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With the dawn of the pandemic, the at-of-home coffee
consumption has been benefiting from the retail segment, but
this initial spike in demand later have been proven not sus-
tainable, as determined by panic buying and stockpiling more
than they really need.
In the traditional market, like Europe and the US, green
coffee demand for the destination arabica certified stocks has
strengthened, arabica spreads across the board with supply
chain increasing their finished good inventory to meet super-
markets demand. We saw the demand was impacted negative-
ly as a result of quarantines specifically mild arabica usage as
the specialty sector and out of home consumption is impacted
greater than instant/soluble, pods, capsules products that
In economics, commodities can be divided into two contain a higher proportion of naturals and Robusta coffee.
categories according to their utility or the time they can be We also do not expect an overall lower global demand
consumed: durable goods and non-durable goods. Food and because of the COVID-19 pandemic, as it may seems more
beverages, such as coffee, are non-durables or we also call it reasonable for a change in consumer behaviors, with an in-
consumables, for the basic need of people’s daily life, they creasing demand for lower-prices blends or brands, and an
are essential in many developed economies. Despite the role increasing demand for caffeine substitutes and complements.
of coffee in the developed economies we should that its nature
may change when considered for emerging markets and de- The Supply Side - Crisis in the Origins
veloping economies. Our daily demand for essential goods is
independent from the national economy trend. Even if we There has been a significant alertness on the supply side
were in a recession, it’s still necessary for people to continue with the increasing lockdowns across central and south
to buy the same quantity of essential goods such as rice, flour America since March. Challenges that coffee producing coun-
and cooking oil etc. Although depending on the pocket, we tries have been going through are extremely tough. In April,
would choose to buy goods at certain prices or the alternatives. FNC (National Federation of Coffee Growers of Colombia)
As for Chinese people, being consumers and living in a tra- acknowledged a 28% decline in the Colombian coffee harvest
ditionally tea-drinking country, the best example for them comparing with the same period in the previous year.
would be tea. For small coffee farm holders, which we have thousands
In April, ICO tried to use their Global Coffee Database, across the coffee origins, coffee growing and producing prov-
population and GDP, as well as economic and demographic en to be unprofitable. COVID-19 forced the experienced
indicators from the resources of United Nations and the World seasonal pickers out, farmers are forced to use locals who lost
Bank etc. in order to provide a preliminary assessment of the their jobs in this pandemic to harvest the coffee under the
demand-side effects of COVID-19, specifically the impact of travel restrictions, not to mention this could also raise wage
a global recession on coffee consumption, which has been level, followed with increasing labor costs, the cost of pro-
challenged by various market players. The conclusion was duction and so on. While hiring the local labors has enabled
that to simply using the GDP as the indicator for the global smaller holders to deal with regional lockdowns and managed
coffee consumption is not realistic, what’s more important the harvest. However, using family, friends and neighbors to
for the consumption forecast is the growth trend in the pop- pick coffee will not be enough when the main Colombian
ulation of the consuming countries. coffee harvest starts in September, there will simply not be
From the early days, we started to see the forecast enough people to finish the job!
showing negative growth in the global economy in 2020. A
gloomy global recession may affect the overall consumption
of coffee. Increasing unemployment and falling household
incomes may affect more price sensitive consumers. This may
lead to a significant decline in sales in higher premium coffee
market segment, like specialty coffee and certified sustainable
coffees as consumers are likely to shift to cheaper options.
However, depending on the level of household savings, the
demand for coffee and other essential goods is often relative-
ly inelastic, and the impact of it may show up over time.

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