High coffee prices keep market steady while Romanians drink less

Romanians drank less coffee last year, after a steady coffee consumption level in the previous years, and a surge prior to that, according to a recent study. But coffee prices have been going up in recent years in Romania. Romania’s coffee market reached a value of some EUR 420 million last year, slightly lower than the year before, according to a PwC Romania study. Coffee prices grew by some 30% between 2009 and 2013, mainly due to the high taxation level in the industry. Romania’s annual coffee consumption increased at a rate of 9% between 2000 and 2009, amid the economic growth during the period. The economic crisis also hit this industry in 2009, and coffee consumption started to decline. The market contracted by 8% between 2009 and 2011. After this period, the local coffee market remained relatively constant. Romania currently ranks 26th in Europe for the average coffee consumption. Romanians drink about 2.3 kg of coffee a year, lower than the EU average of 4 kg. There are several reasons for this: one is the high coffee price compared to the purchasing power. Another is the VAT level, while a third is the still uneven excise duties, according to PwC Romania. „Taking into account the correlation between the coffee price and coffee consumption, we estimate that a price decrease by eliminating the excise, cumulated with the ascending trend of disposable income could lead to an increase of the coffee consumption level and would generate a multiplication effect on other economic sectors. The estimated value of additional taxes collected to the state budget would reach RON 64 million” argues Bogdan Belciu, Partner, Advisory Services, PwC Romania. Romania is one of the last EU member states that still applies excises on coffee, together with Denmark, Germany, Croatia, Belgium and Latvia. Irina Popescu, irina.popescu@romania-insider.com (photo source: freeimages.com)