Ghana’s coffee consumption is forecast to grow by 5.9% year-on-year over 2021-2025, Fitch Solutions says.
While this indicates a gradual growth as compared to that of Kenya reaching 8.8%, it is still less compared to its regional coffee-producing peers: Uganda, Tanzania, Ethiopia, Kenya. On the global front, however, coffee consumption growth is being led by emerging markets.
Global coffee consumption is changing quickly, and emerging markets are leading in the consumption growth of the commodity. Yet, how fast is Ghana’s coffee industry positioning itself to tap into this growing market?
Like all else, the change in consumption behaviour of households triggered by the Covid-19 pandemic affected global coffee production and demand to a very large extent.
However, one year on, coffee consumption is increasingly growing worldwide. Coffee is one commodity that is gaining traction across the globe, considering the number of commodities that are fast regaining momentum post-pandemic.
Ghana’s coffee production has struggled over the years, making smaller contributions to global output than cocoa. Whilst the commodity’s output has doubled to above 12,000 tonnes per annum in recent times for the domestic market, with yields of about 1.4 tonnes per hectare, this is not adequate compared to the global output.
Last year, a plan was hatched to establish a coffee division at COCOBOD. The aim was to increase the commodity’s production from around 10,000 tonnes to 50,000 tonnes in the medium term. In the long term, it will then be doubled to 100,000 tonnes while exporting some of the produce to other markets.
While Fitch Solutions expects accelerated growth in the consumption of the commodity, compared to Ghana’s current growth pace, it may still not meet its projected output in order to tap into this growing market in emerging markets (EMs).
Global Consumption growth of Coffee over 2021-2025
According to Fitch Solutions, global coffee production is estimated to increase from 161.2 mn 60kg bags in 2020 to 175.0mn 60 kg bags by 2025. Fitch Solutions expects global coffee consumption to grow by 1.7% year-on-year from 2021-2025 after an abysmal performance in 2020, representing a decline of 2.3% year-on-year.
This growth will be at a slower rate relative to pre-pandemic levels over 2015-2019, averaging 3.0%, Fitch Solution asserts. This is due to a slower recovery in most developed markets, with falling consumption levels in markets such as Japan.
Albeit, coffee consumption in emerging markets will outperform those of developed markets in terms of absolute growth and growth rate on a year-on-year basis, Fitch forecasts. This growth trajectory will accelerate over the coming years in most countries in the emerging markets.
Among countries that Fitch Solutions forecast to experience the greatest increases in absolute growth are Brazil and Indonesia. Other emerging markets that are expected to experience consumption growth accelerate quickly over the coming years include Philippines, Vietnam and Colombia.
Based on data from Fitch Solutions, consumption growth will average 5.9% year-on-year for Colombia from 2021 to 2025. The research firm also expects strong growth in emerging markets, including Russia and China. Accordingly, the United States Department of Agriculture data, Russia and China saw consumption increase by 194.3% between 2011 and 2020.
Consumption growth in emerging markets will be due to changing consumption habits, especially among young urban populations, and rising incomes. More so, changing preferences for coffee drinking among young urban populations partly explain the increase in consumption growth in emerging markets.
Ghana must take advantage of this increasing consumption and use it as a springboard to meet its potential, going forward.
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