The worldwide economic decline caused by the coronavirus pandemic will drive down demand for coffee. The big question is how far down will it go?
That’s the conclusion of a study produced in April by the International Coffee Organization (ICO). The study takes an early look at the top 20 coffee-consuming countries. It concludes that any drop of Gross Domestic Product (GDP) will result in a decreased coffee demand. As an example, the report says a one percentage point drop in global GDP will result in a corresponding 0.95 percentage drop in coffee demand, or 1.6 million 60-kg bags.
The results “suggest that even a modest decline in GDP growth as a result of the Covid-19 pandemic could have a significant impact on global coffee demand,” the study stated, and that any increased GDP drop will result in proportionately lower demand.
“As a result, coffee consumption levels could stagnate (or even decline) compared to pre-crisis years that were characterized by steadily increasing depend for coffee,” it stated.
The study noted that an early spike in coffee demand was noted at the start of worldwide pandemic awareness as consumers stockpiled supplies. That panic buying is expected to be followed by proportional reduction in demand as coffee drinkers consume supplies already in the home.
Perhaps more threatening to consumer demand is the loss of household incomes. With less money on hand, consumers may be forced to reduce consumption or be more price conscious in their buying decisions and substitute lower-value blends or brands.
The report, “Impact of Covid-19 on the Global Coffee Sector,” is the first installment of the ICO’s Coffee Break Series.