Coffee has been most countries’ leading beverage for years and its largest consumer worldwide is the United States. Recently, it has been reported that the demand for the beverage has grown by a surprising 18% as more millennials start drinking coffee at an earlier age. This has been the commodity’s highest since 2008.
Due to increasing demands of the said commodity, supply has been thinning in the coffee market. In addition to that, the dry weather in Brazil has slowed down the production of Robusta coffee, the type of coffee bean often used on instant coffee. Still, there are good chances that Brazil might recover from this crisis. In the mean time, several coffee suppliers are using Arabica coffee, which is often used by famous coffee-chains such as Starbucks Corp.
The thinning supply in beans has caused for its price to go higher since 2015, although it is quite unclear whether the price hike is currently affecting the cost to consumers.
It was observed that the leading groups who consume coffee the most are the millennials. Due to recent trends, millennials were driven more in drinking coffee compared to when it was just a regular drink by older group of people. Since the rising popularity of varying kinds of coffee shops and cafes, coffee’s popularity has risen as well and helped fuel the market demand. Millennials have contributed to about 44% of U.S. demand for coffee. However, the coffee consumption of people ages 60 and above decreased from 76% to 64%.
According to studies, because of all the growing trends, the younger group of millennials who were born after 1995 begun drinking coffee when they turned 14 years old. This shows that drinking coffee occurred earlier than older group of millennials born after 1982, which started to drink the beverage at age 17.
Another major contributing factor on coffee’s increasing demand was that studies of its health benefits have been afloat all around the internet more often. Social media has greatly affected the perception of health drinks which include coffee and tea.
The International Coffee Organization (ICO) has mentioned that coffee demand is still expected to grow at around 2% a year until 2020 in the U.S and 1.3% growth on a global scale. The United States has been accounted for the 16% of coffee demand globally from 2015 to 2016. This data indicates that the increased coffee consumption in the U.S. reflects the strong stand of the USD.
Reports say that many investors are still anticipating more gains from the commodity. This was because demand for coffee outpaced the production for the year ended September 30, and that price of coffee garnered the 5th highest returns this 2016 among other raw materials.
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