Whether you enjoy drinking your beverages hot or iced, one drink that is a go-to for almost every person is coffee. Many people, including myself, instantly think about enjoying a cup of coffee. It is one of the most popular morning beverages in the United States. What many people do not realize is what it took for a producer to meet the people’s demands, be able to sell their products when needed, and how market and cost supply conditions affect producers. When it comes to costs and market supply conditions, it is often one of the biggest challenges producers face. For example, weather, pests, machinery, and labor play a major factor in the cost and market supply conditions.
The United States imports the second-largest amount of coffee beans and according to the USDA, the US has forecasted to produce 400,000 bags higher raising the numbers to 26.5 million and have an ending stock estimated at 200,000 bags to 6.9 million. In 2018, the dailycoffeenews released an article that said that for the first time since 2006, the price for coffee dropped below one dollar. As of 2019, the Market watched released a statement that although the coffee beans cost between $1-$1.50 that is just the bean itself and then the producers add 15 cents for roasting/grinding, labor/handling 25 cents, packaging 15 cents, label on the package 9 cents, markup $2-$5. Which if you add it all together you get the total between $4-$5 dollars per pound. Technology has positively improved the production, costs, and supply of coffee. The iBeacon is a system that allows messages to be sent out via low-energy Bluetooth transmitters to anyone who has subscribed and has a smartphone nearby. This app allows them to collect data, offer promotions, and overall make it the process of buying a coffee a quicker process. The Third Wave is a movement that allows producers to be precise origins growing altitudes, exact harvest date, moisture content, and pests. This allows the producers to know if they will have a profitable season or if they need to make any adjustments to the plants.
Hawaii is one of the most known states for their coffee beans and also the highest producing state in the United States. The reason why Hawaii is one of the top producers in the states is because of its climate. The nature of Hawaii provides the perfect environment for the coffee trees to be planted on the slopes and their rich volcanic soil that is full of minerals. The reason the trees are planted on the slopes of the active Mauna Loa Volcano is because of the rain that helps keeps the plants nourished and protected from intense sunlight. Keurig Green Mountain (GMCR) controls 20% of the United States coffee retail market. According to Fortune, the top sales in billions are Keurig sitting at 2.57, Folgers at 1.56, Starbucks at 0.95, Maxwell house at 0.82, Dunkin Donuts at 0.42. While the largest market sales are Keurig Dr.Pepper, The JM Smucker Company, Nestle SA, and Kraft Heinz company.
The United States is one of the top countries to import coffee beans. The reason the United States imports so much coffee is due to the high demand for coffee and the climate the US has. The WorldAltlas released an article where the only coffees that can be commercially grown in the United States are Hawaii and California. Since these two states have an adequate climate to produce coffee beans, this is why they are allowed to harvest coffee beans. Which leads to the US to have to consume 90% of their coffee from other countries, but more specifically South America. The coffee beans imported raw and then shipped to companies to decide what they are going to do with the beans. The three top exporting countries are Brazil which at 5,714,381,000 lbs, Vietnam at 3,637,627,000 lbs, and Colombia at 1,785,744,000 lbs and these countries are also the top producing coffee countries. The largest importing countries are the United States, Germany, and Italy. The US gets 24% of coffee from Brazil, 22% from Colombia, 15% from Vietnam. They are major players in importing because they do not have adequate climate from them to grow coffee, so they must import this product. To correctly grow coffee beans, they need soil full of nutrients and tropical weather and for the most part, these countries do not offer that. The major use of this commodity in the countries that import it is to simply just consume. More specifically to use as a beverage, or for the larger companies, it is to sell to the people.
The future supply look for coffee beans in the United States is to potentially attempt to grow more coffee beans in the states rather than importing from other countries. Since coffee beans must grow in tropical weather, it is more difficult to grow in the US, but recently there has been experimenting in Santa Barbara and Georgia. They are doing some growing projects, where they adjust the needs of the plants, especially the climate they need to grow. If they are successful with this project then this is a possibility that the US’ imported percentage could decrease. The US also has territories that are known for producing coffee beans, for example, Puerto Rico. At this point, the US government has not put any form of regulations on coffee production trends. Based on the information I have found online, it does not seem that the United States will be becoming a top exporter because of the amount that other countries in South America are producing. They are producing billions of pounds of coffee beans compared to the US. In my opinion, if the project that is currently happening was successful and the taste of the coffee was not to be affected.
Eventually, the US could be more of an exporter rather than an importer, but the demands of the people are always going to be different because of the different tastes each coffee bean has.