Young Amer­i­cans love their cof­fee fix

East African Business Week - - LIVING -

NEW YORK, Usa-cof­fee de­mand in the United States is grow­ing, thanks to in­creas­ing con­sump­tion by mil­len­ni­als, th­ese are peo­ple who reached young adult­hood around the year 2000.

Mil­len­ni­als are push­ing US de­mand to his­toric records, ac­cord­ing to Bloomberg. Be­cause the United States is the big­gest con­sumer of cof­fee, world de­mand is grow­ing as well.

“Cof­fee de­mand is ro­bust and grow­ing at about 1.5per­cent per an­num,” said Car­los Mera Arzeno, a com­modi­ties an­a­lyst with Rabobank In­ter­na­tional in Lon­don.

He said there are two trends at work that are in­creas­ing cof­fee de­mand.

“One is the ex­pan­sion of cof­fee cul­ture, in par­tic­u­lar the ex­pan­sion of cof­fee shops and cap­sule sys- tems,” Arzeno said in an email. “The other trend is the ur­ban­iza­tion pro­cesses in emerg­ing coun­tries. Many peo­ple mi­grate from the coun­try­side to the ci­ties, say in coun­tries like China, try cof­fee for the first time and start con­sum­ing it.”

The tight­en­ing in sup­plies is push­ing bean prices for cer­tain va­ri­eties to their high­est lev­els since early 2015. It is not clear that tighter sup­plies are push­ing up the cost to con­sumers, although Star­bucks in­creased its prices last July.

Bloomberg said in­vestors are an­tic­i­pat­ing more gains. World con- sump­tion out­paced de­mand for the year ended Sept. 30, Bloomberg re­ports. The Bloomberg Com­mod­ity In­dex said cof­fee prices have the fifth-high­est re­turn this year among 22 raw ma­te­ri­als it fol­lows.

Arzeno ex­pects de­mand over the next year to out­strip sup­ply. “Brazil, by far the largest pro­ducer and re­spon­si­ble for about one third of all cof­fee, is likely to pro­duce a lower crop next year due to the cycli­cal na­ture of the cof­fee trees,” he said. Ro­bust U.S. stock­piles ap­pear to be pro­vid­ing some re­lief.

Bloomberg’s re­port cited re­search that says mil­len­ni­als con­sume 44% of cof­fee in the United States:

“Daily con­sump­tion among 18- to 24-years-olds rose to 48% from 34 per­cent, while it climbed to 60 per­cent from 51 per­cent among those aged 25 to 39, ac­cord­ing to the Na­tional Cof­fee As­so­ci­a­tion in New York. At the same, adults 60 and older saw a drop to 64 per­cent from 76%, and there was also a de­cline for the 40-to-59 age group.

It is not clear that tighter sup­plies are push­ing up the cost to con­sumers, although Star­bucks in­creased its prices last July

Agen­cies

COM­FORT­ING: Bloomberg says Mil­len­ni­als are push­ing US de­mand to his­toric records.

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