World demand for coffee beans continues to hit record highs as people around the world are consuming more of the beverage, and Americans are leading the way. Global coffee consumption is expected to grow by 1.2% annually over the next twenty-five years, and U.S. consumption is expected to be up 1.5% this year alone. Coffee has also reached peak popularity in China, Japan, and India, and more demand for java is expected in other emerging markets.
Coffee drinkers are consuming more of the brew than ever, helping to send global coffee consumption to an all-time high and sending prices for the beans soaring. The high demand is leading to higher prices for coffee beans, and more and more investors are seeking to profit from the one commodity that the world wakes up with.
According to the National Coffee Association's 2013 online survey, about 83 percent of adult’s drink coffee in the U.S., up from 78 percent a year earlier. That's an average of three cups a day per person, or 587 million cups. Coffee is worth over $100 billion in global trade, that puts it ahead of commodities like natural gas, gold, Brent oil, sugar and corn.
Alternative real estate investments have helped drive some of the world’s best-performing portfolios, and coffee producing properties offer superior risk-adjusted return.
US investor Jim Rogers outlined his view on where the world’s next boom will come from in the Economic Times in 2011. A well-regarded financial commentator and a co-founder of hedge funds with billionaire financier George Soros, Rogers is extremely bullish on food. “Agriculture is going to be the big thing in the next 20 years,” he said. “The best thing you can do is to become a farmer; that is where the money is going to be made. Farmers are going to be driving [Lamborghinis] in the next 20 years, stockbrokers are going to be driving taxis.”
IMPACT INVESTING Transforming How We Make Money While Making a Difference The next generation of investors want to make a meaningful difference both socially and environmentally, in addition to making money. Impact investing for blended value encompasses a set of strategies that generate financial returns while intentionally improving important sustainable conditions. Our coffee farms provide much more than jobs, we support a wide variety of responsible projects.
FARMLAND – A TANGIBLE REAL ASSET Institutional investors find farmland to be an attractive long-term investment that offers capital preservation, historically strong performance, a current income return component, low to moderate risk and favorable diversification characteristics. Farmland is a major asset class with over $1.9 trillion in total asset value across the U.S., according to the United States Department of Agriculture (USDA). Of that, approximately $300-400 billion is institutional-quality farmland. Farmland investments are becoming a popular alternative investment model. Farmland is not only the source of the food, feed and fuel upon which mankind depends; it also represents a stake in a finite (and potentially diminishing) resource.
INVESING IN THE FUTURE OF COFFEE Coffee loving millennials are pushing global demand to new highs. Prices for Arabica and Robusta beans surged in 2016 as Hedge Funds increased their bets and are positioning for more gains. The National Coffee Association reports that from 2008 to 2016, daily consumption among 18- to 24-year-olds rose to 48 percent from 34 percent, while it climbed to 60 percent from 51 percent among those aged 25 to 39. Investors in coffee stand to enjoy even more growth as the trend has crossed over to younger millennials born after 1995.
Global Coffee Consumption Data as of 14 October 2016
151.3 million - Estimated number of 60 kg bags of coffee consumed in coffee year 2015/16 (Oct. 2015 to Sep. 2016)
1.3% - Average annual growth rate in global coffee consumption since coffee year 2012/13
Global Coffee ProductionData as of 14 October 2016
148 million - Estimated number of 60 kg bags of coffee produced in 2015/16
+0.9% - Estimated increase in global coffee production in 2015/16 compared to 2014/15
0.7% - Estimated change in global production of Arabica coffees in 2015/16 compared to previous coffee year
1.3% - Estimated increase in global production of Robusta coffees in 2015/16 compared to previous coffee year