According to a report by Euromonitor, Ethiopia is now one of the largest coffee markets in Africa with a rough estimate of 127,000 tonnes sold in 2015.
That sums up to which it is a quarter of the total volume of coffee sold in the Middle East and Africa. The figure is comparable to those of much wealthier countries like South Korea and Russia.
“Africa is the next frontier” for coffee, says Robério Oliveira Silva, Executive Director of the International Coffee Organization.
Even though Ethiopia is the poorest of the world’s major coffee-consuming nations, with GDP per capita of just US$599 in 2015, Ethiopians still drink around 200 cups a year. No other country in that income group drinks as much as that.
A large part of Ethiopia’s coffee culture comes from the fact that it is one of the best places to grow the beans on the planet. Ethiopia is fifth in the world in total production, according to statistics from the International Coffee Organization, and many of its Arabica beans are recognized internationally for their high quality. Even so, domestic consumption is unusually high, even for a producer nation. Many exporters have historically discouraged domestic consumption so as to make more crops available for export. Indonesians, for example, drink only 34 cups of coffee a year, even though their country is the third biggest producer worldwide.
Does domestic consumption pose a threat to the export of coffee in Ethiopia?
According to Matthew Barry, Beverage Analyst, Euromonitor International,one major threat looming on the horizon is a government initiative to expand exports in order to increase the country’s supply of foreign currency. This comes at a time when the coffee-loving and increasingly wealthy urban population of the country is looking for higher-quality beans. Barring an unexpected burst in crop yields, the only way the government can meet its goal is if it curbs domestic consumption to free up more beans for export, which would be highly unpopular. Saving high-quality beans for domestic consumption already attracts a fine or even jail time, and more than a few Ethiopians find it unjust that the best beans are being reserved exclusively for foreigners. This problem will not be resolved anytime soon, and tension between exports and domestic demand will be an ongoing issue.
There is also no shortage of macroeconomic threats that could get in the way of economic growth and an expanded coffee market. The business environment is less than ideal, with burdensome regulations and a government monopoly over many areas of the inefficient transportation sector. Geopolitical issues are also a concern, as the disputed border with Eritrea could erupt into open warfare at any time and trouble could spill over from nearby failed states like Somalia and South Sudan. But, on its current track, Ethiopia is very likely to continue being the growth driver of African coffee consumption.