The Steaming Rise of Africa's Coffee Culture

In the dynamic landscape of global commodities, coffee has emerged as the second-largest market, following closely behind oil. Projections suggest that this trend is set to continue, propelled by the ever-expanding specialty beverage sector. Coffee consumption worldwide consistently outpaces production. By 2030, this trend is expected to escalate by a third, reaching an impressive 200 million, driven by population growth and increased disposable incomes. However, the intricacies of Africa's coffee industry present a unique narrative, blending challenges with promising opportunities.

Africa, celebrated for its premium beans, boasts key producers such as Ethiopia, Uganda, Ivory Coast, Tanzania, Kenya, Burundi, Rwanda, and the Democratic Republic of Congo. Despite the continent's renowned quality, it contributes only 12% to the world's coffee production, with East Africa stealing the spotlight, contributing a staggering 82% to the continent's overall output.

Traditionally reliant on European countries for coffee exports, Africa is now redirecting its gaze toward domestic consumption. The G25 African Coffee Summit spotlighted a significant challenge: only 30% of the continent's population presently indulges in coffee. Innovative endeavors, like establishing coffee houses on university campuses in Kenya, are aimed at elevating this figure.

According to Ecobank, nurturing domestic consumption and supporting local retailers could breathe new life into Africa's coffee sector, effectively addressing persistent challenges.

Popularizing coffee indulgence

Despite its rich history as the birthplace of coffee and being the largest producer in Africa, Ethiopia faces a curious challenge — a stagnation in coffee consumption at 50% for two decades, meaning the younger generation are not consuming it. In response, the country has birthed a college dedicated to imparting coffee-related skills, a move aimed at capturing the imagination of the younger generation. Organizations like the Inter African Coffee Organization are also actively involving women and youth to popularize coffee consumption.

Per capita, coffee consumption is low around the continent, with leading consumers include Algeria (3.2kg), Ethiopia (2.27 kg), Madagascar (1kg) and Cote d’Ivoire (0.9kg). This is still well below other emerging markets, such as Brazil (6kg), the data from Ecobank shows.

During the G25 African Coffee Summit, Director-General of Ethiopia Coffee, and Tea Authority (ECTA), Adugna Debele summarized that Africa consumes 9,800 metric tons while Europe consumes 55,625 metric tons annually, an estimate of nearly 9kg per person.

The ascent of an urbanized middle class in coffee-growing regions has triggered a surge in local consumption. Global coffee giant Starbucks, recognizing the vibrant African market, has expanded its footprint, eyeing the continent's rapid growth.

"The coffee market here is vibrant and growing fast - we want to be part of that growth," Starbucks executive at that time, Kris Engskov said in a statement.

While Africa remains a critical supplier of high-quality beans to many world-renowned roasters, local challenges pose hurdles to the industry's seamless growth.

 Trials and Triumphs in Kenya

Kenyan coffee, celebrated for its robust flavors, grapples with challenges ranging from pests and diseases to the impact of climate change and governmental policies. Many producers are made up of smallholder coffee farmers who heavily relied on the provision of farm inputs on credit terms and hence in the case of non-provision, the crop is underfed leading to suppressed production level. Despite these headwinds, Kenya continues to be a powerhouse in the global speciality coffee market. The recent dip in production and escalating prices highlight the urgency for sustainable practices.

The 2020/2021 season witnessed a 6.4% decline in Kenya's coffee production, prompting a re-evaluation of the industry's export-focused approach. Market analysts explain that only 3-5% of the total domestic population of the country purchases locally grown coffee on a regular basis with the rest being exported. Out of the 95% of coffee exported, only 5% is in roasted format.

A Stirring Future

While the USDA forecasts a 10% drop in Kenya's coffee production for the 2022-23 season, a surge in domestic consumption offers a silver lining. The influx of global and local brands like Burger King, Dominos, Java House, and Café Espresso signifies a brewing potential in the local market. There are also tens of other local brands that sell coffee across the country’s major towns such as Savannah, Café Espresso, ArtCaffe and Café Arabika.

With more than 506 coffee shops dotting Kenya's landscape, the prospects for a coffee culture renaissance are palpable. Increased awareness, alongside strategic investments in technology and value addition, could set the stage for Africa to savor the rich rewards of its burgeoning coffee industry.