* Roasters struggling to find premium robusta coffee
* Nestle scours for sustainable beans amid squeeze
By Ana Ionova
LONDON, April 12 Major European coffee buyers
such as Nestle are struggling to obtain supplies of
premium robusta beans after heavy rains in Vietnam last year
wreaked havoc on the crop in the world's biggest producer.
Coffee roasters with strict requirements about the quality
of their robusta beans, a cheaper variety than arabica and used
for instant coffee, are rejecting deliveries, traders said.
Roasters complain the coffee is musty and bitter, having
been soaked last autumn by heavy rains during harvesting, when
farmers lay the coffee cherries out to dry.
The weather damage can also be seen in the colour -- more
beans than usual are a brown or black hue rather than the
typical pale green colour of raw coffee.
Nestle, the world's largest coffee company, has been hit
particularly hard, traders said, since it has also committed to
buying coffee that meets the voluntary Common Code for the
Coffee Community, known as the 4C sustainability standards.
"They have specific quality standards that are generally
higher than others," said one European trader.
Sourcing coffee has been more difficult this year due to
roughly 20 percent lower production in Vietnam, as well as a
second poor crop in Brazil, the world's second largest robusta
Traders said Nestle had earlier this year tendered for
roughly 3 million 60-kg bags of Vietnamese robusta coffee for
March 2017/March 2018 delivery.
One trader said Nestle typically uses 5-6 million bags of
Vietnamese robusta coffee a year, which represents nearly a
quarter of the country's 2016/2017 output, expected at about
24.5 million bags.
Nestle declined a request for comment.
Nestle could try alternative sources, traders said, but few
countries grow the beans it needs on a large scale.
While 4C is a widely used benchmark, only about 29 percent
-- 2.6 million tonnes (43.3 million bags) in 2015 according to
the Global Coffee Platform -- of coffee grown globally meets
Nestle's specification. Most 4C robusta comes from Vietnam.
The bulk of 4C is arabica coffee, typically used in premium
blends, from countries such as Brazil and Colombia.
Indonesia, the world's third largest robusta producer, grows
some 4C coffee, but traders said it usually falls short of
Nestle's taste test.
"You are stuck because you committed to that supply chain
and that sustainability programme," said a second trader. "You
might have the perfect coffee next door - but it's not
Higher quality coffee from India and Uganda could fit
Nestle's profile, but these countries also produce only small
volumes of 4C coffee and traders say the premium on supplies
from these countries is $160-$200 a tonne to top quality
For now, quality issues have mostly affected companies which
buy on taste rather than the look of robusta beans and the
coffee shunned by Nestle is expected to easily find a home and
unlikely to be discounted.
"There are plenty of people who are less strict," another
More broadly, the market is worried about future supplies
from Vietnam due to producers having sold forward their best
coffee in a bid to lock in profits earlier this year, when
robusta prices hit 5-1/2 year highs of $2,282 a tonne.
The low grade quality of the remaining stock in Vietnam is
causing concern, as is the volume farmers and middlemen are
holding at this point in the season. Traders estimated just
20-30 percent remains in the country, compared with 45-50
percent in a typical year.
Focus is also on discoloured beans, which some dealers say
could make up 8 to 10 percent of the total crop. Traders say
more than 20 percent of Vietnam's remaining crop could be black
beans, which affect taste and may have to be blended with the
Price differentials have not yet shifted dramatically, but
the discount for lower quality beans suggests oversupply; grade
3 is trading about $150-$200 a tonne below Grade 2 compared with
about $100 previously.
"The longer we go, the more we realise we've drawn down the
good coffee," said a third trader.
"At some point this is going to be an issue."
(Additional reporting by Michael Hogan in Hamburg and Mai
Nguyen in Hanoi, editing by David Evans)