SpendEdge Publishes New Global Coffee Bean Market - Procurement Intelligence Report

CoffeeNetwork (New York) – According to a new report from market research firm, SpendEdge, spend growth of the coffee bean market has the potential to touch a value of over USD 7 billion with spend momentum accelerate at a CAGR of nearly 7% between 2019-2024. By virtue of being a significant source of antioxidants, coffee is believed to prevent the risks of ailments such as heart diseases, skin cancer, Alzheimer's disease, and gallbladder stones. Apart from being one of the highly demanded beverages in the food and beverage industry, coffee beans find their extensive applications in the pharmaceutical industry. This will bring drive spend growth in the coffee bean market through 2024.

In terms of spend growth, North and South America will claim substantial shares in the coffee bean market with APAC expected to house the fastest-growing market during the forecast period.

North America

Most of the public places such as offices, airports, and railway stations are installed with coffee vending machines that makes this beverage easily available to people, thereby drive its consumption. This will serve as the primary growth driver in the coffee bean market in this region. In the US, the consumption trend of millennials is marked with their preference towards cappuccinos, lattes, and the like, while 22% of them like espresso. This will contribute to spend growth in the coffee bean market in this region.

South America

Countries such as Brazil, Columbia are some of the top producers of high-quality of coffee beans. Innovations made in brewing methods coupled with the consumption of high-quality and specialty coffee in countries will credited for spend growth in the coffee bean market in South America.

APAC

The growing culture of coffee consumption at coffee shops will be among the chief growth promoting factors in the coffee bean market in APAC. Vietnam is second to Brazil as the largest producer of coffee beans which will further contribute to spend growth. The surge in product launches such as coffee pods and capsules significantly contribute to the growth of Asia's coffee bean market.

Factors such as climatic conditions, trading activities will have significant impacts on coffee beans prices. Any deviation in the ideal climatic scenario which are timely rain and sunlight will reduce farm output and will impact supply. According to the coffee beans price trends, this supply shortage tends to have a direct impact on the market price.  Any increase in coffee trading activities results in a surge in coffee bean prices, thereby highlighting the increased demand for coffee beans.

To cater to the exponentially increasing demand, coffee beans suppliers are installing more equipment to ramp up their production. This will increase their expenses on coffee planting, harvesting, processing, drying, and milling. According to the coffee beans price trends, this increase in supplier's production expenses will have an inflationary impact on buyer's procurement spend in the coffee bean market.

Market-based pricing is the most widely adopted pricing model in the coffee bean market where buyers are charged based on the prices offered by competitors, resulting in similar price offerings across the industry. This increases competition among suppliers, thereby rendering the bargaining power of buyers high.

Coffee bean suppliers are making investments in R&D activities for optimizing production processes and increasing the yield. Methods such as coffee milling process and coffee roasting are made more efficient to reduce wastage. This will help suppliers increase their profit margins.

Regional suppliers are experiencing low profit margins, mainly due to their smaller clientele compared with global suppliers, high operating costs, and strain in retaining qualified personnel such as plant managers. However, regional suppliers are adopting modern technologies and digitizing their manufacturing units. This will help improve the productivity and plant utilization rate, thereby contributing to the marginal growth in profits for regional suppliers.

Buyers are advised to constantly monitor the storage and transportation of the products, which increases their procurement costs. Buyers must collaborate with suppliers that have expertise in logistics operations. This will help buyers reduce storage costs and avoid coffee bean degradation due to improper handling.

Alexis Rubinstein