Laos’ Coffee Industry: Growth, Challenges and Opportunities

By John P. LaWare, Coffee Market Analyst

A Sleeping Giant Awakens

While Laos may not be the first country that comes to mind when one thinks of coffee, it is quickly gaining recognition in the specialty coffee world. This small, landlocked Southeast Asian nation is the 27th largest bulk coffee producer globally, with output reaching 30,000 metric tons in 2022 according to ICO data. But what Laos lacks in volume, it more than makes up for in quality and untapped potential.

As James Hoffmann notes in The World Atlas of Coffee, “Laos has some of the most interesting and unique coffee terroirs in the world.” The country’s high elevations, rich volcanic soils, and microclimates are ideal for growing distinctive, high-scoring Arabica varieties like Bourbon, Typica, and Catimor.

Having visited coffee farms across the Bolaven Plateau, I’ve witnessed firsthand the meticulous care Lao farmers put into every stage of production – from hand-picking only the ripest cherries to carefully sun-drying the processed beans. This dedication to quality is starting to pay off, with Lao coffees regularly fetching high prices at specialty auctions and earning accolades from Q graders.

Laos’ Coffee Production and Market Trends

The majority of Laos’ coffee is grown in the southern provinces of Champasak, Saravane, Sekong and Attapeu, with the Bolaven Plateau being the primary growing region. While coffee has been cultivated in Laos since the early 1900s, production has increased significantly in recent decades:

• 1990s: 4,000 – 10,000 T annually
• 2000s: 10,000 – 20,000 T annually
• 2010s: 20,000 – 30,000 T annually
• 2020-present: 25,000 – 35,000 T annually

Source: ICO Historical Data

robusta makes up ~75% of the crop and arabica the remaining 25%. However, the arabica share, especially specialty grade, is steadily increasing year-over-year as farmers realize they can command much higher prices for quality beans.

The bulk of the robusta crop is exported to Vietnam and Thailand for blending and processing into instant coffee. read more about Thailand Coffee Industry But with growing international recognition of Lao arabicas, an increasing portion of washed and natural processed specialty lots are making their way to roasters and cafes in Asia, Europe and North America. read more about Brazil Coffee Industry

Regional Competitors for Laos’ Coffee

Laos faces stiff regional competition from coffee powerhouses like Vietnam (#2 global producer) and Indonesia (#4), as well as up-and-comers like Myanmar and China. To differentiate itself, Laos is smartly leaning into its strengths:

• Focusing on high-value specialty arabica coffee beans vs commodity robusta coffee
• Leveraging unique cultivars and terroir to produce distinctive flavor profiles
• Investing in quality-focused processing methods and infrastructure
• Forging direct trade relationships with specialty buyers
• Capitalizing on “exotic origin” appeal and narrative

As Hoffmann explains, “Laos has the opportunity to position itself as the ‘anti-Vietnam’ – a specialty origin in contrast to its neighbor’s commodity-driven model.” This niche approach allows Laos to attract premium prices and build a strong reputation at the higher end of the market. read more about India Coffee Industry

Laos’ Coffee Industry Financial Implications & Risks

For green coffee buyers and roasters, Lao specialty lots offer attractive margins but also come with unique costs and risks to consider:

Cost Drivers:

• FOB prices: Expect $4-7/lb for washed Arabica and $1-3/lb for semi-washed/natural process
• Freight: Limited infrastructure leads to high logistics costs, though new China-Laos railway may help
• Taxes: Import duties, VAT, etc
• Certification/traceback premiums: Many lots are organic and Fair Trade certified

Margin Considerations:
With retail prices of $25-40+/lb for Lao single origins, there is ample room for margin capture across the value chain, from farm-gate to cafe. Key is balancing FOB/freight costs with sufficient volume to gain efficiencies. Larger lots = more blending flexibility.

Working Capital & Inventory:
Significant inventory tie-up given long sea-freight transit times (30-45 days to US/Europe). Consider financing needs, especially during peak season contracts.

Risks:

• Quality variability: Still an emerging origin, QC is critical
• Supply reliability: Microlots mean limited volumes, pre-finance helps secure supply
• FX volatility: Lao kip can fluctuate significantly vs USD/EUR
• Political instability: Key ports and transit routes vulnerable to disruption

Ultimately, the risk-reward equation is favorable for specialty buyers who can navigate supply chains, build direct relationships, and market the compelling provenance of Lao coffees. While not without challenges, Laos offers an exciting frontier for differentiated sourcing.

Strategic & Operational Perspectives

Having a Lao specialty offering can be a key point of differentiation for roasters and cafes, reinforcing quality and sustainability positioning. Featuring Lao single-origins or using them as key blend components creates opportunities for storytelling, consumer education and premium pricing. As Imbibe Magazine highlights, “Lao coffee is still hard to find but offers unique flavors you can’t get anywhere else.” read more about Colombia coffee industry

Operationally, the keys to success are:

1. Developing a diversified network of trusted suppliers/farmer groups
2. Investing time on the ground to build relationships, calibrate on quality
3. Being willing to commit to pre-financing and multi-year contracts
4. Partnering with experienced importers who can navigate logistics
5. Understanding local market dynamics, pricing cycles and FX trends
6. Building flexibility into blends/product lines to manage supply variability

A Cup Reaching Full Potential

As Sara Morrocchi, co-founder of Vuna Origin Consulting notes, “Lao coffee’s star is rising quickly, but there is still much work to be done.” Farmers require ongoing agronomy training, processing equipment upgrades, and access to finance. Stronger institutional frameworks around grading, export procedures and intellectual property are also needed.

Yet with growing international recognition, improving infrastructure, and increasing private and public sector investment, Laos is well-positioned to become a top-tier specialty origin in the years ahead. For intrepid coffee buyers and roasters, now is the time to explore this exciting frontier and help a 600-million-dollar industry blossom.

FAQ’s

1. What makes Lao coffee unique?
   High elevation, volcanic soils, heirloom varieties (e.g. Typica) and unique local cultivars contribute to distinctive flavor profiles with notes of florals, fruit and chocolate. Laos also has pristine water sources for processing which enhances quality.
2. How much coffee does Laos produce annually?
   Laos produced approximately 30,600 metric tons of coffee in 2022, making it the 27th largest producing country globally (ICO). Production has steadily increased from under 10,000 MT in the 1990s.
3. What are the main coffee-producing regions in Laos?
   The majority of coffee production takes place on the Bolaven Plateau in southern Laos, across the provinces of Champasak, Saravane, Sekong and Attapeu. This plateau sits at elevations of 800-1300 MASL.
4. What types of coffee are grown in Laos?
   Laos grows both Robusta (~75% of crop) and Arabica (~25% and increasing). Catimor is the most common Arabica cultivar, but Typica, Bourbon and local varieties are also found. Most specialty lots are fully washed Arabica.
5. Who buys Lao coffee?
   Vietnam and Thailand purchase the bulk of Lao robusta for blending/processing. Specialty Arabica lots are exported to China, Japan, Korea, the US and Europe. Domestic consumption, while still low, is growing with the rise of local cafes.
6. What prices do Lao specialty coffees command?
   Green specialty Arabica fetches $4-7/lb FOB. Roasted single-origin retailsfor $20-50/lb. Specialty robusta and semi-washed arabica sells for $1-3/lb FOB. Farmer premiums can reach 30-70% over commodity “C” price.
7. Is Lao coffee organic?
   Many farms are organic by default (limited pesticide use). Some co-ops have formal organic certifications. Buyers should verify claims as countrywide organic practices are not uniform.
8. What are the harvest and shipping seasons?
   Main harvest runs Nov-Mar, with peak in Dec-Jan. Micro-lots typically shipped Jan-Apr. Some areas have a fly crop in Jun-Jul. Rainy season and limited infrastructure can delay shipments.
9. How is Lao coffee typically processed?
   Washed process is most common for specialty arabica – cherries pulped, fermented ~24 hrs, washed and sun-dried on raised beds. Some lots are wet-hulled “Indonesian-style.” Robusta is typically strip-picked and dried as naturals.
10. What are the main challenges facing the Lao coffee sector?
    Farmers face low productivity (old trees), limited access to finance and processing equipment, and climate change impacts. Weak institutional frameworks around quality control, research and export procedures also constrain growth.
11. What does the future look like for Lao specialty coffee?
    Rising demand for unique, traceable origins positions Laos well for growth in the specialty market. Large roasters are investing in farmer extension services to boost quality and output. Tourism is also creating local demand for higher-value production.
12. Are there opportunities to visit Lao coffee farms?
    Yes! Several specialty-focused exporters and cafes offer farm tours in Paksong and Thateng districts. Visits typically include plantation walks, processing demos and tastings. Best time is Dec-Feb during the harvest.
13. Where can I try Lao coffee in Laos?
    Dao Coffee in Pakse is a top spot – they serve flight of Lao arabicas and robustas. Jhai Coffee House and Sinouk Coffee in Vientiane also a good bet. Morning markets in Pakse and Savannakhet sometimes have vendors brewing local beans.
14. What are some recommended Lao coffee brands/roasters?
    Yuni Coffee and Comma Coffee are two quality-focused Lao brands. US-based Laos Coffee Co does a good job sourcing topsingle-origin lots. Saffron Coffee and Jhai Coffee are socially-focused roasters who source direct from farmers.
15. How can I source Lao green coffee?
    Partnering with a reputable importer is key for navigating logistics and quality control. Trabocca (EU), Collaborative Coffee Source (US), Indochina Coffee (VN) are active in Laos. Building relationships with farmer groups/co-ops also recommended.
16. What should I look for when evaluating Lao green coffee?
    For washed Arabica, look for uniform green color, 16-18% moisture, 10-12% bean weight, and clean cup free of defects. Natural/semi-washed lots will be less uniform but should still have minimal insect damage, mold, etc.
17. Are there sustainability certifications available for Lao coffee?
    Fair Trade, Organic and Rainforest Alliance certifications are available from some co-ops and exporters. UTZ program has also done work on sustainable robusta production. But most farms are not formally certified.
18. What are the labor practices like on Lao coffee farms?
    Lao coffee is predominately smallholder-grown on 1-2 hectare parcels. Farms are typically family-run with some seasonal hired labor during harvest. Forced/child labor not known to be a widespread issue but due diligence always advised.
19. What is the best way to roast Lao coffee?
    Washed Lao arabicas can be treated similarly to other high-grown, dense origins – try a light-medium roast to highlight acidity and complexity. Natural/honey processed lots benefit from slightly deeper development. Robusta does well at a full-medium roast.
20. How can I learn more about Lao coffee?
    The Specialty Coffee Association (SCA) and Alliance for Coffee Excellence (ACE) have good intro resources. The Coffee Quality Institute (CQI)’s Q program sometimes features Lao coffees. Visiting the growing regions during harvest is hard to beat for building knowledge!

As the specialty coffee wave continues to build, Laos is sure to gain increased recognition and market share. With its combination of distinctive terroir, skilled farmers, and improving infrastructure, the “Land of a Million Elephants” is poised to become the next big thing in specialty brew.