The World of Coffee
The World of Coffee: A Dynamic and Growing Industry
Coffee is one of the world’s most important commodities, supporting millions of livelihoods and driving global trade. Industry has evolved through four distinct waves, shaped by shifts in production, consumption, and trade.
Coffee is a key agricultural commodity, with 70% of global production exported, generating $19 billion in 2017. The retail value of coffee was $83 billion, supporting 125 million jobs worldwide. About 12.5 million coffee farms, 95% of which are smallholder farms, supply the world’s coffee, mainly located in countries like Ethiopia, Uganda, Indonesia, and Colombia.
Smallholder farmers play a crucial role in the coffee supply chain, but many live in poverty, with 5.5 million earning below $3.20 per day. Despite the challenges, the coffee industry has seen a 65% increase in demand over the past two decades, driven by emerging markets and the rise of specialty coffee.
The Coffee Value Chain
Coffee stands out from other commodities because it requires extensive processing before consumption. After harvesting, the outer layers of the coffee cherry are removed, and the beans are dried. Once dry, the parchment layer is mechanically stripped, and the beans are sorted for size and quality. Most coffee is exported as raw, or "green", beans for roasting, packaging, and selling in consuming countries via supermarkets, coffee shops, and e-commerce platforms.
The global coffee value chain consists of five main stages: production, processing, trade, roasting, and marketing. Only about 10% of the coffee market's value remains in the producing countries. Arabica, known for high-quality, premium coffee, and Robusta, often used in soluble coffee, are the two main species consumed. While Arabica dominates production, demand for Robusta is rising due to its resilience and role in addressing climate change.
Coffee is segmented by species (Arabica and Robusta) and quality (standard, premium, and specialty). Post-harvest methods, like "washed" or "natural" processing, further differentiate coffees.
Trends in the Coffee Industry
The global coffee industry is experiencing significant growth, but various structural changes are shaping its future. Key trends include the impact of climate change, the rise of sustainability, specialty coffee, and growing consumption in producer countries.
Climate change is drastically altering coffee production, with forecasts predicting a reduction in suitable coffee-growing areas by half. Smallholder farmers, responsible for 80% of global coffee production, are most vulnerable due to factors such as:
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Shifting cultivation areas to higher altitudes
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Increased water stress
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Poor flowering and cherry development
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Pest and disease outbreaks
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Vulnerability of smallholder and women farmers
In response, farmers are adapting with climate-smart agricultural practices, often supported by government policies, producer organizations, and private sector partnerships.
Sustainability has become a vital component of the coffee industry, especially in the specialty coffee and certified coffee segments:
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Specialty Coffee: Focuses on quality and origin, making traceability a critical feature.
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Certified Coffee: Assures consumers that the product follows strict environmental, social, and economic sustainability standards.
Public awareness of these issues, driven by social media, has created a demand for transparency and ethical production practices, reshaping supply chains.
Specialty coffee, particularly Arabica beans, is gaining momentum due to its focus on high quality and distinct origin characteristics. While the specialty market is a higher-value niche, it presents challenges:
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Certification Costs: Expensive but provides market access and technical assistance.
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Human Capital: Producers need skills to meet high-quality standards without certification.
Estimates suggest the specialty coffee market in the U.S. could make up 5% to 38% of the green coffee market.
As the demand for specialty coffee grows, so does the need for consistent quality across the sector. This trend is evident even in mainstream and premium coffee markets, leading to the rise of an intermediate premium segment that offers higher quality at accessible prices while incorporating sustainability and social responsibility.
Coffee consumption is rising in producer countries as their economies grow. Countries like Brazil, Indonesia, and Ethiopia already have strong domestic coffee consumption. However, in many other producer nations, consumption is low but increasing. This shift opens new opportunities for value addition at origin, including domestic sales of roasted coffee and South-South trade between producer countries.
These trends indicate an evolving coffee industry that is becoming more sustainable, transparent, and diverse, driven by changing consumer expectations and climate challenges.
Useful tools and resources to navigate coffee’s industry
Our resources are designed to equip you with the information you need to navigate the dynamic and evolving world of coffee with confidence.
In accordance with internationally accepted practice, all quantity data in this guide represent bags of 60-kilogram net (132.276 lb) green coffee or the equivalent thereof, i.e. green bean equivalent ‘GBE’. Green coffee means all coffee in the naked bean form before roasting. Although the 60kg bag is the most common size bag in the trade, some countries use bags holding 46kg, 50kg, 69kg or 70kg.
The International Coffee Organization has agreed on the following conversion factors to convert different types of coffee to GBE:
| Product to be converted | Product for multiplication | Conversion factor |
|---|---|---|
| Dried cherry to green bean | multiply the net weight of the cherry by… | 0.5 |
| Parchment to green bean | multiply the net weight of the parchment by… | 0.8 |
| Decaffeinated green bean to green bean | multiply the net weight by… | 1.05 |
| Regular roasted coffee to green bean | multiply the net weight of the regular roasted coffee by… | 1.19 |
| Decaffeinated roasted coffee to green bean | multiply the net weight of the decaffeinated roasted coffee by… | 1.25 |
| Regular soluble coffee to green bean | multiply the net weight of the regular soluble coffee by… | 2.6 |
| Decaffeinated soluble coffee to green bean | multiply the net weight of the decaffeinated soluble coffee by… | 2.73 |
| Regular liquid coffee to green bean | multiply the net weight of the dried coffee solids contained in the regular liquid coffee by… | 2.6 |
| Decaffeinated liquid coffee to green bean | multiply the net weight of the dried coffee solids contained in the decaffeinated liquid coffee by… | 2.73 |
Alternatively, for statistical purpose: 60kg green coffee represents:
- 120kg dried cherry;
- 75kg parchment.
Landmark publications on coffee from seed to cup:
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Coffee Sapiens: Innovation Through Understanding from Ferran Adrià's el Bullifoundation and Lavazza (2019)
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The World Atlas of Coffee, second edition, James Hoffmann (2019)
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Coffee and Wine: Two Worlds Compared, Morten Scholer (2018)
For the latest news and coffee industry insights, visit:
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www.perfectdailygrind.com: One of the world’s fastest growing online media outlets in the coffee sector. Covers, in particular, specialty coffee news and information for a variety of audiences, i.e from farmers to baristas.
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www.sprudge.com: Media outlet focusing on coffee news and culture.
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www.freshcup.com: Covers coffee and tea, with special sections for roasters and baristas.
For news and information dedicated to the specialty coffee industry, visit:
For health-related information, visit the Institute for Scientific Information on Coffee. The institute is a dynamic information point presenting the latest research and data on the links between coffee and health with a neutral perspective: https://www.coffeeandhealth.org
E-learning/training: Check ITC’s SME Trade Academy for courses related to coffee exporting: https://learning.intracen.org.
For information related to coffee and COVID-19, visit: The Specialty Coffee Association has gathered many different resources and responses to the impacts of COVID-19 on the global coffee community. Its website hosts a database of resources submitted by the global specialty coffee community. For more information, visit:
International Coffee Organization publications on COVID-19:
Lao coffee: Adapting to COVID-19 with new business strategies
Coffee firms are left with no other choice than to adapt to new pandemic-related challenges, according to the results of the Lao People’s Democratic Republic COVID-19 Rapid Assessment of the Coffee Sector.
As part of the European Union-funded ARISE Plus Lao PDR project being implemented by the International Trade Centre, an online questionnaire was quickly designed and shared with firms. The goal was twofold: To better understand the early effects of the COVID-19 pandemic on the Lao coffee sector and to help inform ongoing work under the project.
In July and August 2020, 35 coffee firms were asked about the effects of COVID-19 on their businesses, what they were doing to manage these challenges, what extra support they needed and their expectations for recovery. Respondents expressed concern about the effects of the pandemic on production and sales, pointing to labour shortages, reduced sales and product waste as the main struggles.
The assessment revealed that COVID-19 primarily affected these companies through lower sales to customers, the effects of the temporary shutdown and difficulty exporting due to increased border checks or closure.
Sourcing inputs has become more challenging for many as well, particularly importing firms. While most firms did not foresee pandemic-related business closure as a threat, about a third of respondents identified it as a real risk.
It’s not all doom and gloom for Lao coffee stakeholders, though. The crisis may help open the door to innovation and digitalization in the coffee sector. Most firms are re-evaluating their business strategies in response to the challenges posed by COVID-19, taking this into account.
The most popular strategies have been targeting online sales, reorganizing production scale and capacity, and market diversification. This will help firms stay above water as they navigate an expected slow return to normal operations, caused mainly by depressed demand and cash flow problems.
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