As an entrepreneur, you’re always looking for new opportunities. And what could be better than getting into the coffee business? After all, coffee is one of the most popular drinks in the world, with millions of people drinking it every day. In 2020 the global coffee market was valued at $102 billion, and while the pandemic has shown a slight dip, the market has shown surprising resilience.
There are many reasons why coffee is a great commodity to get into right now. First of all, the demand for coffee is always increasing. In fact, between 2010 and 2019, global consumption increased by an impressive 9%. This trend looks set to continue in the years ahead, with the global coffee market expected to reach $133 billion by 2025.
So how is investing in coffee– whether in the form of putting up a cafe or roastery, or trading it as a commodity or investing in coffee-focused companies– a good idea? Here are a few points to consider:
Universal and Growing
There are many reasons why coffee is a great commodity to get into right now. For one, the demand for coffee is only increasing. According to the National Coffee Data Trends study conducted in 2020, 64% of Americans say they drink at least one cup of coffee per day, up from 63% the previous year. And more and more people are starting to drink higher-priced specialty coffees, such as cold brews and pour-overs. This segment of the market is expected to grow by 16% over the next five years.
And as with many commodities, always look to the East: China has come to the market, and in a big way. The volume of coffee consumption in the country has increased 44% in the past five years, and affluent Chinese consider coffee consumption in the traditionally tea-drinking country a status symbol. Because of this, China has gone straight into luxury coffee, to an extent that it is now in the middle of a wave of counterfeit coffee.
Coffee is a recession-resistant commodity
Coffee enjoys what economists call “inelastic demand” where even with an increase in the price, the market’s buying habits remain largely unchanged. In other words, no matter how expensive it gets, people will always want to drink coffee.
Because of this, coffee is one of those rare commodities that actually do well during economic downturns. Despite many industries reporting losses in 2022, coffee prices have remained high.
Many commodities experts are also optimistic about coffee’s future despite the global economic downturn. People may cut back on spending in other areas but generally continue spending on their morning routine. This makes it a relatively safe investment even during tough times.
Coffee shops provide good ROI
The return on investment for coffee shops is relatively high. This is because the overhead costs for coffee shops are relatively low. The main cost is the price of coffee beans, which has been fairly stable over the past few years. Additionally, rent is often cheaper for coffee shops than other types of businesses, as the required footprint is small, and the customer turnover is quite high.
In addition, customers are likely to return to a coffee shop multiple times a week, which means that the café can establish a loyal customer base, given the right circumstances.
Coffee is stable and ethical
Another reason to invest in coffee is it’s a relatively stable commodity. The coffee industry has been around for centuries, and it’s not going anywhere anytime soon. Additionally, the industry is fairly regulated, which means that there are fewer risks involved.
Finally, coffee is an ethical investment. The coffee industry has come under fire in recent years for the way it treats workers and the environment. However, many initiatives are in place to ensure that coffee is produced ethically and sustainably. These initiatives are likely to increase in the future, so investing in coffee now is a good way to support these efforts.
The majority of coffee beans are grown in developing countries, which means that coffee companies have a big impact on the lives of farmers and their families. Many coffee companies and companies who buy coffee wholesale are Fairtrade certified, which means that they meet strict standards for fair labor practices and environmental sustainability.
Now is a great time to get into the coffee industry. The industry is booming and is expected to continue growing, coffee is recession-resistant, and there are many different ways to profit from it. Whether you’re interested in opening a coffee shop or investing in coffee beans, now is the time to do it.
