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
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Feb 20, 2024 - Producer Prices Rose Up 2023
                                    • Producer prices for coffee and tea manufacturers rose 6.73% in December compared to a year ago after jumping nearly 18% in the previous annual comparison, according to BLS data. Rising producer prices are helping to mitigate rising industry labor costs. Employment by makers of coffee, tea, and other food products reached a new high in December and average wages for employees of food manufacturers rose by more than 5% in 2023 vs 2022 to a projected $22.41 per hour, per the BLS.
                                    • Legislators in Hawaii have introduced a pair of bills that would increase the percentage of Kona coffee required for a product to be labeled as such and would expand legal penalties for mislabeling, Spectrum News reports. Currently, products labeled Kona coffee must contain at least 10% Kona coffee beans. The bills, which followed the January release of a study by the Hawaii Department of Agriculture (HDOA), are intended to support Hawaiian farmers and preserve the integrity of the Kona brand. “Requiring coffee labeled as “Kona” to actually be 100% Kona beans will protect the value of the Kona name and support farmers’ ability to get the best prices for their products,” said state Rep. Nicole Lowen. The HDOA reports that increasing the minimum amount of Kona coffee content from 10% to 51% or 100% would increase the price of Kona coffee without significantly impacting quantities grown and sold.
                                    • Global coffee prices may ease in 2024 on a projected increase in supplies from key producing countries such as Brazil, Vietnam, and Colombia, according to the World Bank’s commodity markets outlook. Prices of Arabica coffee fell 14% during Q3 2023 versus the previous quarter. Following this decline, Arabica prices are down by nearly a third (-30%) compared to a year ago. Arabica prices are expected to ease further in 2024 as production ramps up with output likely to rise 14% in Brazil, Vietnam, and Columbia, according to the World Bank. Coffee production in Brazil – known as the “coffee pot of the world” because the country produces more than 35% of the world’s coffee – rebounded in 2023 from lows in 2021-2022 due to supply chain disruptions. Production from Brazil is a strong indicator of US coffee import volumes, and ultimately the price of coffee, according to the US Bureau of Labor Statistics.
                                    • Starbucks has announced it's 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.
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