Which trends offer opportunities or risks in the European coffee market?
The European coffee market is mature, but constantly evolving. Specialty coffees, single-serve methods and ready-to-drink coffees are growing in popularity among European consumers. Sustainability remains a top priority for industry stakeholders. The growing consumer demand for traceability and transparency in the value chain, as well as the growth in digital marketplaces, has intensified direct trade between producers and European roasters. At the same time, the increasing involvement of multinational companies in mainstream coffee trading and roasting has strengthened market concentration, putting pressure on prices along the entire chain.
Contents of this page
- European coffee consumers becoming more knowledgeable and demanding
- Convenience drives growth of European single-serve and ready-to-drink coffee market
- Reshaping the out-of-home coffee segment
- Consumers are concerned about the health impacts of coffee
- Specialty coffee is a growing segment in the European market
- Certified coffees continue to grow but require caution
- Increased direct trade between small roasters and producers
- Blockchain is gaining ground as a tool to increase transparency and traceability
- Sustainability initiatives in the coffee sector continue to expand
- Increasing consolidation in the mainstream coffee segment
1. European coffee consumers becoming more knowledgeable and demanding
Development of the current European coffee market has been defined by waves starting in the 1960s. The first wave was the popularisation of coffee consumption in Europe from the 1970s into the 1990s. The second wave consisted of a shift to higher-quality coffee and the development of coffee corner locations. This wave was marked by the introduction of chains, such as Starbucks and Costa Coffee, beginning in the mid-1990s in Europe. The third wave has been noted since the mid-2010s, marked by the growing demand for high-quality coffees. These coffees focus on particular taste attributes — a ‘coffee-like-wine’ consumer attitude — and direct sourcing, usually traceable to farm level.
The high-end segment of the European coffee market experienced a fourth wave, characterised by what is called the science of coffee. In this context, it became crucial to understand the intrinsic characteristics of the coffee bean and the influence of its preparation on its taste. During the third and fourth waves, consumers have also taken interest in the origin of coffee and understanding the story behind the product as well as the impact of their consumption at origin.
Currently, there is a fifth wave in the global coffee industry. This wave is aimed at achieving a highly successful, high-quality, customer-centric and sustained coffee business that meets the desires and needs of today’s demanding and knowledgeable coffee drinker.
Meanwhile, consumers can more easily connect with coffee farmers through increased traceability and digital tools. Consumers also have an increased interest in understanding the environmental impact of their consumption. This is further highlighting connectivity and the planet as important themes in the coffee market.
Coffee origins increasingly improving capacities and resources
Coffee-producing countries are increasingly developing capacities and gaining access to resources that improve their position in the value chain. For example, producers are learning more about buyer profiles, allowing them to better position their products and engage in negotiations. In addition, a rise in expertise about coffee quality and quality assessment has led to the creation of more cupping labs at cooperatives. In these labs, farmers evaluate and learn to appreciate different aspects of coffee quality according to international standards.
Examples of coffee cooperatives with integrated cupping labs and internationally trained cuppers are Cooperative Muungano (DR Congo), AsproUnión (Colombia), Koakaka (Rwanda) and Koperasi Arisarina (Indonesia). In some cases, national cupping schools have been established, for instance by IHCAFE (the Honduran Coffee Institute) and ANACAFE (Guatemala).
There is also an increasing number of educational short and on-demand online courses on offer. Topics include improving coffee quality, better harvesting protocols and developing cupping skills. These online courses make education more accessible to coffee producers and exporters across the globe. Examples of online courses include The Center (by Sucafina) and Boot Coffee Campus.
- Keep yourself informed on the different trends, developments and waves of the European coffee market. This can help profile your products and business in a more targeted way. Look for information on the websites Perfect Daily Grind, Daily Coffee News, World Coffee Portal, Specialty Coffee Association: News, Bar Talks and Comunicaffe International.
- Check out these coffee tasting exercises to start learning how to taste coffee and eventually consider the possibility of becoming a Q-grader (for Arabica) or R-grader (for Robusta). Refer to the Coffee Quality Institute to see if any cupping projects or activities have been developed in your region.
- Becoming a Q-grader or R-grader could be expensive, so consider also earning a professional tasting certificate provided by local institutions, such as the coffee quality and tasting programmes offered by national institutes of professional training in Honduras (INFOP) or Colombia (SENA).
- Develop and promote your unique selling points as a supplier of (specialty) coffee. Think about what sets you apart from your competitors and create your marketing story around it. It can be related to the origin of your coffee, for example, the agro-climatic characteristics of the producing region, the culture of the producing communities or the unique quality of your products, such as your cupping score, or a combination of these.
2. Convenience drives growth of European single-serve and ready-to-drink coffee market
European demand for single-serve coffee, such as coffee pods and capsules, has been growing strongly in the past decade. The European market for coffee pods and capsules is expected to grow further at an average annual rate of 6.8% until 2027. Sector growth was boosted by the COVID-19 pandemic. The pandemic led consumers to buy more and more coffee to be consumed at home, due to the closure of cafés, restaurants and offices.
Large industry players continue to invest in their single-serve coffees. For instance, in 2020, Nespresso announced it will invest about €145 million to increase production of their coffee capsules in Switzerland. JDE Peet’s announced in late 2020 that it would increase their coffee capsule production in France by 60% to meet increased global demand for at-home coffee products during and after the pandemic.
Especially in Northern and Western Europe, retailers keep expanding their assortments of single-serve methods. The ease-of-use of these products, their strong marketing, and the wide variety of flavours available have contributed to their popularity. The European market of pods and capsules is dominated by Nespresso, Starbucks, Lavazza and JDE Peets.
One important trend within the single-serve market is the introduction of specialty coffee capsules. This is still a very small market but is growing rapidly. There are more and more roasters including an offering of coffee capsules in their assortment. Examples of companies offering specialty coffee capsules are the British Difference Coffee, Halo, Hayman and Colonna, the Dutch Bocca Roasters and Belgium’s Caffènation.
The growing popularity of specialty coffee capsules brings interesting opportunities for specialty coffee exporters. This is mainly because it is helping to popularise high-quality coffees of different origins and flavours. Nespresso has also joined this trend by launching the Reviving Origins programme, aimed at bringing back lost coffee origins. Origins in their assortment include specific regions of Colombia, Zimbabwe, Uganda, DR Congo and Cuba.
Figure 1: Nespresso’s Reviving Origins programme
Source: Nespresso, 2022
The single-serve market has a major downside as well. This is the negative environmental impact of coffee capsules. In response, the industry has introduced recyclable and compostable solutions and alternatives. Today there are many environmentally friendly solutions found on the market. Examples are Dualit's compostable coffee capsules, Migros’ fully compostable ‘coffee balls’ and the biobased capsules by Dutch roaster Peeze. There are also several initiatives for recycling coffee pods. One is the Alliance for Aluminium Capsule Recycling in France, started by JDE Peet’s, Nespresso and Nestlé France. Another is the Podback scheme in the UK, set up by Nestlé and JDE UK.
Still a niche market, ready-to-drink (RTD) coffees form one of the fastest growing market segments in Europe. The market is expected to grow by 4.8% between 2022 and 2027. The convenience of RTD coffees and their perceived health aspects drive this trend, as RTD coffee is presented as an alternative to sodas and alcoholic beverages. Cold brew coffees and nitrogen brew coffees are examples of RTD coffees. Coca-Cola is the largest player in the RTD sector, followed by Starbucks (distributed by PepsiCo) and Nestlé.
- As an exporter of large quantities of standard quality coffees, identify European roasters that manufacture private-label packaging, single origins, coffee blends, ready-to-drink products (RTD), pods, capsules or importers that supply to these roasters. Approach them to sell your green coffee directly. Bear in mind that many single-serve manufacturers use mostly bulk coffee, often certified by Rainforest Alliance/UTZ.
- Read our study on how to find buyers in the European coffee market for more information.
3. Reshaping the out-of-home coffee segment
Following the COVID-19 lockdowns and social distancing restrictions in Europe, different segments of out-of-home consumption have revived in different ways. The number of coffee shops grew again in 2021, after having been hit hard by the pandemic in 2020.
Coffee served in the workplace is another main out-of-home segment in the European coffee market. Due to lockdowns, Europeans had to work from home during COVID-19. As of 2022, many offices have reopened for employees who choose to work in the office full time or part time. This means that not only is demand for office coffee reviving, but employers are also looking for ways to make the workplace more attractive for employees.
Across Europe, coffee quality awareness is growing in the workplace. Increasingly, employees expect similar coffee qualities and sustainability profiles as they would get at coffee shops. Sweet coffee flavours, cold brews and quality decaf options are especially popular. There are some variations between European countries. In the Czech Republic, for example, offices have seen growth in filtered/brewed coffee, which is becoming at least as important as classic espresso. Spanish offices have seen growth in alternatives to espresso, with more nitro coffee solutions (a type of chilled coffee).
Offices are also opting more for coffees that emphasise the environment and zero waste. This is in line with a trend towards more sustainable coffee consumption, which has been strengthened by the COVID-19 pandemic.
The changing profile of European office coffee consumption reflects a demographic shift in the workplace, with an increasing share of Generation Y and Z employees. It is estimated that Generation Y will make up around 75% of the workplace by 2025.
- If you are interested in selling your green coffee to the office segment, connect directly with roasters that are already active in this market segment. This shortens the supply chain and puts you closer to your end segment. You can find roasters on the websites of national coffee and roasters associations. Examples include the British Coffee Association, the German Coffee Association, the Italian Coffee Roasters Association and the Spanish Coffee Association.
4. Consumers are concerned about the health impacts of coffee
European consumers are increasingly concerned about the impact of food on their health and wellness. The COVID-19 pandemic has made consumers even more health conscious, driving up demand for healthy and organic foods. Growing consumer interest in healthy living has also fuelled concerns about health aspects of coffee. According to the Institute for Scientific Information on Coffee (ISIC), global online searches for ‘health benefits of drinking coffee’ increased by 650% in 2021.
Research shows that moderate coffee intake reduces the risks of type 2 diabetes, heart disease, cancer, Parkinson’s disease and depression. This is likely due to anti-inflammatories and antioxidants found in coffee. The European Food Safety Association suggests that moderate coffee consumption fits within a healthy diet and active lifestyle.
The healthy living trend has changed consumer preferences. There is a growing range of coffee products with no added sugar or dairy. For instance, Starbucks offers four non-dairy milk options, including soy milk, coconut milk, almond milk and oat milk. The company regularly introduces new plant-based beverages. Sugar is often replaced with plant-based sweeteners such as monk fruit and stevia.
The coffee industry is also increasingly adding functional ingredients to coffee products. Functional ingredients are thought to boost energy and relieve stress. Popular examples are turmeric, collagen and mushrooms. Mushroom coffee, for instance, is said to have half the caffeine content of regular coffee. The Finnish-American company Four Sigmatic has introduced mushroom coffee in Europe and the United Kingdom, where it is available at Holland & Barret and other retailers.
At the same time, consumers are also more concerned about the negative side effects of high caffeine intake. The consumption of decaffeinated coffee in both the US and Western Europe has grown annually since 2017. There is also a slowly growing demand for specialty decaf coffees.
Concerns about high caffeine intake are also leading to growing interest in alternative products with no or lower caffeine content. Examples of alternative coffee products promoted as being caffeine-free include Chikko not Coffee (roasted chicory), available at Holland & Barret (the Netherlands), and Café Pino (lupine coffee), available at Miraherba (Germany). Other competing beverages include turmeric latte and matcha tea. The UK-based company Pukka Herbs sells three types of organic matcha teas across the UK and Europe. It is worth noting that, although these coffee competitors are growing, they still represent a small market share in specific health-related segments.
- Educate yourself on how coffee compares to alternative products, especially in terms of caffeine content. There are various scientific sources and websites providing this kind of information, such as Healthline. You can find relevant articles by searching on ‘coffee’ and the name of your alternative product.
- Read this post to learn more about what decaffeinated coffee is.
5. Specialty coffee is a growing segment in the European market
The majority of European consumers still buy cheap mainstream coffee, usually in the form of standard blends, ground-for-filter or capsules and pods. However, a growing number of consumers in Europe is willing to pay more for high-quality coffees. Some consumers are also willing to pay more for coffees with a good story related to origin, highlighting environmental, social aspects and other sustainability topics.
There is no exact definition of specialty coffee. In 2021, the Specialty Coffee Association (SCA) proposed a definition of specialty coffee based on both its intrinsic and extrinsic attributes. Generally, specialty coffee is often related to cupping scores, which reflect how coffee is evaluated during coffee cupping. There are different protocols you can use to score a coffee, such as the one developed by the Specialty Coffee Association. For some, coffees with a cupping score of 80 and above qualifies as a specialty coffee, while for others it has to have at least some certification or a cupping score of at least 85.
Relevant developments within the specialty coffee market:
- Signature blends: These are carefully selected coffees from various origins, which reach unique taste palettes. They cater for specific consumer tastes, communicating balance and quality. Examples include various blends by Coffee Masters (United Kingdom), Taf (Greece) and Flying Roasters (Germany).
- Single origin: Coffee origins have received attention from industry and consumers for years now. Single origin is associated with high quality and uniqueness from a certain region or country. Growers from Ethiopia, for example, rely on the uniqueness of this origin, which is considered to be the birthplace of coffee. Peruvian producers also promote their coffees’ unique origin, with their national coffee brand Cafés del Peru, which was launched in 2019. Other examples of single origins are: Jamaican Blue Mountain, Hawaii Kona, Kenya AA and Guatemala Antigua.
- Single farm or estate: Coffee sourced from one single farm is called single farm or single estate. Examples include Tanzanian Kifaru Coffee and the Salvadorian Finca el Cerro.
- Micro lots and nano lots: The specialty coffee market has also led to an increase in micro and nano lots. These lots consist of extremely high-quality coffee beans, which are sold for very high prices. Micro lots usually consist of 10 to 75 bags. Nano lots are even smaller, consisting of less than five bags of coffee conferring an even more exclusive quality. Micro and nano lots are allowing for more direct relations between producers and smaller buyers, such as specialised traders and small-scale roasters. This opens up an interesting opportunity for top-quality and value-added coffees. However, volumes are low, the costs for preparing these lots for export and the logistical expenses are high. Micro and nano lot coffees usually do not represent the core business of a coffee producer but may primarily boost the producer’s reputation of having the skills to produce interesting varieties and processing.
Growing specialty market
The fact that large trading companies are expanding their portfolio with specialty coffees shows how the segment is gaining importance. InterAmerican Coffee, owned by Neumann Kaffee Gruppe, was one of the first large players to set up a group dedicated to sourcing specialty coffees. Other more recent examples include Rehm & Co (owned by Benecke Coffee) and Sucafina Specialty. Olam Specialty Coffee expanded its brand and e-commerce platform from the US to Europe in 2022.
Although mainstream coffee actors increasingly engage in the specialty market, there is also a large number of specialised independent trading companies in Europe. These companies are focused on importing small volumes of high-quality or single origin coffees, for which they pay interesting premiums. Examples include Coffee Quest, Trabocca, This Side Up (the Netherlands), Belco (France), Falcon Coffees (United Kingdom) and Nordic Approach (Norway).
The increasing interest in specialty coffee is also reflected in the growing number of coffee bars, small roasters, small local brands and baristas in Europe. The specialty segment was hit hard in 2020-2021 because of the global COVID-19 pandemic, which led to the closure of many specialised coffee shops and bars. Especially the higher-end segment suffered, registering lower demand than in previous years.
However, the interest in high-quality coffees across Europe is embedded in consumer preferences and is here to stay. In fact, demand for unique and high-quality coffees may see further growth in the near future. This is mainly due to a growth in e-commerce and the consumption of higher-quality coffees at home during the global pandemic. Also, supermarkets are increasingly looking at specialty coffee, offering lighter roasts and starting up collaboration with local roasters, such as Lidl in Ireland.
Most specialty coffees are Arabica cultivars, of which Typica and Bourbon are the most widely known. High-quality Robusta (or: Fine Robusta) is not yet widely available. However, thanks to increased industry efforts to create a common language for Robusta quality, it has also become possible to become an R-grader. R-graders are cuppers specialised in Fine Robusta coffees. Also, updated Q Fine Robusta Standards and Protocols were published in 2019, as well as a Robusta Green-Grading Handbook.
These efforts are the result of a growing interest in Robusta varieties in the specialty coffee market. Some European coffee shops and roasters already focus on Fine Robustas. For instance, the Swiss micro-roaster Röstlabor offers single-origin Robustas from countries like Mexico and Thailand, alongside specialty Arabicas. Another example is Black Sheep Coffee in the United Kingdom, which serves single-estate specialty grade Robusta from India.
The growing demand and the current limited supply of high-quality Robusta coffees offers interesting opportunities for exporters that can provide a constant supply of fine Robusta coffees. Producers can improve the quality of their mainstream Robusta via processing techniques and post-harvest activities. Consider also growing organic Robusta, for which demand is also growing. Examples of Fine Robusta exporters include Beanspire Coffee (Thailand), Fazenda Venturim (Brazil) and Macenta Beans (Guinea).
- Read our study on the specialty coffee market in Europe to learn more about trends and market opportunities for coffee exporters.
- Investigate new varieties that can be grown on your farm or by your cooperative. Also look into different ways of processing coffee. This will increase your reputation as a specialty coffee producer. If interested in your micro and nano lots, importers may also purchase your mainstream coffee to fill up the container. Investigate opportunities in high-quality micro or nano lots. Read this article on how to limit risk and improve quality on your micro lot.
- Check the Specialty Coffee Association (SCA) website to learn more about coffee cupping and protocols. Consider obtaining a Q-grader certificate to be able to cup and score your Arabica coffee according to international aroma and taste standards. If relevant, explore opportunities to become an R Robusta grader as well. The SCA website also publishes news, events and resources related to specialty coffee in Europe and North America.
- Provide correct documentation, such as a detailed cupping result report and full description profiles of your coffees. Buyers expect proof of the grading process and the final cupping score of your coffee. Being able to indicate the coffee’s variety, altitude, fragrance, aftertaste, balance, sweetness and uniformity will be important in communicating to your potential buyer that you know what coffee you have. The exact minimum scores differ per country and buyer but usually ranges between 80 and 100. Note that buyers will cup and re-grade your coffee.
- Refer to the Cup of Excellence platform to connect with other industry players and potential buyers.
6. Certified coffees continue to grow but require caution
European consumers are increasingly concerned about the social and ecological impacts of their consumption behaviour. This has a great influence on the coffee market, where sustainability standards are ever more popular and where companies are increasingly required to comply with such standards.
Certification standards are often part of the sustainability strategy and minimum requirements of European traders, coffee roasters and retailers. Many European retailers, for instance, have committed to sourcing only certified coffee for their private-label brands. An example is that all private label coffees from Lidl (Germany) must be Fairtrade, Rainforest Alliance/UTZ and/or certified as organic. Another example is Coop (Switzerland), which requires all coffee products in their assortment to be either certified with Fairtrade standard Max Havelaar or 4C. German discounter ALDI Nord also launched a new organic and Fairtrade-certified coffee brand, Hermanas del Café from Peru.
As certification has become essential for medium and large European coffee companies, it is increasingly difficult for non-certified suppliers to access the European market. However, small coffee roasters in the specialty segment are more interested in building trust with suppliers through direct sourcing practices and less in third-party certification.
Although the market for certified coffees is growing, there is more certified coffee on the market than is sold as certified. According to the Coffee Barometer 2020, about 55% of global coffee production is certified, while only 25% of total coffee production is purchased as certified by the industry worldwide. This means that not every producer or exporter will be able to sell their certified coffee at a premium price. However, certification is not just about profit. Thanks to better agricultural practices, certification can also help you boost yields by producing more efficiently, more sustainably and producing higher-quality coffee.
Certification standards in coffee
The major certification schemes in coffee are: Fairtrade, organic, Rainforest Alliance/UTZ and 4C. Rainforest Alliance/UTZ has large-scale operations, reaching mainstream markets in Europe. As of July 2020, Rainforest Alliance offers mutual recognition options for coffee. This means that companies at the end of the supply chain will be able to source UTZ and/or Rainforest Alliance-certified coffee and then use either the Rainforest or the UTZ label on their product. 4C, which stands for Common Code for the Coffee Community, also serves the mainstream market.
Organic and Fairtrade certifications have entered the mainstream markets but can still be considered niche markets. Fairtrade launched its first living-income reference prices, specific for Colombian coffee, in mid-2021. Besides Fairtrade’s mandatory minimum prices and fixed premiums for coffee purchases, the living-income reference price is voluntary. Living-income prices reflect the prices required for coffee farmers in Colombia to have a decent standard of living. Still, studies show that certification has mixed results in relation to coffee farmers’ income and welfare.
Smaller certification schemes for niche markets also gain more visibility in Europe, addressing issues such as biodiversity. An example is Bird Friendly Coffee, which is currently mostly available in the United Kingdom and France. Other examples include Demeter (biodynamic), Símbolo de Pequeños Productores (SPP) and Fair for Life (social and fair-trade standards, but not as popular as Fairtrade).
Figure 2: Several certification schemes for coffee
Source: ProFound, 2022 (logos retrieved from certification scheme websites)
- Refer to the Sustainability Map of the International Trade Centre for more information on trends, figures and developments in this market, including an overview of certification schemes.
- Read our study on social certifications to learn more about various different certification schemes. Also see our studies on Exporting certified coffees and Exporting organic coffee to the European market to learn more about market opportunities.
- Consider showing the sustainable and ethical aspects of your coffee production with certification standards. However, before engaging in any certification schemes, always verify whether there is sufficient demand for certifications in your target market or with the buyers you already know.
- Consider the costs involved in the certification process. You can do so by making a detailed production cost calculation with and without the certification expense, using various scenarios with different volumes of certified coffee sales to calculate the possible extra profit with each additional certified container sold. Check this article by Caravela on how to estimate production costs on your farm. Usually, in the beginning, you may not sell a lot of certified coffee; sales evolve over time as you increase your portfolio of certified buyers.
- Read the Specialty Coffee Transaction Guide’s article explaining the effects of Fairtrade and Organic certification on FOB prices for specialty coffees.
7. Increased direct trade between small roasters and producers
The demand for greater transparency in the coffee chain has strengthened the links between coffee producers and roasters. More and more coffee roasters, shops and sustainability-minded brands are trying to form more direct links with farmers, coops and associations. This also helps them meet consumer demand to be more closely connected to the source.
There is a growing number of actors and digital tools that aim to bridge the gap between specialty coffee roasters and coffee producers. Examples are the digital marketplaces Algrano, Beyco and TYPICA. These platforms allow for the commercialisation of smaller trade volumes and direct contact to build trust between suppliers and buyers.
Many of the roasters engaged in direct sourcing are located in western and northern Europe, where the concept of direct sourcing appeals most to consumers. Examples of small roasters with direct links to origin are Carrow Coffee Roasters (Ireland), Clever Coffee (Denmark), Wakuli and Bacano (the Netherlands), Horsham Coffee Roasters (the United Kingdom). Examples of cooperatives exporting their coffee to specialised roasters are Muungano Cooperative (DR Congo) and Ethio Gabana (Ethiopia).
There has been pushback against direct trade, arguing that it might have led to self-enforced, self-regulated and firm-led schemes, because it lacks any form of outside control or validation. For exporters, engaging with reliable and ethical buyers or platforms will make the difference.
There are also examples of digital platforms in producing countries. For instance, Guatemalan Coffees is a web platform where Guatemalan producers can upload their coffee offers online. The platform does not allow for direct online purchases, but acts as a digital promotion system. It also helps connect sellers and buyers.
- Invest in long-term relationships. Build mutual trust by making sure your buyer-supplier commitments are well documented and stay loyal to long-term partners. Also stay in constant communication with your buyers. European buyers strongly appreciate a proactive attitude, so inform your buyers of any possible or foreseen issues and what you can do to avoid or solve problems. Long-term relationships will likely help you manage market risks, improve the quality of your products, and reach a fair quality-price balance.
- Make sure you are in control of your supply chain. Know your producers and stand out from your competitors by telling your story. This approach makes it easier for you to focus on a niche, specialty market, which increases your chances of obtaining a better price for your coffee.
- Explore online trading sites such as Algrano, Beyco, TYPICA and Almacena Platform to connect to roasters in Europe and elsewhere.
- Read CBI’s studies on Tips to go digital in the coffee sector, Tips on finding buyers for coffee and Tips for doing business in Europe.
8. Blockchain is gaining ground as a tool to increase transparency and traceability
Blockchain technology is a tool that you can use to increase accountability, transparency and traceability. It is an open system of decentralised data tracking and storage that also supports cryptocurrencies. In the case of coffee, this means that the database records transactions in a verifiable and permanent way, so its origins and journey can be traced back. Coffee that is recorded into blockchain thus allows a roaster to see where the coffee comes from and how much was paid for it earlier on. Likewise, producers can see to whom their coffee was sold eventually and for how much.
By bringing together information about end-users and producers, blockchain offers a way to create and strengthen relationships. It enables roasters to make safe claims of direct trade, while producers can invest in connecting with buyers. It improves access to farms by providing information about the size and availability of harvests. Some see the accessibility of blockchain, especially in more rural areas, as well as the education about blockchain’s benefits as major challenges for the successful adoption of blockchain.
Examples of the use of blockchain technology in the coffee industry include Trace from Fairfood, which is used by the Dutch importer Trabocca and coffee brand Moyee Coffee. Another example is Farmer Connect. This platform, launched in 2020, aims to improve traceability in the global coffee supply chain. It has big industry partners on board, such as JDE Peet’s, Sucafina and Colombia’s National Federation of Coffee Growers. Farmer Connect also targets consumers with an app called Thank My Farmer. The app iFinca is another example, which connects consumers and farmers, and verifies farmgate prices.
Another implementation of blockchain is the coffee trading platform Farmers Direct Coffee, launched in 2021. This platform offers direct connections between potential buyers and sellers, using blockchain technology. It is the first platform co-owned by farmers and cooperatives.
- Learn more about traceability along the coffee supply chain in the UNIDO manual Traceability in the Green Coffee Supply Chain.
- Read more about the added value of traceability for coffee farmers in this blog from Caravela Coffee.
- Read more about the application of blockchain technology in the coffee chain and learn about the implications for the industry in Fresh Cup Magazine’s article Keeping Track: Leveraging Blockchain Technology to Improve Coffee Price Transparency.
- Look into the above blockchain initiatives online and consider listing your organisation to join the buyer-seller community. The Progreso-supported Beyco platform may be suitable for small and medium-sized coffee producers working in specialty coffee.
- Refer to the Specialty Coffee Transaction Guide to get an idea of current market prices for specialty coffee. This guide quantifies anonymous contract and pricing data of importers and roasters, based on quality, quantity, and origin of purchased coffee. The idea behind publishing these data is that transparency can contribute to challenge current pricing mechanisms in the coffee industry.
9. Sustainability initiatives in the coffee sector continue to expand
Sustainability has three main pillars: economic, environmental and social. In social sustainability, issues around gender inequality and child labour are serious concerns. Economic sustainability refers to issues around low prices, price volatility, meeting market demands and earning a living income.
Regarding environmental sustainability, attention to climate change and biodiversity issues is rising in the coffee industry. Climate change is expected to substantially reduce areas suitable for coffee cultivation by the year 2050. Prolonged droughts, rising temperatures, biodiversity loss and heavy rains expected as consequences of climate change can severely affect the global coffee production. Several coffee varieties have already been declared endangered due to the effects of climate change. Plant disease outbreaks have also been directly linked to climate change, for example the 2020 outbreak of coffee rust in Central and South America. These issues might make it more difficult for exporters to fulfil contracts according to the agreed terms, as availability of coffee is under pressure.
The 2021 publication of the International Trade Centre’s (ITC) Coffee Guide pays special attention to sustainability in coffee. This book builds on collaboration with more than 70 coffee industry actors from across the globe, from seed to cup, to chart a path towards a more sustainable future for the industry.
Private and public sector take coffee sustainability into their own hands
Sustainability concerns are leading consumers to demand more sustainable coffees and stimulating industry players to take action. As a result, the main multinational coffee companies have developed their own sustainability programmes. These programmes either integrate existing certification schemes or bypass them altogether by creating their own responsible sourcing model.
Starbucks has its own private standard for quality and sustainable coffee production called Starbucks’ Coffee and Farmer Equity Practices (C.A.F.E. Practices). Nestlé also has its own private guidelines with a similar approach and focus on quality: Nespresso AAA Sustainable Quality. The large-scale roaster JDE Peet’s initiated the Responsible Coffee Sourcing Principles, and Lavazza has launched its own Sustainability programme. Retailers cover their sustainability concerns and requirements with their own codes of conduct as well, such as those by REWE (Germany), Ahold Delhaize (Netherlands) and Carrefour (France).
Companies are also directly engaged in projects at origin to improve sustainability matters. For instance, the trading group Neumann Kaffee founded the independent NGO Hanns R. Neumann Stiftung, with which it implements several coffee-based projects to promote a sustainable coffee economy. Roaster Lavazza founded the Lavazza Foundation, which implements sustainability projects to support coffee producing communities worldwide. Smaller and mid-sized industry players are also involved in projects directly at origin. For instance, access the websites of the Dutch trader Trabocca or UK trader Falcon to get an idea of the type of projects at origin traders are engaged with.
Global multi-stakeholder initiatives
In addition to the private sector, the number of sustainability initiatives and events in the global coffee sector is increasing. A few examples of multi-stakeholder, sector-wide collaborative sustainability initiatives include:
- The Global Coffee Platform, which is a multi-stakeholder sustainability platform. The Global Coffee Platform has promoted several initiatives, such as the Kenya Coffee Platform and the Coffee Data Standard to streamline reporting practices.
- Conservation International has started the Sustainable Coffee Challenge, which aims to transform coffee production towards fully sustainable practices. It mobilises governments, private companies and research institutions, including around 164 partners from 44 countries.
- The International Women’s Coffee Alliance, a global organisation with the mission to empower women in the international coffee community to achieve meaningful and sustainable lives.
- SAFE Platform, which is a multi-stakeholder knowledge platform that seeks to transform coffee and cocoa landscapes in Latin America.
What all of these programmes have in common is that they provide a platform for actors in the value chain to share experiences and to create a common understanding of the issues affecting them. They also generate knowledge, tools and policies which can propel the sector towards more sustainable and profitable practices.
There are also developments on a European level. The EU is implementing the European Green Deal (EGD) to make Europe climate neutral by 2050. The EGD will impact trade within and imports to the EU. Mainly by introducing stricter environmental and sustainability standards, as well as by adding requirements for export companies from developing countries. One of the policy areas of the Green Deal is the From Farm to Fork strategy, which aims to create a healthier and more sustainable food system. Among the most notable targets set by this strategy is a 50% reduction in the use of pesticides by 2030. As part of this measure, the EU has proposed legally binding targets for maximum residue levels and set strict new rules to enforce environmentally-friendly pest control.
Another policy area of the EGD is the Biodiversity Strategy for 2030. This strategy includes specific measures such as the EU Regulation on deforestation-free products, for which the first legislative proposal was published in November 2021. This regulation aims to minimise consumption of six commodities, including coffee, that are produced on deforested and degraded land.
Another EGD area that the EU has been working on is an EU law requiring companies to address human rights and environmental standards in their value chains, including for coffee. In February 2022, the EU published a draft due diligence regulation to this effect for companies that do business in Europe.
The European Coffee Federation (ECF) reported that it supports an EU-wide mandatory due diligence approach for companies to identify, prevent, mitigate and account for actual or potential adverse impacts in their own coffee supply chains. The ECF also said it welcomes the European due diligence regulation to stop EU-driven deforestation, which includes coffee production.
- Check the website of the initiative for coffee&climate and their practical toolbox to tackle climate change. It provides practical tools on how to improve on-farm drying and storage against bad weather, practical tips on how to implement shade management on your farm, as well as methods that help you make decisions, such as cost-benefit analyses of interventions.
- Check out Fairtransport as an alternative to ship green coffee beans through emission-free transport.
- Look for ways to market your coffee as sustainable. For instance, read about how Ecuador is exploring new sustainable specialty markets with its so-called deforestation-free coffees.
- Read the newly released Fourth Edition of the ITC Coffee Guide, containing the latest trends and sources covering sustainability in coffee.
- Make sure to have a good overview of the opportunities, training and support for improved sustainability that are available in your region. Many local and international initiatives exist to support farmers with their business. For example, look into local governmental programmes and sector-related organisations such as the International Coffee Organization, European Coffee Federation and Speciality Coffee Association, certification standards such as Fairtrade and Rainforest Alliance/UTZ, and agricultural institutes or universities such as The International Center for Tropical Agriculture (CIAT) and the Tropical Agricultural Research and Higher Education Center (CATIE).
10. Increasing consolidation in the mainstream coffee segment
Both the European and the global coffee markets are increasingly consolidating. In an already competitive and saturated market, large-scale players continue engaging in mergers and acquisitions.
In 2018, Jacobs Douwe Egberts’ (JDE) holding company JAB Coffee spent about €45 billion on acquisitions. In late 2019, JAB Holdings merged JDE with Peet’s, with more than 21,200 employees worldwide and a revenue of €6.9 billion. In 2020, JDE Peet’s became the first company to exclusively focus on coffee and tea to announce its listing on the Amsterdam stock exchange.
Nestlé spent about €6.2 billion on a deal with Starbucks in 2018 to sell Starbucks-branded coffee products in retail outlets outside the coffee corner chain, thus gaining market share in the United States. In another example, Lavazza allocated €2 billion on acquisitions in the coffee industry, acquiring, for instance, Mars Drinks.
Other more recent examples of acquisitions in Europe include the acquisition of 75% of the UK trader Complete Coffee Limited (CCL) by Swiss trader Sucafina in early 2021. CCL is the supplier of Costa Coffee, which is the largest UK-based coffee shop. In November 2021, the German coffee giant Melitta Group bought a 70% stake in the Italian-based coffee company Corsino Corsini.
There is also a trend whereby mainstream companies engage further in the specialty market. For instance, Nestlé acquired specialty roaster Blue Bottle in late 2017. JAB Holdings acquired Stumptown Coffee Roasters and Intelligentsia. Another example is JDE Peet’s acquisition of specialty roaster Campos Coffee in 2021. These large companies increasingly adopt terms common to the specialty market, such as single origin and premium quality, thus appealing to consumers who look for signs of quality. As a result, more and more producers are working under the umbrella of large-scale companies. This means producers will have to comply with volume, quality, traceability, certification and other requirements established by these buyers.
Another trend that explains acquisitions is the industry’s attempt to expand the consumption options in coffee, for instance, by marketing it as an alternative to sodas. Examples of this movement include the acquisition of Dr. Pepper Snapple Group by Keurig Green Mountain, the partnership between PepsiCo and Starbucks and the acquisition of Costa by Coca-Cola.
In the coffee shop market segment several acquisitions have also occurred. JAB Holdings has acquired major restaurant chains that sell large volumes of coffee, such as the British Pret A Manger in 2018. Starbucks is consolidating its market position by expanding globally. As described above, market consolidation leads to standardised products and requirements, where exporters eventually need to comply with, often pushing those that cannot comply out of the market.
- Investigate whether you can follow the standardised qualities, volume requirements and standards required by large-scale roasters or whether your product is more suitable to smaller-scale markets. See our study on finding buyers for coffee for more information on different approaches to the coffee market.
- Diversify your markets. If you have coffees of different characteristics and of sufficient volumes, you may operate in conventional, certified and high-quality markets. Many importers are willing to purchase a mix of qualities and certifications because they will be a one-stop-shop to different customers.
- Constantly research online to understand the factors that influence New York coffee market price fluctuations, such as overproduction, upcoming weather and harvests in Brazil, supermarket wars and hedge funds. Examples of useful sources include the USDA Coffee Reports on the World Market and Trade and ICO’s monthly coffee market reports.
- Learn more about coffee hedging and global coffee prices on the Perfect Daily Grind website.
This study has been carried out on behalf of CBI by ProFound – Advisers In Development.
Please review our market information disclaimer.