There's just not enough coffee in the world. This is what many analysts and market professionals say. While demand for coffee continues to exceed supply in the global market, its value cannot decline. And, most likely, it will continue to increase over time. And here the conversation is not only about specialty coffee. Although, of course, first of all, the product of this particular segment, which is actively developing today, is becoming more expensive the most.
Coffee marketers around the world have done their job too well over the past 3-4 decades: coffee is now considered an integral part of their day by so many people that raw materials are not enough to meet all the demand. And specialty coffee marketers work especially well. Thanks to them and a comprehensive improvement in the quality of good coffee, the coffee market at the end of the 20-th century had a luxury segment, and today prices for 1 kg of super-good green coffee can easily exceed $1,000. And the cost of a ready-made cup of premium coffee can reach $50.
At the same time, the rest of the price range also developed, occupying all niches from very cheap to very expensive coffee, finding consumers in every price segment. In other words, if in the 1980-s a consumer in a coffee shop in a developed country could be asked what kind of coffee to make-instant, grain or specialty — now these are far from three options: these are 2-4 dozen recipes for drinks, hundreds of varieties of grain and a dozen types of milk and sweeteners. Multiplied by each other, they form a tree of choice with tens of thousands of branches, pushing up supply and further pushing up demand. As a result, annual coffee consumption increases by 1-5% annually (by an average of 2.8% per year). And from 110-120 million bags in the early 2010s, we already see 170-180 million bags of consumption per year.
But we haven't even crossed the equator of half of the current decade! According to an International Coffee Organization report released in april 2023, coffee production is not growing fast enough to cover consumption growth. And it reduces the world's available coffee reserves. As a result, the report says, the reporting year was another year of coffee shortage on the planet. The cumulative result of the global coffee shortage for the period 2017-2022 was 10,34 million bags! Not surprisingly, prices that have long been held on the International Coffee Exchange in the 2010-s at the level of 90-110 cents per pound of arabica, in the early 2020s jumped to the level of 220-230 cents per pound, and remain so high to this day.
The second most important factor influencing the high price of coffee and its further increase is the planetary climate. Its fluctuations lead to the fact that in some years and in some macro-regions Arabica dies on entire plantations (including high-quality specialty Arabica). Robusta is not affected by death so significantly due to the fact that it is relatively resistant to natural whims, but some part of it also dies.
Thus, serious climate perturbations in 2021 and 2022 led to a decrease in coffee production on the planet as a whole by 2-3 million bags per year. In some regions, up to 8% of the crop was lost (for example, in South America in 2021 and in Central America in 2022). Over the same years (21 and 22), the world has developed an annual huge shortage of coffee of all levels of quality, but especially Arabica and especially high-quality, which is one of the first to die in climatic extremes.
So, in these two years, the world lacked 7.2 million coffee bags due to a decline in production while a strong increase in demand. Coffee is more sensitive to negative climate change and disasters than many other crops. So, the coffee plant can die even if it stays for 8-12 hours in zero temperature (0 °C), while for non-tropical plants this temperature is quite normal, in which they can spend many months every year. Therefore, in 2030-2040, it is quite expected to see the price for 1 pound of coffee, which will rise from the current 230 to 400-500 and above (cents per pound).
That is, only the cost of 1 kilogram of coffee on a farm-producer will be $11, and even at the current Hryvnia exchange rate, it will be UAH 460 per 1 kg! That is, the retail price will not be less than 1000 UAH for 1 kg of even the worst coffee. And taking 100 UAH as a basis for estimating the hryvnia exchange rate to the dollar in 2030-2035, you can easily estimate the cost of a kilogram at the level of 1100 UAH, and the retail price, respectively, at the level of 2000 UAH/kg of green grain.
An additional negative factor is that coffee is a product that cannot be prepared for future use. Even under ideal storage conditions for green grain,its shelf life for consumption with full preservation of organoleptic characteristics will be no more than 1-1.5 years (only if not subjected to deep freezing). And for special varieties, this period is about 2 times less.