Image courtesy of: chinabevnews

We wrote recently about the price of coffee being at an all-time 13 year high and it was very interesting to read back in January 2011 that Starbucks had purchased its stock of coffee and would not be raising prices during the year.  It seems that was a short lived statement – Starbucks have more recently begun raising their prices as coffee bean production indicated short supply.  Why is coffee production getting into a situation where demand outweighs supply? 

There are a couple of reasons.   Emerging markets such as China, Brazil and India have become coffee lovers.  As business markets grow in these areas so is coffee consumption.  The trend is following the more established markets such as the US, UK and European regions that are already established high coffee consumers.  Coffee is part of working life in many regions, a quick cup on the way to work a cup at break and of course at lunch break.

The trend has been established alongside a backdrop that coffee is good for employees with many companies realising that installing a coffee machine results in a happier, more motivated workforce – and the emerging markets have cottoned on to this realisation.  Coffee is the motivator in the workplace.  The problem is that the demand for coffee is leading to shortages and particularly in Brazil, coffee producers are tending to supply the internal market to meet Brazil’s demand for coffee.  What for the rest of the globe – China is consuming more coffee than ever, mainly in terms of the younger generation workforce and India is showing a similar trend to Brazil, with much of its coffee production being sold on their internal market.  This is affecting exports.

There is however, no sign that the UK is reducing its coffee intake – we are still major consumers of coffee and this is likely to continue.  More and more companies are realising that installing a coffee machine in the staff room is increasing motivation for the workforce even in hard times.  It is likely that coffee outlets too will continue to see increased business, they may have to raise their prices and competition may become fierce in order to keep their loyal customers but overall there remains profit in coffee.  Gourmet coffee in the UK may be seen as s luxury to some people – but we all love and try to have a little luxury ‘don’t we’.