News & Opinion
The best way to plan ahead is often to look back to see the patterns emerge. Today’s article offers a recap of key patterns and trends that shaped the coffee industry throughout 2024, to help craft a strategy for 2025.
The European Union’s recent decision to delay the enforcement of its landmark European Union Deforestation Regulation (EUDR) has set the record straight on whether plans will go ahead or be scratched. EU coffee imports hit €21.9 billion in 2022, underscoring that compliance is non-negotiable. Looking to cocoa and palm oil offers the coffee industry a roadmap for smarter EUDR preparation.
Taco Bell, a brand synonymous with budget-friendly tacos and late-night cravings, is expanding into premium coffee. Its Live Más Café brings specialty drinks to the $5B coffee market, targeting younger, trend-focused consumers. Fast-food chains added 1,400 coffee outlets in 2023, with Taco Bell joining the race to compete with Starbucks and Dunkin’. Taco Bell is betting on affordable drinks to stand out in a crowded coffee space.
McDonald’s has launched a limited-time Dulce de Leche Frappé, signalling a calculated nod to the Latino community, their fastest-growing demographic in the US and a key driver of specialty coffee consumption. The frappé offers a workaround for their espresso machine troubles, with espresso drinks off the menu in several cities. With Latino spending power set to hit $2.6 trillion by 2025, McDonald’s blends cultural relevance with practicality.
Starbucks, the world’s largest café chain and a buyer of 3% of the world’s coffee, has taken a risky gamble in its approach to coffee purchasing. Starbucks cut coffee hedging from $1B in 2019 to $200M amid a 70% price surge this year. By relying on price-to-be-fixed contracts, Starbucks is shifting risk to an uncertain future. Starbucks and many small to mid-sized roasters are betting on future price drops but risk hefty costs if prices remain high.
Coffee prices have surged to their highest levels since April 1977, driven by fears over supply disruptions in top-producing nations like Brazil and Vietnam, and the anticipation of the EU Deforestation Directive (EUDR). While headlines indicate the coffee world is in shock, hasn’t it been a long time coming?
Italy’s beloved espresso, a cultural icon served at bars across the country for as little as €1, is poised to undergo a radical transformation. Espresso prices in Italy could jump 66%, reaching €2 – double the iconic €1 tradition. Global coffee prices have soared as Arabica just hit $3 per pound, driven by climate disruptions. Italy’s beloved coffee culture faces a reckoning as the €1 espresso era fades.
The UK coffee market is becoming a tricky one, tough for specialty coffee shop chains, and major players are redefining their strategies to capture consumer interest in high-traffic areas. Nero Group’s acquisition spree includes recent buys 200 Degrees and FCB Coffee. Now with 790 UK stores and over 1,100 worldwide, Nero Group is expanding fast. Specialty coffee chains are struggling across the UK, making investment and acquisitions the path to survival.
CEO Brian Niccol, leading Starbucks’ turnaround plan, unveiled sweeping changes to the Starbucks experience. This new strategy targets better pricing and convenience, and premiumisation and nostalgia at the same time. Meanwhile, Luckin Coffee is gearing up for US entry with $2 coffee options.
High coffee prices, stubbornly sustained over the last two years, are emerging as a lasting reality for the coffee industry. Arabica prices peaked at $2.75 in September 2024 – roasters are holding off on premium buys. The expected price drop? Unlikely to happen soon.
Dunkin’, one of the most recognised names in American fast food and coffee, recently declared bankruptcy in the Netherlands and Belgium. Only 12 months ago, the Van der Valk hotel group took a majority stake in its Benelux franchises. This is a stark reminder of the difficulty in replicating domestic success abroad.
Alupak AG, the Swiss packaging company known for its pioneering role in coffee capsule manufacturing, is preparing for the future. The capsule market has surged since Nespresso lost its patents, with over 400 competitors now in play. As the market grows, regulators are tightening the restrictions on waste.
In a decision that has divided stakeholders across industries, the European Union (EU) has announced a 12-month delay in the implementation of its Deforestation Regulation (EUDR). The delay was driven by both technical and political factors. After 20 years in development, EUDR remains firm, but does this delay hint at easing requirements?
In late 2023, the Alshaya Group, a major franchise operator in the Middle East and North Africa (MENA), reportedly put plans to sell a minority stake in its Starbucks franchise on ice. Political tensions and growing “boycott, divestment, and sanctions” movements may be factors. Homegrown brands like Barns are expanding fast, aiming for 1,000 outlets globally by 2030.
JAB Holding Company, the private investment firm known for its vast consumer goods portfolio, recently announced a pivot towards building a global insurance platform. F&B's appeal is fading – JAB sold 100 million Keurig Dr Pepper shares in March at 25% below their 2022 peak. JAB's pivot could reshape the industries it's exiting, especially coffee
In a surprising move, Black Rifle Coffee Company has struck a distribution deal with Keurig Dr. Pepper for its line of energy drinks. Keurig will distribute Black Rifle’s new line nationwide. Energy drinks are set to lead U.S. soft drinks growth in 2024 with 4.2% sales rise. Coffee brands are diving into the lucrative segment.
Global investment firm Verlinvest recently made headlines in India's emerging coffee market by leading a $35 million Series C funding round for Blue Tokai, a specialty coffee and bakery brand. A tea-drinking nation to date, India’s retail coffee market is projected to grow by 13% until 2025. After China, India looks like the new hub for investors and specialty coffee players looking to expand.
Australian appliance giant Breville Group, known as Sage in Europe, has recently reported a record performance, achieving $1.53 billion in revenues this year, marking a 3.5% growth. Over the last 4 years, at-home coffee consumption has held steady. However, out-of-home has fallen 11% as customer trust wanes.
Starbucks, long associated with premium quality and the craft of coffee, has replaced its CEO in a move that suggests a dramatic shift in strategy. With shares falling by a record 16% in May, they jumped 24.5% when the chain announced new CEO Brian Niccol – formerly of Chipotle. The change in management could be indicative of a shift from premium to “fast” coffee for the iconic chain.
The recent acquisition of Volcafe by Hartree Partners, a global energy and commodities trading company, marks another chapter in the ongoing consolidation of the global green coffee trade. This acquisition is indicative of a broader trend sweeping through the sector. The green coffee trading sector is in crisis, and consolidation is becoming a troubling symptom.
