Can the industry meet the demand?
There’s less coffee to go around worldwide this year. The demand for coffee is higher than ever and prices are becoming sky high, thanks to a surging desire for the stuff among one key demographic: millennials. According to Bloomberg, more people between the age of 18 and 34 are drinking coffee on a daily basis, and they’re getting hooked on caffeine earlier in life. In the United States, the National Coffee Association in New York reports that the share of daily coffee drinkers between the ages of 18 and 24 rose from 34 percent to 48 percent in the last eight years. The share of those between 25 and 39 who drink coffee every day also rose from 51 to 60 percent in that period. Millennials born after 1995, meanwhile, now start drinking coffee around the age of 14, while those born near 1982 started around 17. Coffee consumption among older Americans has declined, meaning that Millennials are now responsible for just under half of all coffee demand in America, the world’s top coffee market. But the millennial coffee craze isn’t just limited to the States. They’re also increasingly crazy for the beverage in Brazil and China, according to Bloomberg.
This is surely good news for the coffee industry, but it’s struggling to keep up with demand right now. This summer, Extra Crispy’s Brian O’Connor reported that coffee crops in southeast Asia and Brazil suffered due to an unusually dry growing season, making the supply of robusta beans lower than years past, and increasing the demand for Arabica beans. Industry analysts expected prices would jump to the highest levels since 2015 by year’s end, but according to Bloomberg, that’s already happened for Arabica beans. Hedge funds are now betting that coffee prices could soon reach an eight year high.
Don’t start hoarding your beans just yet, though. There’s reason to be optimistic that the world’s coffee supply could still manage to recover. Rains in Brazil could put Brazilian production back on track, and, according to Bloomberg, Peru and Honduras are starting to increase their output to make up the difference. Meanwhile in the United States, stockpiles of unroasted coffee this summer were their biggest since 2000, which could keep supplies up. The size of those stockpiles has since declined, however, so we’re not in the clear just yet. In these uncertain times, millennials, gather ye lattes while ye may.