- Consumption of coffee is expected to overtake production next year by about 502,000 bags — or more than 66.4 million pounds — according to a November report released by the International Coffee Organization. This is due to a mix of factors, including unfavorable weather and prolonged low international prices.
- Average November coffee prices rose more than $1 per pound, the first increase of that size in the last 12 months. This affected all varieties of coffee beans, with only robusta increasing less than $1.
- Global exports fell by 13.4% in October to 8.91 million bags, compared to the same time last year. This is also 2.4% lower than the same period in 2017.
Although coffee has been a mainstay in Americans' daily routines for decades, consumers have recently moved from seeing it as merely a pick-me-up to an indulgent, experience-driven occasion. The result is that, for some, a cup of joe has moved from a morning necessity to a beverage also consumed at various points throughout the day.
The coffee market has ballooned with Americans leading the pack, drinking about 400 million cups per day. About 64% of U.S. adults drank coffee each day in 2018, up 2% from the prior year. This is the highest level since 2012, according to a survey from the National Coffee Association cited by Reuters.
But not just any coffee will do. Gourmet coffee now represents more than half of all consumption for the first time in history, according to research from the National Coffee Association. Coffee has also found its way into the functional space with trends like butter coffee, probiotic and protein-infused CPG products bringing about more occasions — and reasons — to sip the energizing beverage throughout the day.
Clearly coffee's popularity is pervasive and Big Food has latched on to ride the wave. Some of the largest M&A deals in the last few years have involved companies buying coffee, so it shouldn't come as a surprise that there could be supply issues.
JAB Holdings' caffeinated portfolio includes Keurig Green Mountain Peet's Coffee, Stumptown Coffee Roasters and Intellegentsia. Nestlé snapped up Chameleon Cold-Brew in 2017, and last year paid $7.15 billion to sell Starbucks' retail products. Last fall, Coca-Cola purchased Costa Coffee from U.K. drinks and hotels group Whitbread for for $5.1 billion.
Behind the scenes of this growing popularity, experts have been giving warnings about coffee's sustainability for years. Starbucks sustainability director Jim Hanna told The Guardian in 2011 climate change was threatening the world's coffee supply. Business Insider reported major coffee regions like Brazil’s Minas Gerais were faced with a 30% supply reduction in 2014 due to drought. And in this latest International Coffee Organization report, Brazilian exports — which account for about 38% of the global total — fell 12.9% in October, compared to the same time last year.
Brazil isn't the only coffee producing region in danger, though. Half of the world's coffee growing regions will be lost by 2050 if climate change remains unchecked, according to a report from The Climate Institute of Australia.
With coffee supplies dwindling, prices are likely to increase dramatically. Initially, this will help coffee farmers who are currently seeing the lowest global prices in more than a decade, according to The Wall Street Journal. But soon after, both coffee manufacturers and consumers could begin to feel the financial burden of their love affair with coffee.
With coffee being such a hot commodity, it is concerning for manufacturers who will need to prepare for a potential shortage. However, there are companies preparing alternatives. Atomo Coffee is working on a molecular coffee that mimics the taste, mouthfeel and aroma of coffee without the beans. The product is still in prototype stages and the company is currently looking at upcycled alternatives like sunflower seed husks or watermelon seeds to stand in for coffee grounds. There is also Postum, a caffeine-free coffee substitute made from wheat grain and molasses. It was produced by Big Food until 2007, and is now made by startup Eliza's Quest Foods, which bought the formula in 2012.
Although more manufacturers are launching brands in the coffee space to keep up with demand, companies should be wary about potential supply issues. In the meantime, more companies may be looking to make alternatives like chicory coffee, tea and innovations that don't require beans.