There’s nothing quite like the smell of a freshly brewed ‘cup of joe.’ A morning ritual turned into an all-day-long desk accompaniment for many people, coffee is one of the largest industries in the world. In fact, it’s the second-most traded commodity in the global economy, just behind crude oil. It’s truly fascinating that the products of a simple bean could provoke trade to soar almost higher than a natural resource necessary for nearly all functions, transportation, and operations in countries around the world.
Colombia is famous for having world-renowned quality coffee. Moreover, it is one of the country’s strongest export sectors. Currently, increases in global consumption, especially in the US, means positive outlooks for the future of Colombian coffee farmers. Moreover, recent advancements in technology and digitization could grant farmers certain advantages and improve overall yields.
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Digitization – Global coffee consumption
To put to scale the size of the global coffee market, there were 500 billion cups of coffee consumed in 2018 alone. A worldwide increase in the middle class, disposable income, and leisure time collectively served as a catalyst in the ever-increasing consumption of coffee. At the forefront of the industry is none other than Colombia, one of the world’s leading producers of coffee.
Colombia’s current coffee industry
The Colombian coffee industry has a stronghold on the global market. Total, the country exported over US$2.5 billion worth of coffee in 2018 alone. The biggest buyer in the global coffee industry is United States, and their main supplier happens to be Colombia. In 2018, the US accounted for 20% of coffee imports worldwide. Of the US$5.7 billion in imports, Colombia supplied US$1.2 billion of it. Growth in coffee appreciation and disposable income in countries such as the US fuels Colombian farmers’ growth and innovation potential.
Coffee appreciation is a growing trend worldwide. When consumers are able to appreciate different types of brews, farmers are encouraged to experiment and try new things. Currently, companies are focusing on the ‘experience within the cup,’ to entice and capture consumers. This experience is more than just what the coffee tastes like, but goes further to describe the story of the brew: its origins, who produced it, the history of the farm, the personality of the brand. With its authentic and captivating culture and taste, producers from Colombia have no problem selling the ‘experience’ aspect of their coffee.
Technology improving coffee cultivation
As of right now, there are certain digital tools Colombian cafeteros can use to track their yields. These platforms allow farmers to create profiles specific to their own land and outstanding crops. Each day, the growers update the profiles with any changes in production, temperature, rainfall, disease, etc. This helps improve the transparency and quality of the beans being produced.
Moreover, the Sistema de Información Cafetera (SICA) is a national platform supported by the Federación Nacional de Cafeteros de Colombia (FNC). This database holds information regarding its members and the status of their land and crops. This data can be used to track quality of the beans, as well as gain insight into any negative trends ocurring on a national scale.
Finally, scientists in the UK raised £133,000 to fund a research project that will develop and modify the genome structure of coffee beans to make them more resistant to extreme weather events, diseases, and pest invasions. Progress in this endeavor has been so fast and positive, the modified genome sequence could be ready within the next 18 months. Should drastic weather-related events and natural pests threats escalate, coffee farmers could turn to this newly developed coffee bean DNA sequence to continue satisfying global demand.
Obstacles for the industry
While the global demand for coffee increases, feasibility of producing the bean and its derivatives is getting progressively harder. The main obstacles cafeteros are facing are the effects of climate change.
One prominent problem in coffee-growing regions of Colombia is the threat of erosion and mudslides. These risks come as result of prolonged rainy seasons and flooding, followed by droughts and increasingly unpredictable seasons. The ambiguity of the environment thus propagates the ambiguity of the business and a farmer’s yield.
Unfortunately, farmers are now used to dealing with scorching temperatures, unpredictable blooming times, invasive pests, possible crop disease, and difficulty bringing in a substantial harvest.
However, recent research and development efforts in the agritech industry are making the future of the coffee cultivation industry a tad brighter. There have already been a host of inventions to help cafeteros with the environmental challenges they are facing. Additionally, there are more opportunities for researchers and companies to continue innovating and improving the industry.
As of now, a handful of innovative technologies are being used to facilitate the coffee cultivation process. For example, hyper-local weather applications give farmers detailed reports of nearby weather patterns. Moreover, they explain how the crops could be affected and how to prepare for upcoming weather events.
To tackle the problem of crop disease and pest infestation, researchers developed an application which identifies the exact disease or pest that is causing the problem. Overall, the app has a diagnosis accuracy of over 90%. It then gives a series of possible solutions so as to rectify the issues at hand and halt any further damage to other yields.
Other possibilities for AgriTech researchers and developers continue to flood the industry. The key is being sensitive and aware of how environmental changes affect production, and how to remedy these changes. Moreover, concern for sustainability is increasing. New technologies to facilitate sustainable production would be well-received in the coffee-growing industry.
Potential for the size of the coffee industry is growing exponentially, Currently, Millennials make up the majority of coffee sales, accounting for an impressive 44% in the US. Additionally, they are the largest consumers of gourmet coffees, cold brews, and in-home, single-serve coffees. The Millennial’s coffee-crave is mostly driven by the experiential factor manifested by marketing gurus and coffee companies. By selling the experience, they have a better chance of getting the consumers hooked and purchasing again.
Additionally, coffee demands are growing at astonishing rates in all of China. Consumption is increasing so much, the drink is set to dethrone tea as the country’s number one drink of choice. With consumption growth rates at 20% per year, China poses as another buyable option for Colombian coffee producers and companies. Prior trading and investment with China and Colombia help foster this relationship.
Opportunities for your business are brewing!
The coffee industry has a plethora of business and investment opportunities for foreigners. Whether it be in production, exporting, agritech, or any other field, the industry will keep growing.
It’s time to wake up and smell the brew! Reach out to our team at Biz Latin Hub for personalized assistance in entering the booming coffee industry. With extensive experience in commercial representation and other back-office services, we can ensure a smooth and successful transition to this rich market. Contact us now to receive personalised information.
The information provided here within should not be construed as formal guidance or advice. Please consult a professional for your specific situation. Information provided is for informative purposes only and may not capture all pertinent laws, standards, and best practices. The regulatory landscape is continually evolving; information mentioned may be outdated and/or could undergo changes. The interpretations presented are not official. Some sections are based on the interpretations or views of relevant authorities, but we cannot ensure that these perspectives will be supported in all professional settings.