High coffee prices fail to add aroma to Chicory demand

High coffee prices fail to add aroma to Chicory demand
KOCHI: High coffee prices have not led to increased consumption of chicory, a cheaper additive sans caffeine that is blended with coffee for better aroma and to keep the beverage prices competitive.
The blending ratio is usually changed by the local brewers by raising the percentage of chicory used in coffee when the latter becomes dear. “But unlike earlier instances, it may not happen this time as the buying power is low and the demand for coffee remains flat,” said PNR Pagalakumar, CEO of Pioneer Chicory based in Gujarat.

Price of robusta beans, used more in instant coffee, has jumped nearly 30 per cent from a year ago to Rs 153 per kg. Chicory production, meanwhile, has shown a rise thanks to better crop in Uttar Pradesh though the output in other major growing areas of Gujarat is just average. Consequently, the chicory prices which had tou ched Rs 30 per kg have now slumped by 2530 per cent.
The ratio of chicory used in coffee is in the range of 30-40 per cent. It is more or less maintained at that level even now. “It could be an indication of lower demand for coffee and chi cory. Otherwise, the consump tion should have gone up,” sa id Jayant Kotadia, managing director of J K Malt Products
Multinational companies like NestleBSE -0.33 % use specific chico ry-coffee ratio which are not influenced by price fluctua tions.

With the domestic chicory consumption sluggish, manu facturers are looking at ex ports. “Till now, the annual in crease in chicory consump tion has been in the range of 10 15 per cent. But with surplus produc tion annual growth may be marginal. Export has better potential,” said Nitin Kesh wala, managing director of PMK Chicory . India exports over 15,000 tonnes of chicory annually.
Certain regions like the Middle East prefer chicory blended coffee while Europe favours pure coffee. “Since we use imported coffee beans which have become costly for our exports, we are getting bet ter prices from Middle East.
 

SOURCE: ECONOMIC TIMES