Despite the Slowdown in the Global Economic Growth, the Coffee Bean Market Will Grow With the Increasing Coffee Demand

Despite the Slowdown in the Global Economic Growth, the Coffee Bean Market Will Grow With the Increasing Coffee Demand

By Knowledge Sourcing Intelligence Thought Articles

The market for coffee beans is projected to surge during the forecast period, 2020-2025, owing to the growing coffee popularity among the younger generation. In addition, coffee is also accepted due to its health benefits. Roasted beans are used for producing the popular beverage for consumption.

It has been widely observed that coffee is among the most important cash crops known for its delectable taste. Coffee beans are grown along the Equatorial zone known as “The Bean Belt” in more than 70 countries of the world. Coffee beans are mainly imported by the developed regions of the world, while, it is produced and exported by the developing economies. The three major coffee producers of the world are Brazil, Vietnam, and Colombia. As per the International Coffee Organization (ICO) estimates, these major producers together account close to 70% of the coffee production at the global level. According to the organization statistics, the global coffee production rose at an annual growth rate of 2.6% approximately, increasing from around 140.16 million bags in 2010/2011 to reach the predicted volume of around 168.71 million bags in 2019/2020.

 

coffee bean market

Source: ICO, in million bags

Assessing the current novel coronavirus pandemic impact on the global coffee sector, it was estimated by the ICO that the global coffee exports was observed to be around 11.11 million bags in February 2020 in comparison to around 10.83 million bags in February 2019. A decrease in shipments, was, however, noticed during the first five months of 2019/2020 by around 3.4% accounting for 50.97 million bags. This is because of the fact that due to the outbreak of the global pandemic, there was an unprecedented joint supply and demand shock to the coffee industry worldwide. This further resulted in posing huge challenges to the coffee growers, farm workers, domestic supply chains, and to the international trade. Also, the supply demand impacts are being felt at different points that are contributing to market uncertainties and price volatility. Furthermore, the global pandemic is poised to have a major impact leading to poverty and food insecurity to around 25 million coffee producers in the world. This is due to the fact that major coffee producers are smallholders residing in low-to-middle-income countries and are less prepared for dealing with a public health crisis of this measure. In addition, in the same year, the coffee consumption is accounted for 169.34 million bags, predicted to be 0.7% higher compared to the previous year, 2018/2019. At present, the coffee demand is projected to exceed production, accounting for around 168.86 million bags in 2019/2020, increasing by around 0.47 million bags. It was also observed that the price for all Arabica indicators surged in December 2019, while, for the Robusta variety, there was a decline in price by 0.1% to 73.22 US cents/lb.

In spite of the slowdown in the global economic growth, specifically, observed in the developing economies and markets, the global coffee bean market will continue to rise owing to the increase in demand and consumption during the forecast period. It was predicted by the International Monetary Fund (IMF), in late 2019, that the decline in global economic growth could hamper the growth in coffee consumption. In Europe, the demand is projected to decline by around 0.6% to 55.4 million bags in 2019/2020. On the other hand, in the North American region, coffee consumption is predicted to increase to achieve around 31.88 million bags, this is around 0.7% higher than 2018/2019. After experiencing a low growth rate in 2018/2019, the coffee consumption in Asia & Oceania is estimated to recover, increasing by around 2.9% to attain around 37.51 million bags. The demand in the African region is estimated to surge by around 1.8% to around 11.94 million bags. While in Central America and Mexico, the demand is forecast to grow by around 1.4% to achieve around 5.47 million bags. In the South American region, the coffee demand will surge by around 0.1% to attain a volume of around 27.14 million bags.

Status of the Increasing and Decreasing Demand and Consumption Trend of Coffee in the Form of a Graphical Representation

coffee bean market

Source: ICO and IMF

Coffee has certain health benefits, this has increased its consumption with time, hence, it has predicted to increase the global coffee bean market growth prospects over the forecast period. It has been recommended that coffee consumption in optimum quantity is contributing towards providing health benefits apart from mere refreshment drink. Research studies have predicted that there is a correlation between coffee consumption in moderate quantity and its benefits in providing protection against specific diseases. These include Parkinson’s disease, Type 2 diabetes, liver diseases including liver cancer. Additionally, coffee is associated with increasing life expectancy as it is rich in antioxidants. As there is an increasing number of chronic diseases worldwide, coffee consumption can help in providing protection against these diseases. The rising consumer awareness regarding the health benefits of coffee is the major factor driving the market demand during the forecast period. Coffee is known for reducing inflammation in the human body. It has mostly observed that depressed individuals tend to have high blood levels of inflammation related proteins. Research studies have revealed that coffee contains anti-inflammatory properties and that is attributed to decreasing depression in people. According to the National Coffee Association, around 7 in 10 Americans drink coffee at least once in a day, increasing its daily consumption to around 5% in 2020 from the last five years. As per the US National Institutes of Health, it is studied by the researchers that coffee drinkers tend to live longer with the greatest increase in life expectancy that is linked with drinking around 6-7 cups of coffee every day.

The growing use of dietary supplements worldwide has enabled the use of coffee in the form of dietary supplements, further providing an impetus in fueling the market demand during the forecast period.

According to the American National Standards Institute, ANSI, the market for dietary supplements is large is increasing at a rapid pace. The international market was estimated to be around USD133.1 billion in 2016, further projected to experience tremendous growth to attain USD220 billion by the end of 2021. By 2025, the global dietary supplement industry is projected to achieve a value of USD252 billion. The United States, China, and India are accounted to hold the dominant market share in the global total.

coffee bean market analysis

Source: ANSI, in USD Billion

Coffee bean extracts are utilized on a wide scale for use in dietary supplements available in the market. Growing consumer awareness regarding preventive health, an increasing geriatric population, and expansion of food and beverage retail sales with high growth of online sales channels, the market is estimated to surge over the next five years.

The adoption of a busy lifestyle is quite popular among the millennials, these younger generations prefer to consume food and beverages that are convenient to carry. Hence, manufacturers are working on producing innovative coffee products including instant coffee in order to keep pace with the current market demands. Furthermore, with the emergence of specialty coffee, the market will continue to increase during the forecast period. People prefer to sit and enjoy coffee with friends and colleagues, whether in coffee shops or at their workplaces, this is further contributing to soaring the market growth.

ABOUT THE AUTHOR:

Vibha Saklani is a Market Research Analyst at KSI, working on the estimates and global reports on multiple industries spanning from IoT to food and beverages, with a special knack for healthcare, medical devices, and related markets. With the addition of her formal education in Biotechnology and having a research background, she is able to shed more light on the detailed analysis of the story. To read more articles by her, and for more information regarding multiple global markets, visit www.knowledge-sourcing.com.