Americans Are Drinking More Coffee

The supply versus demand equation for coffee may soon be driving prices higher because Americans are drinking more coffee. Fortune writes about Americans’ coffee guzzling and how this may drive prices higher.

World demand for coffee beans is poised to hit a record this year as people around the world are consuming more of the beverage, and Americans are leading the way. Global coffee consumption is expected to grow 1.2% over the next year starting in October, and American consumption is expected to be up 1.5% this year alone, reported Bloomberg. Coffee has also reached peak popularity in China, Japan, and India, which are expected to demand more java than ever locally.

Futures prices for both Arabica coffee beans and Robusta beans are up as a combination of higher demand and production difficulties in Brazil combine. Coffee stockpiles are falling as growers sell of beans that have been in storage. (We mentioned this in our article asking how do you know when coffee is old.)

Coffee per Person Times Lots of People

Traditionally the heaviest coffee consumption is in nations in the far north. Who drinks the most coffee by nation is the USA but who drinks the most per person is different.

  • Netherlands, 2.414
  • Finland, 1.357
  • Sweden, 1.257
  • Denmark, 1.231
  • Germany, 1.201
  • Slovakia, 1.188
  • Serbia, 1.17
  • Czech Republic, 1.152
  • Poland, 1.128
  • Norway, 1.076
  • Slovenia, 1.076
  • Canada, 1.009
  • Belgium, 0.981
  • Switzerland, 0.971
  • New Zealand, 0.939
  • USA, 0.931
  • Austria, 0.803
  • Costa Rica, 0.793
  • Greece, 0.782
  • Algeria, 0.765

The USA is #16 on this list but leads the pack in total consumption it has a lot more people than the Netherlands, Finland, Sweden or Denmark. When you live in a cold climate you buy coffee not only to warm your stomach but your hands as well! A friend of mine who lived in Alaska said that his favorite grocery store had two coffee shops, one by each entrance and both were busy.

How High Could the Price Go?

Seeking Alpha thinks the coffee price could double in the next year.

The USDA estimates a drop in coffee stock levels that will mean the 2016-17 season ends with just 31.5 million bags.

Last time stock levels dropped to this level the price of coffee was double the current cost.

We feel that going long with coffee today with a long-term view would be a great investment.

Trading Economics provides us with a chart of coffee prices going back forty years.

Over the decades the price of coffee has risen above $3 a pound and fallen as low as 50 cents a pound. Speculators such as readers of Seeking Alpha are anticipating as high as $3 a pound as stock piles fall and Americans as well as everyone else drink more coffee.

The Taste for Coffee Spreads the Really Large Nations

Americans drink less coffee per capita than the Netherlands but make up for it in population size. What happens when coffee catches on in India and China? China.org.cn reports the first Starbucks at Shanghai Disney Resort.

China is Starbucks’ second-largest and fastest-growing market. The coffee chain has over 2,100 stores in more than 100 Chinese cities. It has previously announced plans to have around 3,400 coffee shops in China by 2019.

With a billion people each India and China will not need to drink all that much per person to go to the head of the list in coffee consumption and help drive prices higher.




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