Coffee Market

The global coffee market is expected to witness substantial growth during the forecast period. Urbanization and increasing per capita disposable income result in an increased demand for coffee during the forecast period. Frequent innovations in the product variety brought by the key players is also expected to drive the global coffee market. However, the fluctuating prices of coffee might hinder the market growth.

Coffee is the one of the most widely consumed beverages in the world. North America has a huge market share of coffee where almost 71% of the population in the US consumes coffee on a daily basis. In Europe, the coffee market is swelling with the growing popularity of specialty coffee and single-serve methods. As per MRFR analysis, about 36% of the revenue of coffee market has come from Europe in 2017. Asia-Pacific is also one of the most lucrative markets for commodities, owing to its rapid economic growth and the largest population.

Some of the Asian countries such as Japan and South Korea already have a well-developed coffee consumption culture. Rapid urbanization and an increase in per capita disposable income support the consumption of coffee in the developing countries. For an instance, besides the high population, the markets in China and India have high potential for coffee because of the adoption of westernization. In other emerging markets such as Indonesia, the Philippines, Thailand, and Malaysia, the consumption of coffee has become popular. An increase in the number of cafes’ and beverage outlets adds to the growth of coffee market. Such consumption patterns support the growth of the global coffee market.

Rising health consciousness has led to the preference for organic food products among the consumers. There has been an inclination among consumers towards the consumption of organic coffee, which is produced without any synthetic substance such as most pesticides, herbicides and fertilizers. It has been observed that the demand for organic products grew tremendously in most of the developed countries in the past few years.

Thus, the preference for organic products creates an opportunity for players in the global coffee market. For instance, Australia is believed to have the highest consumption of organic coffee in the world, owing to which the coffee brand, Lavazza, chose Australia as its first market to launch an organic coffee, ¡Tierra! Bio-Organic in August 2018. Moreover, apart from developed countries, the demand for organic coffee is at a rise from certain developing countries too, providing a scope to the players of coffee market to expand and grow.

Coffee is one of the most highly traded commodities in the world. The consumption of coffee is rising rapidly in both producing and non-producing countries. However, managing the lack of supply to meet the growing demand for coffee is a challenge. Moreover, climatic change also affects the productivity of coffee, which increases the price fluctuation. Increasing temperature tends to spread the plant disease known as “coffee rust” or “la roya”, which is a fungus that attacks the leaf and destroys the branch and the coffee cherry. Thus, plant diseases, pests, and defects in coffee beans hamper the supply of coffee in the market. This gap between demand and supply leads to increased prices of the product.

Surplus, on the other hand leads to low product prices. For instance; according to ICO (International Coffee Organization), the larger supplies in coffee year 2017/18 have led increased shipments in August 2018, as global exports increased 6.3% to 11.1 million bags compared to August 2017. In coffee year 2017/18, world consumption was estimated 1.8% higher at 162.23 million bags. However, coffee production exceeded by 2.58 million bags. This surplus has contributed to the low prices of coffee during this period.

Fluctuating prices affect production cost, which further results in determining the product prices. This may hamper the profits of the manufacturers. Thus, fluctuating prices of coffee beans hinder the growth of the coffee market.