Nestle Report
The Nestlé coffee report
Faces of coffee
Contentsii
Page 2ii
The changing world of coffee
Page 10ii
From cherry to cup
Page 50ii
1 Faces of coffee
The future of the coffee world
2 Faces of coffee
The changing world of coffee
3 Faces of coffee
The changing world of coffeeii
Coffee price 1900–2003
US cents/lb
300
250
200
150
100
50
Millions of bags
Rest of the world
40.2
4 Faces of coffee
60
Rest of the world
44.3
50
40
Brazil
32.4
30
20
Brazil
19
10
1992-1993
Source: Nestlé Purchasing Department
2002-2003
2000
Worldwide Arabica production
1990
Source: McKinsey/Technoserve Study, 2004
1995
Post-ICA trend
1985
1980
1970
1975
1965
1960
1955
1950
1940
1945
50-year trend
70
Price volatility
Until the late 1980s, the green coffee market was protected from wide price swings by the International
Coffee Agreement (ICA), through which consuming and producing countries agreed on export quotas and price bands for coffee. It had been established in the
1970s after wide swings in prices. However, the economic clauses of the ICA collapsed in 1989 due to systemic shortcomings, mainly as a result of the withdrawal of support by the United States. The consequence was a more volatile market, in which prices, after initially collapsing, reached levels well above production costs by the mid-1990s.
This was worsened by severe frost and drought damage to the Brazilian coffee crop in 1994, and the resulting shortage of supply pushed Arabica prices to over USD 3 per pound by 1997.
But by the end of the decade, export earnings had begun to slide – from USD 12.9 billion in 1997 to just
1935
1930
1925
Real price
1920
1915
1905
1910
1900
Take any morning in London, Brussels or Paris. Millions of people start their day with a cup of coffee. For some, a day without coffee is worse
Faces of coffee
Contentsii
Page 2ii
The changing world of coffee
Page 10ii
From cherry to cup
Page 50ii
1 Faces of coffee
The future of the coffee world
2 Faces of coffee
The changing world of coffee
3 Faces of coffee
The changing world of coffeeii
Coffee price 1900–2003
US cents/lb
300
250
200
150
100
50
Millions of bags
Rest of the world
40.2
4 Faces of coffee
60
Rest of the world
44.3
50
40
Brazil
32.4
30
20
Brazil
19
10
1992-1993
Source: Nestlé Purchasing Department
2002-2003
2000
Worldwide Arabica production
1990
Source: McKinsey/Technoserve Study, 2004
1995
Post-ICA trend
1985
1980
1970
1975
1965
1960
1955
1950
1940
1945
50-year trend
70
Price volatility
Until the late 1980s, the green coffee market was protected from wide price swings by the International
Coffee Agreement (ICA), through which consuming and producing countries agreed on export quotas and price bands for coffee. It had been established in the
1970s after wide swings in prices. However, the economic clauses of the ICA collapsed in 1989 due to systemic shortcomings, mainly as a result of the withdrawal of support by the United States. The consequence was a more volatile market, in which prices, after initially collapsing, reached levels well above production costs by the mid-1990s.
This was worsened by severe frost and drought damage to the Brazilian coffee crop in 1994, and the resulting shortage of supply pushed Arabica prices to over USD 3 per pound by 1997.
But by the end of the decade, export earnings had begun to slide – from USD 12.9 billion in 1997 to just
1935
1930
1925
Real price
1920
1915
1905
1910
1900
Take any morning in London, Brussels or Paris. Millions of people start their day with a cup of coffee. For some, a day without coffee is worse