"We'll have to fight to recapture what we have lost, but we are confident that in the years to come we will continue the long-term trend of increasing consumption," Gunter Fude, president of the European Coffee Federation, told Reuters.

New strategies to capture the key youth market and more stable prices should lead to flat if not rising consumption in Western Europe, coffee industry players said at the 11th European coffee congress.

In 1997, consumption in Western Europe fell to 35.4 million 60-kg bags, provisional figures from the International Coffee Organisation showed -- down from 36.3 million in 1996 and 37.4 million in 1992.

"My feeling is that the decline in Western European consumption has stopped," said Bertel Paulig, chief executive of the Paulig Group, one of the top 10 roasters in Europe.

Two well-publicised spikes inworld prices over the past five years have hit consumption, Paulig and other industry players said.

Frost and drought in Brazil pushed up Arabica prices to $2.60 per pound in 1994 and panic buying due to low stocks and tightness in Latin America sent prices rocketing last year to over $3.00, the highest in 20 years. Arabica is currently trading at around $1.20 per pound.

With forecasts of more plentiful higher supplies over the next few years, prices should stabilise and quality should improve, Paulig said.

Within certain limits, the absolute price is less important than repeated violent fluctuations, Fude said. "What is most important for consumption is a stable price," he added.

A marketing head for another major European roaster agreed, saying: "The consumer has been confused for the past few years."

It was difficult to establish market segments when prices were continually jumping, he added.

Most European companies are stepping up marketing strategies to capture the important youth market,which has shied away from coffee in favour of soft drinks.

Kraft Jacobs Suchard (KSJ) in Germany has had success in attracting younger drinkers with a caffeine-free version of its main Kroenung brand, said Anke Krahn of the consumer marketing division.

Instant cappuccino-type drinks have grown dramatically in Germany in recent years, finding favour with the younger segment.

Even though these contain mostly milk powder and sugar, with only 20 per cent coffee, they have helped orient younger drinkers to coffee-based beverages, said Peter von Enden, also with KSJ Germany, a unit of Philip Morris Group.

Meanwhile, the Mexican Coffee Council has revised downward for the second time its estimate for the current 1997-98 coffee crop, now putting it at 4.8 million 60-kg bags, Executive Director Ruben Castillo said.

Castillo told Reuters in an interview that the council expects exports from the current crop to total 3.8 million 60-kg bags, down sharply from 4.4 million bags in the previous crop year.At thestart of the crop year last October, the council initially forecast the 1997-98 crop to total 5.8 million 60-kg bags but that was revised down to 5.0 million bags at the end of January because of severe damage from hurricanes, frost and drought.

"The damage was greater than we expected mostly because the frost damage was more severe," Castillo said of the latest revision, which he called the council's final estimate and one that should closely match total crop figures when the season ends in September.

Castillo said the prolonged drought has "clearly affected" the flowering of the upcoming 1998-99 crop. "In some areas where trees have died because of the drought and the lack of rain, the crop will be affected not just in the coming 1998-99 season but for at least three years," Castillo said.

Castillo also said Mexico would continue plans to remain a non-member of the Association of Coffee Producing Countries (ACPC) and keep a distance from the ACPC's export quota schemes.