Market Trends of Ethiopia Coffee Industry
Strong Production Base in the Country
In Ethiopia, Arabica coffee is mostly grown in the forest areas of the southwestern highlands of the Kaffa and Buno districts. According to the USDA Foreign Agricultural Service, Ethiopia, coffee was cultivated in around 540,000 hectares of the area during 2020-21. 95% of the coffee is produced in the Ethiopian forest area and is claimed to be organic. According to the United States Department of Agriculture, for the year 2022-23 (Oct-Sep), Ethiopia is expected to produce 8.25 million 60-kilogram bags of coffee (495,000 MT). Forecasts indicate that exports will hit a record 4.72 million bags (280,560 MT). During the year 2021/22, exports totaled 4.70 million bags (282,000 MT). The ample production of coffee leads to a reduction in the price of the commodity, in turn driving the market.
Additionally, a major share of Ethiopian coffee is exported in green coffee bean form to the rest of the world. This factor gives a key advantage to Ethiopian coffee in the international market as well. According to the United States Department of Agriculture, the production of coffee increased from 7,055 thousand 60-kg bags in 2017 to 7,620 thousand 60-kg bags in 2021. Such factors are driving the coffee market in Ethiopia.
Increased Internet Penetration Driving the Market
The Ethiopian coffee market is booming with the increasing penetration of the internet. According to the International Telecommunication Union (ITU), approximately 25% of households will have access to the internet in the year 2021. The rising domestic demand for coffee among younger individuals, along with the demand for flavored and blended instant coffee, has been driving the coffee market across the region. The increased internet penetration is influencing coffee consumption across the country. The customers are exposed to various campaigns, advertisements, trends, etc., which affect their buying decisions. Additionally, the development in e-commerce also encourages customers to purchase coffee with convenience, and discounts in turn drive the market. According to Ethio Telecom, social media accounted for 80-90% of internet usage in Ethiopia, while the use of digital gateways was still in its infancy and growing gradually. Social media has been one of the crucial platforms propelling the growth of the market studied.
