The world is full of coffee. It is everywhere around us! Whether its purchasing beans or lattes, everyday people engage in the coffee industry. It is no wonder that coffee beans are one of the top traded commodities in the world.
Only a proper coffee industry analysis can show us the truth behind coffee consumption. From East to West, nearly every citizen enjoys a cup of coffee. Learning more about the global coffee industry will educate you on the reality of coffee and coffee consumption. The best part is it will make you a proper coffee expert!
From history to production to coffee shop orders, we are diving deep into a proper coffee industry analysis!
How the Coffee Industry Got Started
The demand for coffee did not just appear out of thin air. From its origins in Ethiopia, coffee beans soon traveled to Yemen in the 15th century. There, coffee culture blossomed and spread throughout Arabia. Most importantly, raw beans were sold from the Yemeni port city of Mocha. This is where the mocha coffee drink got its name!
Nonetheless, the Yemeni birthed coffee trade. Arab merchants helped to spread coffee throughout the world. Coffee especially excited European traders. They loved it so much that some merchants smuggled the plants from Yemen! This resulted in these merchants eventually bringing coffee cultivation East. For example, the Dutch settlement in Indonesia created the world’s first coffee plantations. Indonesia’s port of Java also generated a nickname for coffee. Today, people all over the world love Indonesian coffee, particularly Indonesia’s Sumatra coffee.
There is also a lovely legend on how coffee cultivation spread East. A Sufi from India named Baba Budan took a pilgrimage to Mecca in the 16th century. He apparently snuck 7 coffee beans back to his home in Southern India. Currently, the same region coffee still grows tons of coffee, with India being the 7 largest coffee exporter worldwide.
The Introduction of Coffeehouses
The establishment of coffeehouses boosted the evolution of the global coffee industry. Beginning in Mecca in the 15th century, coffeehouses were places to relax, exchange ideas, and play board games. European travelers took notice of this and soon applied it to their native countries. In the 17th century, the first coffee shops appeared in cities like Venice, Paris, and Austria. These coffeehouses created a steady demand for beans from the world’s wealthy countries and empires.
With demand growing, Europeans soon realized that coffee could be introduced in more places. The current exploration and occupation in the Americas deemed a fantastic idea for potential coffee cultivation. The French were the first to plant in the West Indies. This formally introduced the Western Hemisphere to the coffee trade. Soon enough, Americans began importing and even growing their own coffee.
Coffee Industry Today
The coffee industry evolved tremendously since its trade begins. There is demand from all corners of the globe. This affects the industry, both on the production and retail side.
The Production Industry
You must start at the beginning to make a proper coffee industry analysis. There are several countries contributing to global coffee production. It is a very important cash crop, providing incomes for farmers worldwide. Each coffee-producing nation offers a different product, with a unique flavor profile that suits different roasting styles.
It’s All About Trade!
As much as we all love coffee aromas and flavors, the coffee industry is really all about trade! Coffee is a cash crop, meaning it is an agricultural product sold commercially. Many coffee farmers are smallholders. Therefore they rely on co-ops to successfully process and sell their beans. This is necessary, as these farmers must compete in the global market.
Coffee trade equaled 30.9 billion dollars in 2018. That is a lot of money and coffee, considering that coffee currently costs roughly $1.04 dollars per pound. The price does vary by type and origin of the coffee bean. Nevertheless, the demand for it persists everywhere.
Leading Exporting Countries
So, who produces the most coffee? As we learned through the history of the coffee industry, cultivation spread to all parts of the globe. This set the ‘seed’ for the rest of coffee production history. Each country grows both arabica and robusta beans, with arabica usually comprising the majority of the production.
Who are the top coffee producers?
Each of these countries caters to specific market demands. For example, peaberries are highly sought after. This coffee bean is rare and results from a rare mutation within the bean. They also come at a higher price per pound. Ethiopia and Brazil produce peaberries, giving an extra boost to their coffee economies.
These countries also must compete with industry shifts. Vietnam is encouraging its growers to shift away from coffee plants, due to a decrease in coffee price and recent low coffee yields. Many Vietnamese growers are replacing coffee plants.
On the flip side, some countries are incorporating more coffee plants. Columbia is in high demand on the retail side of coffee. Also, the country’s government is employing its evolving coffee as a method to combat the cocaine industry. The Columbian government is giving land, once used to grow coca plants, to coffee farmers.
Leading Importing Countries
Which nations need the most beans? This relies on a few factors. Each nation has a different consumer base. Also, each country is home to specific large coffee conglomerates. For instance, the United States is home to Starbucks and Dunkin Donuts, while Italy is home to Lavazza. Neither country grows its own beans on a largescale platform (with the exception of Hawaii in the U.S.)
Here are the top coffee importing countries (as of 2018:)
- United States
- United Kingdom
The Retail Industry
Think of how many roasters you know or seen previously off the top of your head. There is a lot. Coffee retailing skyrocketed, especially over the last 10 years. This is partially due to the increased amount of coffee shops and coffee education. Consumers all over the globe today have access to beans from every coffee-producing country.
Consumer’s increased buying power gives the retail coffee industry, in the United States, an estimated worth of $47 billion! That is a lot of money. This results from increased exposure to various types of coffee beans.
Honduras is a perfect example. This small but mighty Central American country leads the exports for the region. Many roasters worldwide adore Honduran coffee for its unique sweet and chocolatey notes.
Who Spends the Most on Coffee?
The increased retail profitability of coffee has a lot to do with the generations. Millennials are more inclined to spend money on coffee, whether on a bag of specialty beans or brewed at coffee shops. This contributes to the increasing number of coffee shops each year. The U.S. alone has roughly 36,000 coffee shops! A majority of these shops are chains like Starbucks and Peet’s. Yet, even these coffee giants continue to open up branches.
Price Per Cup of Coffee
Another facet to coffee spending depends on how much consumers pay for a cup of coffee. This has to do with numerous factors, like currency, tariffs, and coffee quality. It is truly fascinating to see how much it costs for a coffee. It is even crazier to compare them all.
Looking at Europe, we see coffee prices vary across the board. In Milan, Italy, the average cup of coffee is $1.33, whereas, in Munich, Germany, it is $3.75. The funny part is that these cities are just under 300 miles from each other!
Meanwhile in the Western Hemisphere, coffee is a little pricier. The average price of a cappuccino in New York in $5.00. Boston, a few hours drive North of New York, a cappuccino costs an average $5.20. This showcases the increasing demand for artisanal beverages across the globe!
The World’s Leading Coffee Consumers
There actually is a slight difference between countries that import the most coffee and consume the most coffee. By understanding how many beans and/or cups are consumed per capita, we can observe who drinks the most java!
Top 10 nations that consume the most coffee:
It comes as no surprise that a majority of these countries are located in the E.U. Considered as a whole, the E.U. imports the most coffee overall. Other top importers like the United States did not make the list. Surprisingly, American coffee consumption has declined over the years.
Nonetheless, these coffee-loving nations all developed their own cherished coffee cultures. This keeps coffee consumption high, especially outside the home. Coffee shops in many of these countries continue to grow in numbers yearly.