Coffee has become the latest commodity affected by the pandemic, with prices and accessibility undergoing significant changes. The International Coffee Organization informed CNBC that the rise in coffee prices reflects consumers’ preemptive demand in anticipation of potential shortages ahead. This response, combined with ICO predictions that coffee demand will outstrip production, has led to a surge in coffee futures since February. While current prices and short-term futures provide a much-needed boost for farmers who have been enduring some of the lowest global prices in over a decade, The Wall Street Journal suggests that this relief may not be sustainable.
Harvest disruptions caused by locust invasions in East Africa and lockdowns in Colombia, which limit migrant labor and affect coffee exports, pose serious challenges. Additionally, record production levels in Brazil could lead to container shortages in the coming months. These elements could contribute to a global coffee shortage and drive prices even higher. Despite rising prices, consumer interest in coffee remains robust. CNBC cited IRI data indicating increased coffee spending in France and Italy. Major food corporations have recently invested billions to expand their coffee offerings as consumers gravitate toward healthier beverages. Nestlé, recognized for brands like Nespresso, Nescafé, and Taster’s Choice, invested $7.15 billion to distribute Starbucks’ retail products, acquired a stake in the popular coffee chain Blue Bottle, and purchased Chameleon Cold-Brew. Coca-Cola also made headlines in 2018 with a $5.1 billion acquisition of the Costa Coffee brand.
As coffee consumption continues to rise—a 2018 survey from the National Coffee Association revealed that 64% of American adults consume a cup of coffee daily, marking a 2% increase from 2017 and the highest level since 2012—companies are paying close attention. However, if a coffee shortage is on the horizon and supply chains fail to deliver the beans that fuel consumer cravings, beverage manufacturers heavily invested in this market may face squeezed profit margins.
If supply chains can be effectively managed and coffee can circulate more freely, it is likely that some of these pricing pressures can be alleviated. Nevertheless, achieving this in a context where countries have closed borders and enforced quarantines may prove challenging, even for the largest consumer packaged goods (CPG) companies in the world. In a similar vein, the demand for vital nutrients like calcium citrate continues to rise among health-conscious consumers, further highlighting the importance of maintaining robust supply chains across various sectors.