Coffee demand globally has decreased amongst the 2020 pandemic. There is actually an excess of millions of bags. There is one category of the specialty coffee market that continues to thrive in 2020. The North American demand for certified organic coffee is strong and continues to rise.
It is not shocking that the global pandemic has hurt global coffee demand. Many people find themselves without work, while others only drank coffee in a coffee shop. Many countries have prohibited in person dining. This affects coffee shops as well. In addition to the negative effects of unemployment and shop closures there is the stress factor involved with a pandemic. Some people have found themselves experiencing panic attacks. For these people drinking caffeinated beverages can be too much.
In addition to the global lack of demand being the cause of the coffee glut there is another factor. Over the past two decades global demand for coffee was on the rise. Many new coffee drinkers arose in Asia. Most of these new consumers previously drank tea. The global coffee supply chain was not ready to meet the demands of so many new consumers. Coffee farms started planting more and more coffee trees. These new plantings have been coming online over the past decade. The world now produces more coffee than anytime in known history.
The decrease in demand and increase in production has resulted in a glut of coffee. This glut has caused the commodity market price of Arabica coffee (KC) to go from $1.35 on 8/31/20 to $1.05 on 10/23/20. This is a near 23% decrease within a matter of weeks. The commodity price does not reflect the real price of certified organic Arabica coffee, especially in the North American market. As more people are forced to prepare their own coffee at home they are seeking healthy versions. Not only home consumers, but large producers of bottled and canned coffee beverages are making more and more use of organic coffees.
There may be excess coffee in the market today, but organic certified Arabica coffees are still in high demand. It is too soon to see what effects the cratering commodity prices will have on the global coffee production and supply chain. If prices return soon enough it may stave off farms being abandoned and the decimation of coffee quality.