Coffee and Tea Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 865 coffee or tea manufacturers in the US produce roasted coffee, packaged tea, and related products. Coffee manufacturers roast coffee beans and produce coffee-based products, such as concentrates, extracts, flavorings, and syrups. Tea manufacturers produce tea concentrates or herbal teas or blend tea. Firms may offer related products, such as green coffee, other types of beverages, coffee filters, sugar, and creamers.
Variable Ingredient Costs
The cost of green coffee, the primary input to roasted coffee, is volatile and affects margins and profitability.
Dependence on Imports
The US is the largest importer of tea in the world and imports the second-largest quantity of coffee beans.
Industry size & Structure
The average coffee or tea manufacturer operates out of a single location, employs fewer than 20 workers, and generates about $14-15 million annually.
- The coffee and tea manufacturing industry consists of about 865 firms that employ 22,600 workers and generate $12.5 billion annually.
- The industry is highly concentrated; the top 50 companies account for about 91% of industry revenue.
- Multi-national food conglomerates, including J.M. Smuckers (Folgers) and Kraft Heinz Group (Maxwell House), roast and sell coffee beans, as do large coffee chains, such as Starbucks and Dunkin’ Donuts.
- Large coffee manufacturers include Farmer Brothers and Coffee Holding.
- Large tea manufacturers include Unilever, R.C. Bigelow, Hain Celestial, and Twinings. Major soft drink manufacturers, such as Coca-Cola and Pepsi, have tea brands in their product portfolios.
Industry Forecast
Coffee and Tea Manufacturers Industry Growth
Recent Developments
Oct 20, 2023 - Producer Prices Rising
- The producer price index for coffee and tea manufacturers, which measures prices before reaching consumers, rose in August compared to a year ago and was up sharply vs July after several months of relatively little change. The average price for a pound of coffee was $6.085 in September compared to $6.091 in August, a 0.10% decrease. However, over a longer period the per-pound cost rose to $5.89 in 2022 from $4.71 in 2021, registering a year-over-year increase of 25.1%, according to monthly pricing data from the Bureau of Labor Statistics. Overall, prices paid to US producers increased in August by the most in more than a year, driven by rising energy and transportation costs.
- Starbucks in September announced it has developed six new climate-change-resistant tree varietals that produce Arabica – a type of bean that is threatened by climate change, The Seattle Times reports. The new tree seeds, developed by agronomists at the company’s Costa Rica farm Hacienda Alsacia, are resistant to coffee leaf rust, a disease exacerbated by climate change, according to ST. The new tree breeds are part of an initiative Starbucks launched five years ago to distribute climate-resistant tree seeds to suppliers and farms. The company says it has distributed over 3 million seeds to date. Climate change is considered the biggest long-term threat to coffee with Arabica being at risk of extinction by 2080. Four of the top five producers of coffee in the world (Brazil, Vietnam, Colombia, and Indonesia) are projected to have their best areas for growing coffee decrease in size and suitability, according to the International Coffee Organization.
- “Natural” arabica coffee from Brazil is arriving in large volumes on the world's main price-setting market, presenting a challenge for hand-picked premium beans from less efficient, smaller farms elsewhere in Latin America and Africa, Reuters reports. Brazil grows almost half the world's arabica coffee, much of it harvested by machine on large plantations. But some of its beans, known as unwashed or “natural” arabicas, haven’t previously been used for high-end benchmark coffee contracts around the world, according to Reuters. Now, however, global coffee traders are adding these Brazilian-grown beans to the bags used to settle these contracts, traders told Reuters, marking a previously unreported structural change set to affect world coffee prices in the long-term, the traders and others in the industry told Reuters. While the inclusion of Brazilian-grown arabica could bring relief to consumers facing food price inflation, it threatens hilly farms unsuitable for Brazilian-style harvesting vehicles.
- Coffee consumption will continue to grow this year driven by the pent-up demand created by the pandemic for the second straight year, according to the recently released Coffee Report and Outlook from the International Coffee Organization (ICO). However, consumption will rise at a slower rate of 1.7%, to 178.5 million bags, compared to the prior year when it posted a 4.2% gain, to 175.6 million bags, marking the sharpest growth rate since the 4.6% gain in coffee year 2000/2001, according to ICO. Consumption will also be affected by slowing economic growth and inflation, which will cause consumers to trade down to less expensive brews. Production, which was hampered in 2021/2022 by meteorological conditions, is expected to recover in 2022/2023, increasing by 1.7% to 171 million bags compared to a 1.4% decrease in 2021/22.
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