Coffee prices are seen staying firm until next year when fundamentals may change, said Michael Garrett, executive vice president of Swiss-based Nestle.
The current high prices are due to a disruption in fundamentals, but prices may ease once the balance returns, Mr. Garrett said during an interview with Knight-Ridder Financial News.Coffee prices have skyrocketed these past few months due to a frost in Brazil - the world's biggest coffee producer - which may result in a huge decline in world coffee availability next year.
Brazil accounts for 25 percent of world output.
Mr. Garrett said it is unlikely that the current Vietnam crop will offset the expected decline in output as its production levels are still too small.
Estimates for Vietnam's 1994 coffee output range from 140,000 to 190,000 metric tons.
Mr. Garrett added that coffee consumption will continue growing in the Asia Pacific region, although growth rates will depend on maturity of the markets.
For instance, markets such as Japan and Australia have seen growth rates at 2 percent to 3 percent, while Malaysia and Thailand have seen double-digit rates, he said.
On the iced coffee market, he said Japan remains the top consumer because it was open to innovation and a variety of foods.
But the iced-coffee market in Asia is still too small, accounting for less than 10 percent of the total coffee consumed in the region, Mr. Garrett said.