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
Apr 20, 2024 - Producer’s Hike Prices
- According to the latest data from the US Bureau of Labor Statistics, the Producer Price Index for coffee and tea manufacturers, which measures prices before reaching consumers, rose 7% in March compared to a year ago after rising 8% in the previous annual comparison. Producers began hiking prices in 2022 as demand rose amid supply shortages. Employment by coffee and tea manufacturers is also growing, up 2.6% in January compared to a year ago, BLS wage data shows.
- Global prices for coffee are surging as severe weather hampers production in key growing regions, The Wall Street Journal reported in April. Heat waves, heavy rainfalls, and droughts are increasing in frequency, damaging harvests and crippling supplies amid growing demand from consumers worldwide, according to WSJ. “Adverse weather conditions, mostly in the Southern Hemisphere, have played an important role in sending several food commodities sharply higher,” Ole Hansen, head of commodity strategy at Saxo Bank, told WSJ. The global coffee benchmark prices, London Robusta futures, are up 56% this April compared to a year ago, according to data from FactSet. Soaring coffee bean prices and rising costs for other inputs like labor and transportation are pinching coffee manufacturers' margins. Climate change is central to the rising price of coffee and other commodities and threatens to send them even higher, per WSJ.
- 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.
- 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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