Essay Example on Coffee Addiction: The Story Behind the Stimulating Cup

Introduction

Coffee is among the most consumed beverages, not only in the United States but also across the globe. With its stimulating kick of caffeine, coffee has grown to be a widely accepted and much-used beverage around the world. It has almost created its unique addiction, and the community of coffee lovers grows day after day. I am one of the staunch coffee lovers; I use at least three cups of coffee a day. Behind the taste and stimulating ability of any well-prepared coffee, is a mega story and universe with multiple players, benefactors, and conditions rocking it. Beyond all one can see or feel when they get a taste of the coffee, is the journey of the coffee from seedlings to the garden, and through a turbulent market to the retailers serving it. To many African, Latin American, and Asian countries, coffee has been a backbone to their economy, and a basis of politics. Coffee stands tall as the second most traded commodity, with its value being second only to oil. Even with such dominance, the coffee market is continuously rocked by various ever-changing factors in both supply and demand. The following is a critical analysis of the dominant supply and demand factors that affect the overall coffee market, coupled with the prospects of the market's near future.

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Demand

A first of the various factor that influences the demand for coffee is the preference of the food in the world population. Food choices have, over the decades, been changing, growing more precise and even more stern. The human track record has vivid evidence of the continued change and diversification in food preferences and decisions. How much people condone, accept, and praise the consumption of particulate food directly affects its demand. In recent years, world populations have been pushing for the use of natural products, with the emphasis being on farm products. The reasoning has been that avoiding manufactured foods could significantly reduce the risks of contracting diseases and disorders such as cancer and diabetes. This switch to healthy foods has grown the overall coffee consumption taking it over and beyond soft drinks (Alemayehu, 2017). Aggravated consumption has, therefore, increased the demand for coffee around the globe. A switch to a different alternative is, however, bound to significantly lower this demand.

Second is the price of alternatives in the same market. Coffee barely has any monopoly in the beverage market. It strives for consumers against the likes of tea, cocoa, and chocolate, among others (Nguyen et al., 2017). Each of these comes as a commodity of choice to a shopping consumer. Typically, everyone considers the price of that which they want to buy as much as they consider the health benefits of the same. A rise in the prices of alternative beverages such as tea sparks a shift in customer preference to the other "availables," and with the given benefits of coffee, most go for it. This, in turn, skyrockets the demand. A drop in the prices of other beverages creates a similar reaction, only this time, in the opposite direction. People will buy cheaper beverages and therefore lower the demand for coffee.

Impact of Consumer Income on Coffee Demand

The income of the consumer population is another factor that affects the demand for coffee. Like any other commodity, the demand for coffee is directly dependent on the income of the people. The higher the income, the greater the purchasing power, and therefore, the higher the demand for goods. A decrease in the income translates to reduced consumption, which in turn, lowers the demand.

Last but not least is customer expectations. Studies have shown that the average population is speculative of commodity price trends, and they try to consume any given product at the least possible cost (Mankiw and Taylor, 2011). Coffee consumers aren't any different. They will buy more when they feel the prices are low, especially if they anticipate an increment of the same to avoid paying more in the future.

Supply

Pinkasovitch (2011) defines supply as the amounts that producers and suppliers of a given commodity are able and willing to supply to the market at a given time and price. Among the factors that affect the amounts, coffee producers and processors can provide s weather changes in producing countries. Coffee grows under prime climatic conditions. Changes in the regular sun, soil fertilization status, frost, temperature, or rainfall in major producing countries such as Brazil and Vietnam have, over the years, lowered the global supply of coffee (Bedford, 2020). The cost of production is yet another factor that influences the supply of coffee. The drying, crushing, and processing of coffee is dependent on fuel. A rise in the cost of the useable fuels hikes the production cost, and with a focus on profits, producers shun form processing it to evade tentative losses.

Weather Changes in Coffee-Producing Countries

The changes and in either demand or supply, create a functional fluctuation in coffee prices. If the demand is more, coffee prices rise with the degree dependent on the available amount. If high demand coincides with low supply, then coffee prices go way higher than when the demand increases amidst surplus supply. The same applies to supply. If there is an increment in supply amidst low demand, coffee prices are bound to get quiet, and if the increase is at a time when there is high demand, then the prices go up.

Conclusion

The current Coronavirus pandemic is promising nothing but the worst for most industries, the coffee business included. With lockdowns in producing countries such as Kenya, there will be minimal coffee production this year. The closing of international flights into and out of various countries will also amputate the supply of coffee to consuming countries such as America, Italy, and Australia. With anticipated significantly low production, and barely efficient means of transportation, not even the reduction in VAT will possibly save coffee lovers from high coffee prices. We had better brace ourselves for coffee prices higher than what we have been used to.

References

Alemayehu, A. (2017). Independent Lens. BLACK GOLD. The Economics of Coffee | PBS. Pbs.Org. https://www.pbs.org/independentlens/blackgold/economics.html

Bedford, E. (2020, March 10). Topic: Coffee market in the United States. Www.Statista.Com; Statista. https://www.statista.com/topics/1248/coffee-market/

Hameed, A., Hussain, S. A., & Suleria, H. A. R. (2020). "Coffee Bean-Related" Agroecological Factors Affecting the Coffee. Reference Series in Phytochemistry, 641-705. https://doi.org/10.1007/978-3-319-96397-6_21

Kunst, A. (2017, December 20). Factors influencing coffee purchasing by country 2017 | Statista. Statista; Statista. https://www.statista.com/statistics/696093/factors-influencing-what-coffee-consumers-purchase-by-country/

Mankiw, G., & Taylor, M. (2011). Economics. 2nd ed. Andover: Cengage Learning EMEA.

Nguyen, T. V., Nguyen, N. C., & Bosch, O. J. H. (2017). Identifying key success factors in supply chain management for increasing the competitive advantages of Vietnamese coffee | Emerald Insight. Competitiveness Review: An International Business Journal. https://doi.org/10.1108\/CR

Pinkasovitch, A. (2011, October 4). Introduction To Supply And Demand. Yahoo.Com; Yahoo News. https://www.yahoo.com/news/Introduction-To-Supply-And-investopedia-3695952464.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAADoLFb_Q2Au1qE_S19qCyBP8Z889eQrBAk4R2Bgt7bGBcqR4MVWoExtwQEoKWVOtNqCTI31Va4GaT6BSW93fOaDCdxdR5kYDzLCm9JitlyXUN2aPq2RWt1dUgZgn-pldkpAJrhCXoNg_Zh6SiHQljXPPIxl_WxjbM2YyKsIkqKZU