What is Happening to Consumption?
Last week, I came across a report by the International Coffee Organization (ICO) that analyzed the impact the pandemic is having on the consumption of coffee. As I was reading the report, I was able to make a connection between their macro study and what I am witnessing firsthand.
When the pandemic struck, people went into panic mode and stocked up on everything they thought might be needed. Coffee was on the list.
A local roaster I work with told me that the orders from the supermarket stores spiked like never before, and the stores kept running out of coffee! They had not experienced anything like that.
In addition, their loyal customers who tend to buy regular retail bags suddenly started buying wholesale size bags. The report described the same activity on a larger scale. Even though it might bring a temporary boost to roasters, orders have begun to wind down, and are leveling off and even decreasing. They expect orders to continue to slow as people use from their stock at home.
Not everyone was fortunate to receive the benefits of panic buying. My clients and friends who run coffee shops were probably hit the hardest. The social distancing rules established at first decreased their sales dramatically, and once store closures were enacted, well, sales stopped. Some shops were able to continue operations with drive-through service, but many do not have that capacity.
According to the report, “out-of-home consumption represents 26.1% of total consumption worldwide.” That has an immediate impact on the coffee industry.
Biarte has felt the impact of the pandemic, just like everyone else. Our sales to our restaurant and coffee shop partners stopped on its tracks, but we have seen an increase in online orders. The strategy and effort involved in wholesale and retail are completely different, but we are fortunate to have a medium to adapt to, and will put all our effort to satisfy our customers.
What About the Farmers?
It is without a doubt that the pandemic is afflicting producers around the world. There are different circumstances for each country and region of the world so I will focus on Latin America.
Caravela Coffee ran an interesting survey where they asked coffee farmers in Colombia, Peru, and Ecuador what their primary concerns were. Farmers in Colombia and Peru said that they are worried about the lack of labor they might encounter, and in Ecuador, they are concerned that the roads will be blocked by people.
This will most likely impact the coffee supply. The South American harvest season is underway, and Colombia and Peru depend on outside labor to harvest the coffee. The farmers are already expecting a loss in production.
Central America finished the harvest earlier this year, but farmers might still face similar issues.
I spoke to my brother, Jorge, about the conditions in Guatemala. Jorge currently manages Finca Santo Tomas Perdido, and according to him, it will be very hard to find labor and to transport the coffee, if conditions remain the same.