The EU currently is the second largest export market for Vietnamese coffee, after the United States, accounting for more than 42 percent of total export volume. Economists predict the EU-Vietnam Free Trade Agreement (EVFTA) will help increase Vietnamese coffee’s share in the EU market.
The EVFTA applies zero-percent taxes to Vietnamese coffee exports to the EU. Buon Ma Thuot Coffee is among the 39 Vietnamese geographical indications protected by the EU under the trade deal, a major advantage for the Vietnamese coffee sector in the competition with foreign rivals in the EU market.
Dr. Nguyen Trung Kien from the Institute of Policy and Strategy for Agriculture and Rural Development said the EVFTA would create a major boost for Vietnamese instant coffee exports to European countries due to tax reduction from 15 percent to zero. The trade deal will encourage Vietnamese coffee businesses to expand deep processing to create refined products, thus enhancing the added value of exports and restricting the impact of declining global coffee bean prices due to oversupply.
To take advantage of EVFTA opportunities, many domestic and foreign companies have invested in expanding coffee processing. However, Dr. Nguyen Trung Kien said that despite rapid export growth, processed coffee products still account for a modest percentage of Vietnam’s exports to the EU, while most Vietnamese export coffee products are unroasted and non-decaffeinated.
Vietnam Coffee-Cocoa Association (Vicofa) data show that although Vietnamese coffee products account for more than 8.5 percent of total volume of coffee imported by the EU, processed coffee accounts for a mere five to seven percent of the total export volume. This year, the EU is expected to import 49.5 million coffee sacks, an increase of two million sacks compared to 2019, accounting for nearly 45 percent of total global coffee imports and offering clear potential for Vietnamese coffee.