When we think of hot beverages, coffee is among the most consumed worldwide with roughly 42.6 liters per person per year. While tea is also consumed in largest qualities (85 liters in beverage equivalents per person per year), in terms of value, coffee is much bigger as more coffee powder than tea is used per liter of beverage.
Coffee sales have been propelled in recent years by the proliferation of specialty coffee shops developing a new coffee culture and a taste for higher quality beans, writes eToro analyst for Romania, Bogdan Maioreanu.
Coffee prices in Romania rose 19% in the past year though on the international markets we have seen a decrease about 25% from 228 dollars in March 2022 to around 170 dollars at the end of March 2023. On the global commodity markets the C price – a global benchmark for the price of arabica beans – started decreasing from a high of 260 dollars in February 2022, after the steady increase during the pandemic, currently trading around 193 dollars per pound, still a historically high level due to fears of still tight supply. Goldman Sachs, Rabobank, and Fitch predicted that the C coffee price will continue to fall in 2023, following a steep drop in October last year.
However, this decrease might not show in your cup of coffee. Beans are a fraction of the end-consumer’s coffee price as energy and labor prices are also driving cost pressures. This is just one more factor squeezing consumer spending in the current cost-of-living crisis. The problem is acute in the European Union, whose consumers drink the most coffee globally, sipping about one third of the global production. The rise in demand for higher quality beans – arabica – is also pushing up prices – while the overall global demand for coffee decreased worldwide, the demand for specialty coffee is on the rise.
In Romania coffee consumption per capita is estimated to be around 95 dollars equivalent per year, much lower than the 285 dollars generated by Germans and 222 dollars by Italians. Germany is the largest importer of green coffee beans in Europe and accounted for 34% of all European coffee imports sourced directly from producing countries. At 39% of total direct imports, Brazil is the largest supplier of green coffee to Germany, followed by Vietnam and Honduras.
The mass development of the current European coffee market has been defined by waves starting in the 1960s. The first wave was the popularization of coffee consumption, which was followed by a shift to higher-quality coffee and the development of coffee corner locations including large chains like Starbucks (SBUX). The third wave started in the mid-2010s, marked by the growing demand for high-quality coffees.
In recent years, Eastern European consumers have been developing a taste for quality coffees. While consumption is still well below that of Western Europe, the number of specialty coffee shops has been rapidly growing in Poland, Czech Republic and Romania. Worldwide, the specialty coffee market is expected to grow from 53.67 billion dollars in 2021 to 152.69 billion dollars by 2030.
Europe is now experiencing a fourth “coffee wave” – the science of coffee – with increasingly sophisticated markets focusing on the intrinsic characteristics of the coffee bean and the influence of its preparation on its taste. This leads to specialty coffee shops offering extensive brews and coffee selections to demanding customers. We are also witnessing the rise of the at-home coffee industry, with increasingly sophisticated coffee machines now available for home use.
