Coffee, it's the drink that wakes you up. The one you cannot forfeit no matter how late you are for your day.
Coffee is the best way to get ready for a busy day. Depending on what you want, there are more than a few ways to prepare coffee. For most people, dark coffee is the best way to start your morning. Once the bitter taste hits your tongue, you are ready to conquer the world.
The average annual increase in coffee uptake is 500, an annual rate of 2.2%
. It is estimated that we consume 400 Billions cups of coffee every year. It means the coffee industry continues to grow. The competition rate is also soaring as many companies continue to invest in coffee.
Big players in the coffee industry, like Starbucks, own the largest market share. They run chains of coffee shops all over. While Starbucks is large, several thousands or millions of small coffee shops are worldwide. There are about 1 billion coffee drinkers
in the world.
So you see, coffee is important not just for the big brands that earn from it but for everyone who needs a cup to start their day.
Key Facts About the Coffee Industry
Since 2018, the coffee industry has been growing at a rate of 5.5%.
The United States is the largest coffee market, followed by Brazil. 62% of adults in the United States drink coffee every morning.
Brazil is one of the largest world coffee producers, followed by Vietnam and Colombia. Brazilians produce over 2.7 metric tons of coffee. They are also the second-largest coffee market after the U.S.A.
Coffee production is a big industry. Over 125 million people depend on coffee to make a livelihood. Everyone that takes part in the coffee production process knows the true value of the bean.
• Farmers grow, till, and harvest the farms
• Processing companies that dry and grind the coffee
• Brewers that create appetizing drinks from it
• Coffee shop franchises and owners
Growing coffee depends on the land and the climate. Coffee grows in tropical and equatorial climates. It grows well between the tropic of cancer and Capricorn. The weather for coffee-growing regions includes humidity throughout the year. The soil is also rich.
Coffee requires a temperature between 18°C and 22°C Arabica coffee. Robusta does well in temperatures between 22°C and 26°C. The rainfall should be between 1500mm to 2000mm annually.
The two varieties of coffee need protection from too much rain and too much shine. They can do well under regulated shade.
Countries producing coffee compete to have the largest market share. Most Arabica coffee comes from Ethiopia, and it is the most common coffee in coffee shops. Other coffee-growing countries include Honduras, Peru, Guatemala, India, and Indonesia.
Competition in The Coffee Industry
No doubt that the coffee industry would have tight competition. Coffee is a daily drink for most people, and it is an industry worth Billions of dollars. That sets the pace for high stakes. Anyone thinking of going into the coffee business has to play their cards well before they make any moves.
If considering going into the coffee business, you should reconsider your unique selling point. Big market players undoubtedly have funds to play around with their products and offers.
It started in Seattle over 50 years ago as a small coffee shop. It would later grow to become the biggest coffee chain in the world. It has become a respected brand for its uniqueness. Customers make it their first and last stop.
What makes Starbucks stand out is how they have continued to increase its offers, create more food and drink options, and heap on the rewards. Also, the company has continuously improved and remodeled its outlets to make them more inviting.
Starbucks was adversely affected by Covid restrictions in 2020. The low sales recorded a 12% increase in profit. Notably, the drive-through sales were a save for the company since the company continues to rise and dominate the market.
As of 2021, the annual coffee sales for Starbucks were $29.1 Billion.
Dunkin Donuts is another key competitor in the U.S. coffee market. Dunkin Donuts was a quiet coffee house sharing the glory alongside Starbucks for years. However, in the 2000s, the campaign started an aggressive marketing campaign to take the top seat from Starbucks.
It has since started to market coffee and increase its offerings to stay relevant. The coffee house prides itself on an all-American brand.
Inspire brands acquired Dunkin' Donuts in 2020. They joined a rich portfolio of restaurants like Arby's Jimmy John's and SONIC Drive-in. Dunkin Donuts continues to rival Starbucks.
Mcdonald's is more popular for its fast food. However, it has been on the rise as a coffee destination. The brand started offering iced coffee in the 00s. It became a hit that they kept it.
Mcdonald's leans heavily on the fact that they keep their prices low. They are popular with everyday Americans. Also, the McCafe line has 23 products offering a range for customers.
Mcdonald's continues to dominate the market thanks to its 36,000 restaurants in 100 countries. The company still faces fierce competition from other big and smaller coffee shops.
Advantages of Competition in the Coffee Market
A little competition doesn't hurt, especially when it involves coffee.
Here are a few pros about the competition in the coffee industry
- Customers get a variety of products to pick from
- Innovative products like the at-home coffee line from Starbucks
- Low prices for most market players
- Quality products.
Challenges Facing the Coffee Industry
The Coffee industry is not immune to the challenges facing every other food-related industry. Some challenges continue to affect the growth of the coffee industry.
Coffee is one of the leading industries causing high levels of pollution. The coffee industry has come under fire for its high disposable waste in landfills. Most coffee companies have resorted to more sustainable packaging for their coffee.
Sustainability has been a key topic in all industries. Everyone does their best to reduce waste by consuming and dumping small quantities.
2. Climate change
Climate change is affecting farming in most areas, with higher temperatures. It won't be easy to grow coffee in the future. Some leading coffee-growing areas have recorded low output.
Climate change could change the way coffee is grown. It could also lower the production of coffee. Farmers have to think of innovative ways to keep farming going. Agroforestry has been suggested as one way farmers will continue to grow coffee.
3. Pests and diseases
Pests and diseases are also affecting the coffee quality. Using harsh chemicals to kill pests only works against the farmers, as most companies want organic produce. The presence of problems is on the rise owing to the high temperatures.
Closing Thoughts on Competition in the Coffee Industry
The coffee industry will continue to grow. The expanded uses for coffee as a drink have become a culture. The industry has much more to offer despite the challenges and competition.