Why coffee and tea companies’ shares are in focus? Analyst decodes, as Tata Coffee, CCL Products stocks end flat

Hot beverages such as coffee and tea company stocks have come in focus as the world’s top coffee producer countries Brazil and Vietnam are expected to reduce the overall production, Zee Business Research Analyst Arman Nahar said in a report on Friday.

According to Nahar, Brazil was earlier expected to produce around 321 crore kilograms of coffee, however, it has been estimated that it would cut production to 298 crore kilograms. This decline in production can be attributed to the bad weather/environment in the country last year.

Brazil is one of the largest producers and exporters of Coffee Arabica beans in the world, contributing around 40 per cent of overall exports.

Similarly, he further stated that Vietnam, the second largest producer, has also shown a decrease in production. The estimated decrease in yield is due to change in the use of fertilisers. Besides, coffee stockpile in Vietnam has also dropped by 50 per cent.

Vietnam contributes nearly 17-18 per cent to the overall exports in the world of Robusta Coffee beans.

In the last 12 days, the price of coffee has witnessed a 14 per cent jump due to the lower-than-estimated production of these countries, the analyst said.

On the other hand, India, which is also one of the leading exporters of coffee, has exported around Rs 5500 crores worth of coffee exports during April-October of 2022 as compared to Rs 4000 crore year-on-year, Nahar further mentioned in his report.

With respect to tea, the analyst said that there has also been around 10 per cent jump in tea prices since July 2022.

The rise in global coffee prices may have a direct impact on the share price of two listed companies — Tata Coffee and CCL Products. 

Tata Coffee shares on Friday closed flat with a negative bias at 231.65 per share and CCL Products shares ended flat with a positive bias at Rs 532.7 per share on the BSE.