Before the pandemic, going to coffee shops was a daily social activity in many people's lives. In addition to enjoying a cup of coffee , coffee shops allow us to connect with friends or enjoy a dessert. In 2020 and still today, we have visited them less.
In this article, we'll discuss how COVID-19 impacted coffee production and consumption.
The coffee industry is experiencing a significant decline due to COVID-19.
Today's coffee culture is negatively impacted by the pandemic, which has plunged economies around the world into disarray. The lack of demand is causing global coffee bean prices to plummet. For example, the value in April 2020 was about 10% lower than the market price in December 2019.
In countries deeply affected by COVID-19, such as Italy, Singapore, Japan, Spain, and South Korea, gatherings were banned entirely, directly impacting businesses such as hotels, cafes, and restaurants, and thus coffee tourism.
The coffee supply chain
Coffee is undoubtedly helping many of us work from home, but it's clear that the impact on the hospitality industry has had enormous ramifications for coffee demand, especially specialty coffee . This has had a domino effect for businesses that rely on wholesale coffee as their primary source of income, and most small and medium-sized businesses have had to restructure their business models overnight.
Retail and e-commerce sales have become the primary focus for businesses to emerge from the other end of the pandemic.
When it comes to exchange prices for producers, there are concerns about supply chain disruptions, which make coffee more valuable. Still, there is uncertainty about future demand, which makes coffee less valuable.
Since the sharp decline, we have seen an increase in the price of both Arabica and Brazilian natural coffees. Robusta coffees, however, continued to fall. In March 2020, global exports fell 3.7% to 11 million bags. Shipments in the first six months of the 2019/2020 coffee year decreased 3.9% to 62 million bags.
Although specialty coffee operates outside the commercial market, the links between commodities and specialty coffee are nonetheless intertwined. The impact of the pandemic will undoubtedly cause significant disruptions to the specialty coffee movement and have a ripple effect at the farm level.
The consequences from the origin
Coffee is a living, breathing agricultural product that requires tremendous care to be grown, harvested, and processed. This requires a tremendous amount of labor to achieve and is often done in developing countries that lack basic social infrastructure and access to comprehensive healthcare.
Importers' reports vary slightly depending on the government and the restrictions they impose. One thing that was evident was that countries that adopted social distancing measures saw a reduction in the volume of coffee harvested and processed.
The restrictions also led to temporary closures of some processing plants. Combined with the closure of some ports, the impact on supply and production of the most vulnerable sectors of the chain was evident.
Post-crisis
What happens next depends on when the pandemic ends. We can already see people returning to their old habits.
Some areas already allow coffee shops to operate, but owners are still seeing a decline in sales because many prefer to stay home.
Those stores that remain open should intensify their marketing efforts, such as improving their website and app to offer delivery. Other restaurants are trying new approaches. In addition to a full menu and price list, operators should clearly state that they prepare drinks using best hygiene practices.
They must also sell coffee products for home brewing, alongside their ready-to-brew items. Café owners who want to survive this crisis must evolve.
Despite the obvious challenges caused by the pandemic, we can see that as companies adapt to the new reality, they are identifying solutions to minimize and overcome the impact. It's also clear that consumer habits have changed during the pandemic, with at-home consumption increasing, a trend that should continue throughout 2021, when vaccines are expected to become widely available.