The Global Coffee Market: Demand and Supply Conditions

Coffee is globally traded commodity. It is the second-most traded commodity with oil being the first. Coffee is generally traded in financial instruments known as futures contracts, and this is mainly done through the New York Board of Trade. In recent years, countries producing coffee has been increasing. Established producers like Colombia have faced bigger competition from these countries seeking to enter the market. Because of increasing number in countries it makes it harder for coffee producers to influence prices. Over the last few centuries, coffee has grown into one of the world’s most popular drink. There has been strong growth for coffee as it has become a fashionable drink. Coffee has replaced alcohol as a drink of choice for workers

According to statistics, Finland is the country with the highest per capita consumption of coffee, and China is the lowest one, but in Finland there are nearly five million residents only, which means Finland will consume a million bags of coffee every year, but the 1.3 billion residents of China will provide approximately 200 million potential coffee consumers, and this will make China becomes a major coffee market. On the other hand, under the same culture background, compare to Japan and Korea, Chinese average annual per capita consumption is only around 20 Cups, but this also means Chinese consumer coffee market has a big room for future growth.

The popularity of coffee began with its introduction to Europe in the 17th century, a time when colonialism had brought many resources to countries like France and Britain. In Europe, coffee was a delicious beverage, and was very inexpensive due to the monopoly of coffee imports from colonized to colonizer. But while tea was still the preferred choice in North America, an increasingly higher tax on America’s favorite beverage led to the Boston Tea Party. Tea forever came to be known for the British oppressor, and coffee became as popular in the U.S. as it was in Europe. The popularity of coffee remained because the colonies in Africa were required to export all precious resources to Europe. Despite the history of exploitation of resources in many African countries, the coffee industry in Ethiopia has thrived, taking a product that is in high demand and creating a stable economy, leading to the improvement of its citizen’s economic prosperity. This is because Ethiopia was one of the few areas not colonized by European powers, letting it avoid the consequences of colonialism and focus on the development of a country.

The coffee served in Second Cup is also high quality and the drinks available strongly rival those in Starbucks. In the past decade there has been an explosive growth of 157% in the area of coffee shop market. Canadian coffee market share, new companies have limited to no space for growth in North America. Second Cup’s market share at the Canadian market is about 8%.Upon these facts and analysis there is an unlimited growth possibilities in the coffee market in Canada. There are different factors that do influence in the purchase of coffee from these outlets and the the way these coffees are priced. Customers are reluctant to get coffee from these outlets as the prices are too high than the coffees that could be made at home. There is a huge conflict between the pricing of coffees at these places and homemade ones. Coffee shops are determined to serve the best quality coffees which are been imported from South America and Africa, due to the rise in oil prices transportation charges have also been increased. And also due to different global climatic conditions the prices of these gourmet coffee beans have been increased.

Coffee, the bean we love. To many it is known as the magic elixir, brain juice, or nectar of the gods, while others see it as the devil in a cup. America is a country that is obsessed with its coffee, now more than ever before. Although coffee has spanned generations, the craze did not exist like it does today. According to anthropologist William Roseberry of UBC, coffee was on the decline in the 1960’s and hit an all time low in the 90’s with only half the country drinking about a cup a day (D’Costa). However, with coffee being the world’s most commonly traded commodity, second to crude oil, much money is at stake when people stop drinking it. Thus the coffee empire was rebuilt, coffee revamped, and redefined to suit the needs of the “me

Coffee is an important source of income, and it is produced in more than fifty developing countries in Latin America, Africa, and Asia . Moreover, requiring the labor to be intensive is the reason behind the initial production of coffee beans that includes farming, collecting, and processing, being performed in developing countries.The labor in the developing countries is more abundant to the circumstances necessary for the initial production of coffee. However, The roasting and branding of coffee is more capital intensive, and therefore is it is done in northern industrialized countries( COFFEE VALUE CHAIN & P3G ANALYSIS, n.d).

Coffee consumption in the US and Europe equals approximately one-third of the tap water consumed annually, with annual production of approximately seven million tons estimated in 2010 (http://www.coffeefacts.com). Worldwide, nearly 25 million small producers derive their income from coffee; the economies of Africa, Indonesia, and South and Central America are especially dependent on coffee production. The majority of this production takes place in Brazil, where approximately five million people are involved in the cultivation and harvest of over 5 billion coffee plants without the aid of modern machinery. (Rice, 2003, p. 228).

Along with the second biggest part of the equation are the consumers of the products, not only the countries that import the goods. In the last six months, the European Union fluctuated, but did not falter being the leading importer of coffee with 9,994 units in july 2017, 10,439 units in September 2017, and 9,509 units in December of 2017. The United States imported 2,453 units in July 2017, 2,255 units in September 2017, and 2,328 units in December 2017. Japan imported 580 units in July 2017, 607 units in September 2017, and 460 units in December 2017. The Russian Federation imported 476 units in July 2017, 446 units in September 2017, and 467 units in December 2017. All units in thousand 60 kilogram bags (“Trade Statistics Table”). Within the European Union is the biggest coffee market as well as the oldest coffee market, which are the United Kingdom and the Netherlands. Both countries’ fair trade sales increased by 24% in 2011 and continue to increase as more producers become Fair Trade certified (Ladhari,2015). The United States fair trade sales increased by 12% in that same year. While these statistics were acquired, it was also noted about the consumer’s purchasing trends compared to their personal values. According to Pelsmaker, consumers’ ideal purchasing trends are not completely reflective of their actual buying behavior (Pelsmacker, 2005). Therefore, the

Coffee has played a major role in the lives of many people around the world. “Yet, poetic as its taste may be, coffee’s history is rife with controversy and politics…[becoming a] creator of revolutionary sedition in Arab countries and in Europe” (Pendergrast xvi). After reading Uncommon Grounds, it is apparent that the history of coffee is intertwined with the aspects of the globalization process, the role of Multi-National Corporations, and global economic issues.

I feel as though since the coffee shop is locally owned they will have a solid reputation and have the loyalty of all the locals. Café Campesino currently works with 18 small farmer organizations in 9 distinct, coffee producing countries. Their trading partners are farmer cooperatives, local organizations founded and democratically governed by the farmers themselves. These trading partners include Bolivia, Colombia, Democratic Republic of Congo, Ethiopia, Guatemala, Mexico, Nicaragua, Peru, and Sumatra. There is a high demand for coffee. Statistics show that household ownership of single-cup brewers reached an all-time high of 27% in 2015, that is almost double of what is was in 2014. The younger generations are more likely to go out to purchase coffee than brew it their self. The coffee consumption for ages 18-39 is 45-46%. 34% of those drink at premium places such as Starbucks, Coffee Bean, and would also include Café Campesino, and the total amount of money spent on specialty coffee in the U.S is $18 billion dollars. Most purchased coffee certifications (exclusive purchase, regular, or occasional purchase) are organic at 25%, fair trade at 18%, and rainforest alliance at 16%. Coffee is typically wanted more in the mornings, but is also wanted throughout the day by some. There are many direct competitors such as Starbucks and Coffee Beans which are more specialty coffee shops such as Café Campesino. These coffee shops will have the same premium price as Café Campesino

Assuming that the demand and supply for premium coffees are in equilibrium, the price will be at a constant, without significant pressure from the market. If Starbucks introduced the world to premium blends, this would cause a positive shift in the demand curve. There a higher equilibrium price and higher quantity when demand increases and supply remain unchanged. As prices increase, and the market moves to a new equilibrium, we will see higher wages, more advances and investments in technology and infrastructure, and greater competition. As production become more efficient and competition becomes greater, supply will increase and cause prices to settle back down. There are several factors that will impact the long-term equilibrium, such as changes in supply. For example, if a hard freeze eliminated Brazil’s premium coffee crop, this would cause a negative shift in the supply curve. Assuming demand remains constant a negative shift in the supply curve will cause quantity to decrease and equilibrium price to increase. Research shows that in 2011 a frost occurred in Brazil's southeastern coffee growing belt. Traders worried that next year's yields could be hurt. At the same time, heavy rains during harvest forced Columbia to reduce its crop estimate for 2011. Understanding the impact of problems along the supply chain and how the changes in supply

The coffee trade has long played an important role throughout history and has had a major impact worldwide, both politically, socially and economically. The subject of the coffee trade is explored in Anthony Capella's historical fiction novel, The Various Flavours of Coffee (2008), and Irene Angelico's documentary film, Black Coffee (2005). Both of these sources represent different aspects of the history of coffee and explore the coffee trade in different ways, although they also share many similarities. Although The Various Flavours of Coffee and Black Coffee are very different mediums, one being a historical fiction novel and the other a documentary, both of these sources examine the role that coffee plays in Western culture. Each of these

Statistics show that over half of the American population consumes coffee on a daily basis. You may drink coffee hot, cold, mixed, or even in a frappuccino. Individuals are able to make coffee at home, or buy it on the go. Coffee provides people with caffeine, which ultimately gives energy for hardworking people all around the world. The main focus for this paper will cover the following topics, with coffee as the basis: causes for shifts in supply and demand, how coffee supply and demand influence price, quantity,

The demand for coffee shops is born from the increased number of individuals seeking coffee brewed outside of the home. This creates a larger market for coffee shops. An increased amount of people are starting their mornings off by purchasing breakfast and a cup of coffee away from home (Tuttle 2014), more people are enjoying gourmet coffee (NCA National Coffee Drinking Trends 2015 Infographic), and younger generations are demanding more coffee and coffee drinks from coffee shops (Tuttle 2014, S&D Coffee and Tea inc. 2014, Statista 2015). Coffee shops must compete with at home coffee, work place coffee, and teas for the caffeinated beverage markets (LN 2015). Demand for coffee within different markets varies, and provides competition for coffee shops. Single cup coffee makers, increasingly qualitative instant coffees, and gourmet beans are all sources of competition that could satisfy the demand for coffee. However, coffee shops are becoming more ingrained in social

Today, a jug of moment espresso (a type of strong black coffee) can be found in 93 every penny of British homes and progressively buyers are going for diverse sorts of espresso, for example, cappuccino, coffee, mocha and latte. The growing purchaser interest for item decision, quality and worth has prompted an increment in the espressos made accessible to a recognizing open. "Quality" is the route in which the purchaser sees an association 's item in correlation with focused offerings. This detailed analysis clarifies why Nestlé needs a top of the line inventory network, with great linkages from where the espresso is become in the field, to the path in which it achieves the shopper.