Overall, coffee industry to experience growth in next year

According to BusinessWeek, coffee will trade at roughly $1.80 a pound until the end of 2012 which is a 42 percent drop from the 14-year high in 2011.

This slip is despite the fact that arabica coffee has jumped up to $3.08 in New York as of May 3. That is the highest the line of coffee has traded since 1997 and is likely due to an increased demand and short supply as Colombia and Brazil – the major producers of arabica beans – see decreased output due to rain shortage and the lower-yielding half of a two-year cycle.

“The arabica prices, when they were at their maximum, they were not driven by coffee fundamentals,” said Per Harkjaer, the CEO of United Coffee, to BusinessWeek. “They were driven by investment speculation in commodities.”

Although robusta beans – used in instant coffee – may fall by 5 to 10 percent by the end of year, the line has still increased by 12 percent this year alone. This rise and fall of prices is due to Vietnam farmers holding back on the supply – roughly 20 to 25 percent, actually – as they hoped for better prices, which they got. They are now shipping more beans than earlier, therefore decreasing the price.

Furthermore, coffee sales in the United States grew by 5 percent in the past year to 62,000 metric tons. And, according to BusinessWeek, coffee prices are set to remain “high and volatile” for a while as consumer demands continue to increase worldwide.

This makes a great market for coffee roasters and retailers. If these business owners wish to invest on the rising demand of arabica and robusta beans from Central America and Asia, the use of custom designed labels promoting these key features can help sell these coffee labels.