Cvoid-19 And Other Factors Created A Rollercoaster Year For Global Coffee Market

The extent to which the global coffee industry has been severely hit by the novel coronavirus pandemic which is reflected by the figures from those countries that are the biggest markets for coffee.

According to Euromonitor International, after a long period of strong growth, a fall of almost 11 per cent in 2020 is expected for in the sales at specialist tea and coffee shops in the United States, the biggest cafe market in the world.

It is expected that the sales growth in the second largest coffee market of the world, China, ill fall to just 1.6 per cent in 2020 from just over 40 per cent.

Strong growth in the coffee market in Thailand, Malaysia, Indonesia and across eastern Europe has been spurred by the emergence and growth of international chains such as Starbucks and the UK’s Costa.

A big drop in consumption has also been recorded in Southern Europe, particularly in Italy and Spain, which is known for its traditional coffee culture and a busy tourist industry.

In the three months to the end of June, there has been a 6 per cent year on year drop in net imports by coffee-buying countries as the demand for coffee globally and in some of its largest markets has gone down.

According to Rabobank, a leading financial services provider for the food sector, the net import figures are particularly poor for the US and Japan.

Major coffee chains are hopeful of a rebound in trade and the sales of coffee capsules have grown and the market was “not the bloodbath it could have been”, said Rabobank analyst Carlos Mera.

But an already volatile coffee market has been pushed into deeper uncertainty because of the novel coronavirus pandemic which originated in China towards the end of 2020 and was later allowed to spread all across the world.

And with consumers stockpiling under the coronavirus threat, prices of coffee on the global commodity market had climbed sharply in February and March. Since then prices have slumped by more than 25 per cent in middle of June with the closure of coffee shops in many of the largest coffee consuming markets because of the pandemic. Since then the prices have risen again.  

With investment funds investing heavily into commodities as an alternative to shifting away from the more volatile equity markets and the changes in demand and fluctuations in the dollar, in which coffee is usually traded, the prices of coffee have also simultaneously changes, said Mera.

The changes affecting the price of coffee has created difficulties for companies dealing on coffee to make long term plans to cover costs which has made the system of Fairtrade for conducting business, a system that seeks to guarantee a minimum price to coffee producer more important than ever to implement, she added.

“That safety is not only crucial for farmer but for the long-term sustainability of coffee. If they are not covering the cost of production there is little incentive to carry on [farming].”

(Adapted from TheGuardian.com)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: