The Coffee Industry

Megan Hay
BCOM 214
December 12, 2020
As requested, this report is an overview of the coffee industry in the United States. This report
provides information for potential investors about the industry. The information in the report will
be useful to informing if investors are interested in this industry. Specifically, this report covers
Industry Overview, Industry Trends, and the Impact from COVID-19.

Industry Overview

Coffee is one of the most popular consumed drinks in the world. Specifically, America is the
world’s second-largest coffee importer. The worth of a US dollar affects the demand for coffee.
It is expected that coffee bean prices are going to alter at a steady rate, which is going to allow
industry operators to grow their profit margin. Coffee has been considered as one of the most
popular drinks because of the versatile ways you can serve it, and various flavors (Business
Wire, 2020).

Industry Trends

Coffee Consumption

It is predicted that the consumption of coffee is intended to increase in the year 2019. In years
past, there has been a trend where more people are not purchasing high-quality coffee. Due to
single serve, one-cup, coffee machines, it has become very popular to purchase one-cup coffee
products. The driving factor for coffee consumption in the industry is that there is now a various
selection of coffee flavors to choose from, from the single coffee products (Lifschutz, 2019).

Demand for Coffee

The supermarket and grocery store industry now have a higher demand for coffee. Since single-
serve or one cup of coffee products is trending. This specific industry has a higher demand for
coffee and their revenue is expected to increase in 2019. In view of this common trend, there is
an opportunity for the coffee industry to continue their growth in revenue (Lifschutz, 2019).
Single-cup coffee options are commonly sold at supermarkets or grocery stores, which is why
there is such a demand for it.

Starbucks Corporation

As a result, from the previous five years, Starbucks Corporation is predicted to continue their
growth in revenue. Currently, Starbucks’ market share is at 30.5% and their revenue is expected
to increase at a rate of 7.9% ($14.2 billion) (Lifschutz, 2019). With their public market, seasonal
drinks, free WIFI at store locations, and expansion with product lineup, adds potential to grow
their revenue. Below, figure 1 shows Starbucks’ financial performance.
 Figure 1

Figure 1 shows that Starbucks Corporation in the United States has a steady income growth
throughout a six-year period (Lifschutz, 2019). This trend displays that there is an average of 8%
of growth change within those six years. Starbucks’ success in revenue growth, is due to their
decision making for the company.

Dunkin Donuts Corporation

It is expected that Dunkin Donuts Corporation is to have their revenue increase in the following
years. Forecasting into the future, the company is predicted to grow at 5.0% ($5.3 billion) in
revenue. The coffee industry is also predicted to have a 4.6% expansion in their revenue
(Lifschutz, 2019). Dunkin’s premium-priced cold beverages is what drives their sales growth.
Their popular branding of donuts and coffee is what also generates their revenue. Figure 2 shows
the financial performance from Dunkin Donuts Corporation:
 Figure 2

Figure 2 displays Dunkin Donuts’ (US) financial performance within a six-year period. From the
chart, there is about a 5.2% average growth change for the company. The reason as to why the
company is successful in terms of their revenue growth, is because they continue to work on
their menu innovation, marketing, and franchisee coaching to help their brand.

Impact from COVID-19

Revenue from the coffee industry is expected to decline due to the COVID-19 pandemic (Butler,
2020). There has been a huge decrease in production, exports, and imports because of the
cancelations of flights and shipments (NASDAQ OXM’s News Release Distribution Channel,
2020). The key impacts from the pandemic are the travel restrictions, quality of the coffee beans,
financing, and the health and safety measures (Verité, 2020). Due to these setbacks, such as
slower production, the industry is expected to have a slight decline in revenue.

The Coffee Industry in the United States has been very successful recently due to different coffee
options and various amounts of coffee flavors. Major coffee companies like Starbucks and
Dunkin Donuts have added value and revenue to the Coffee Industry because of their branding
and quality of coffee. Although the COVID-19 pandemic has setback the industry, there is still a
slow and steady incline in revenue for the coffee industry.
 References

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Comprehensive Analysis and Forecast—ResearchAndMarkets.com.
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Butler, B. (2020, October) Coffee Production in the US. Retrieved from IBIS World database.
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Verité. (2020, June) COVID-19 in the Coffee Sector: Challenges for Workers and Farmers.
https://www.verite.org/covid-19-in-the-coffee-sector/