No matter where you live, this year is proving to be as different as it has been difficult. Although the pandemic has affected each of us by bringing uncertainty and negative news, the impact has not been the same in every country or industry, and coffee is no exception. Although there has been a lot of information about what has happened in the coffee industry, most of it relates to the overall coffee industry, with little research focused specifically on the specialty segment.

To improve our understanding of the situation and develop a better response for our customers, in July we designed an online survey to ask our customers and roasters around the world about how they were doing and coping during the current situation.  The anonymous survey was open for three weeks, starting July 23^rd. We had 143 specialty coffee roasters participate, hailing from Australia, Europe and North America, with a few respondents form Asia and Latin America as well.  We believe this feedback offers a fair representation of how COVID-19 has impacted the specialty coffee industry over the past 6 months.

Based on the results of the survey, we can confirm that there was indeed a moderate to significant impact on the industry caused by the COVID-19, with over half of respondents reporting a decrease in sales exceeding 25% – while over a fifth saw sales decrease by more than 50%.  However, it is also evident that most roasters reacted quickly, specifically by closing cafes, laying off staff, renegotiating rents and, crucially, shifting their sales to other distribution channels. A third of respondents described strengthening online sales, with 40% of roasters focusing on direct-to-consumer sales and the quick development of new offerings, two of the most popular strategies implemented to address the needs of newly home-bound consumers.

Location, Location, Location

Despite the effects of lockdowns and safety protocols, we can see most of the roasteries by the summer were adapting and shifting to recovery mode.  In Australia, for example, there was great optimism as 44% of respondents claimed that their sales were already the same or above pre-COVID and almost 40% responding that they expected their sales would be equal than before COVID within the next 12 months. European roasters were cautiously optimistic, with 32% of respondents already showing similar sales as before the pandemic, while 36% expected their sales would return to pre-COVID levels in the next 12 months. However, with second wave arriving in Europe, circumstances might change – although we believe that by now most roasters have taken steps to adapt and are well positioned to mitigate the consequences of a second wave. We can see how their reactions and the measures implemented have helped them strengthen their businesses and move forward.

A more cautious assessment can be seen in North America – perhaps because in July cases and deaths were on the rise in most of the region, as only 16% of respondents claimed that their demand was already the same or above pre-COVID, while the vast majority of respondents claimed that it will take longer than six months for their demand to reach pre-COVID levels.

Size Matters

Larger roasters seem to have fared much better than medium- and small-sized roasters, with half of them reporting a negligible impact and 83% reporting that their sales are already at or will be above pre-COVID levels in the next 6 months.  These roasters tend to depend less on wholesaling coffee to cafes or restaurants and have benefited greatly during the pandemic from their well-established supermarket distribution channels. Smaller roasters also seem to have been less impacted than medium sized roasters, with 26% reporting no or minimum impact on their demand and 17% reporting that their sales were already above pre-COVID. This compares drastically with what was reported by medium sized roasters, as none reported having none or minimum impact, and only 7% of medium sized roasters reported already seeing sales above pre-COVID.

As for the impact on their coffee suppliers, many respondents mentioned that they had dialed back volumes purchased or delayed shipments, with 8% reporting reduced prices paid to coffee suppliers. Encouragingly, 11% of respondents cited an increase in volumes and strengthened relationships.

The Road Ahead

Despite the obvious challenges caused by the pandemic, we are happy to see that as businesses adjust to the new reality, they are identifying solutions to minimize and overcome the impact. It is also clear that consumer habits have changed during the pandemic, with at-home consumption on the rise, a trend that should continue at least until the summer of 2021 when vaccines are projected to become widely available. We are hopeful that once the pandemic recedes, these new home-brewing habits will prove durable, as people also return to enjoying coffee at cafes when socializing or working, providing a solid foundation for future growth.

Despite the tough circumstances, we remain optimistic about the future of specialty coffee and stand prepared to keep supporting the specialty coffee industry, both growers and roasters, as the new reality will continue to pose challenges, but also opportunities.

We invite you to see the complete results in an interactive format, with filters by location and roaster size.