# Coffee Industry Outlook

## Rising "Specialty"

&#x20;When it comes to coffee consumption, espresso coffee culture began to become mainstream around the world, and Italian coffee culture became the basis of global coffee culture. However, coffee makers' efforts to coffee quality and consumers' needs have recently raised interest in specialty coffee, which leads to the latest trend of coffee culture when you go to Portland, Oregon, and Seattle, Washington. A new trend in the global coffee market is Specialty Coffee, which is called the third wave of coffee. COE, which evaluates coffee quality in the U.S. Specialty Coffee Association or production, defines specialty coffee by applying each evaluation method, while Stumptown, the representative of specialty coffee established in Portland in 1999, defines "vivid coffee for both coffee makers and end consumers." In addition to Stumptown, more than 10 coffee brands, including Blue Bottle, Counterculture Coffee, and Intelligensia, which lead the US specialty coffee industry, are consistently striving for the sustainable growth of the coffee industry by focusing on the specialty coffee industry.

Source: Global Coffee Industry Production and Consumption Trend (Hongsungdae)

## Specialty Market is expanding with the trend of psychological-effectiveness

There is a specialty coffee craze around the world. Specialty coffee refers to green beans with a score of 80 or more out of 100 according to the standards set by the Specialty Coffee Association (SCA), a global coffee expert organization. On top of that, direct transactions of mountainous areas must be made to be recognized as specialty beans. Only the top 5% of the world's coffee is judged as specialty coffee. The term specialty coffee is known to have first appeared in the United States in the 1970s.

Since then, in the 2000s, as consumers' desire to "enjoy proper coffee" has increased, it has begun to develop as an industry. Specialty coffee is also increasing in Korea. As the trend of finding "my own coffee taste" spreads around the world, especially among lovers who have experienced various coffee flavors while traveling around the world, the industry is also introducing a series of special stores where you can find your own coffee.

The representative one is Starbucks. Starbucks first launched a reserve store in 2014 that sells "reserve" coffee made from single origin premium coffee, and in 2016, it introduced a "reserve bar" store that added a high-end strategy to it and currently operates more than 50 reserve bar stores. At Reserve Bar, coffee experts who have passed Starbucks' global certification evaluation work and explain in detail the manufacturing process of a cup of coffee, including the extraction method, to consumers by selecting beans.

All of this is to provide the best coffee experience. China (97) is the only place with more reserve bar stores than Korea, a Starbucks official said. "There are the largest number of reserve bar stores compared to the population, leading the growth of specialty coffee in Korea." There are 32 reserve stores in the United States and 6 reserve stores in Japan. Blue Bottle, which recently opened in Seongsu-dong, Seoul, shows domestic consumers' interest in specialty coffee. Blue Bottle is a coffee brand that started in California in 2002 and the fandom of Korean consumers played a significant role in Blue Bottle's entry into Korea.

Brian Mihan, CEO of Blue Bottle, said in a recent interview, "I was sure how passion Koreans were about coffee," revealing the background of their entry into Korea. Blue Bottle is famous for its service method of making eye contact with customers and calling their names in the process of making coffee. Although there is also a differentiation between coffee beans and roasting methods, it is evaluated that these special services have created a coffee culture unique to Blue Bottle. With the advent of the blue bottle, the domestic specialty coffee industry has heated up.

![Source : Euro Monitor](https://1683796579-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FBHaz3yJbrRyxv9T12Vi4%2Fuploads%2F1meVE2z1eVlh4uZMHiSx%2F57146_13651_626.jpg?alt=media\&token=b23ca4e0-a7bf-4fc3-a459-222fc72995eb)

Now, the explosive growth of the psychological-effectiveness specialty coffee market rather than cost-effectiveness is also in line with the trend of psychological-effectiveness consumption. As more and more people seek psychological satisfaction, not price, in drinking a cup of coffee, they turn to expensive but special places, cheap and delicious things rather than cheap things. As coffee consumption shifts from cost-effectiveness to psychological-effectiveness, it is premium coffee such as customized coffee that attracts attention along with specialty coffee.

Source: Food and Dining Economy(<http://www.foodbank.co.kr>)

## Sustainable "alternative coffee" rising in the threatened coffee industry

&#x20;Just as alternative meat is drawing keen attention as an alternative to solving environmental and food problems, "alternative coffee" for sustainable consumption has recently emerged in coffee, drawing keen attention.

&#x20;Until now, coffee-related companies and organizations have made various efforts to maintain the sustainable coffee industry. A typical example is "fair trade coffee." The move was aimed at producing sustainable coffee through ethical purchases to protect farmers' economic independence and communities and the environment by paying proper prices to production farmers and workers who cannot escape poverty despite increasing coffee consumption.

&#x20;However, recent rapid climate change is threatening the industry itself as well as coffee-producing areas based on beans. The International Center for Tropical Agriculture (CTA) said in a report that about 50% of the current coffee-growing land will not be available within 30 years due to climate change. In addition, a study by the Royal Botanical Garden in the UK and the Ethiopian Environmental, Climate Change and Coffee Forest Forum (ECCCFF) also analyzed that by 2040, Arabica or Robusta coffee species could be virtually extinct and 40% of all coffee species would disappear by 2088.\
\
&#x20;Price instability is also hindering the economic sustainability of the coffee industry. Until now, coffee prices have steadily risen regardless of the price of coffee beans. In addition, coffee consumption and demand have continued to increase due to the prolonged pandemic, but the supply has not met this, making it inevitable to raise coffee beans prices. Along with this, as interest in health increases, the shortcomings of long-term consumption of coffee beans are also an obstacle to growth.

&#x20;In addition to ethical factors, realistic factors such as environment, health, and price have become a hot topic in the coffee industry, and coffee without coffee beans, or alternative coffee made of seeds or herbs, has recently been developed. The KOTRA Detroit Trade Building also paid attention to this and recently reported the current status of the U.S. alternative coffee market, summarizing it.

Then why are we paying attention to alternative coffee?\
\
◇ Increasing the price of beans.

&#x20;The coffee industry is no exception to the concerns about future food caused by climate change. This is because coffee beans prices continue to rise internationally.

&#x20;On the International Commercial Exchange (ICE), coffee-C futures prices, based on international coffee beans prices, rose about twice as much as a year ago to $2.33 per pound. The biggest reason is that Brazil, the world's largest coffee producer, has been hit by a series of cold waves and droughts, which produces 40% of the world's supplies. In addition, the rainy season begins later than usual due to the Lanignia phenomenon, and the possibility of a recovery in production is expected to be low.

&#x20;As Starbucks and others announced plans to raise coffee prices, the already predicted surge in coffee prices is becoming a reality. The Brazilian Coffee Industry Association said in a report on August 18 that coffee product prices will rise 35 to 40 percent by the end of September.

&#x20;According to statistics released by the U.S. Department of Agriculture in 2019, coffee consumption by Americans is expected to increase gradually by 2026, but the International Coffee Organization (ICO) predicts that "coffee beans prices will inevitably rise as demand for coffee beans exceeds supply worldwide."\
\
◇ Eco-friendly

The movement to destroy the environment less and find sustainable food continues. Coffee trees take more than two years to mature to harvest fruits, making it difficult to respond quickly in the event of a supply shortage. In addition, pesticides are essential to growing coffee fruits so that they do not go bad, which has been pointed out by environmental activists.

Alternative coffee compensated for these shortcomings. Since it is made through seeds or herbs without using beans, it has the advantage of being less environmentally destructive and sustainable. According to Atomo Coffee, the water used to make alternative coffee cold brews was 94% less than the amount of water used to make coffee in traditional cold brews, and carbon emissions decreased 93%.

◇ Health

Controversy over residual pesticides in coffee beans has continued. This is why more and more consumers purchase organic beans themselves. In addition, coffee promotes diuretic action, causing water imbalance in the body, breaking the inorganic balance in the body, causing symptoms such as eye tremors, or muscle dehydration, but alternative coffee companies claim to have compensated for these health shortcomings.

◇ Flavor

Atomo coffee, which won an overwhelming victory compared to traditional coffee in blind testing, said it embodied the body, color, aroma, taste, as well as bioactive nutrients of coffee, so-called the Big Five. In the future, competitors following Atomo are expected to emerge by further improving taste and flavor.\
\\

![Source: Food and beverage newspaper](https://1683796579-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FBHaz3yJbrRyxv9T12Vi4%2Fuploads%2Fm0VNVqREdl8xGChZEvxD%2F92943_121111_531.jpg?alt=media\&token=642f45ed-8167-426f-bd03-65070a34ed2a)

Source: Food and beverage newspaper(<http://www.thinkfood.co.kr>)
