%, to 641,000 60 kg bags, with revenue of 139.2 million dollars (+2.4%), according to Cecafé.
But this growth should accelerate again from September onwards, as more than 90% of shipments to China are of the Arabica variety, whose new Brazilian crop had not yet effectively entered the market, explained Cecafé's technical director, Eduardo Heron.
As the Arabica crop was just harvested at the end of July, it will enter the market from September onwards, according to the Cecafé director.
“With the effective entry of Arabica coffee into the market, starting in September, the expectation is that we will return to the level of double-digit growth (for China), as had been occurring until July, as long as there are favorable logistical conditions for shipments,” Heron told Reuters, through the Cecafé press office.
Delays
He also commented on the logistical challenges in shipping containerized cargo from Brazil, including coffee, due to the shortage of containers.
Because of this, delays in coffee shipments are recurrent and there are so-called “cargo rollovers”.
According to the Detention Zero Bulletin, prepared by the startup ElloX Digital in partnership with Cecafé, 69% of ships, or 197 out of a total of 287 vessels, had their ports of call changed or were delayed in exporting coffee to Brazil's main ports in August.