New Articles

Global Coffee Market Enjoys Ongoing Growth Despite Pandemic


Global Coffee Market Enjoys Ongoing Growth Despite Pandemic

IndexBox has just published a new report: ‘World – Coffee (Green) – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

Coffee yield figures remained robust in 2020 and coffee bean exports increased, despite the disruption to supply chains caused by the Coronavirus restrictions. Home coffee consumption surged, thereby helping to offset the slump in sales following the closure of the HoReCa segment. Average prices remained growing gradually through to Q1 2021. 

Key Trends and Insights

Favorable weather conditions in 2020 enabled coffee bean crop figures to remain high. IndexBox estimates based on the USDA and International Coffee Organization (ICO) data indicate that global coffee production increased by +3.3% over the last year, reaching 10.5 million tonnes. According to ICO, Robusta coffee bean production fell by -2.8% year-on-year, while Arabica coffee bean output increased by +13.6%, amounting to 6.3 million tonnes and 4.2 million tonnes, respectively. Production slowed in Africa (-0.9% y-o-y) and Mexico and Central America (-0.1%), but South America indicated significant growth (+13.9% y-o-y).

Global coffee exports increased by 2.4% against the previous year, reaching 7.6 billion tonnes (IndexBox estimates). Brazil, recording a 2.5 million tonne shipments volume, continues to lead in terms of exports (IndexBox estimates).

Coffee prices, monitored by the International Coffee Organisation (ICO) Monthly Price Index, averaged 120.36 US cents/lb in March 2021, against 119.35 US cents/lb in February of this year. In 2020, average coffee prices fluctuated between 99.05-116.25 US cents/lb. Over the pandemic, prices grew gradually, and this trend persisted in Q1 2021.

In the medium term to 2030, market growth is forecast to continue, bringing the market volume to approx. 12.4 million tonnes, due to rising population and an increase in disposable income (IndexBox estimates). Should the pandemic wane in 2021, and HoReCa and tourism restrictions be removed, it would promote market growth.

Brazil to Dominate the Global Green Coffee Production and Export Market

Global green coffee production amounted to 10M tonnes in 2019, reducing by -4% in 2018. In general, production, however, saw a slight expansion. In value terms, green coffee production declined to $25.6B in 2019 estimated at export prices.

The countries with the highest volumes of green coffee production in 2019 were Brazil (3M tonnes), Viet Nam (1.7M tonnes) and Colombia (885K tonnes), together accounting for 55% of global production (IndexBox estimates).

From 2012 to 2019, the most notable rate of growth in terms of green coffee production, amongst the key producing countries, was attained by Colombia, while production for the other global leaders experienced more modest paces of growth.

In 2019, Brazil (2.2M tonnes), distantly followed by Viet Nam (1,388K tonnes), Colombia (681K tonnes) and Honduras (360K tonnes) were the major exporters of coffee (green), together committing 63% of total exports. The following exporters – Indonesia (318K tonnes), Ethiopia (237K tonnes), India (233K tonnes), Belgium (231K tonnes), Peru (222K tonnes), Germany (213K tonnes), Uganda (203K tonnes), Guatemala (191K tonnes) and Nicaragua (159K tonnes) – together made up 27% of total exports.

From 2012 to 2019, the biggest increases were in Colombia, while shipments for the other global leaders experienced more modest paces of growth.

In value terms, Brazil ($4.6B), Colombia ($2.5B) and Viet Nam ($2.1B) were the countries with the highest levels of exports in 2019, with a combined 51% share of global exports.

Among the main exporting countries, Colombia saw the highest growth rate of the value of exports, over the period under review, while shipments for the other global leaders experienced a decline in the exports figures.

Source: IndexBox AI Platform

Starbucks, Juan Valdez in Friendly “Coffee Clash’

Los Angeles, CA – International coffee purveyors, US-based Starbucks and Colombia’s Juan Valdez, have both announced major expansion plans…in each other’s own front yard.

Starbucks has opened the doors at its first operation in Bogota, Colombia – the South American country synonymous with coffee, while Juan Valdez has countered with a new coffeehouse in Miami, Florida.

The new Bogota Starbucks is a three-floor, 2,700-square foot operation, the first of a planned chain of 50 the company plans to open throughout the country over the next five years. It will also be the only Starbucks in the world to serve exclusively only locally-sourced coffee.

Starbucks’ stores in Colombia will be operated as a joint venture with two of the company’s regional Latin American business partners, Alsea and Colcafe, a subsidiary of Grupo Nutresa, Colombia’s largest food company.

Alsea currently operates more than 520 Starbucks in Mexico, Argentina and Chile, while Colcafe worked with Starbucks to develop ‘soluble coffee’ product.

The company has heavily invested in Colombia, which serves as its primary source of arabica coffee, a mainstay of its menu.

In 2012, Starbucks opened a Farmer Support Center in Manizales, Colombia to deliver training and agronomy support to Colombian coffee farmers.

Last summer, Starbucks announced a public-private partnership with the US Agency for International Development that is investing $3 million to increase Colombian coffee yields and to enhance economic opportunities for Colombian coffee growers, according to the company’s website.

Not to be outdone, Colombia’s own Juan Valdez, the coffee brand backed by the Colombian Coffee Growers Federation (Procafecol), is expanding its footprint in Starbuck’s home turf with the opening of a new coffee house in downtown Miami, Florida.

Procafecol, which represents more than 500,000 Colombian coffee-growing families, said it will work with an unnamed Florida franchisor to open four more stores in Miami by the end of this year with an additional 60 sited throughout the state over the next five years.

The new Florida operation isn’t the Colombian company’s first attempt to build a retail chain in the US. It currently operates seven stores in New York, Washington and the Miami International Airport.

The moves by both companies underscores the nature of the ongoing competition for an upscale market that in the US alone generates $18 billion in business annually.

But, whatever the competitive dynamics of the so-called ‘coffee clash’, Juan Valdez will have a long way to go to match the clout of rival Starbucks in Florida and elsewhere.

Customer Loyalty

With 200 stores in Colombia alone, Juan Valdez has garnered a vast reservoir of customer loyalty, both in its home country and regionally.

It is heavily invested in developing Colombia’s country’s coffee industry, a bulwark of the country’s economy. Since its founding in 2003, the coffee chain has funneled more than $20 million to a national fund that supports the country’s 560,000 coffee-growing families, some of whom also own shares in the company.

Most of its 450-plus current cafes are in Latin American countries, though they span as far as South Korea and Kuwait.

There are, however, more than 400 Starbucks in Florida alone, and, while, Procafecol’s total sales are expected to reach $85 million this year, up from $74 million in 2013 and $67 million the previous year, Starbucks is projecting 2014 sales of $16.5 billion, according to reports released by both companies.

There are more than 20,500 Starbucks locations in 65 countries. In 2002, Starbucks opened its first location in Mexico. Since then, the chain has expanded into Latin America with more than 700 stores in 12 countries including Peru, Brazil, Argentina, Costa Rica, and soon, Bolivia and Panama.

Despite the David and Goliath caste to the parallel developments, Procafecol is, at least outwardly, welcoming the competition with the group’s Director of International Sales, Alejandra Londono, was quoted as saying, “There’s room in the market for us both.”