Coffee, Frost and Prices. What’s really going on right now

Over the past several months, there has been a flood of media coverage taking what seem to me to be increasingly panicked approaches to covering changing coffee prices and what it may mean for coffee consumers.?

As many of us have experienced first-hand, the COVID-19 pandemic has devastated communities around the globe and put extraordinary strain on the supply chains coffee relies on every day but that rarely see the spotlight. Suppliers of everything from toilet paper to furniture to shipping containers and computer chips have struggled to keep up with dramatic shifts in consumer demand, shortages of certain ingredients and inputs, and skyrocketing prices for transportation -- not to mention the pandemic’s impacts on workers, their health, and their workplaces.?

Of course, since coffee is a beloved staple in grocery shopping carts, media reports about potential shortages or price increases generate a lot of questions – and clicks.?

NCA has taken a steady approach throughout, turning first to the data. As NCA reported in our September 2020 report on coffee consumption during the pandemic, COVID-19 has greatly impacted where Americans drink coffee (driving more at-home consumption, unsurprisingly) but had relatively little impact on how much coffee we drink or how often.?

In fact, overall coffee demand has been remarkably stable for decades. About 60% of Americans drink coffee every day, more than any other beverage, and that has been the case for at least ten years.? Coffee is a pleasure a part of life – and a habit, and our latest consumer research, which we’ll be releasing in the coming weeks, shows that consumers are gradually returning to the pre-pandemic coffee drinking customs.

Coffee planting, harvesting, and purchasing also tend toward stability. Coffee trees are slow growers, taking several years to reach maturity. Planting and purchasing plans are typically made several years in advance, and coffee can be transported and stored for relatively long periods of time, helping to smooth out peaks and valleys in supply and demand.

Another factor that has cushioned the impact of current stressors on consumers’ coffee experience is that we’ve actually had a surplus of coffee on the global market for many years. That is, until recently farmers grew more coffee than the world drank. That surplus supply kept prices below levels seen in the past. In 2019 the surplus helped lead to global coffee prices decreasing by 15 percent.?

Now, between COVID-19 impacts and the effects of both drought and frost in Brazil – one of the world’s most significant coffee producers – USDA predicts that for the first time since 2015 the world will drink more coffee in the year ahead than farmers will grow in that year. The frost in Brazil, linked to a supply deficit forecast by some, is what has set off new rounds of speculation about prices.

But speculation is just that. Many people are working hard to fully measure and understand the full impact of the extreme weather in Brazil and how to help impacted farmers recover. Estimates so far have ranged widely, with the most recent reports suggesting crop damage is less extensive than had been feared.

From extreme weather to new requirements for health and safety in coffee shops, I’m proud and grateful to say the coffee industry has been remarkably resilient – and remains committed to the future of coffee. Whether through commitments made under Conservation International’s Sustainable Coffee Challenge, individual programs, or the ongoing work of the International Coffee Organization, the industry’s commitment to sustainability -- and the farmers who grow coffee -- has persevered throughout the pandemic.

Coffee prices are determined by many factors, and the NCA plays no role in their trajectory. Whatever the future holds, we will continue to closely monitor consumption and market data, work to support farmers’ crops and livelihoods, and be a champion for coffee by providing accurate, informed information and insight to help guide us into the future.?

NCA: We Serve Coffee.

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For our most recent consumer data, our market research collaboration with the SCA.

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