The Strategist

Global coffee consumption may decline for the first time in nearly 10 years

07/13/2020 - 09:12

People began to drink less coffee as restaurants and cafes remained closed during the pandemic. According to the year’s results, consumption of the drink in the world can be reduced for the first time in almost 10 years.

Kim Sanso
Kim Sanso
The consumption of coffee in the world this year will be reduced for the first time since 2011. This forecast was made by the US Department of Agriculture, reports Bloomberg.

The “stunning” effect on consumption was exerted by the closure of cafes and restaurants due to the coronavirus, which typically account for about 25% of demand, the agency said. At the same time, coffee sellers are not expecting a quick recovery in sales. “For us, this will be a slow and phased comeback, as many shops in London will remain closed until the end of the summer, and some may not open until next year,” Robert Robinson, co-founder of the London Notes coffee shops chain, told Bloomberg. Although restrictions in the UK capital are gradually being lifted, most Notes cafes are still closed.

Consumers hesitate to dine out in large groups, Bloomberg notes. The agency emphasizes that coffee houses were hit hard as their existence depends on customers who bought coffee in the morning on their way to work or dropped in at lunchtime. 

Even the fact that sales of coffee for home use in grocery stores grew sharply did not save the situation with a drop in consumption, Bloomberg notes. Slow recovery in consumption could have a “devastating” effect on the lives of approximately 125 million people around the world receiving livelihoods from coffee beans, Bloomberg writes. One of the largest cafe chains in Brazil, Suplicy Cafes Especiais, was forced to defer payments to farmers for already made deliveries. “Some of our franchised partners have already warned us that they would close,” said Suplicy CEO Felipe Braga.

According to Citigroup's forecast, the price of Arabica coffee futures may fall by about 10% in the second half of the year and reach about 90 cents per pound (about 0.5 kg).

At the same time, there is hope that the worst is behind, Bloomberg emphasizes. In Asia, the fastest growing coffee market in the world, consumption in restaurants and cafes is expected to recover in the second half of the year as countries lift their restrictions. And the US Ministry of Agriculture expects a recovery in global consumption in the next year.