Coffee drinkers warned over looming shortage

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There’s extra reason to savour a morning coffee from now on – an Italian roaster has warned that there could be global shortage of the stuff as production is struggling to keep up with demand.

Andrea Illy, the chairman and chief executive officer of Illycafe, said an extra 40-50 million bags of coffee will need to be produced in the next decade to satisfy demand as the number of coffee drinkers increases in developing economies.

That’s more than the entire crop of Brazil, according to Bloomberg.

The problem is exacerbated by the threat of climate change and low prices.

“Sooner or later, in months or years, we’ll have to make a bold decision about what to do. We don’t know where this coffee will come from,” Illy said.

Climate change is a real threat in Brazil, where farmers risk losing a quarter of their output unless they adapt, according to some estimates.

The popular Arabica bean, which is used by Starbucks, is most at risk from rising temperatures.

Starbucks is also opening more stores in emerging markets like China, fuelling a 13.8% growth in the coffee market last year. 

In developed countries, coffee drinkers increasingly turn to home-brewing to keep the cost of coffee habits down.

Analysts at Mintel said that consumers in developed countries were increasingly seeking out cut-price pod coffee rather than premium brands, like Nespresso.

A coffee shortage doesn’t necessarily mean that the cost of coffee in coffee shops and supermarkets will increase, because many roasters use futures contracts to lock in favourable prices.

However, Kiti Soininen, head of UK food, drink and foodservice research at Mintel, said that the combined pressure of undersupply and changing regulations in Britain could mean that the price of coffee in cafes and restaurants increases.

“The fact that coffee shops look set to be faced with rising costs due to the National Living Wage coming into force could limit their ability to absorb any rises in coffee wholesale prices,” Soininen said.

“This makes it more likely that they’ll feed these through to consumer-facing prices.”

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October 2, 2015 |
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