Today Autumn is starting... so it's kind of time to forget about our summer freedom.
While Africa is talking about re-opening on October 1st the countries who already had gone back to the new normal are increasing measures again. We see a lot of people who are urging governments, experts, virologists and other corona experts to not lock down the world again but they seem to have no other option.
Over the past 3 months we have basically lived in some sort of new normal in Europe, today we're facing another new normal, so what is needed in this world is flexibility in the mind set. The ability to adapt to the new new normal while hoping everything will go back to the old?
For coffee this means a whole lot of things. Here are just a couple of them.
Premiumization is growing in home consumption while the demand for specialty coffee is tanking. In a way this is contradicting but all numbers seem to point to the same conclusion.
Volume wise we have far less consumption than before in the specialty segment, some numbers are even saying 30% less. Since there's no official data around what volume is considered specialty coffee and "commodity" you can't really argue about it but a wide survey with a lot of roasters confirms it in one way or another. The total volume used over the past months is lower than before. At the same time there's far more consumers drinking the better coffees from quality focused coffee roasters at home, they're just unable to compensate for the losses in the "out-of-home" market. In a way we should say specialty coffee is thriving because of Corona we just don't see the real effect in the volume (yet).
The total volume of coffee demand is lower and that's a good thing for the planet in general but that's very bad for the coffee world. So while the consumer has upgraded his cup of Joe at home he's not over consuming as before. We have less spillage in offices and restaurants. This doesn't only have an effect in coffee but also in potatoes, meat, grain, wine, beer...
The coffee world was basically set for a total usage of about 169 mio bags of coffee in 2019/20 but what if the market only needs about 155 mio bags who will not work this year? Who will not be able to deliver coffee? So while we have "no" over-consumption this creates an under-usage of facilities and means.
Coffee farmers are and will be the biggest victims of this certainly in less dynamic coffee producing countries, but this will also have an effect on the total coffee chain. We have to assume some exporters and importers will be out of a job soon, certainly with some commodity bankers turning their backs on loyal customers.
Brazil is proving you can make money with producing coffee and this is not good news for the rest of the coffee producing countries.
Brazil has started to export its biggest coffee crop ever and the quality seems to be fantastic. Coffee farming in this country is typically an industrial process and they have managed to make higher yielding farms, varieties, harvesting tools and optimised post crop management. They have made coffee farming into a professional profitable business. While this is good news for big roasters and the biggest part of the consumer market it's not good news for the smallholder focused coffee countries.
The only solution we can come up with is to focus on quality but the world seems to have a limit in the volume and premium people are able to pay for countries that are struggling to survive. Since Brazil is also improving its qualities the adagio of having "better cupping" coffees from elsewhere is under threat. So it's more than ever the time to focus on trying to improve the perception and cup while at the same time becoming more entrepreneurial as coffee farmers. Sustainability is about profitability in coffee farming.
The coffee world in Q4/2020