Analysis Of The Coffee Industry

Coffee Crafters manufactures fluid bed coffee roasters using a patent pending chaff extraction system that allows for low temperature venting and easy installation.

Mission: to manufacture the world's best coffee roaster in its class.

The global coffee industry generates combined revenue of close to $10 billion a year. Approximately 25 million people depend on the coffee industry worldwide for their livelihood. The coffee industry is very concentrated at the top and fragmented at the bottom with the top 50 companies taking up to 70% of the sales. However, this trend is shifting due to the growing popularity of independent coffee shops. Starbucks leads the way with over 20,891 stores worldwide; and Caribou Coffee is a distant second, with nearly 500 corporate owned stores and over 100 franchised outlets (source: PBS - Kelly Whalen - “Your Coffee Dollar”).

The general coffee industry is well developed and very competitive. A coffee store operator will face competition not only from other coffee shops but also gas stations, quick service and fast food restaurants, convenience stores, donut shops, gourmet food stores, and in-home gourmet espresso and coffee makers. Moreover, coffee as a drink is facing a strong competition in the US against the energy drinks as an alternative source of caffeine.

The National Coffee Association of U.S.A.’s 2013 National Coffee Drinking Trends market-research survey indicates (source: National Coffee Association):

● Coffee Consumption jumps by 5%;

● 83% of Americans Say They Drink Coffee on a Past Year Basis;

● Hispanic-Americans consume Espresso-based Beverages at twice the rate of other groups on a Past Day Basis;

● Single-cup segment builds on growth, ownership of single-cup brewers increases to...

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...of use and balanced result in the cup.

● Coffee subscriptions - tailored coffee deliveries of artisan blends delivered directly to your doorsteps.

Typical cost structure, margins, etc.

Growers - 10-12%

Traders - 2-3%

Shippers - 4%

Roasters receive 65 cents to 70 cents of every dollar spent on coffee in the United States. Nestle, Philip Morris, Procter & Gamble, and Sara Lee account for more than 60 percent of US coffee sales and 40 percent worldwide. Exact information on the profit margins of the Big Four is not available to the public. But experts estimate that their profit margins are up to 25 percent of the retail price of coffee - a higher margin than on most other food and beverage lines. In recent years, mega roasters have increasingly turned to the cheaper robusta coffee in their blends.

Retailers - 10-15%

(Source: PBS - Kelly Whalen - “Your Coffee Dollar”)