Coffee Industry: Lower Prices and Higher Consumption will Keep Revenue Brewing

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Expected declines in raw coffee bean prices and a high level of consumption will drive the Coffee Production industry growth over the next five years, according to IBISWorld, the nation’s largest publisher of industry research. Through 2016, the world price of coffee is anticipated to gradually decline at a 0.4% average annualized rate. Likewise, IBISWorld expects soft consumer and business confidence and low disposable incomes to rebound slowly during this time. Leading indicators of global economic activity are forecast to recover, and a weak dollar will boost industry exports. As a result of these trends, revenue is projected to increase 0.1% in 2012 and grow at an average annualized five-year rate of 0.7% to total $9.1 billion in 2016.

IBISWorld Market Research

IBISWorld Market Research

The rapid expansion of coffeehouses and their associated social aspects also renewed demand and drove industry growth over the five years to 2011

Expected declines in raw coffee bean prices and a high level of consumption will drive the Coffee Production industry growth over the next five years, according to IBISWorld, the nation’s largest publisher of industry research. Through 2016, the world price of coffee is anticipated to gradually decline at a 0.4% average annualized rate. Likewise, IBISWorld expects soft consumer and business confidence and low disposable incomes to rebound slowly during this time. Leading indicators of global economic activity are forecast to recover, and a weak dollar will boost industry exports. As a result of these trends, revenue is projected to increase 0.1% in 2012 and grow at an average annualized five-year rate of 0.7% to total $9.1 billion in 2016.

According to IBISWorld analyst, Agata Kaczanowska, the changing landscape of consumer dietary patterns and the increased emphasis on healthy living and lifestyles are driving Coffee Production industry growth. Backed by the scientific community, coffee manufacturers aggressively promoted the various health benefits of coffee consumption. In addition, “the rapid expansion of coffeehouses and their associated social aspects also renewed demand and drove industry growth over the five years to 2011,” says Kaczanowska. Despite the global recession, rising unemployment and waning consumer confidence, industry revenue is expected to increase during the five years at an average rate of 3.2% per year to $8.8 billion. Because coffee bean prices have risen recently, revenue is projected to decline slightly in 2011, dropping 0.5% as a result of lower consumption in response to the increased prices.

The high level of value added during production has enabled the Coffee industry's major players to realize high profit margins and do well despite high unemployment and saving rates in the past five years. Major players in the Coffee Production industry include; The J. M. Smucker Company (Folgers, Millstone), Kraft Foods (Maxwell House, General Foods International Coffees, Starbucks (under license), Seattle's Best (under license), Yuban (under license), Nestle SA (Nescafe, Taster's Choice, Coffee-Mate), Green Mountain Coffee Roasters and Starbucks Corporation. The strong brand loyalty that the major players command has also contributed to high profit margins and sales growth. A mature market and domestic volatility in supply have led to an increase in international trade participation. In 2011, coffee imports are estimated to increase 50.9% to $1.9 billion, comprising a 19.7% share of domestic demand. Export volumes are expected to increase by 24.7% in 2011 to $1.1 billion and account for 12.0% of industry revenue.

Population growth in the United States is forecast to balance out a gradual decrease in per capita coffee consumption. The Coffee industry's ability to adapt to changes, like the rise of the ethical consumer and the increased awareness of fair-trade and organic coffee production methods, will largely impact future demand and consumption. To this end, IBISWorld projects that industry revenue will grow at an annualized rate of 0.7% over the five years to total $9.1 billion in 2016. Meanwhile, projected declines in coffee bean prices over the next few years should translate into lower industry costs and lead to higher profit margins.

For more information, including latest trends, statistics, analysis and market share information, download the full report from IBISWorld on the Coffee Production industry

IBISWorld Industry Market Research Reports Contain:

About this Industry
Industry Definition
Main Activities
Similar Industries
Additional Resources

Industry at a Glance

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle

Products & Markets
Supply Chain
Products & Services
Major Markets

Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry

Major Companies

Operating Conditions
Capital Intensity

Key Statistics
Industry Data
Annual Change
Key Ratios

Jargon & Glossary

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About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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