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Coffee, one of Egypt’s oldest consumed beverages, strives to cope with inflation - Daily News Egypt

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Coffee, one of Egypt’s oldest consumed beverages, strives to cope with inflation

Coffee consumption has a long history in Egypt. It started with the brotherhood of Sufi Islamic mystics, who used it during prayers before it was culturally accepted. At first, religious scholars were divided between coffee supporters and opponents, the drink which came to Egypt from Yemen in the 16th century AD. In the early 18th …


Coffee consumption has a long history in Egypt. It started with the brotherhood of Sufi Islamic mystics, who used it during prayers before it was culturally accepted. At first, religious scholars were divided between coffee supporters and opponents, the drink which came to Egypt from Yemen in the 16th century AD.

In the early 18th century, most religious scholars forbade drinking coffee. Consequently, the chief of police attacked coffee consumers and imprisoned some of them. The locals attacked some cafes, destroyed them, and attacked their visitors.

However, coffee traders ignored the religious edict to preserve their source of livelihood, which led some the era’s security forces to organise a crackdown on anyone who sold coffee or openly drank it, and that sparked several confrontations between traders and advocates of the prohibition, in which one person died.

In the end, the Ottomans were forced to appoint a new mufti in Egypt, who allowed coffee to be used to cajole the public into accepting it. This became evident in the period of Koca Hüsrev Mehmed Pasha, who ruled Egypt from 1534-1536, with his ruling period known for coffee and coffeeshops.

The taboo surrounding coffee thus became a thing of the past, with coffee drinking since evolving into an important social practice for Egyptians, at all levels of society. In many cases, coffee house became a kind of literary circle or political club. 

According to Euromonitor International’s “Coffee in Egypt” report, one of the main challenges that face coffee’s retail growth was the rise in inflation rates, reaching an all-time high level of 33% following the November 2016 floatation of the pound and the adoption of an economic reform programme which included several other measures alongside the liberalisation of the exchange rate, such as the implementation of a value added tax (VAT) and the reduction of energy and fuel subsidies.

Nonetheless, coffee sales witnessed a double-digit increase in terms of value, despite the reduction in sales volume. Consumers switched to cheaper coffee brands to cope with their falling purchasing power, shifted completely to cheaper alternative beverages such as tea, or reduced their consumption on general.

2017 was the final year for instant coffee’s rise

According to the report, the strong year-over-year retail volume growth for instant coffee came to an end in 2017, as the category went through a modest decline, along with fresh coffee. The report indicated that such decline came as a result to the falling purchasing power of Egyptians, as many of them do not view coffee as an essential product, largely due to high inflation. However, regular instant coffee recorded a sharper decline than instant coffee mixes due to the latter’s continuing appeal to middle-income consumers.

On the other hand, fresh ground coffee and coffee pods posted positive retail volume growth due to price inelasticity, as it is an item usually consumed by members of upper-income households, who have been able to continue to afford high-priced coffee pods and pod coffee machines.

Positive growth for coffee forecasted in the near future

According to the report, coffee in Egypt is expected to go through positive retail volume growth over the near term  period (2018-2022), albeit slower than that of the review period. The report cites the limited growth as a result of several different factors, including rising prices amid tighter consumer budgets and some Egyptians switching to cheaper and healthier alternatives such as green tea. Indeed, in addition to the fact that despite the popularity of coffee as a drink, it is not considered as traditional a drink as tea, and so any trend that affects well-educated, mid- to upper-income consumers may have an impact on coffee.

The report concludes that it is forecasted that, over the longer term, as the government’s economic measures take effect, the coffee industry is expected to recover.

Volume of forecast retail sales of coffee by category from 2017-2022 (tonnes)

Value of forecast retail sales of coffee by category from 2017-2022 (in millions of EGP)

Percentage of growth in volume of forecast retail sales of coffee by category from 2017-2022

Percentage of value growth of forecast retail sales of coffee by category from 2017-2022

Topics: beverages coffee

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https://www.dailynewsegypt.com/2018/03/19/coffee-one-egypts-oldest-consumed-beverages-strives-cope-inflation/
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