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Supply Glut Could Lead to Higher Margins Throughout Coffee Industry

The recent drop in coffee bean prices could assist profit margins throughout the industry, according to a recent report from the market research firm Paragon Report. Coffee futures in May saw their longest monthly slide in nearly 31 years as growing global supply is far exceeding current demand.

According to Volcafe, one of the world’s leading coffee merchants, global production is increasing exponentially while world consumption of coffee increased only 1.7 percent in 2011, which was below the average of the previous 12 years, according to the International Coffee Organization.

“Macro-economic uncertainty remains a major driver in the coffee market, impacting currency relationships and potential future demand,” analysts at Rabobank International stated in a recent e-mailed report obtained by the market research firm Paragon Report.

Paragon Report’s analyses of Caribou Coffee, Coffee Holding Co. and the coffee industry can be found here.

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