The year 2020 and onwards saw the widespread contagion of COVID-19. It hit the world hard and abruptly. The term ‘unprecedented times’ was repeated at nauseum as daily activities were turned on their heads. The world clutched to anything resembling normalcy – coffee was core amongst them.
In total, over 100 million people depend on coffee for
their livelihood, from transporting and roasting the beans to selling the final
product (livelihoods.eu, 2020). This year has not been easy for people in the
coffee industry, including some 25 million smallholder farmers who are responsible
for 80% of global coffee production. Coffee shops holds their history in the
communal exchange of thoughts and philosophy. So of course, these community
centres were some of the first to close as COVID-19 regulations locked down
public businesses the world over. Some never reopened.
Despite the incredibly challenging working environment
imposed by COVID-19 restrictions, consumers have still been able to get their
hands on their favourite drink, thanks largely to the resilience of coffee
producers and supply chains. Coffee survives.
After a shock in both demand and supply, coffee prices
have been volatile, according to ICO reports, and they dropped steadily from
March to June 2020. This exacerbated the existing challenge of low global
coffee prices that have impacted growers for several years. However, prices
reported by the ICO in November 2021 were at record levels, fueled by higher
freight and labour costs, with the ICO composite price indicator hitting US$1.95
per lb.
Most growers (75%) told the ICO that they predict
travel restrictions and social distancing measures (among other impacts of COVID-19)
will affect their ability to employ workers and lead to a higher cost of
production. This is more likely to impact countries such as Ethiopia where
cultivation and harvesting is largely done by hand. Nonetheless however,
worldwide production of coffee beans has seen record highs over 2021. The
projected total production of coffee year 2020/21 is 8.6% higher than the
average of the last 10 coffee years.
Looking at the supply chain, shipping logistics have
become overwhelmed by the sudden increase in demand of specialty items such as
masks and hand sanitizers. The sharply increased demands in these sectors
forced congested systems and backlogs as this coincided with work-from-home
orders and social distancing which increased inefficiency.
The need for a strong domestic market has instantly
been increased as production remains high, but the surety of export markets and
supply chains was questioned.
COVID-19 drove record coffee consumption at home, with 85% of coffee drinkers having at least one cup at home (up 8% since January 2020), as per the Spring 2021 National Coffee Data Trends. Whilst soluble coffee is the largest growing market in coffee consumption, another trend is growing which exists between the extremes of ground coffee and instant coffee – the coffee pod. Coffee pods are single use aluminum pods containing concentrated coffee with flavouring. It’s sealing and ease of use ensures an easy way for consumers to get high-quality coffee without getting their hands dirty. They also take less energy to make one cup of coffee when compared to the average drip coffee maker which helps adherence to sustainable energy-use trends.
Soluble and ground coffee has remained to be the largest market segments, however, and consumers proved just as likely to seek their favoured coffees at home. Consumers have used e-commerce and delivery services as well as the good, old-fashioned supermarket to feed their habits. This is a huge win for the resilience test of the coffee market.
There is an opportunity for coffee producing countries to look to do more processing (roasting, freeze-drying, etc.) of their coffee beans in country before shipping. This would add greater value and more revenue to the various economies of coffee-producing nations as local consumers can be marketed to as added consumption.
