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2. World coffee consumption
2.1 Factors influencing coffee demand
Consumption is the driver of the world coffee economy. After all, all coffee produced must be used at some
stage in order for it not to burden the market with a surplus and thus put pressure on prices. A number of
factors which influence coffee demand have been identified by economists. The most important of these
the price of coffee and alternative beverages,

per capita incomes,

population growth,

availability,

consumer preferences, and
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
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are:

government policies.
The influence of the individual variables is more difficult to quantify as they tend to change simultaneously.
However, population growth and income per head have been singled out as the most important ones.
Studies have shown that rises in population explain the bigger part of increases in offtake. Given the fact
that demand defines the prospects for growth, any long-term forecast for coffee consumption will form an
important element in any investment decisions in this sector.
Income
It is no major surprise that income is an important factor affecting the demand for coffee, especially as
coffee is still perceived by many to be a luxury item, especially in low income countries. There is clear
evidence that consumption is highly dependent not only on absolute income levels but also, and probably
more importantly, on changes in real income levels.
In countries that have a history of drinking coffee, there seems to be a direct correlation between the level
of income and the level of consumption. For example, high per capita consumption is found in Scandinavia
(in fact, by far the highest), and other European countries such as Germany, Switzerland, the Netherlands
and Austria. All these countries have a history of drinking coffee and also enjoy relatively high personal
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incomes. Clearly, habit and tradition play a significant role in determining the overall level of consumption in
a country, but it is noticeable that countries that also have a tradition of drinking coffee but have lower
personal incomes, such as Spain, Portugal and Greece, have a considerably lower rate of consumption.
Given that coffee is still considered to be a luxury item in many consuming countries, it is not surprising that,
as a general rule, changes in real incomes have a greater effect on consumption in low income countries
than they do in high income countries. For example, Spain has witnessed a relatively fast rate of growth in
the consumption of coffee per head in recent years and has also experienced a fairly impressive rate of
growth in its overall level of real disposable income per head, whereas in many Scandinavian countries
consumption has either remained static or fallen although real income levels have continued to rise.
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Prices
The effect of price volatility on consumption tends to be overestimated, especially in industrialized countries
that still account for the lion's share of global consumption. While coffee was a luxury food in these
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countries in the 1950s it has developed into a very cheap food item over the next couple of decades. Coffee
has gotten so cheap (even at $3/lb for arabica beans) that every consumer in these countries – even those
living on social welfare – would be in a financial position to purchase the best quality available on
supermarket shelves – if he or she had just the desire to do so. You cannot say this of cars, TV sets or
wines.
Coffee consumption in these countries is mainly a matter of habit. You drink your coffee in the morning to
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wake up, you drink another one or two during the day and probably a strong espresso after a fine meal. In
other words, the price elasticity of coffee consumption is rather low. If coffee gets cheaper you do not drink
more. In turn, if it gets more expensive you do not drink less.
Also, coffee drinking is a matter of taste. Either you like it or not. The price does not affect your gustative
nerves in the mouth. You do not start drinking coffee when the price has fallen just because you could now
afford it. You do not start coffee drinking when your economy is doing well and stop it again when you lose
your job. You start drinking it when you like it, and otherwise you leave it.
In other words, a bad economy does not seem to be enough to explain weak consumption of a widely
available cheap basic food item, even if it comes along with a period of high prices. In fact, most of these
markets have simply reached a degree of market saturation, which makes it difficult to raise consumption
further. This is even more so the case if high per capita consumption is coupled with a declining population,
such as in Europe.
Also, the proliferation of coffee shops and the single-serve revolution should not be confused with a
program to boost coffee consumption. Part of the coffee consumed in coffee shops simply replaces at-home
consumption and several popular drinks available in these shops contain more milk, sugar and syrup than
coffee itself.
As for the single-serve machines it may be pointed out that anecdotal evidence suggests that they even
contribute to a reduction in overall consumption because they allow the user to brew exactly the number of
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cups he wants and thereby reduces coffee “consumption” of the kitchen sink. That said, it should be pointed
out that these deliberations are of significance for highly industrialized countries with established dietary
habits, which still make up the better part of global coffee consumption. However, the main drivers of coffee
consumption in recent years have been emerging economies and coffee producing countries. It is
undisputed that price and income play a much bigger role in these markets and falling coffee prices may be
a major factor for stronger consumption growth in these markets in 2012/13 and 2013/14.
Other factors
While price and incomes obviously play a major role in determining the demand for coffee, it is difficult to
ignore the effect other factors, such as competition from alternative beverages, adverse publicity as a result
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of various health studies, advertising, or lifestyle, may have on overall consumption. Coffee, apart from its
traditionally recognised role as an everyday beverage that is frequently seen as a stimulant and an aid to
alertness, is also seen as a social lubricant fulfilling a very necessary function enabling people to socialise.
“Let’s have a coffee” is a phrase often used to cover a general request for an informal get-together
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regardless of whether coffee is to be drunk or not. It is interesting to note that coffee is more likely to be
consumed at breakfast, lunch or dinner if these are taken as family meals rather than eaten alone.
However, as meals are becoming less formal and structured in many countries, more coffee is being
consumed out of home, although the home remains the most popular place to consume coffee.
The type of food consumers prefer may also have an effect on the amount of coffee they drink. Either
through habit or taste, coffee seems to complement some foods more than others. This might explain why
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coffee is generally less popular in restaurants serving oriental foods than in those serving traditional
Western European cuisine.
Competition from other beverages has also been an important factor affecting the demand for coffee. Over
the last thirty years or so, soft drinks have become more popular, invariably at the expense of coffee,
especially among young people. However, the situation is far from static and the new American-style coffee
bars appear to be reversing this trend, although the situation varies from country to country.
Price may be a major factor in the change to alternative beverages, but health worries and advertising also
provide strong motives to switch to other beverages.
2.2 Historic and current consumption growth
The 21st century has been a period of significant global consumption growth. While it took the market nearly
30 years to raise consumption by 30 mln 60-kg bags to breach the 100 mln bag plateau in 1997/98
(Oct/Sep), only ten more years were needed to add another 30 mln bags and reach 130.2 mln in 2007/08.
This means global coffee consumption growth averaged 2.5% in the ten years to 2007/08.
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World: Coffee Consumption
mln 60-kg bags
140
120
100
80
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60
20
0
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Source: F.O. Licht
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40
We currently estimate global coffee consumption at 142.9 mln bags during 2013/14, up 2.4% on the year.
Domestic consumption in producing countries is seen rising by 3.3% to 41.1 mln bags, while consumption in
importing countries is seen up 2.1% on the year at 99.7 mln bags. This means global consumption growth
has recovered from an interim drop in the wake of the global financial and economic crisis that started in
2008.
Probably the most spectacular growth of a major market occurred in Japan, where it initially averaged some
3.5% a year until appearing to have reached a plateau over the last ten years. Japan is now the thirdlargest importer of coffee in the world.
Over the last five years market growth in Europe has been weak, with consumption showing signs of
stagnation and possibly even decline. The situation is only slightly better in the United States, where overall
consumption, despite the boom in the specialty sector, has grown at a low rate.
Importers nowadays account for about 71% of world coffee consumption and within this group the highlyindustrialised countries in North America, the European Union and Asia/Pacific (Japan, South Korea,
Australia) make up about 90% of the total.
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Estimated Global Coffee Consumption - Oct/Sep (1,000 bags green bean)
2012/13
2011/12
2010/11
2009/10
2008/09
Total
142.9
139.5
136.1
135.4
132.6
130.8
Importers
101.8
99.7
97.2
97.4
96.1
95.1
27.8
27.2
27.1
26.4
24.9
25.4
4.3
4.2
4.2
4.2
4.1
3.7
United States
23.5
23
22.9
22.2
20.8
21.7
Europe
51.5
51.1
49.5
50.5
50.9
49.6
EU
44
43.8
42.5
42.8
43.4
42.4
France
5.8
5.6
5.9
6
5.8
5.4
Germany
9.4
9.4
9.2
9.3
9
8.8
Italy
5.7
5.7
5.6
5.9
5.7
5.6
Spain
3.7
3.7
Poland
1.6
1.3
United Kingdom
2.9
2.9
Central and Eastern Europe
7.5
7.3
4.4
North America
3.3
3.3
3.4
1.6
1.8
1.8
1.6
3
3
3.2
3.3
7
7.7
7.5
7.2
4.2
3.8
4.2
3.9
3.4
1.1
1.1
1.1
1.1
1
1.1
7.2
7
6.9
6.9
6.9
6.7
13.9
13.1
12.4
12.3
12.1
12.2
1.7
1.6
1.5
1.4
1.4
1.3
7.5
7.4
7.2
7.1
7.1
7.5
Russia
Switzerland
Africa & Middle East
Asia & Pacific
Australia
Japan
South Korea
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Canada
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2013/14
1
0.9
1
1.2
1.2
1.3
China
1.5
1.2
1
0.9
0.6
0.4
Latin America
1.4
1.3
1.3
1.3
1.3
1.2
41.1
39.8
38.9
38
36.5
35.7
Producers
Source: F.O. Licht
2.2.1
A look at some individual markets
2.2.1.1 Two number ones: the United States and Finland
The United States is the single-biggest consumer of coffee in the world with nearly 24 mln bags each year –
but that does not mean that the typical person in the United States drinks more coffee than the typical
person in any other country. In fact, a look at per capita coffee consumption reveals that the country is No.
12 on the list with only about 4.2 kg of coffee per person per year. The Scandinavian countries are nearly all
at the top of the coffee-drinking cohort. The Finns average an amazing 12.3 kg of coffee per person per
year, but the Norwegians (9.7 kg) and the Swedes (7.3 kg) are not far behind and also belong to the world’s
top five per capita coffee consumers. The Danes drink their share of coffee as well, with about 8.7 kg of
coffee per year, with the people in Switzerland consuming about 8.2 kg and Germany 6.9 kg per year.
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Per capita coffee consumption (kg, green bean)
12.3
Norway
9.7
Denmark
8.7
Switzerland
8.2
Sweden
7.3
Germany
6.9
Canada
6.3
Brazil
6.0
France
5.7
Italy
5.7
Spain
4.2
USA
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Finland
Australia
Honduras
Japan
Algeria
United Kingdom
Source: ICO
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Costa Rica
3.9
3.6
3.6
3.3
3.0
2.8
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For the people of Finland, coffee is more than just a morning pick-me-up. The major cities feature dozens of
cafés, and many of them are now offering a wide variety of coffee varietals for the drinking pleasure of their
patrons. In the early days of the country, alcohol was forbidden, so coffee served as a social lubricant.
When alcohol was legalised, it did not replace coffee. According to one Finnish coffee importer, “Coffee and
alcohol go well together”.
Despite the amount of coffee that is consumed in Finland, some major importers are concerned. Coffee is
so important to the Finnish culture that it is the main loss leader in supermarkets and groceries. Also, home
coffee consumption is slowing, and as coffee consumption in cafés and restaurants has increased, home
coffee consumption has decreased. Many “traditional” coffee drinkers in Finland are of the older generation,
who grew up in times when coffee was often the only social beverage. Younger folks, more and more, are
turning to other beverages and caffeine drinks.
The situation in Finland has been emerging in many other coffee consuming countries worldwide. For more
than a decade now, coffee has been visibly rising in popularity, with prices for gourmet coffees
subsequently increasing. However, in the late 1990s and early 2000s coffee production worldwide regularly
outweighed coffee demand. That fact drove coffee prices down on the international market, to the point
where many coffee farmers have been driven out of business completely or are barely staying afloat.
The world's coffee industry has responded to the crisis by working tirelessly to increase coffee consumption
worldwide. The ongoing effort to increase coffee consumption has included identifying market saturation
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points, developing quality control mechanisms, encouraging farmers to maintain high standards and
rewarding coffee roasters for developing new varieties and blends of coffee.
The efforts of the International Coffee Organization (ICO) to raise coffee consumption around the world are
paying off. Despite the fact that coffee prices have risen, there is more coffee traded, sold and enjoyed each
year. Marketing thrusts by the ICO have turned coffee drinking into a fine art and encouraged people to
think of coffee as an affordable luxury.
This is especially true in countries like India, Japan and China. Asian countries, traditionally bastions of tea
drinkers, have been drinking more and more coffee. In countries that have already reached “saturation
level”, brand awareness has helped nearly eliminate the bottomless cup of coffee.
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2.2.1.2 Brazil
Brazil, with a population of about 201 mln, is not only the world’s largest coffee producer but also the
world’s second-largest consumer. The Association of Brazilian Coffee Roasters (ABIC) says that demand
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fell in 2012/13 (Nov/Oct) for the first time since 2002/03. Total domestic consumption during 2012/13 was
about 20.08 mln bags, (19.01 mln bags of roast & ground and 1.08 mln bags of soluble coffee), down from
20.33 mln the year before. Per capita consumption for the aforementioned period is estimated at 4.87 kg of
roasted coffee per person (6.09 kg in green bean, up from 4.88 in 2001/02).
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Brazil: Per Capita Coffee Consumption
Nov/Oct; kg green bean equivalent
7
6
5
4
3
2
1
0
Source: ABIC
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This is now considerably higher than that of the United States and getting close to treble the low that
Brazilian per capita consumption fell to in 1985 (2.3 kg). Consumption stagnated around this level until
steps were taken in 1989 to improve the quality of coffee available on the domestic market. In particular, the
industry introduced what became known as the Purity Seal (Selo de Pureza). This, together with an active
marketing policy aimed at encouraging consumption by providing more information on the product, formed
the basis of a successful push to increase consumption. Coffee products are only eligible for the Purity Seal
if they comply with certain basic conditions. In addition, ABIC continues its Coffee Quality Program, aimed
at educating consumers about aroma, body, flavour, degree of roasting and grinding. Participating roasters
display the Quality Seal on their retail packaging. ABIC also runs an internal accreditation program for
coffee shops, hotels and restaurants that use quality beans and in doing so help promote the coffee culture
in Brazil. Finally, the promotion of sustainability in the coffee chain is also actively pursued.
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The steady rise also came in the wake of the continuous growth of the Brazilian economy. This is partly
because about 30 mln low-paid Brazilians have seen their incomes rise sufficiently in the past ten years to
allow them to spend much more on food and drink, including coffee. The increase in consumption also
reflects the growth of the habit of drinking coffee in coffee shops and the broader and more differentiated
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array of coffee products in the Brazilian market.
The structure of Brazil’s domestic industry is relatively diverse, characterized by a large number of small to
medium-sized roasters, possibly as many as 1,400. Nevertheless, concentration is a continuing process.
The top five roasters are, in order of importance: SaraLee, Tres Curaçoes, Santa Clara, Melitta and Marata
whereas the top ten roasters account for just over 75% of the market.
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Roast and ground (R&G) coffee dominates the market with over 90% of all sales and although the country
is a large exporter of soluble coffee, instant coffee accounts for only approximately 5.5% of the overall
domestic market in Brazil.
2.2.1.3 Japan
Coffee consumption in Japan, a traditional tea consumer, grew significantly in the second half of the 20th
century, recording double-digit growth rates in the 1960s and 1970s. With the market becoming more
mature and saturated, average annual growth rates fell to 4.4% in the 1980s, 2.4% in the 1990s and just
0.6% since 2000. In 2013/14, coffee consumption is estimated at 7.5 mln bags, making it by far the largest
coffee drinker in Asia, and behind only the United States, Brazil and Germany in the world. Per capita
consumption is around 3.3 kg per person, and has remained relatively unchanged since the turn of
the century.
The majority of coffee consumption is arabica, consistently accounting for 70-80% of the market over the
time period. However, robusta has been growing more quickly since 2000, at around 4% per annum, while
arabica use has stayed relatively constant. Brazil is the single largest origin, accounting for around 29% of
total imports since 2000, followed by Colombia (19%), Indonesia (14%) and Vietnam (10%). However, it is
notable that imports from other East and Southeast Asian countries have increased significantly since 2000,
by 2.8% per year, while those from South America have stagnated, and those from Central America and
Africa have fallen.
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