What Economic Impact Will Coffee Industry Have

What Economic Impact Will Coffee Industry Have

It is known that most people depend on coffee, but what if some of the economic industries and countries depend as much as people do? This is an increasing industry with permanent demand and high popularity. The innovations caused more interest and big changes in the supply-demand chain. As the industry grows, the level of impact rises too. Today, the coffee industry has an essential influence on the global economy, and many countries, consider this sector one of the main income sources. 

A great example of it is the United States of America, where locals annually spend more than 74 billion USD on coffee. This revenue is from 100 000 coffee shops in the country, whereas Starbucks is more than 80 000. 

In the USA, Starbucks and Dunkin’ coffee are the leading ones that annually get about 28 billion USD revenue, in total. According to the example of the USA, the total impact of the coffee industry on the country’s economy was more than 225 billion USD. This is data from 2015, which means that today, the impact is increased, significantly. 

It is not only about income, but the employment sector too. Let’s continue the example of the US, where the coffee industry makes more than 1.6 million jobs for people. This is a huge sector with great potential and the example of the US proves it. Similar situations are in other countries too.

All in all, it proves that the effective management of the coffee industry plays a huge role in determining global economic growth as well as specific data. The coffee industry is connected with revenues, costs politics, international trading, employment, and other significant sectors. Because of this enormous impact, in this article, we will introduce you to some interesting facts about how coffee determines the global economy and what predictions and trends can be outlined for the near future. 

How Coffee Industry Influences Global Market?

Society loves coffee. Permanently increasing demand for coffee caused exploration and production of more and more types of coffee, which made the industry more diverse and beneficial. The cost for production as well as for the supply chain is quite high because the distribution is happening over a long distance and increases the tense competition between companies.

For example, the highest-quality Nganda coffee beans, which are very demanded on the market, are the best from Tanzania, Zimbabwe, and Uganda. When the company decides to provide customers with Nganda coffee, the high cost of production should be considered. Even if the price will be high, it will not affect the level of demand seriously, because society is too much dependent on using coffee daily. 

Because of complex resources, needs, and structure, the impact of industry on the global economy is raising. According to the latest data, people are drinking more than 2 billion cups of coffee daily. Such kind of demand caused the industry to double to 90 billion USD in a very short period. 

Experts say that if this level of demand is maintained, till 2024, the coffee markets’ annual rate will be raised by 5.32%. The main basement of this prediction is that the younger generation more frequently uses coffee and increases the level of consumption enormously. 

Expected Trends For 2022 and Global Problems In Coffee Industry

More than 25 million farmers are involved in the production of coffee. For 125 million people, income from coffee production is the main source of money. But on the other hand, local economic problems in Africa will cause a big risk for the coffee industry by 2050. Experts think that the production of Arabica will be problematic soon because of negative financial pictures in Uganda, Zimbabwe, and other African countries.

The problem is in other countries too. According to ICO searches, global production was reduced by 2.1% because of hard problematic issues in Central America. Export from Columbia and Brazil is problematic because of less availability of needed resources such as shipping containers and others. This caused a decrease in exports by 3%, which means that until the end of 2022,  more than 3 billion bags will be in deficit. 

Another problematic influence is the pandemic. The negative impact is high on global companies such as Starbucks. For example, according to their data for 2021, their revenue declined by 44%. The most problematic were sales from China, where the rate decreased by 40%. After the peak of the pandemic, the company tries to boost sales in China and increase the high sales as it was before 2020. But the economic problems and the distribution risks are causing big risks to production in the near 2022. 

According to the current situation, experts say that after the pandemic, the demand for coffee, as well as costs, will increase immediately. The ICO report says that the export of Arabica and Robusta in 2021 increased by 3 million bags and this difference will be more by 2022. Because of that reason, from 2022 to 2025, the coffee industry will be the largest sector in Europe and South America.

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