Producers will promote coffee's health benefits and adapt to ethical trends to sustain growth
Los Angeles, CA (PRWEB) December 20, 2012
The rapid expansion of coffee shops and their associated social aspects have revived demand and driven growth for the Coffee Production industry during the past five years. Despite the global recession, rising unemployment and waning consumer confidence, industry revenue is expected to increase at an annualized five-year rate of 5.2% to $9.6 billion in 2012. This rate, however, is inflated by high raw coffee prices during the period, which producers passed on to consumers in the form of higher prices. With coffee bean prices anticipated to fall significantly in 2012, revenue is estimated to grow just 1.0%, despite consumers' higher disposable income. Further, according to IBISWorld industry analyst Agata Kaczanowska, “heightened competition from alternative beverages, like tea and energy drinks, is hindering revenue growth, as some consumers switch out some of their regular coffee intake.” As such, coffee manufacturers are aggressively promoting the health benefits of coffee consumption, back by findings from the scientific community.
Passing on high input prices to consumers has enabled the Coffee Production industry's major players to realize slightly higher profit, despite low consumer spending during the past five years. The strong brand loyalty that the major players command has also contributed to high margins as well as revenue growth. “A mature market and domestic volatility in supply have led to an increase in international trade participation,” says Kaczanowska. In 2012, despite the decrease in domestic coffee prices, the value of coffee imports is estimated to increase 7.6% to $2.6 billion, accounting for a 24.3% share of domestic demand. Likewise, exports are expected to grow by 11.3% in 2012 to $1.5 billion and account for 15.3% of industry revenue.
Over the next five years, per capita coffee consumption is expected to rise, albeit at a slow rate. The industry's ability to adapt to changes, like the rise of ethical consumerism and the increased awareness of fair trade and organic coffee production methods, will largely influence future demand and consumption. In addition, industry concentration is expected to increase over the next five years, as industry giants like the J.M Smuckers Company, Kraft and Nestle increase their brand awareness and acquire smaller companies to garner a larger share of the market. With coffee producers benefiting from stable demand and new markets, IBISWorld projects industry revenue will grow steadily over the next five years. For more information, visit IBISWorld’s Coffee Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry produces coffee, usually by purchasing coffee beans and subsequently processing them into roasted or ground coffee products. The industry excludes tea production and revenue from coffee made on-premises, such as in a coffeehouse or cafe. Coffee creamer production is also excluded from the industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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