Tag: coffee

Sucden Financial is a leading multi-asset execution, clearing and liquidity provider across FX, fixed income and commodities. A report entitled “Modernizing the Coffee Crop: A Bumpy Journey for Coffee Markets.”

According to the report, the coffee industry experienced a rollercoaster ride in 2023, with turbulent prices impacting both Arabica and Robusta contracts. Brazil and Vietnam continue to play a pivotal role, comprising 58% of the total blend. Concerns linger about weather conditions, but it is believed that the majority of the damage has occurred, leading to expectations of a fading super crop. While there is no overall shortage of coffee, uncertainties in certain regions create doubts about accessibility.

Executive Summary: Global Economic Variances

The US economy remains robust, driven by strong consumer spending and a tight labor market. Inflation is on the decline, with expectations of a gradual easing of monetary policy, starting with a 25bps Fed interest rate cut in March. In contrast, the eurozone teeters on the brink of recession, facing contraction in manufacturing and services sectors. China grapples with low consumer confidence, weaker global demand, and a deepening property crisis. Brazil, despite a 3% growth in 2023, faces challenges in 2024 due to reduced agricultural output caused by adverse weather conditions.

Starbucks concluded Q4 2023 on a positive note, reporting an 8% increase in global comparable store sales and record consolidated net revenues of $9.4 billion. Nestle thrived with strong organic growth, while JDE Peet’s faced challenges with lower sales growth and decreased profit.

Market Outlook: A Cautionary Tale

The coffee market faces uncertainties, primarily influenced by Brazil and Vietnam. Despite concerns about the weather, expectations of a super crop fading, and potential shifts in farmer behavior, optimism prevails. However, the recent rally in prices is deemed overdone, and a marginal retracement is anticipated in the near term. Changes are noted in other coffee origins, with expectations for production in India, Indonesia, and Central America.

Macro Overview: US Economy Resilient, Global Variances Persist

The US economy defies recession concerns, showing positive Q1’24 outlook with resilient output growth. Consumer spending remains strong, supported by a robust labor market. Inflation decline and expectations of a 25bps interest rate cut in March contribute to an optimistic economic forecast. The global scenario, however, presents challenges, with the eurozone on the brink of recession and China facing economic hurdles.

Corporate Results: Starbucks Shines, Nestle Excels, JDE Peet’s Faces Challenges

Starbucks celebrates a successful Q4 2023, recording an 8% increase in global comparable store sales and reaching record consolidated net revenues. Nestle experiences strong organic growth, especially in emerging markets and e-commerce. In contrast, JDE Peet’s confronts challenges with lower organic sales growth and decreased underlying profit.

Arabica and Robusta Dynamics: Price Swings and Crop Insights

The market witnesses shifts in demand between Arabica and Robusta, leading to multi-decade highs and lows in contract prices. Weather concerns and the threat of El Nino impact the market sentiment. Despite uncertainties, the outlook for Brazil and Vietnam remains positive, with expectations for a retracement in recent price rallies.

Conillon Challenges: Weather Woes and Crop Impact

Dry weather in northern Espirito Santo raises concerns about conillon cultivation, with potential damage estimates ranging from 15% to 35%. Limited irrigation options and government restrictions exacerbate worries about conillon production.

Inventories and Commitment of Traders: Balancing Supply and Demand

Certified stocks witness drawdowns, supporting upward momentum in prices. Attention shifts to supply stories, with Central American shipments slow but expected to pick up. Commitment of Traders positions indicate high net lengths for Arabica and Robusta, with a cautious outlook for potential price vulnerabilities.

In conclusion, the coffee market faces a complex landscape influenced by global economic trends, corporate performances, and crop dynamics. Navigating through uncertainties, industry players remain cautiously optimistic while anticipating potential retracements in recent price rallies.

A beloved beverage for millions globally, coffee holds a cherished spot in the daily morning rituals of many. However, experts caution against the common practice of consuming coffee immediately upon waking, deeming it “unhealthy.”

According to insights shared by a group of experts cited by ABC News, the ideal timing for morning coffee lies approximately 90 to 120 minutes after rising from sleep. This recommendation is grounded in the understanding of cortisol, the hormone responsible for morning motivation. Dr. Evangeline Mantzioris, a nutritionist at the University of South Australia, elucidates that cortisol levels peak in the early morning but gradually decline thereafter.

“Cortisol, which stimulates and energizes you in the initial two hours after waking, diminishes over time,” explains Dr. Mantzioris. Consequently, the opportune moment to enjoy coffee is post these two hours, aligning with the decline in cortisol levels.

Dr. Mantzioris highlights the presence of adenosine, a chemical inducing sleepiness by binding to cell receptors. Contrary to immediate post-wake-up moments, adenosine’s impact intensifies later in the morning. To counteract this sleep-inducing process, Dr. Mantzioris suggests delaying coffee consumption until drowsiness sets in.

Can Coffee Be Enjoyed Later in the Day?

While consuming one or two cups of coffee before noon typically poses no threat to nighttime sleep, partaking in coffee closer to bedtime can directly interfere with falling asleep and compromise sleep quality and comfort.

Insights into Caffeine

Ian Musgrave, a molecular pharmacologist from the University of Adelaide, delves into the evolution and properties of caffeine. Originally developed by plants as a chemical defense and natural insecticide, caffeine is present in over sixty plant species, with coffee, tea, cocoa, and certain flower nectars being significant sources.

Beyond its insecticidal role, caffeine boasts notable health benefits and pharmacological effects. For instance, it contributes to treating asthma and serves as a bronchodilator in newborn incubators, expanding air passages in the lungs. As elucidated by Trigger McGuire, a pharmacologist at Bond University, caffeine acts as a stimulant, enhancing alertness, focus, metabolism, and regulating heart rate and blood pressure.

McGuire further explains that caffeine swiftly enters the central nervous system, binding to receptors involved in dopamine release— the brain’s feel-good hormone. This stimulation targets the brain’s pleasure and reward center, reducing fatigue during strenuous tasks and enabling athletes to engage in more vigorous training.

You might have seen yet another influencer coffee brand launch on social media, have noticed your colleagues making their own drip coffee in the office kitchen rather than using the machine, or even seen lines form at your local independent coffee shop.

Whatever way, it’s clear that coffee drinking has become a trend, something more than just getting a caffeine hit.

“With drinks and snacks becoming must-have items with cool currency, coffee has become a steady go-to as a vehicle for affordable luxury and lifestyle expression,” Claire Lancaster, head of food and drink forecasts at consumer and product forecasting company WGSN, told CNBC.

“We’ve seen a trend over time towards premiumization,” she explained, adding that this has been reflected in a growing preference for higher quality coffee, both in how it is brewed and where it originates from, as well as different types and flavors.

The Bean Shop, an artisan coffee roastery in Scotland that offers online ordering, has noticed a surge in customers.

“There has a been a big increase in people making speciality coffee at home,” one of it’s owners, Lorna Bruce, told CNBC. “People love to try something new.”

Elsewhere, AeroPress, a company that produces popular coffee makers, told CNBC that it has seen sales increase, as well as a “dramatic” rise of interest from second-party retailers. In the past year, the company has gained two major retail partners including Walmart
, Chief Marketing Officer David Cole told CNBC.

As consumers pick up new ways of brewing, they continue buying the necessary accessories like filters, Cole added.

In the U.K., AeroPress sales between December 2022 and December 2023 grew by 40%, and the company now distributes its products to over 400 retailers like roasters and small coffee shops, a company representative said.

Besides AeroPress, other popular coffee-making methods include pour-over or drip coffee makers (like V60s or Chemex coffee makers) as well cafetières and moka pots that boil coffee on the hob.

Many of these methods are historically popular in certain regions, like cafetières in France and moka pots in Italy, but have recently gone global.

How coffee became cool

But how did coffee go from a standard, easily accessible caffeinated drink to being a major trend? Well, the Covid-19 pandemic and resulting lockdowns appear to be one reason.

“Lockdown meant people took the time to make the drinks that they’d normally get on the go,” the Bean Shop’s Bruce said.

“Customers tell us that they ‘can’t drink supermarket coffee now’ and they have gotten used to the freshly roasted flavors and aromas you get when coffee is brewed within a couple of weeks of roasting,” she added.
Consumers also appear to value small things like coffee drinking more now, Melanie Birnbaum, chief brand officer at Nespresso, told CNBC.

“Recent years have reaffirmed the value in simple pleasures and little luxuries like a cup of coffee,” she said, adding that this has prompted consumers to seek out higher quality produce.

“At the same time, some of the creativity and sense of exploration is being driven by social media, where new and inventive recipes are shared on TikTok,” she added.

WGSN’s Lancaster has also identified social media as a key driver of coffee’s coolness.

“Gen Z and TikTok are shaping coffee culture,” she said, pointing out that certain hashtags like #CoffeeTok have grown significantly in the past year.

There is also some overlap with the pandemic. For example, trendy coffee drinks like the Dalgona coffee (which involves whipping coffee powder, water and sugar to create a cream-like substance before adding milk) went viral on social media in 2020.

Coffee trends ahead
Social media is also a driver behind some of the trends that are on the horizon for coffee, Lancaster noted, as brands gain traction there if they have a “cool” element to them — and new coffee-making methods are shared frequently.

Another key trend ahead is coffee with add-ons that are designed to boost wellbeing and health, Lancaster pointed out. This has even reached large companies like Nespresso, which has launched blends enriched with Ginseng or vitamin B12 – or “functional coffee” as Birnbaum calls it.

“Some people are looking for something extra in their day,” she said. “These blends have added wellbeing benefits like vitamins or extra caffeine.”

Other growing trends include specific coffee styles being exported from their traditional markets, like Vietnamese coffee, made with condensed milk, and Indonesian Kopi coffee, which is based on partially digested coffee cherries, Lancaster explained.

And of course, innovations to at-home brewing devices and technologies aren’t going anywhere either, Lancaster added.