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31192ACoffeeProductionintheUSIndustryReport.pdf
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INDUSTRY REPORT 31192A
Coffee Production in the US
Smell the coffee: Continued consolidation will likely cut industry operating costs
Arielle Rose | May 2022
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Contents COVID-19 (Coronavirus) Impact Update.............................3
ABOUT THIS INDUSTRY.................................. 5
Industry Definition................................................................5 Major Players...................................................................... 5 Main Activities..................................................................... 5 Supply Chain....................................................................... 6
INDUSTRY AT A GLANCE................................ 7
Executive Summary............................................................ 9
INDUSTRY PERFORMANCE.......................... 10
Key External Drivers.........................................................10 Current Performance........................................................ 11
INDUSTRY OUTLOOK.................................... 14
Outlook.............................................................................. 14 Industry Life Cycle............................................................. 16
PRODUCTS & MARKETS............................... 17
Supply Chain..................................................................... 17 Products & Services.......................................................... 17 Demand Determinants...................................................... 18 Major Markets....................................................................19 International Trade............................................................ 20 Business Locations........................................................... 21
COMPETITIVE LANDSCAPE.......................... 23
Market Share Concentration............................................. 23 Key Success Factors........................................................23 Cost Structure Benchmarks............................................. 24 Basis of Competition......................................................... 27 Barriers to Entry............................................................... 28 Industry Globalization........................................................ 28
MAJOR COMPANIES...................................... 30
Market Share Overview..................................................... 30 Related Companies........................................................... 30 J.M. Smucker Co............................................................... 31 Keurig Dr Pepper Inc......................................................... 33 Nestle Sa........................................................................... 35 Kraft Heinz Co................................................................... 38 Starbucks Corporation.......................................................40
OPERATING CONDITIONS............................ 42
Capital Intensity................................................................. 42 Technology & Systems......................................................43 Revenue Volatility..............................................................44 Regulation & Policy........................................................... 45 Industry Assistance........................................................... 46
KEY STATISTICS............................................ 48
Industry Data..................................................................... 48 Annual Change..................................................................48 Key Ratios......................................................................... 48 Industry Financial Statement............................................. 49
ADDITIONAL RESOURCES............................ 51
Additional Resources........................................................ 51 Industry Jargon..................................................................51 Glossary............................................................................ 51
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COVID-19 (Coronavirus) Impact Update
IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic:
· Despite a decline in revenue in 2021 stemming from COVID-19 (coronavirus), revenue for the Coffee Production industry is expected to grow in 2022 as the economy recovers from the pandemic.
· The world price of coffee grew in 2021 and is anticipated to continue growing in 2022 due to the lingering effects of supply chain disruptions, which constrained supply levels.
· Overall demand began growing in 2021 and is expected to continue doing so in 2022 as restaurants and cafes reopen and demand from supermarkets remains high. A rise in consumer spending will also likely fuel demand for the industry.
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About IBISWorld IBISWorld specializes in industry research with coverage on thousands of global industries. Our comprehensive data and in-depth analysis help businesses of all types gain quick and actionable insights on industries around the world. Busy professionals can spend less time researching and preparing for meetings, and more time focused on making strategic business decisions that benefit you, your company and your clients. We offer research on industries in the US, Canada, Australia, New Zealand, Germany, the UK, Ireland, China and Mexico, as well as industries that are truly global in nature.
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About This Industry Industry Definition This industry produces coffee, typically by purchasing coffee beans and processing them into roasted or ground
coffee products. The industry excludes tea production and revenue from coffee made on premises, such as in a coffeehouse or cafe. Coffee creamer production is also excluded from the industry.
Major Players J.M. Smucker Co Keurig Dr Pepper Inc.
Nestle Sa
Kraft Heinz Co
Starbucks Corporation
Main Activities The primary activities of this industry are:
Roasting coffee
Manufacturing coffee extracts, flavorings and syrups
Manufacturing coffee concentrates, including instant and freeze-dried varieties
The major products and services in this industry are:
Roasted beans and ground coffee
Single-serve coffee
Ready-to-drink coffee
Instant coffee
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Supply Chain
SIMILAR INDUSTRIES
Tea Production in the US Baking Mix & Prepared Food Production in the US
Soda Production in the US Bottled Water Production in the US
Juice Production in the US Grocery Wholesaling in the US Supermarkets & Grocery Stores in the US
Convenience Stores in the US
RELATED INTERNATIONAL INDUSTRIES
Tea, Coffee and Other Food Manufacturing in Australia
Powdered Beverage Manufacturing in China
Coffee Processing in the UK Coffee & Tea Production in Canada
Tea, Coffee and Other Food Manufacturing in New Zealand
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Industry at a Glance Key Statistics
$10.7bn Revenue
Annual Growth
2017–2022
-5.1%
Annual Growth
2022–2027
1.2%
Annual Growth
2017–2027
$1.1bn Profit
Annual Growth
2017–2022
-8.1%
Annual Growth
2017–2022
10.7% Profit Margin
Annual Growth
2017–2022
-1.9pp
Annual Growth
2017–2022
4,067 Businesses
Annual Growth
2017–2022
7.2%
Annual Growth
2022–2027
4.4%
Annual Growth
2017–2027
18,836 Employment
Annual Growth
2017–2022
0.1%
Annual Growth
2022–2027
1.9%
Annual Growth
2017–2027
$973.1m Wages
Annual Growth
2017–2022
-4.5%
Annual Growth
2022–2027
1.8%
Annual Growth
2017–2027
Key External Drivers % = 2017–22 Annual Growth
1.6% Demand from grocery wholesaling
4.6% World price of coffee
2.2% Per capita disposable income
0.5% Trade-weighted index
0.4% Per capita coffee consumption
Industry Structure
POSITIVE IMPACT
Technology Change Low
Barriers to Entry High / Increasing
MIXED IMPACT
Life Cycle Mature
Revenue Volatility Medium
Capital Intensity Medium
Industry Assistance Medium / Steady
Concentration Medium
Regulation & Policy Medium / Steady
Industry Globalization Medium / Increasing
NEGATIVE IMPACT
Competition High / Increasing
Key Trends
High commodity prices generally benefit coffee producers, since they are able to pass on rising coffee bean prices to consumers
The largest customer base for the industry is consumers aged 60 and older
A growing number of operators are obtaining fair trade and organic certifications to comply with growing pressure from consumers
Quality is anticipated to continue to be an integral component in driving consumer demand for industry products
Time-strapped consumers are expected to benefit the industry over the next five years
The value of industry imports is anticipated to increase marginally
Internal competition is expected to intensify as the number of enterprises is projected to increase
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Products & Services Segmentation
Major Players SWOT
STRENGTHS
High & Increasing Barriers to Entry
High Profit vs. Sector Average
Low Customer Class Concentration
High Revenue per Employee
WEAKNESSES
High Competition
High Imports
High Product/Service Concentration
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2022-2027)
High Performance Drivers
Demand from grocery wholesaling
THREATS
Low Revenue Growth (2005-2022)
Low Revenue Growth (2017-2022)
Low Outlier Growth
World price of coffee
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Executive Summary Smell the coffee: Continued consolidation will likely cut industry operating costs
Operators in the Coffee Production industry purchase coffee beans and process them into roasted or ground coffee products. Over the five years to 2022, the world price of coffee has experienced volatile ups and downs, ultimately contributing to an overall decline in industry revenue during the period. Although coffee producers have largely passed on volatile coffee bean prices to consumers, mitigating shocks to industry profit, price-based competition has limited the extent in which operators can remain competitive. Furthermore, an appreciated dollar during a portion of the current period has constrained industry exports. Overall, industry revenue has declined at an annualized rate of 5.1% to $10.7 billion over the five years to 2022, including an increase of 2.0% in 2022 alone as the economy continues to recover from the COVID-19 (coronavirus) pandemic.
The current period has also been defined by the emergence of numerous coffee trends. The number of individuals consuming gourmet coffee, who typically consume products with less packaging at premium prices, is at an all-time high. Additionally, the recent introductions of cold brew and nitrogen-infused coffee have been a major boon for coffee producers. During the current period, operators have increasingly offered specialized product portfolios, such as sustainable coffee in environmentally friendly, single-serving formats. Demand for coffee from online retailers has also grown significantly during the period. Shifting consumer preferences have led many operators to consolidate and streamline operations to expand into niche product lines.
Over the five years to 2027, the ability of operators to adapt to fluctuations in consumer preferences, such as ethical consumerism, the growing awareness of fair trade and organic coffee production methods, will likely be vital to industry performance. Furthermore, industry operators are anticipated to continue experiencing external competition from imports, which are expected to satisfy 42.7% of domestic demand in 2027. Similarly, internal competition is expected to intensify as the number of enterprises is projected to increase. Continued consolidation will cut operating costs while a rise in the population of consumers aged 65 and older will provide steady demand for the industry. Overall, IBISWorld estimates that industry revenue will rise an annualized 1.2% to $11.4 billion over the five years to 2027, driven by more consumers purchasing premium coffee.
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Industry Performance
Key External Drivers
World price of coffee
The world price of coffee determines the price coffee producers charge downstream markets. Producers that have strong brand loyalty can normally pass high coffee bean costs to consumers in the form of marked up coffee prices. However, during times of volatility, operators are not always able to anticipate price increases and end up bearing much of the cost. An increase in 2022 reflects continued volatility, hindering industry revenue. The world price of coffee is expected to increase in 2022, posing a potential threat to the industry.
Per capita coffee consumption
Growth in per capita coffee consumption has been slightly constrained by consumers favoring gourmet coffee. For example, as consumers have moved toward home brewing their coffee over the five years to 2022, many individuals have purchased smaller amounts of premium coffee, which has lowered their overall coffee consumption. Nevertheless, per capita coffee consumption is expected to increase in 2022.
Per capita disposable income
Per capita disposable income determines an individual's ability to purchase goods or services. As per capita disposable income rises, more consumers are expected to purchase high-cost, specialized coffee, such as coffee in single-serve packaging. In 2022, per capita disposable income is expected to decline.
Demand from grocery wholesaling
The Coffee Production industry is highly dependent on demand from downstream suppliers, such as grocery wholesalers, which provide coffee products to supermarkets. Coffee producers rely on favorable supply-side contracts with downstream markets, such as supermarkets and grocery stores. Establishing relationships with downstream markets enables coffee producers to gain competitive advantages, such as coveted shelf space or prominent in-store advertising. Demand from grocery wholesalers is anticipated to increase in 2022, representing a potential opportunity for the industry.
Trade-weighted index
As the US dollar appreciates relative to other currencies, coffee becomes less expensive for domestic consumers to purchase from global coffee producers, which intensifies competition for industry operators. Since the United States is the world's largest coffee importer, the value of the US dollar significantly affects demand for coffee. For example, the price of coffee beans is dependent on the exchange rate, which determines the price of coffee. The trade- weighted index is projected to increase in 2022.
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Current Performance
Over the five years to 2022, the Coffee Production industry has contended with rapidly fluctuating commodity prices and shifting preferences among a still loyal consumer base.
The industry has sought to balance meeting demand for new consumer trends while hedging against the varying conditions that affect the price of coffee beans, including fluctuations in the dollar, changes in demand and climatic conditions. An inflated US dollar during a portion of the current period has been damaging to an already volatile industry. The United States is the world's largest importer of coffee, satisfying 43.9% of industry demand from foreign imports in 2022. Moreover, imports are expected to increase an annualized 0.5% to $7.7 billion over the five years to 2022. Weak foreign currencies relative to the dollar in some of the world's largest coffee bean producing countries, such as Brazil, have made foreign imports of coffee more appealing due to lower prices. They've also created a surplus of supply of coffee beans which has contributed to some of the largest price drops in the commodity during the period; in 2018, the world price of coffee fell 12.0%, significantly affecting industry revenue. Consolidation and expansion among the industry's top operators has helped support the industry during the period. Overall, industry revenue has decreased at an annualized rate of 5.1% to $10.7 billion over the five years to 2022, including a 2.0% increase in 2022 alone.
VOLATILITY IN COFFEE BEAN PRICES
High commodity prices generally benefit coffee producers, since they are able to pass on rising coffee bean prices to consumers.
However, recent increases in coffee bean prices have been associated with supply chain disruptions due to the COVID-19 (coronavirus) pandemic. Downstream demand shifted immensely as restaurants and cafes around the world were forced to close shop while consumers turned to at-home coffee consumption to fulfill their needs. The overall level of coffee consumption has changed marginally during the period, increasing an annualized 0.4% over the five years to 2022, and fell 3.1% in 2020. However, increased demand from supermarkets and retailers and decreased demand from restaurants and cafes shook the supply chain and squeezed supply of coffee beans, leading to heightened commodity prices. Moreover, a global shortage of shipping containers put additional pressure on the supply chain. According to a 2021 Bloomberg article, many warehouses in Brazil had the product but were awaiting shipping containers. Many operators were not able to anticipate the price increases at the time, which caused them to bear much of the cost.
Brazil's particularly heavy rainfall in mid-2020 helped yield a record coffee bean crop, shielding the Coffee Production industry from some of the economic turmoil associated with the coronavirus. However, such booms in annual production often led to surplus supply, causing the world price of coffee to drop. Volatility in prices during the period has made it difficult for coffee producers to quickly reflect raw commodity prices in product pricing. Moreover,
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many industry operators hedge commodity risk by purchasing coffee futures, potentially exposing industry operators to losses if they lock in a price that is higher than the future market price. Industry profit has benefited some from the purchasing of coffee futures but remains quite volatile itself. In 2022, profit, measured as earnings before interest and taxes, is expected to account for 10.7% of industry revenue.
INCREASING DEMAND FOR SPECIALIZED COFFEE
The largest customer base for the industry is consumers aged 60 and older, who, according to the National Coffee Association, are more inclined to drink traditional coffee over gourmet styles of the beverage.
However, younger consumers have increasingly demanded specialized, high-quality coffee products, particularly in single-use servings. Over the past five years, rising per capita disposable income has contributed to the increased demand for high-quality industry products, which are often considered an affordable luxury. The higher profit margin of these high-end or gourmet products, such as cappuccinos and espressos, have stimulated industry revenue. Many industry players, such as Nestle SA, have attempted to capture a consumer base with high-quality coffee preferences, but low disposable income by offering specialized instant coffee, such as instant cappuccinos. The Starbucks VIA product line has succeeded by attracting cost-conscious consumers with low-cost, high-quality coffee. Industry operators marketed a diverse portfolio of low-cost industry products by mimicking the taste and packaging of gourmet products. According to 2020 data from the National Coffee Association, the consumption of gourmet coffee has increased 25% in 2019, compared with 2015.
Additionally, cold brew and nitrogen-infused coffee have both made a big splash in the industry over the past five years. US consumers' fast paced lifestyles creates a need for quick options, especially in the morning; a trend that is being driven largely by millennials, who make up the largest consumer group for cold brew and ready-to-drink coffee products. As a result of these new opportunities, new industry participants have entered the market in an attempt to capture these niche markets. The number of enterprises has risen an annualized 7.2% to 4,067 companies over the five years to 2022. As more coffee production companies enter the market, demand for employees has grown. The industry workforce has increased an annualized 0.1% to 18,836 employees over the five years to 2022.
INTERNATIONAL TRADE
In line with an inflated dollar during the period, the value of industry imports has increased at an annualized rate of 0.1% to $7.8 billion over the five years to 2027.
However, imports still manage to satisfy 43.9% of industry demand in 2022. Arabica coffee beans are a necessary input for specialized coffee, which has bolstered consumer demand for coffee products from Central and South America. The United States reexports industry products and derives a significant portion of export revenue from roasting and grinding coffee. The value of exports has contracted at an annualized rate of 2.5% to $874.0 million over the five years to 2022, accounting for 8.1% of industry revenue in 2022.
The globalized nature of the industry has induced many consumers to analyze the supply-side aspect of coffee production and demand ethical industry products that are produced sustainably. While concerns about ethical sourcing practices have distressed the industry, some companies have developed a strong, loyal customer base by adopting environmentally conscious practices. Furthermore, a growing number of operators are obtaining fair trade and organic certifications to comply with growing pressure from consumers.
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Historical Performance Data
Year Revenue
($m) IVA
($m) Establishments
(Units) Enterprises
(Units) Employment
(People) Exports
($m) Imports
($m) Wages
($m)
Domestic Demand
($m)
World Price of Coffee
(Cents per pound (lb))
2013 12,648 2,546 2,030 2,000 14,962 1,197 7,002 922 18,452 11,212 2014 14,188 2,624 2,221 2,192 16,453 1,112 7,492 1,002 20,568 11,515 2015 14,382 2,799 2,541 2,507 15,056 1,060 7,384 1,058 20,705 11,893 2016 14,271 2,995 2,662 2,626 15,767 1,056 6,964 1,211 20,178 12,188 2017 13,947 3,416 2,910 2,867 18,788 993 7,532 1,223 20,486 12,484 2018 12,433 2,808 3,249 3,207 18,189 982 6,728 1,141 18,179 12,845 2019 11,589 2,594 3,580 3,528 18,763 959 6,662 1,116 17,292 13,126 2020 11,662 2,618 3,821 3,781 19,229 876 6,495 1,006 17,281 12,630 2021 10,527 2,358 3,890 3,878 18,327 860 7,516 948 17,183 13,629 2022 10,741 2,415 4,118 4,067 18,836 874 7,718 973 17,586 14,043
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Industry Outlook Outlook Over the five years to 2027, the Coffee Production industry is expected to
benefit from an aging population and consumer trends toward premiumization.
Favorable economic conditions will support profit and revenue moving forward as the world further recovers from COVID-19 (coronavirus). Rising demand from downstream markets as per capita disposable income increases likely will also benefit the industry. The world price of coffee is expected to stabilize, enabling coffee producers to benefit from less volatile input prices. Furthermore, exports will be supported by a depreciating dollar in the outlook period. Overall, industry revenue is forecast to grow at an annualized rate of 1.2% to $11.4 billion over the five years to 2027.
DEMAND TRENDS
Quality is anticipated to continue to be an integral component in driving consumer demand for industry products.
Per capita disposable income is expected to grow an annualized 1.7% over the five years to 2027, enticing more consumers to spend more on high-quality, gourmet coffee. As consumers demand more specialized coffee, downstream markets, such as supermarkets and grocery stores, will likely demand a wider product portfolio, encouraging industry operators to expand product lines. Demand for specialized coffee, especially single-use servings, will enable industry operators to mark up coffee prices. However, domestic coffee producers are still expected to contend with stiff international competition, as well as competition from industry operators that appeal to niche markets, such as sustainable and ethically sourced coffee. Overall, high competition is expected to hinder operators' ability to raise prices. However, less volatile input prices are anticipated to benefit the industry, as industry operators are able to more accurately anticipate commodity prices and efficiently price products. The world price of coffee is anticipated to remain relatively stabilize over the five years to 2027. Therefore, industry profit, measured as earnings before interest and taxes, is expected to remain steady during the period, accounting for 10.4% of revenue in 2027, down slightly from 10.7% in 2022.
Trends that were formed in 2020 due to the coronavirus, such as increased at-home coffee consumption, will likely remain in some form throughout the outlook period. According to a 2021 NCA report, 23% of coffee drinkers bought some kind of at-home coffee machine during 2020. Although restaurants and cafes began reopening in 2021 and are fully open in 2022, demand from supermarkets and retailers will likely remain higher than pre-pandemic levels. E-commerce provides additional opportunities for the industry. Online grocery shopping is gaining popularity for its convenience and, in 2020, for its safety. Demand from online grocery sales increased 92.4% in 2020. Furthermore, coffee is the most popular item among online sales of food and beverages. To remain competitive, industry operators must keep up with trends in downstream demand to capture these new consumer preferences over the next five years.
DIVERSIFYING PRODUCTS
Time-strapped consumers are expected to benefit the industry over the next five years.
To appeal to these consumers, industry operators are expected to increasingly offer high-quality instant coffee, such
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as the quickly brewed varieties in single-serve packaging. Additionally, cold brew and ready-to-drink (RTD) coffee products have grown in popularity for the same reason of convenience. Product development has been notably high in these categories, as brands have marketed themselves with added health benefits by including adaptogens, electrolytes, natural sweeteners and milk alternatives. Brands, such as SToK Cold Brew, a brand of Danone North America, have rapidly expanded product portfolio to include nondairy RTD lattes. Additionally, operators are expected to attempt to offer industry products that appeal to consumer concerns, such as ethical and sustainable coffee production. To do this, brands will likely seek out fair trade and organic certifications.
Although the industry is highly concentrated, new companies are anticipated to continue entering the industry to develop a market niche for specialized, organic or fair-trade coffee. Due to this trend, the number of industry enterprises is expected to grow, increasing at an annualized rate of 4.4% to 5,041 companies over the five years to 2027. As a result, employment is also anticipated to grow, rising at an annualized rate of 1.9% to 20,730 workers during the same period, as key industry operators require a greater labor force to cater to new demographics and meet growing demand from downstream markets.
THE CAFFEINE TRADE
As the US dollar is expected to depreciate, thereby making domestic products relatively more inexpensive for global consumers, the value of industry exports is expected to increase, rising an annualized 1.7% to $952.3 million over the five years to 2027.
In addition, more US-based companies are expected to produce their own coffee despite rising demand for premium goods made abroad, especially for high-quality gourmet coffees manufactured sustainably. Product innovations are expected to increase competitive advantages, which will likely decrease the level of competition from imports. Despite a depreciation of the US dollar, globalization is anticipated to increase over the next five years, especially as global economies recover from the coronavirus. Consequently, the value of industry imports is anticipated to increase marginally, rising at an annualized rate of 0.1% to $7.8 billion over the five years to 2027. Moving forward, trade will likely increase as tensions from protectionism under the previous administration subside.
Performance Outlook Data
Year Revenue
($m) IVA
($m) Establishments
(Units) Enterprises
(Units) Employment
(People) Exports
($m) Imports
($m) Wages
($m)
Domestic Demand
($m)
World Price of Coffee
(Cents per pound (lb))
2022 10,741 2,415 4,118 4,067 18,836 874 7,718 973 17,586 14,043 2023 10,806 2,429 4,306 4,263 19,206 883 7,708 990 17,631 14,356 2024 10,960 2,462 4,515 4,481 19,677 904 7,677 1,012 17,733 14,645 2025 11,083 2,484 4,712 4,686 20,008 918 7,698 1,028 17,862 14,909 2026 11,227 2,514 4,892 4,873 20,373 935 7,731 1,045 18,024 15,182 2027 11,386 2,550 5,053 5,041 20,730 952 7,773 1,063 18,207 15,457 2028 11,513 2,580 5,200 5,194 21,035 968 7,791 1,078 18,337 15,608
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Industry Life Cycle The life cycle stage of this industry is Mature LIFE CYCLE REASONS
Product differentiation has been key to driving sales volumes
High market share concentration deters new entrants
Per capita coffee consumption is slowly growing, matching population growth
The Coffee Production industry is in the mature stage of its life cycle. Industry value added (IVA), which measures an industry's contribution to the overall economy, is expected to decline at an annualized rate of 2.9% over the 10 years to 2027. Conversely, US GDP is anticipated to rise at an annualized rate of 2.0% during the same period. Although IVA is declining while the overall economy is growing, the industry's maturity is typified by moderate to high market share concentration, limiting the number of new industry entrants. In addition, product differentiation has been integral to generating sales volumes, which is typically indicative of an industry in the mature or declining life cycle stages. For example, product differentiation has largely stemmed from offering sustainable coffee products in single serve packaging. Additionally, producers continue to rely on the same market segments for sales, primarily grocery wholesalers and supermarket chains.
Moreover, per capita coffee consumption has remained relatively stable, increasing at an annualized rate of 0.4% over the five years to 2022, thus, keeping industry revenue growth steady. Additionally, trends such as cold brewed coffee and espresso-based products have boosted the industry over the past five years, and new product innovations similar to these are expected to keep the industry strong over the five years to 2027.
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Products & Markets Supply Chain Key Buying Industries
1st Tier
Soft Drink, Baked Goods & Other Grocery Wholesaling in the US
Grocery Wholesaling in the US
2nd Tier
Fast Food Restaurants in the US
Gas Stations with Convenience Stores in the US
Convenience Stores in the US
Specialty Food Stores in the US
Single Location Full-Service Restaurants in the US
Consumers in the US
Direct Selling Companies in the US
Coffee & Snack Shops in the US
Chain Restaurants in the US
Supermarkets & Grocery Stores in the US
Key Selling Industries 1st Tier
Agriculture, Forestry, Fishing and Hunting in the US
Plastic Film, Sheet & Bag Manufacturing in the US
2nd Tier
Industrial Machinery & Equipment Wholesaling in the US
Water Supply & Irrigation Systems in the US
Crop Services in the US
Farm, Lawn & Garden Equipment Wholesaling in the US
Farm Supplies Wholesaling in the US
Fertilizer Manufacturing in the US
Products & Services
Most products of the Coffee Production industry are manufactured from green coffee beans that are roasted to give it its characteristic color, smell, flavor and density.
It is manufactured from two major varieties of coffee beans, arabica and robusta, which have several variations. The arabica blend generally tends to have a richer flavor and is considered to be of higher quality than robusta. Arabica beans are typically found in gourmet and imported coffees from South and Central America, which are known for high-quality coffee imports. Comparatively, the robusta blend is considered to be of lower quality and is used in most instant, soluble and canned coffee products sold in supermarkets and grocery stores. The industry also uses peaberry beans, which tend to be smaller than other varieties and have a deeper, richer flavor.
ROASTED COFFEE BEANS AND GROUND COFFEE
In 2022, roasted coffee beans and ground coffee are expected to make up the second-largest share of industry revenue, accounting for 37.7% of revenue.
Roasted coffee beans and ground coffee have a shorter shelf span than soluble or instant coffee. As a result, downstream markets, such as grocery stores, require quick shipping turnaround for roasted coffee beans and
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ground coffee from industry manufacturers if industry operators include distribution in their operations. Over the five years to 2022, this product segment has remained stable, due to increased demand for premium coffee.
Premium coffee includes coffee beans produced for espressos, lattes and cappuccinos. Over the past five years, consumers have preferred premium coffee, evidenced by more consumers purchasing espresso coffee beans and varieties for both at-home and on-site consumption. According to 2019 data from the National Coffee Association (NCA), an estimated 64.0% of coffee consumed by adults on a daily basis is gourmet, bolstering demand for this product subsegment. Additionally, the COVID-19 (coronavirus) pandemic increased at-home coffee consumption, further supporting this product segment. In its 2021 report, the NCA states that 85.0% of coffee drinkers in 2021 brewed at least one cup of coffee at home on a given day, indicating this product segment is likely to dominate the industry.
SINGLE-SERVE COFFEE
Single-serve coffee, including K-Cup and Nespresso capsules, is anticipated to comprise 45.3% of revenue in 2022.
Over the past five years, coffee sold in single serve formats has appealed to time-strapped consumers who appreciate its shorter preparation time and consistency in quality, increasing this segment's share of revenue. According to 2021 data from the NCA's National Coffee Drinking Trends survey, 24% of coffee drinkers reported using a single-cup system as their preferred method of brewing. Additionally, many offices use single-cup brewing systems so employees can brew a single cup of their preferred flavor. As a result, demand for coffee in single serve formats has risen during the five-year period.
INSTANT COFFEE
Instant coffee makes up an estimated 12.5% of revenue in 2022.
This product segment includes coffee in spray-dried powder, freeze-dried powder and liquid concentrate formats. While instant coffee is preferred by many global consumers, it still accounts for a relatively small share of the US market. Despite some companies making instant coffee more appealing to domestic consumers, such as Starbucks Corporation with its popular VIA instant coffee line, it has still appealed to a market niche of consumers. This segment has decreased as a share of revenue over the past five years.
READY-TO-DRINK COFFEE
Ready-to-drink (RTD) coffee products are expected to account for 4.5% of revenue in 2022.
RTD coffee is prepackaged coffee in bottles or cartons, which enables the consumer to purchase it and go. Products offered within this segment have been popular as consumers prefer the convenience and ease of RTD coffee from some of the industry's largest producers. Furthermore, premium coffee producers have increasingly produced RTD coffee, including cold brew and nitrogen infused coffee, further bolstering this segment's share of revenue during the period. RTD coffee products also present the opportunity to contribute to the larger health trends by including adaptogens, electrolytes and natural sweeteners.
Demand Determinants
The Coffee Production industry is affected by changes in consumers' incomes and trends in beverage consumption.
A rise in disposable income typically leads to increased consumption for most products purchased. Consequently, an increase in coffee consumption is directly related to a rise in disposable income, especially for gourmet, specialty and exotic imported coffees.
Conversely, when incomes are depressed, this adversely affects demand for cafes and premium coffee and boosts demand for prepackaged grounds, as consumers switch to brewing coffee at home. This trend was particularly present in 2020 with the economic downturn brought on by COVID-19 (coronavirus). To retain strong consumer product loyalty that can withstand income fluctuations, industry operators are adapting product lines to meet consumer preferences. The aggressive promotion of the relationship between good health and drinking coffee by the scientific community and manufacturers has successfully fostered positive public perceptions for the industry. According to 2020 data from the Mayo Clinic, regular coffee consumption has been linked to reduced risk of Parkinson's disease, Type 2 diabetes, liver cancer and cardiovascular disease.
The recent emergence of cafe culture, especially in affluent communities, has driven demand for coffee as many individuals use local cafes as a social gathering or work space. Thus, the growth of coffee chains has transformed the social landscape of consumption. Consumer lifestyles have a profound influence on determining demand,
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especially for products such as coffee, which has a high social interaction component. In addition to the economic fallout from the coronavirus pandemic, forced closures of cafes and restrictions on social gatherings further depressed industry demand in 2020. With the reopening of restaurants and cafes in 2021 and 2022, demand has stabilized, shifting back toward out-of-home coffee consumption. However, demand from at-home coffee consumption is expected to remain higher than pre-pandemic levels as many consumers have adjusted to the cost- savings and convenience of brewing coffee at home.
The production methods and buying practices of large multinational corporations in developing countries has come under scrutiny for exploitative and inequitable trading conditions. Mass produced coffee is frequently wrapped up in environmental destruction, largely due to the extremely diverse and delicate rainforests coffee grows best in. Additionally, labor exploitation within the industry is another common source of consumer outcry. Starbucks Corporation and Nestle SA have both had their brand images suffer after confirming that they sourced some coffee beans from farms that practiced debt bondage, child labor and wage theft. The rise of the ethical consumer and related lobbying groups has put pressure on producers to be more accountable and transparent in their dealings with farmers and coffee bean harvesters in developing nations. The ethics of coffee production can seriously affect demand for a particular product or brand and erode the credibility of the manufacturer involved. As a result, there has been a rise in demand for brands to obtain certain certifications, such as Fairtrade and organic certification, which provides confirmation to consumers that the company is using reasonable production practices.
Major Markets
CONSUMERS AGED 60 AND OLDER
In 2022, consumers aged 60 years and older are expected to consume 26.4% of products produced by the Coffee Production industry.
This age group has the highest proportion of coffee drinkers in the United States. This segment's coffee consumption has remained relatively stable over the five years to 2022 and is expected to slightly expand over the coming years due to an aging population in the United States. This market segment also consumes a significant share of instant and decaf coffee.
CONSUMERS AGED 40 TO 59
Consumers aged 40 to 59 are expected to account for 24.0% of revenue in 2022.
Over the past five years, this market segment has increased its demand for coffee products. This growth can be partially attributed to the fact that this segment of the population typically has a significant amount of discretionary spending, enabling them to purchase more expensive premium coffee products.
CONSUMERS AGED 25 TO 39
Consumers aged 25 to 39 comprise 23.8% of revenue in 2022.
Over the five years to 2027, this demographic group is anticipated to continue to increase its coffee consumption. This age demographic consumes a large share of gourmet coffee, specifically espresso-based beverages. According to the 2017 National Coffee Drinking Trends survey by the National Coffee Association, this demographic is the most likely to consume gourmet coffee on a daily basis.
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CONSUMERS AGED 24 AND YOUNGER
Consumers aged 24 and younger drink more coffee than they did five years ago.
This segment makes up 17.7% of the revenue in 2022. Most notably, this age demographic consumes the lowest rates of traditional gourmet coffee and comprises the largest share of espresso-based beverages, along with the 25 to 39 age group. This segment has increased as a share of revenue over the past five years.
EXPORTS
The industry is highly globalized and relies heavily on exporting industry products to generate revenue.
The United States primarily re-exports industry products, with global consumers demanding instant coffee, in particular. Industry operators buy coffee beans from Latin America and Mexico and add value to the beans by sorting, roasting or packaging industry products to re-export to Canada and Mexico, among other countries. The value of exports has declined at an annualized rate of 2.5% to $874.0 million over the five years to 2022, accounting for 8.1% of industry revenue in 2022. Much of this decline is due to the appreciation of the US dollar during the period. The COVID-19 (coronavirus) pandemic and the associated global economic downturn exacerbated the appreciation of the dollar, further restricting exports for the industry. As the dollar is expected to depreciate over the next five years, exports are expected to grow as a share of industry revenue.
International Trade Exports in this industry are Medium and Decreasing
Imports in this industry are High and Steady
Imports
The Coffee Production industry has experienced some competition from imports. As the world's single largest coffee importer, the United States relies on global producers to meet demand from domestic consumers. IBISWorld estimates that per capita consumption of coffee has increased an annualized 0.4% over the five years to 2022. In line with this growth, IBISWorld anticipates imports to increase at an annualized rate of 0.5% to $7.7 billion during the same period and satisfy a significant 43.9% of domestic demand in 2022.
In general, consumer demand for arabica coffee, which requires high altitudes and moist tropical climates to produce, is high. The United States lacks the ideal climate conditions that are conducive to arabica coffee production and, therefore, requires substantial imports. In 2022, Colombia is expected to account for 17.9% of industry imports, followed by Brazil (17.5%), Switzerland (11.2%) and Canada (5.1%).
Exports
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Produced in over 70 countries, coffee is one of the world's largest traded commodities. The United States derives a significant portion of export revenue from re-exporting industry products after the coffee beans are roasted and ground. In terms of US export markets, the Canadian market accounts for 56.5% of exports in 2022, followed by South Korea (11.9%), Japan (5.2%) and Mexico (4.8%).
The value of exports has declined at an annualized rate of 2.5% to $874.0 million over the five years to 2022, accounting for 8.1% of industry revenue in 2022. This is primarily a result of an appreciating US dollar, making coffee more costly for international buyers, weakening demand.
The value of exports is expected to increase an annualized 1.7% to $952.3 million over the five years to 2027, resulting in exports comprising a slightly larger share of revenue. Moreover, rising demand for coffee from emerging economies will likely bolster demand for industry products.
Business Locations
The geographic spread of establishments in the Coffee Production industry is strategically located close to sources of key inputs, while remaining within serviceable distance to large city markets. Industry establishments have moved minimally in recent years.
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Investment in the heavily populated Mid-Atlantic and Great Lakes regions has increased, while there has been little investment in other geographic areas as many raw materials originate in South America, Africa and Asia, and are key components determining the geographic spread of the industry. Producers have continued to rely on general distribution chains to supermarkets and coffee shops to distribute roasted coffee beans.
West
The West region houses the most industry establishments, accounting for 32.8% in 2022. California comprises 16.1% of industry establishments in 2022 and is followed by Oregon (6.4%) and Washington (6.3%). A young, educated and affluent consumer base, combined with a well-established coffee drinking culture and easy access to big population centers, such as San Francisco, Los Angeles, Seattle and Western Canada, make it ideal for coffee producers to base themselves in the region. Furthermore, easy access to raw materials grown in South America, Asia and Africa substantially reduces transportation costs.
Southeast
The Southeast region accounts for 15.6% of industry establishments in 2022. These establishments are mainly concentrated in Florida, which comprises 3.9% of establishments in 2022, Louisiana (1.8%) and Tennessee (1.4%) because these regions offer easy access to key raw materials. Additionally, industry operators with manufacturing facilities in the Southeast can easily service the markets in Miami and Atlanta.
Other
The Great Lakes region is home to 10.3% of all coffee production facilities in 2022. Combined, Illinois, Ohio and Michigan account for 7.7% of industry establishments in 2022, placed primarily for their close proximity to major consumer markets such as Chicago, Detroit, Cleveland and Milwaukee.
The Mid-Atlantic region accounts for 12.4% of establishments in 2022. The region is home to some of the biggest and most affluent cities, such as New York City and Philadelphia, while remaining close to high coffee-consuming cities such as Boston and Chicago, which makes this area attractive to manufacturers. New York state alone accounts for 6.0% of establishments in 2022.
The Southwest and Rocky Mountain regions comprise 8.5% and 7.0% of establishments, respectively, in 2022. Most notably, Texas comprises a large share of establishments, accounting for 7.0% in 2022. Texas's close proximity to the Southeast region and Mexico enables the state to easily access and distribute key input commodities. New England and the Plains region comprise 7.5% and 6.0% of industry establishments, respectively, in 2022. Massachusetts is home to the majority of establishments in the region (2.1%), primarily due to its capital, Boston, which has a large and affluent population and a well-established cafe society.
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Competitive Landscape Market Share Concentration
Concentration in this industry is Medium
The Coffee Production industry has a moderate level of market share concentration. The top five producers are estimated to account for 69.2% of industry revenue in 2022. Smaller operators have entered the industry over the five years to 2022, while larger industry operators have engaged in significant acquisition activity in an attempt to grow and protect their existing market share. For example, Nestle SA (Nestle) acquired two smaller companies, Chameleon Cold-Brew and Blue Bottle Coffee Inc., to expand its premium product lines in 2017. As a result, larger industry operators have consolidated, but new independent producers are threatening the position of major players. Market share is expected to gradually increase over the five years to 2027 as key players continue to innovate products, build strong brand loyalty, implement marketing campaigns, conduct joint ventures with other key players and diversify product portfolios with specialized coffee products, such as coffee with sustainable coffee beans. Major players, such as Nestle, will likely continue to manufacture mid- to low-value, high-volume, branded products. Larger companies are expected to begin to compete with smaller players by focusing on niche markets, supplying specialty high-value products that have shorter production runs and lower volumes for capturing more market share.
Key Success Factors
IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Ability to adapt to change: A key factor to industry success is the ability to anticipate and respond to changes in consumer preferences in a timely manner.
Ability to pass on cost increases: The ability of producers to pass unexpected cost increases down the supply chain is vital to maintaining profitability.
Product differentiation: Product differentiation is one of the most important factors for major players to maintain market share and increase revenue. The primary goal is to reduce the directness of competition.
Supply contracts in place for key inputs: Reliable contracts with overseas suppliers of key raw materials, such as coffee beans, considerably reduce the volatility of key input prices for industry players. Guaranteed supplies at fixed prices minimize supply costs and aid production planning.
Economies of scale and scope: The scale and breadth of manufacturing facilities largely determine the per unit costs of roasting coffee and, therefore, the profitability of a coffee production company.
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Cost Structure Benchmarks
Profit
Industry profit, measured as earnings before interest and taxes, is estimated to account for 10.7% of revenue in 2022, down from 12.6% in 2017. Coffee producers generally hedge the risks of volatile input commodity prices, such as the price of coffee beans, by adjusting the product prices. The world price of coffee increased in 2020 and 2021, which helped offset decreases in prior years, leading to an overall increase during the period. The world price of coffee increased an annualized 4.6% over the five years to 2022, which has forced coffee producers to raise product prices. Nonetheless, increased competition has mitigated producers' ability of adjusting prices.
Wages
Wage costs are estimated to account for 9.1% of industry revenue in 2022, up from 8.8% in 2017. Over the past five years, wages have gradually increased as a share of revenue. This is partially due to increased research and development to develop and source new coffee varieties.
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Purchases
In 2022, purchase costs are expected to account for 61.9% of industry revenue. Coffee beans are the main input that manufacturers purchase. The price of coffee has increased at an annualized rate of 4.6% over the five years to 2022. Typically, large coffee producers can secure favorable contracts with coffee bean harvesters that lower purchase costs. Many key operators include coffee purchasing, roasting, packaging and distributing in their operations. For example, Starbucks Corporation incurs costs from purchasing green coffee beans and roasting the coffee beans to meet the company's standards for blends and single-origin coffees.
Marketing
Marketing costs comprise 0.1% of industry revenue in 2022. Many industry operators, particularly larger coffee producers, invest in marketing to drive sales and develop consumer awareness of promotional activities. Major companies have designed sophisticated marketing and advertising strategies that aim to harness the power of their brands to increase customer loyalty. These include media advertisements, point-of-purchase tastings and displays and related promotional costs. The level of spending remains low relative to revenue due to major companies benefit from cross-promotions from other industries, such as the Coffee and Snack Shops industry (IBISWorld report 72221b).
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Depreciation
In 2022, depreciation costs are expected to account for 2.7% of revenue. The industry's main source of depreciation is equipment, since operators depend on effective manufacturing equipment to keep production costs low.
Rent
IBISWorld estimates that rental costs are expected to account for 1.0% of revenue in 2022. Industry operators have been progressively expanding facilities to improve productivity and meet increasing demand.
Utilities
In 2022, utility costs are expected to make up 0.5% of industry revenue. Utility-related expenses are expected to remain stable moving forward.
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Other Costs
Other costs that can significantly affect the industry include overhead expenses, such as logistics attributed to distribution, in addition to research and development expenses. Overall, other costs are anticipated to account for 14.1% of industry revenue in 2022.
Basis of Competition
Competition in this industry is High and the trend is Increasing
INTERNAL COMPETITION
The price sensitivity of consumers in the coffee market varies between the Coffee Production industry's product segments.
Although the market is dominated by well-established brand names, consumers are still price sensitive and can easily switch their preferences to lower-price coffee. Furthermore, the growing segment of low priced, private label brands has made price-based competition more intense, as consumers have become wary of their discretionary spending over the past five years.
The perceived quality of a particular product or brand will likely determine the price consumers are willing to pay for coffee, which is a vital form of competition among industry operators. Brand-loyal customers are not sensitive to price changes due to the associated perceptions of quality and will likely continue to purchase a brand despite price increases. This is particularly relevant in the gourmet coffee segment, where consumers purchase coffee on the basis of quality and taste attributes. In the instant coffee segment, brands such as Nescafé and Folgers are household names and command a high level of brand loyalty.
Developing and maintaining strong relationships with downstream suppliers is also a critical area of competition. The ability to secure coveted grocery store and supermarket shelf space has set market leaders apart from competitors. Brands with the most recognizable products or packaging that are placed visibly at strategic locations have the best chances of maximizing sales at the retail level. As competition intensifies, more manufacturers are expanding traditional distribution networks to include convenience stores, drug and discount stores, shopping mall kiosks and other venues with high pedestrian foot traffic.
Operators also compete on their ability to be innovative and differentiate a product or brand from its competition. Considering the limited opportunities for growth within the industry, it is important for manufacturers to distinguish themselves to maintain market share. Changing consumer tastes and dietary trends have further compelled producers to be innovative with packaging, marketing and labeling initiatives. This trend is evidenced by the emergence of organic, fair-trade and decaffeinated coffee in single serve packs, for example.
EXTERNAL COMPETITION
Industry operators also compete with producers of alternative caffeinated
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beverages, such as tea, energy drinks and soda.
As external competitors produce a wider product portfolio, competition is expected to steadily increase. Beverage producers are also anticipated to compete on the basis of price, brand awareness and consumers' perceived quality of products.
Domestic producers also compete with coffee produced abroad. In 2022, imports are expected to satisfy 43.9% of domestic demand. Overall, imports have increased over the five years to 2022 and are projected to slightly increase over the five years to 2027, weakening external competition.
Barriers to Entry
Barriers to Entry in this industry are High and the trend is Increasing
The biggest threat potential new entrants to the Coffee Production industry experience is the extremely entrenched position of the industry's major players. These companies have high brand and customer loyalty and have considerable resources to invest in advertising and promotions to protect and grow their market share.
Major players also hold favorable contracts with key suppliers, such as global coffee bean harvesters in Brazil and Colombia. Global coffee bean harvesters produce the highest quality beans, and major industry players can leverage their substantial assets to negotiate lower prices. These assets include extensively developed distribution networks, in addition to the ability to secure coveted grocery and supermarket shelf space, both of which prevent new entrants from establishing their position in the industry. Key players have also developed a strong consumer base and distribution market due to established high-quality products and customer service. For example, key players may ensure timely delivery to downstream markets, such as grocery stores. Although this is not a barrier, it may still deter potential industry entrants.
All of the industry's major players have robust product portfolios featuring most of the world's best-known coffee brands. Significant advertising budgets enable them to aggressively promote products through a range of media outlets that are simply inaccessible or too expensive to new entrants. Incumbent players also experience efficiencies created by economies of scale and scope. Lower per unit costs of production, varied product lines and high levels of investment in technology and equipment make competition difficult.
Barriers to Entry Checklist
Competition High
Concentration Medium
Life Cycle Stage Mature
Technology Change Low
Regulation & Policy Medium
Industry Assistance Medium
Industry Globalization
Globalization in this industry is Medium and the trend is Increasing
The Coffee Production industry has a medium and increasing level of globalization, primarily due to its reliance on high quality inputs from a host of different countries, most notably Brazil, Colombia, Ethiopia, Indonesia, Mexico, Peru, Uganda and, more recently, China. In particular, arabica coffee beans are harvested in South and Central America, while robusta beans are produced primarily in Asia and Africa. Rising cost pressures and supply constraints have led producers to source inputs from the most cost-efficient domestic or international locations.
Moreover, most of the industry's major players have an extensive presence in foreign markets. For instance, Nestle SA is based in Switzerland and has 376 manufacturing facilities in 81 countries. This is a strong industry trend, with most industry players maintaining strong global presences. For example, Starbucks Corporation operates more than 32,600 stores worldwide.
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Major Companies Market Share Overview
Related Companies
Competitors Company Type Employee Segment Revenue ($m) Market Share (%) Profit ($m)
J.M. Smucker Co All Star 500+ Employees 2,255.7 22.24 702.2
Keurig Dr Pepper Inc. All Star 500+ Employees 1,929.2 19.02 381.7
Nestle Sa Disruptor 500+ Employees 1,861.9 18.36 290.0
Kraft Heinz Co Rising Star 500+ Employees 595.5 5.87 42.2
Starbucks Corporation Laggard 500+ Employees 373.3 3.68 39.9
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Companies with 5.0% industry market share are displayed in the PDF version of this report. You can view insights for all companies associated with this industry on my.ibisworld.com
J.M. Smucker Co
Company Overview
Brands & Trading Names
9Lives Adams Bick's Café Bustelo Café Pilon Canine Carry Outs Carnation Crosse & Blackwell Dickinson's Dunkin Eagle Brand Five Roses Folgers Golden Temple Gravy Train Jif Kibbles 'n Bits Knott's Berry Farm Laura Scudder's Medaglia D'Oro Milo's Kitchen Nature's Recipe Nutrish Pup-Peroni R.W. Knudsen Family Rachael Ray Robin Hood Sahale Snacks Santa Cruz Organic Smucker's Snausages truRoots Uncrustables
Description J.M. Smucker Co is a public company headquartered in Ohio with an estimated 7,100 employees. In the US, the company has a notable market share in at least five industries: Peanut Butter Production, Pet Food Production, Premium Pet Food Production, Dry Pet Food Production and Snack Food Production. Their largest market share is in the Peanut Butter Production industry, where they account for an estimated 40.2% of total industry revenue and are considered an All Star because they display stronger market share, profit and revenue growth compared to their peers.
COMPANY TYPE Public Company
TOTAL COMPANY REVENUE
$2.3bn
EMPLOYEES 7,100
Other Industries Peanut Butter Production Premium Pet Food Production in the US Snack Food Production in the US Dry Pet Food Production Pet Food Production
Analyst Insights Folgers Tackles Bad Reputation Folgers, which is a part of JM Smucker Company, decided to tackle its bad reputation with a new advertising campaign. The company stated that over the course of time, it has heard many customers say that Folgers is not for them. It has decided to “acknowledge any negative misperceptions and then loudly and proudly challenge them” according to the company’s marketing officer, Geoff Tanner.
New Activity
2022 Café Bustelo El Café del Futuro Scholarship Cafe Bustelo, which is a part of JM Smucker Company, has announced the start of its 2022 Café Bustelo El Café del Futuro Scholarship in partnership with the Hispanic Association of Colleges and Universities. The company is to award 25 $5,000 scholarships, coming to a total of $125,000 to support the education of Latino students.
New Activity
JM Smucker Sells Natural and Organic Beverages and Grains businesses JM Smucker Company announced that it has entered into an agreement to sell its natural and organic beverage and grains businesses to Nexus Capital Management LP in a transaction valued at approximately $110 million. This sale will include R.W. Knudsen® and TruRoots® assets and trademarks, a licensing agreement for Santa Cruz Organic® beverages and the manufacturing and distribution facilities in Chico, California, and Havre de Grace, Maryland.
M&A New Activity
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J.M. Smucker Co
Company Overview
Industry Market Share, Revenue and Profit
Market Share
22.24% Strong 5.2% Current Year (2021)
Annual Growth (2017–21)
Industry Revenue
$2.3bn Strong 1.9% Current Year (2021)
Annual Growth (2017–21)
Profit Margin
31.13% Strong 1.8% Current Year (2021)
Annual Growth (2017–21)
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Keurig Dr Pepper Inc.
Company Overview
Brands & Trading Names
7up A&W Barista Bros Barista Prima Coffeehouse Big Red Brulerie Mont-Royal Brulerie St. Denis Cactus Cooler Café Escapes Café Punta del Cielo Canada Dry Caribou Coffee Cinnabon Coffee People Cplus Crush Diedrich Coffee Diet Rite Donut House Collection Donut Shop Emeril Gloria Jean's Coffees Green Mountain Coffee Roasters Hires Hollys Coffee IBC Kahlua Kirspy Kreme Doughnuts Laughing Man Laura Secord Newman's Own Organics Orient Express Panera Bread Peets Coffee PureZero RC Revv Royal Crown Cola Schweppes Squirt Stewarts Sun Drop Sunkist Tully's Coffee Van Houtte Vernors World Timothy's Coffee
Description Keurig Dr Pepper Inc. is a public company headquartered in Massachusetts with an estimated 27,500 employees. In the US, the company has a notable market share in at least four industries: Juice Production, Soda Production, Syrup & Flavoring Production and RTD Tea Production. Their largest market share is in the Juice Production industry, where they account for an estimated 14.1% of total industry revenue and are considered an All Star because they display stronger market share, profit and revenue growth compared to their peers.
COMPANY TYPE Public Company
TOTAL COMPANY REVENUE
$1.9bn
EMPLOYEES 27,500
Other Industries Soda Production in the US Syrup & Flavoring Production in the US RTD Tea Production Juice Production in the US
Analyst Insights The company is forced to contend with extensive competition The company experiences competition on the basis of product selection and convenience, quality, taste, price and availability, as well as brand recognition and sustainability- and corporate responsibility-related factors. In that regard, competing companies include multinational corporations and within the company’s manufacturing and bottling operations, it competes with smaller bottling companies and distributers. Moreover, one of Keurig Dr Pepper Inc.’s main competitors is Nestlé S.A. NCBs (specifically, its packaged coffee), Coca-Cola, the Kraft Heinz Company, the J.M. Smucker Company and PepsiCo.
Competition COVID ESG
Keurig Dr Pepper Inc. remained focused on the health and safety of its employees throughout the COVID-19 (coronavirus) pandemic Throughout the COVID-19 (coronavirus) pandemic, Keurig Dr Pepper Inc. experienced numerous challenges related to its operations, including decreased demand in at least one of their product lines. Nonetheless, despite these difficult conditions, the company was committed to helping ensure the health, well-being and safety of its employees. For example, it implemented physical distancing and comprehensive sanitation measures and encouraged employees to work from home when possible. Additionally, the company provided employees with paid sick time, in addition to any necessary back-up childcare assistance and temporary financial incentives.
COVID
The company is committed to protecting the environment The company highly values sustainability and incorporates it into its operations in an effort to protect the environment and promote consumer health and well-being. In fact, the company was recognized as one of America’s most responsible companies by Newsweek in 2020 and achieved the top environmental score among all other companies that sell consumer goods. Furthermore, the company has set various goals for the future, including making 100% of its packaging recyclable by 2025. Additionally, the company has partnered with the members of the Beverage Industry Environmental Roundtable in their efforts to improve the quantity and quality of water within Mexico.
COVID ESG
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Keurig Dr Pepper Inc.
Company Overview
Industry Market Share, Revenue and Profit
Market Share
19.02% Moderate -8.1% Current Year (2021)
Annual Growth (2017–21)
Industry Revenue
$1.9bn Moderate -12.7% Current Year (2021)
Annual Growth (2017–21)
Profit Margin
19.79% Moderate -0.9% Current Year (2021)
Annual Growth (2017–21)
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Nestle Sa
Company Overview
Brands & Trading Names
Acqua Panna Alpo Blue Bottle Coffee Boost Cailler Cheerios Coffee- Mate DiGiorno Friskies Froneri Gerber Hot Pocket's KitKat Lean Cuisine Lion Cereals Nescafe Nespresso Nestea Nestle Fitness Nestle Nesquick Nestle Nido Nestle Professional Nestle Pure Life Nutren Junior Optifast Peptamen Perrier Purina S. Pellegrino Stouffer's Taster's Choice
Description Nestle Sa is a public company headquartered in Switzerland with an estimated 335,000 employees. In the US, the company has a notable market share in at least 13 industries: Cocoa & Drinking Chocolate Production, Premium Pet Food Production, Pet Food Production, Dry Pet Food Production, Frozen Pizza Production, Coffee Creamer Production, Bottled Water Production, RTD Coffee Production, Animal Food Production, Frozen Food Production, Dairy Product Production, Agribusiness and RTD Tea Production. Their largest market share is in the Cocoa & Drinking Chocolate Production industry, where they account for an estimated 34.3% of total industry revenue and are considered an All Star because they display stronger market share, profit and revenue growth compared to their peers.
COMPANY TYPE Public Company
TOTAL COMPANY REVENUE
$1.9bn
EMPLOYEES 335,000
Other Industries Agribusiness in the US Candy Production in the US Premium Pet Food Production in the US Coffee Creamer Production Cocoa & Drinking Chocolate Production Frozen Food Production in the US Dry Pet Food Production Dairy Product Production in the US Animal Food Production in the US Frozen Food Wholesaling in the US RTD Tea Production Infant Formula Manufacturing Frozen Pizza Production RTD Coffee Production in the US Bottled Water Production in the US Pet Food Production
Analyst Insights Nestle SA experienced challenges throughout the pandemic During the COVID-19 (coronavirus) pandemic, the company experienced some challenges. In response, the company quickly innovated new products and transformation of digital technology to stay ahead of its competitors. In addition to increased digitalization and innovative efforts, the company remained competitive due to its strong brand investment and strong management of its portfolio. All of these factors contributed to the company’s growth in 2021. Specifically, the company achieved 7.5% growth in output and sales due to an increase in prices, market shares gains and steady recovery of out-of-home channels.
COVID
The company is committed to protecting the environment The company has recognized and addressed issues related to climate change in an effort to protect the environment. For example, the company continuously works toward its net zero pledge. Additionally, the company has built robust plans to improve supply chain resilience. Specifically, the company has developed varieties of drought-resistant coffee and has increased the efficiency of its dairy farm while reducing emissions through the investment in new technologies. Moreover, Nestle SA has been working toward developing solutions to tackle plastic pollution. In that regard, the company aims to have zero of its packaging end up as litter in rivers, lakes or oceans or in landfills.
COVID ESG
The company utilizes technology to further digitize its operations and promote growth The company continues to implement more advanced technology to increase its operational efficiency and further the success of the company. For example, the company has utilized remote assistance and artificial intelligence, both of which have enabled the company to be more flexible and agile within its supply chains and manufacturing locations. Additionally, the company has enhanced its marketing personalization efforts and its direct-to-consumer
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Nestle Sa
Company Overview
offerings to enhance loyalty. Furthermore, the company’s sales via e-commerce have grown from representing 14.3% to 15.1% of total sales for the company.
COVID ESG
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Nestle Sa
Company Overview
Industry Market Share, Revenue and Profit
Market Share
18.36% Moderate 4.0% Current Year (2021)
Annual Growth (2017–21)
Industry Revenue
$1.9bn Moderate 1.5% Current Year (2021)
Annual Growth (2017–21)
Profit Margin
15.58% Moderate 0.8% Current Year (2021)
Annual Growth (2017–21)
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Kraft Heinz Co
Company Overview
Description Kraft Heinz Co is a public company headquartered in Pennsylvania with an estimated 36,000 employees. In the US, the company has a notable market share in at least seven industries: Salad Dressing Production, BBQ Sauce Production, Seasoning, Sauce and Condiment Production, Cheese Production, Baking Mix & Prepared Food Production, Frozen Food Production and Hot Dog & Sausage Production. Their largest market share is in the Salad Dressing Production industry, where they account for an estimated 21.9% of total industry revenue and are considered an Incumbent because they display strong market share, but lower profit and revenue growth than some of their peers.
COMPANY TYPE Public Company
TOTAL COMPANY REVENUE
$595.5m
EMPLOYEES 36,000
Other Industries Seasoning, Sauce and Condiment Production in the US Hot Dog & Sausage Production Frozen Food Production in the US Canned Fruit & Vegetable Processing in the US Salad Dressing Production Baking Mix & Prepared Food Production in the US Cheese Production BBQ Sauce Production
Analyst Insights The company is also dedicated to protecting the environment The company has implemented various techniques and plans to help support and protect the environment. For example, the company expects to reach carbon neutrality by 2050. In that regard, by 2025, the company aims to sustainably source 100% of its Heinz ketchup tomatoes and use packaging that is more recyclable. Additionally, the company supports the health and nutrition of people through its responsible and transparent communications and marketing efforts, in addition to the ongoing nutritional improvements made to its products.
ESG M&A
The Kraft Heinz Company is forced to contend with significant competition The Kraft Heinz Company’s products are sold in marketplaces that are extremely competitive. In that regard, the company has experienced increased competition from e-commerce retailers, discounters and large-format retailers. More specifically, competitors include large food and beverage companies, throughout the nation and internationally, in addition to companies that are local and regional. Furthermore, the competition is based on price, convenience, brand recognition, marketing and promotional activity effectiveness, nutritional value, taste, product quality and the ability to meet the everchanging preferences of consumers.
Competition COVID ESG M&A Structural
The company is committed to ensuring the safety and health of its employees The company values customer health and safety. Therefore, it has established numerous practices to support an protect the safety, health and security of its employees, in addition to subcontractors and those who visit company facilities. In 2021, the company received a 0.62 Total Recordable Incident Rate, which represents the safety performance of the company. This extremely low rate is highly indicative of the company’s substantial efforts placed toward ensuring a healthy and safe work environment. Moreover, in the COVID-19 (coronavirus) pandemic, the company remained dedicated to employee health and safety. In turn, the company implemented additional safety programs and protocols to help limit the spread of coronavirus among its workforce. This quick and effective response enabled the company to continue providing support for employees while being able to continue delivering the desired and necessary products to customers.
COVID ESG M&A Structural
Completed numerous acquisitions in an effort to grow its operations The company has placed effort toward growing its business through numerous acquisitions. For example, it spent approximately $211 million on acquiring most of the remaining equity interest shares of Hemmer, a company that manufacturers Brazilian beverages and foods, specializing in sauces and condiments. Additionally, the company acquired the remaining equity interests in food manufacturer Assan Gida Sanayi ve Ticaret A.S. (Assan Foods) in October 2021 for an estimated $79 million. Soon after, in December of that same year, the company made definitive plans to acquire 85% of the shares of Just Spices, a company based in Germany that produces blends of premium spices, for an approximate $243 million.
M&A
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Kraft Heinz Co
Company Overview
Industry Market Share, Revenue and Profit
Market Share
5.87% Weak -0.1% Current Year (2021)
Annual Growth (2017–21)
Industry Revenue
$595.5m Weak -4.9% Current Year (2021)
Annual Growth (2017–21)
Profit Margin
7.09% Weak -16.1% Current Year (2021)
Annual Growth (2017–21)
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Starbucks Corporation
Company Overview
Brands & Trading Names
Ethos Evolution Fresh Seattle's Best Coffee Starbucks reserve and princi Teavana
Description Starbucks Corporation is a public company headquartered in Washington with an estimated 238,000 employees. In the US, the company has a notable market share in at least four industries: Coffee & Snack Shops, The Retail Market for Coffee, Herbal Tea Production and Accommodation and Food Services. Their largest market share is in the Coffee & Snack Shops industry, where they account for an estimated 39.3% of total industry revenue and are considered an Incumbent because they display strong market share, but lower profit and revenue growth than some of their peers.
COMPANY TYPE Public Company
TOTAL COMPANY REVENUE
$373.3m
EMPLOYEES 238,000
Other Industries Herbal Tea Production Tea Production in the US Coffee & Snack Shops in the US The Retail Market for Coffee
Analyst Insights Company employees beginning to unionize Starbucks employees are beginning to vote in favor of unionizing, with a few stores being able to be successful so far. Starbucks has been strongly opposed to this rise. The more stores that become successful at unionizing, the higher Starbuck's wage expenses are going to be. This will also drive up the demand for the job.
COVID ESG Labor New Activity
Company posts strong revenue performance after pandemic In 2020, Covid-19 ended Starbucks's streak of increasing its revenue every year. However, in 2021, Starbucks was able to make a strong return. Sales from company-operated stores increased by 28% in 2021, depite experiencing a 152% employment decrease.
COVID ESG New Activity
Starbucks phases out paper cups Starbucks Corporation takes environmental sustainability seriously. This is why they plan to rule out paper cups in both the U.S. and Canada. In 2020 Starbucks planned to reduce waste by 50% by 2030. By 2025, it wants to guide customers toward using reusables by giving them "easy access to a personal or Starbucks provided reusable to-go cup for every visit."
ESG New Activity
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Starbucks Corporation
Company Overview
Industry Market Share, Revenue and Profit
Market Share
3.68% Weak 1.4% Current Year (2021)
Annual Growth (2017–21)
Industry Revenue
$373.3m Weak 8.0% Current Year (2021)
Annual Growth (2017–21)
Profit Margin
10.68% Weak -4.5% Current Year (2021)
Annual Growth (2017–21)
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Operating Conditions
Capital Intensity
The level of capital intensity is Medium
The Coffee Production industry experiences a medium degree of capital intensity. For every $1.00 spent on wages, the industry incurs an estimated $0.30 in capital expenditures in 2022. Modern manufacturing plants require significant levels of capital expenditure on sophisticated technology and equipment that streamlines the production process. This is reflected in all of the industry's major players, which have incurred a significant amount of capital expenditures over the five years to 2022. Additionally, the level of capital intensity varies considerably with the size of the manufacturer. Small- to medium-sized facilities lack the resources to invest in high-cost technology and equipment and have to employ additional labor to boost production volumes.
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Technology & Systems
Potential Disruptive Innovation: Factors Driving Threat of Change
Level Factor Disruptive Effect
Description
Very Low Rate of Innovation
Very Unlikely
A ranked measure for the number of patents assigned to an industry. A faster rate of new patent additions to the industry increases the likelihood of a disruptive innovation occurring.
Very High Innovation Concentration
Very Likely A measure for the mix of patent classes assigned to the industry. A greater concentration of patents in one area increases the likelihood of technological disruption of incumbent operators.
Very Low Ease of Entry Very Unlikely
A qualitative measure of barriers to entry. Fewer barriers to entry increases the likelihood that new entrants can disrupt incumbents by putting new technologies to use.
Very High Rate of Entry Very Likely Annualized growth in the number of enterprises in the industry, ranked against all other industries. A greater intensity of companies entering an industry increases the pool of potential disruptors.
Very Low Market Concentration
Very Unlikely
A ranked measure of the largest core market for the industry. Concentrated core markets present a low-end market or new market entry point for disruptive technologies to capture market share.
The rate of new patent technologies entering the industry is low, which limits the potential for innovations. A low rate does not mean that innovations cannot occur, just that the likelihood of some innovation materializing as a threat is lower. However, the concentration of technologies is high in this industry. This suggests that industry operators have exposure to potentially unforeseen areas of innovation.
Additionally, this industry's structure makes it difficult for new operators to enter and succeed. These barriers have the potential to disincentivize potential disruptors. Despite these barriers, the industry is experiencing a rapid growth in the number of companies. A difficult operating environment for new entrants combined with a large cohort of them may create a situation where these companies may take on a disruptive trajectory in non-traditional markets.
Major market segments for industry operators are relatively diversified. The spread of market segments suggests that there are limited entry points other than those already served my incumbent operators.
The most relevant technological disruptor to the Coffee Production industry is ready-to-drink coffee beverages sold at groceries and convenience stores, as well as at cafes and coffee shops.
This product has been around for a long time; however, the drinks and types of options are constantly evolving in line with consumer trends. For example, La Colombe Coffee Roasters recently bottled its specialty drinks into ready-to-drink cans. Furthermore, the market for different types of coffee drinks, such as Bulletproof Coffee, is expanding and siphoning away demand from traditional coffee. Many operators have adopted this business model and have expanded into ready-to-drink products. Therefore, this new technology might not have a significant effect on the landscape of the industry.
The level of technology change is Low
The level of technology change in the Coffee Production industry is low.
Coffee processing is the means of converting the cherry of the coffee plant into the finished commodity derived from green coffee beans. The two main methods of processing are dry (or natural) processing and wet (ferment-and-wash or machine- assisted) processing. The method of processing determines the flavor and richness of the final product.
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Dry processing
The dry process, also called unwashed or natural coffee, is the oldest method of processing.
In this method, the cherry is harvested, cleaned and then placed in the sun to dry. The harvested cherries are typically sorted and cleaned to separate the unripe, overripe or damaged cherries. Impurities, such as dirt, soil, twigs and leaves, are removed in this stage.
Drying involves spreading the harvested cherries, which are then sporadically raked or turned by hand. The cherry drying process can take up to four weeks to achieve optimal moisture content. On larger plantations, machine drying is often used to speed up the process after the coffee has been pre-dried in the sun for a few days.
The dried cherries are subsequently transported to a mill where they are hulled, sorted, graded and bagged using a hulling machine. Dry method processing is implemented by a majority of industry operators in producing arabica coffee and is used for nearly all robusta coffee. Dry processing occurs in countries such as Brazil, Ethiopia, Colombia and India.
Wet processing
The wet process involves removing the fruit covering of the coffee bean prior to drying and is sometimes called washed coffee.
This method requires the use of specific equipment and substantial water, making it a more feasible method of production in large coffee plantations.
Once the beans are picked, they are sorted by immersion in water, in which the bad or unripe beans float to the surface and the optimally ripe beans sink to the bottom. The skin of the cherry and some pulp is then removed, typically by a pulping machine or a pestle and mortar, depending on the size and scale of production. The remaining pulp is removed either by the ferment-and-wash method or a newer procedure called the machine-assisted processing method.
Roasting, grinding and brewing
The roasting process is primarily responsible for the characteristic flavor of coffee.
It causes the beans to expand and change color, taste, smell and density. As roasted beans tend to spoil faster, the process is usually carried out close to the final consumption location to maximize coffee's shelf life. Most coffee is roasted commercially on a large scale; however, some small-scale and niche producers may prefer to roast it themselves to have more control over the freshness and flavor of the beans.
Whole coffee beans are sometimes ground to facilitate the brewing process, which is also known as milling. The fineness of the grind strongly affects the taste and flavor of the final product, which makes assessing quality more difficult. Consumers are wary of coffee bean producers' use of low-quality beans in ground coffee, which has led to considerable market resistance from consumers. Virtually all of the ground coffee manufactured and sold in the United States use either manual or motorized grinders.
Revenue Volatility
The level of volatility is Medium
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Over the five years to 2022, the Coffee Production industry has exhibited a moderate level of volatility.
Industry volatility in coffee production results primarily from fluctuations in the cost of raw materials, energy and oil prices, weather conditions, exchange rates, household incomes and changes in downstream demand. Key input commodities, such as coffee beans, often experience price volatility due to unpredictable climatic conditions which lower coffee bean harvest yields. For example, the world price of coffee fell 12.0% in 2018, only to rise 8.1% in 2020. Over the five years to 2022, the world price of coffee increased an annualized 4.6%. Typically, this represents an opportunity for industry operators since they are able to pass on higher input commodity prices to consumers in the form of higher coffee prices, boosting profitability. However, an increase in global demand and a relative lack of supply fueled the world price of coffee in 2020 and 2021 and is expected to continue boosting it in 2022, leading to profit and revenue increases for industry operators. Furthermore, operators can mitigate revenue volatility by developing a market niche, such as ready-to-drink products.
Regulation & Policy
The level of regulation is Medium and the trend is Steady
PUBLIC HEALTH AND PRODUCT LABELING
Production and labeling standards within the Coffee Production industry are primarily governed by the Food and Drug Administration (FDA), mandated by the Federal Food, Drug and Cosmetic Act (FDCA) and the Fair Packaging and Labeling Act.
The FDA's mission is to promote and protect the public health by helping safe and effective products reach the market in a timely way and monitoring products for continued safety after being in use.
The Nutrition Labeling and Education Act, which amended the FDCA, requires most food and beverages to carry nutrition labeling and requires labels that have nutrient content claims and certain health messages to comply with specific requirements. It is the responsibility of the manufacturers to remain current with the legal requirements for food labeling. Furthermore, the FDA has also instituted the Food Ingredient Safety Program that governs and evaluates descriptions of ingredients, nutritional content and other such claims made by food producers.
Consumers are demanding more stringent rules relating to food labeling, advertising, packaging and other nutritional claims made by manufacturers. Failure to abide by them can seriously impair a producer's credibility, result in expensive product recalls and make the company liable to civil or criminal penalties. Pending enforcement of new FDA regulations has created new opportunities for food manufacturers to differentiate themselves from the competition. Those companies that can respond proactively rather than reactively to safety requirements can eclipse the competition in terms of efficiency, quality and brand integrity.
ENVIRONMENTAL REGULATION
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The Environmental Protection Agency (EPA) and state governments enforce environmental issues pertaining to the food processing industry.
Various federal environmental regulations and statutes such as the Clean Water Act (CWA), Clean Air Act (CAA), Pollution Prevention Act (PPA) and Resource Conservation and Recovery Act (RCRA) have changed the way processing facilities handle products and dispose of waste. The CWA's increasingly rigorous regulations for discharging wastewater are the primary regulatory drivers for the food processing industry. RCRA regulations typically apply only to solid waste disposal issues.
Most federal and state regulations and statutes are typically met with resistance from private industry. However, the federal pollution prevention principles and the subsequent development of clean technologies have been viewed as ways to provide cost savings and improve product quality. Furthermore, adherence to these regulations can improve public sentiment toward companies or industries that aggressively pursue their implementation.
Pollution prevention has also proven to be an effective means of reducing compliance and treatment costs for food manufacturers. Solid waste and wastewater discharges tend to dominate activity for implementing pollution prevention advances. Unless located in remote areas, most food processing facilities pretreat and discharge wastewater directly to a publicly owned treatment plant. When a facility discharges any waste to the environment, they are required to have a National Pollutant Discharge Elimination System (NPDES) permit as mandated in the CWA.
The EPA is exploring several ways to promote voluntary pollution prevention. The PPA lacks the regulatory powers needed to force companies to implement prevention practices into production processes. Agencies are exploring ways to write more flexible permits to enable companies to make process changes without subjecting themselves to lengthy bureaucratic formalities. Environmental agencies encourage pollution prevention by reducing permit costs and extending the compliance schedules for companies that are proactive in their commitment.
COVID-19
The COVID-19 (coronavirus) pandemic led to several government-mandated health and safety protocols for all industries, including the Coffee Production industry.
Industry operators were considered essential businesses and permitted to remain open under limited operations, including social-distancing and enhanced sanitation in all production facilities. However, downstream demand was significantly affected by the closures of restaurants and cafes, which led to increased demand from supermarkets as the at-home consumption of coffee rose. These shifts in demand affected supply chain and operations for operators that previously relied on restaurants and cafes as their primary customer base.
Industry Assistance
The level of industry assistance is Medium and the trend is Steady
Operators in the Coffee Production industry receive some assistance from the federal government through import protection.
The previous US administration released a new round of tariffs which raised duties on imported coffee from China, who then retaliated by raising tariffs on US coffee imports. Since then, import duties on coffee have been lowered by both countries.
While unrelated to assisting domestic coffee producers, the US Department of State in 2014 implemented a series of assistance programs pertaining to Central America, southern Mexico, South America and the Caribbean to help these coffee bean manufacturing countries fight coffee rust, a devastating disease for coffee plants. For instance, the US Department of State allocated $40.0 million to the Rural Coffee Farmer Income Support program in Central America. Recently, unprecedented outbreaks of coffee rust have threatened production of coffee beans, a key input commodity for the industry. As a result, the United States is working with affected governments, international organizations, coffee associations and other sectors to mitigate the effects of coffee rust on production output. In particular, the United States is assisting via technology, training, research and regional financing through its Global Agriculture and Food Security Program.
Additionally, the 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act, which brought into effect the Paycheck Protection Program, provided small businesses with loans to help them maintain their payroll, hire back employees and cover applicable overhead costs caused by the COVID-19 (coronavirus) pandemic.
Organizations
Industry assistance is also provided by the International Coffee Organization, an intergovernmental body formed in 1963 under the auspices of the United Nations. Headquartered in London, its membership includes 44 coffee-exporting and seven importing countries. It has administered six International Coffee Agreements to facilitate international trade through
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increased transparency.
The National Coffee Association (NCA) is headquartered in New York and was founded in 1911. Today, the NCA focuses on advocacy, consumer information and market and scientific research. Through its members, the association represents over 1.7 million jobs in the US economy alone. The NCA is also the leading lobbying association for the coffee industry in the United States.
Furthermore, the Specialty Coffee Association (SCA) is headquartered in Santa Ana, CA and acts as a nonprofit, membership-based agent that aims to unite all levels of the coffee industry. The overarching goals are rooted in sustainable, fair and transparent supply chains that benefit all participants in the coffee community.
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Key Statistics Industry Data
Year Revenue
($m) IVA
($m) Establishments
(Units) Enterprises
(Units) Employment
(People) Exports
($m) Imports
($m) Wages
($m)
Domestic Demand
($m)
World Price of Coffee
(Cents per pound (lb))
2013 12,648 2,546 2,030 2,000 14,962 1,197 7,002 922 18,452 11,212 2014 14,188 2,624 2,221 2,192 16,453 1,112 7,492 1,002 20,568 11,515 2015 14,382 2,799 2,541 2,507 15,056 1,060 7,384 1,058 20,705 11,893 2016 14,271 2,995 2,662 2,626 15,767 1,056 6,964 1,211 20,178 12,188 2017 13,947 3,416 2,910 2,867 18,788 993 7,532 1,223 20,486 12,484 2018 12,433 2,808 3,249 3,207 18,189 982 6,728 1,141 18,179 12,845 2019 11,589 2,594 3,580 3,528 18,763 959 6,662 1,116 17,292 13,126 2020 11,662 2,618 3,821 3,781 19,229 876 6,495 1,006 17,281 12,630 2021 10,527 2,358 3,890 3,878 18,327 860 7,516 948 17,183 13,629 2022 10,741 2,415 4,118 4,067 18,836 874 7,718 973 17,586 14,043 2023 10,806 2,429 4,306 4,263 19,206 883 7,708 990 17,631 14,356 2024 10,960 2,462 4,515 4,481 19,677 904 7,677 1,012 17,733 14,645 2025 11,083 2,484 4,712 4,686 20,008 918 7,698 1,028 17,862 14,909 2026 11,227 2,514 4,892 4,873 20,373 935 7,731 1,045 18,024 15,182 2027 11,386 2,550 5,053 5,041 20,730 952 7,773 1,063 18,207 15,457
Annual Change
Year Revenue
(%) IVA (%)
Establishments (%)
Enterprises (%)
Employment (%)
Exports (%)
Imports (%)
Wages (%)
Domestic Demand
(%)
World Price of Coffee
(%) 2013 -11.1 0.64 15.9 16.3 1.15 -8.74 -18.7 3.02 -14.3 1.48 2014 12.2 3.06 9.40 9.60 9.96 -7.15 6.99 8.65 11.5 2.70 2015 1.36 6.65 14.4 14.4 -8.50 -4.67 -1.45 5.60 0.67 3.27 2016 -0.78 7.03 4.76 4.74 4.72 -0.37 -5.69 14.4 -2.55 2.47 2017 -2.27 14.0 9.31 9.17 19.2 -5.97 8.15 1.02 1.53 2.42 2018 -10.9 -17.8 11.6 11.9 -3.19 -1.08 -10.7 -6.70 -11.3 2.89 2019 -6.80 -7.65 10.2 10.0 3.15 -2.36 -0.98 -2.20 -4.88 2.18 2020 0.63 0.91 6.73 7.17 2.48 -8.69 -2.52 -9.93 -0.06 -3.79 2021 -9.74 -9.93 1.80 2.56 -4.70 -1.88 15.7 -5.70 -0.57 7.91 2022 2.04 2.41 5.86 4.87 2.77 1.68 2.69 2.62 2.35 3.03 2023 0.59 0.60 4.56 4.81 1.96 0.99 -0.14 1.69 0.25 2.22 2024 1.42 1.35 4.85 5.11 2.45 2.42 -0.40 2.24 0.58 2.01 2025 1.11 0.87 4.36 4.57 1.68 1.58 0.26 1.57 0.73 1.80 2026 1.30 1.22 3.82 3.99 1.82 1.76 0.44 1.72 0.91 1.82 2027 1.41 1.44 3.29 3.44 1.75 1.89 0.53 1.68 1.01 1.81
Key Ratios
Year IVA/Revenue
(%)
Imports/ Demand
(%)
Exports/ Revenue
(%)
Revenue per Employee
($'000)
Wages/ Revenue
(%)
Employees per estab. (Units) Average Wage ($)
2013 20.1 37.9 9.47 845 7.29 7.37 61,636 2014 18.5 36.4 7.84 862 7.06 7.41 60,901 2015 19.5 35.7 7.37 955 7.36 5.93 70,284 2016 21.0 34.5 7.40 905 8.49 5.92 76,800 2017 24.5 36.8 7.12 742 8.77 6.46 65,111 2018 22.6 37.0 7.90 684 9.18 5.60 62,752 2019 22.4 38.5 8.28 618 9.63 5.24 59,495 2020 22.4 37.6 7.51 607 8.62 5.03 52,291 2021 22.4 43.7 8.17 574 9.01 4.71 51,738 2022 22.5 43.9 8.14 570 9.06 4.57 51,662 2023 22.5 43.7 8.17 563 9.16 4.46 51,526 2024 22.5 43.3 8.25 557 9.23 4.36 51,420 2025 22.4 43.1 8.29 554 9.27 4.25 51,364 2026 22.4 42.9 8.32 551 9.31 4.16 51,313 2027 22.4 42.7 8.36 549 9.34 4.10 51,278
Figures are inflation adjusted to 2022
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Industry Financial Statement Historical Average
Industry Multiples 2017 2018 2019 2020 3-Year 5-Year 10-Year
EBIT/Revenue 7.6 8.6 8.4 7.8 8.3 8.3 8.9 EBITDA/Revenue 11.6 12.8 12.9 12.4 12.7 12.6 12.9 Leverage Ratio 9.2 8.4 8.3 8.6 8.4 8.5 8.3
Industry Tax Structure 2017 2018 2019 2020 3-Year 5-Year 10-Year
Taxes Paid/Revenue 2.8 2.7 2.8 2.7 2.7 2.8 2.8
Income Statement 2017 2018 2019 2020 3-Year 5-Year 10-Year
Total Revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Business receipts 94.6 95.2 95.6 95.9 95.6 95.1 94.8 Cost of goods 65.5 66.8 67.2 67.3 67.1 66.2 66.4 Gross Profit 34.5 33.2 32.8 32.7 32.9 33.8 33.6
Expenses
Salaries and wages 6.8 7.1 7.1 7.7 7.3 7.1 6.4 Advertising 1.2 1.1 1.1 1.1 1.1 1.2 1.2 Depreciation 3.4 3.4 3.3 3.2 3.3 3.3 3.2 Depletion 0.0 0.4 0.5 0.6 0.5 0.3 0.1 Amortization 0.6 0.5 0.7 0.9 0.7 0.7 0.6 Rent paid 2.6 1.8 1.4 1.4 1.5 2.0 1.9 Repairs 0.2 0.6 0.5 0.5 0.5 0.4 0.3 Bad debts 2.1 0.2 0.2 0.2 0.2 1.0 1.2 Employee benefit programs 1.2 1.9 1.8 1.8 1.9 1.6 1.4 Compensation of officers 2.0 1.9 2.0 2.0 2.0 2.0 1.8 Taxes paid 2.8 2.7 2.8 2.7 2.7 2.8 2.8 Interest Income 2.9 0.9 1.0 0.9 0.9 1.8 2.0
Other Income
Royalties 1.6 1.3 1.1 1.0 1.1 1.4 1.4 Rent Income 0.2 0.9 0.9 1.0 0.9 0.6 0.4 Net Income 1.5 3.0 2.8 2.3 2.7 2.4 3.0
Balance Sheet 2017 2018 2019 2020 3-Year 5-Year 10-Year
Assets
Cash and Equivalents 0.6 4.4 7.0 8.7 6.7 4.3 2.6 Notes and accounts receivable 48.7 40.8 38.2 37.0 38.6 42.9 45.0 Allowance for bad debts 0.0 0.1 0.2 0.2 0.2 0.1 0.1 Inventories 2.0 12.4 13.3 13.7 13.1 8.7 5.5 Other current assets 0.6 6.9 7.7 8.1 7.6 4.8 2.8 Other investments 28.3 22.8 19.7 17.8 20.1 22.9 25.6 Property, Plant and Equipment 9.5 12.6 13.0 12.5 12.7 11.5 10.6 Accumulated depreciation 5.4 14.0 14.8 15.4 14.8 11.1 8.2 Intangible assets (Amortizable) 13.5 11.5 13.4 15.4 13.4 13.6 13.5 Accumulated amortization 1.5 2.7 3.1 3.4 3.1 2.4 1.7 Other assets 3.5 6.3 6.2 6.0 6.2 5.2 4.3 Total assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Accounts payable 47.5 23.6 23.2 22.9 23.2 34.1 41.8
Liabilities and Net Worth
Mort, notes, and bonds under 1 yr 2.8 11.7 10.8 10.1 10.9 7.7 4.7 Other current liabilities 2.6 8.6 11.1 12.6 10.8 7.5 5.1 Loans from shareholders 0.2 1.8 2.8 3.3 2.6 1.7 1.2 Mort, notes, bonds, 1 yr or more 13.0 15.7 15.2 14.3 15.1 14.2 14.6 Other liabilities 3.4 10.5 10.8 10.7 10.6 7.8 6.1 Total liabilities 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Capital stock 2.5 4.1 4.4 4.7 4.4 3.7 3.0 Additional paid-in capital 20.2 6.0 9.5 12.2 9.2 14.4 18.7 Retained earnings, appropriated 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Retained earnings-unappropriated 4.7 0.5 -0.6 -1.2 -0.4 1.6 3.4 Cost of treasury stock 8.7 0.0 0.0 0.0 0.0 3.5 5.0 Net worth 30.5 28.2 26.5 26.3 27.0 27.2 26.5
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Liquidity Ratios 2017 2018 2019 2020 3-Year 5-Year 10-Year
Current Ratio 1.0 1.5 1.5 1.5 1.5 1.3 1.1 Quick Ratio 0.9 1.2 1.2 1.2 1.2 1.1 1.0 Sales/Receivables 1.9 2.3 2.4 2.5 2.4 2.2 2.1 Days' Receivables 190.3 159.3 149.2 144.3 150.9 167.4 175.3 Days' Inventory 12.0 72.4 77.2 79.2 76.3 50.7 32.0 Inventory Turnover 30.4 5.0 4.7 4.6 4.8 14.7 21.3 Payables Turnover 1.3 2.6 2.7 2.8 2.7 2.1 1.7 Days' Payables 283.8 138.2 134.6 132.6 135.1 202.6 246.6 Sales/Working Capital 27.8 3.0 3.1 3.2 3.1 36.2 71.9
Coverage Ratios 2017 2018 2019 2020 3-Year 5-Year 10-Year
Interest Coverage 227.9 291.7 295.7 280.6 289.4 271.2 284.7 Debt Service Coverage Ratio 0.7 2.2 0.2 0.8 1.1 0.9 0.9
Leverage Ratios 2017 2018 2019 2020 3-Year 5-Year 10-Year
Fixed Assets/Net Worth 1.0 1.5 1.7 1.8 1.6 1.4 1.3 Debt/Net Worth 3.3 3.5 3.8 3.8 3.7 3.7 3.8 Tangible Net Worth 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Operating Ratios 2017 2018 2019 2020 3-Year 5-Year 10-Year
Return on Net Worth, % 23.3 28.5 29.7 27.6 28.6 28.9 32.3 Return on Assets, % 7.1 8.0 7.9 7.3 7.7 7.8 8.4 Sales/Total Assets 0.9 0.9 0.9 0.9 0.9 0.9 0.9 EBITDA/Revenue 11.6 12.8 12.9 12.4 12.7 12.6 12.9 EBIT/Revenue 7.6 8.6 8.4 7.8 8.3 8.3 8.9
Cash Flow & Debt Service Ratios (% of sales)
2017 2018 2019 2020 3-Year 5-Year 10-Year
Cash from Trading 32.6 25.9 25.9 25.9 25.9 27.7 27.1 Cash after Operations 28.1 22.9 22.9 22.9 22.9 24.2 23.3 Net Cash after Operations 26.3 22.2 22.2 22.2 22.2 23.3 22.3 Debt Service P&I Coverage 8.3 7.1 7.1 7.1 7.1 7.4 7.0 Interest Coverage (Operating Cash) 0.3 0.3 0.3 0.3 0.3 0.3 0.3
Source: IRS SOI Tax Stats; US Census Bureau; IBISWorld
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Additional Resources Additional Resources
National Coffee Association USA http://www.ncausa.org
Coffeeresearch.org http://www.coffeeresearch.org
Coffee Science http://www.coffeescience.org
International Coffee Organization http://www.ico.org
US Census Bureau http://www.census.gov
Industry Jargon ARABICA A premium variety of coffee bean native to Africa, with which most premium coffee products are made.
GREEN COFFEE Natural coffee beans extracted from the fruits after harvesting.
GROUND COFFEE Roasted coffee reduced to small or very small particles, depending on the end product it is being used for.
ORGANIC A product made from mineral and plant ingredients rather than derived chemical compounds.
PREMIUMIZATION An increasing preference toward high-end products, such as beverages.
Glossary BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.
ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.
EXPORTS Total value of industry goods and services sold by US companies to customers abroad.
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IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry's products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self- employed individuals.
PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.
REGIONS West | CA, NV, OR, WA, HI, AK Great Lakes | OH, IN, IL, WI, MI Mid-Atlantic | NY, NJ, PA, DE, MD New England | ME, NH, VT, MA, CT, RI Plains | MN, IA, MO, KS, NE, SD, ND Rocky Mountains | CO, UT, WY, ID, MT Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC Southwest | OK, TX, NM, AZ
VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES The gross total wages and salaries of all employees in the industry.
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- Contents
- COVID-19 (Coronavirus) Impact Update
- About IBISWorld
- About This Industry
- Industry Definition
- Major Players
- Main Activities
- The primary activities of this industry are:
- The major products and services in this industry are:
- Supply Chain
- SIMILAR INDUSTRIES
- RELATED INTERNATIONAL INDUSTRIES
- Industry at a Glance
- Executive Summary
- Industry Performance
- Key External Drivers
- World price of coffee
- Per capita coffee consumption
- Per capita disposable income
- Demand from grocery wholesaling
- Trade-weighted index
- Current Performance
- Industry Outlook
- Outlook
- Industry Life Cycle
- Products & Markets
- Supply Chain
- Products & Services
- Demand Determinants
- Major Markets
- International Trade
- Business Locations
- Competitive Landscape
- Market Share Concentration
- Key Success Factors
- Cost Structure Benchmarks
- Basis of Competition
- Barriers to Entry
- Industry Globalization
- Major Companies
- Market Share Overview
- Related Companies
- J.M. Smucker Co
- Company Overview
- Brands & Trading Names
- Description
- COMPANY TYPE
- TOTAL COMPANY REVENUE
- EMPLOYEES
- Other Industries
- Analyst Insights
- J.M. Smucker Co
- Company Overview
- Industry Market Share, Revenue and Profit
- Keurig Dr Pepper Inc.
- Company Overview
- Brands & Trading Names
- Description
- COMPANY TYPE
- TOTAL COMPANY REVENUE
- EMPLOYEES
- Other Industries
- Analyst Insights
- Keurig Dr Pepper Inc.
- Company Overview
- Industry Market Share, Revenue and Profit
- Nestle Sa
- Company Overview
- Brands & Trading Names
- Description
- COMPANY TYPE
- TOTAL COMPANY REVENUE
- EMPLOYEES
- Other Industries
- Analyst Insights
- Nestle Sa
- Company Overview
- Nestle Sa
- Company Overview
- Industry Market Share, Revenue and Profit
- Kraft Heinz Co
- Company Overview
- Description
- COMPANY TYPE
- TOTAL COMPANY REVENUE
- EMPLOYEES
- Other Industries
- Analyst Insights
- Kraft Heinz Co
- Company Overview
- Industry Market Share, Revenue and Profit
- Starbucks Corporation
- Company Overview
- Brands & Trading Names
- Description
- COMPANY TYPE
- TOTAL COMPANY REVENUE
- EMPLOYEES
- Other Industries
- Analyst Insights
- Starbucks Corporation
- Company Overview
- Industry Market Share, Revenue and Profit
- Operating Conditions
- Capital Intensity
- Technology & Systems
- Revenue Volatility
- Regulation & Policy
- Industry Assistance
- Key Statistics
- Industry Data
- Annual Change
- Key Ratios
- Industry Financial Statement
- Additional Resources
- Additional Resources
- Industry Jargon
- Glossary
