In today’s coffee industry, two countries reign supreme: Brazil and Vietnam. Combined, these two nations produce more than half of the world’s coffee supply. While their dominance has allowed for efficient, large-scale production, the increasing volatility of climate change threatens this once stable supply chain. As extreme weather patterns become more frequent, so do disruptions to coffee production. When both countries experience poor weather conditions—like the recent droughts—coffee prices spike, resulting in $9 lattes and increased pressure on the entire industry.
This growing instability has sparked a renewed interest in smaller coffee-producing nations like Peru, Thailand, Cuba, and Rwanda. These countries are gaining momentum as the coffee industry diversifies in an effort to protect its future. Though they lack the economies of scale that Brazil and Vietnam boast, smaller producers are stepping up to meet rising consumer demand for specialty coffee and sustainable practices. This shift may be essential in preserving the coffee industry in the face of global challenges.
The Impact of Climate Change on Coffee Production
Climate change is increasingly threatening global coffee production, with Brazil and Vietnam—the world’s top producers—experiencing more severe weather events like droughts, which wreak havoc on crops. Brazil alone produces around 40% of the world’s coffee, while Vietnam contributes another 20%. These two giants of the coffee world are often seen as cornerstones of the industry, providing affordable and consistent coffee supplies.
However, when the weather in both countries takes a turn for the worse, coffee prices spike worldwide, making that beloved cup of joe much more expensive. Droughts in Brazil and Vietnam have had a significant impact on coffee prices, pushing them to their highest levels in years. The pandemic-driven shift in consumer behavior also contributed, as more people began drinking higher-quality coffee at home and demanded greater variety in their daily brews.
Diversifying the Coffee Supply Chain
Recognizing the dangers of relying so heavily on Brazil and Vietnam, many coffee companies have begun diversifying their supply chains. Investments in smaller coffee-producing nations have increased significantly as companies look for ways to secure their supply lines. These smaller countries—like Peru, Rwanda, Cuba, Thailand, and others—are emerging as essential players in the future of coffee production.
Illycaffe, a well-known family-owned coffee company, is expanding its sourcing operations outside of Brazil and Vietnam to include eastern and southern African nations where it previously operated. Similarly, Starbucks has been supporting coffee farmers in Peru, Rwanda, and Tanzania, providing loans and distributing trees to promote sustainability and improve yields. Other companies like Nestlé’s Nespresso and Lavazza have launched initiatives to revitalize coffee production in war-torn and economically unstable regions like Uganda, Zimbabwe, and Cuba.
Specialty Coffee: A Rising Trend
The diversification of coffee production is also closely linked to the rise of specialty coffee. Specialty coffee, characterized by high-quality beans with unique flavor profiles, has grown in popularity, especially in the U.S. According to the National Coffee Association, nearly half of American adults drink specialty coffee daily, surpassing traditional mass-market options.
Smaller coffee-producing countries like Honduras, Peru, and Thailand are capitalizing on this trend, focusing on producing high-quality beans that appeal to discerning consumers. These countries often rely on family farms, where coffee is harvested by hand. Though they can’t compete with Brazil and Vietnam on price, they offer a different value proposition: better flavor, transparency, and traceability.
Consumers are increasingly willing to pay more for specialty coffee, particularly as they seek out direct trade and sustainable sourcing practices. The desire for greater transparency in the coffee supply chain has driven demand for coffee with a story—whether it’s the unique origin of the beans, the ethical treatment of farmers, or the preservation of traditional farming methods.
Challenges Facing Small Producers
Despite the opportunities, smaller coffee-producing countries still face significant challenges. They lack the economies of scale that allow Brazil and Vietnam to dominate the global market. Family farms often operate with higher production costs and less access to advanced farming technology, which can limit their ability to compete on price.
Moreover, smaller producers are more vulnerable to market fluctuations. High prices may make coffee farming more profitable, but if prices drop, farmers could lose incentive to grow coffee, leading to supply shortages. This delicate balance between supply, demand, and price stability is a key issue for the future of coffee production.
Even with these challenges, many small producers are benefiting from increased demand for specialty coffee. As consumers become more knowledgeable and particular about their coffee, small producers are finding a foothold in the global market. This trend is likely to continue as long as companies keep investing in sustainability and direct sourcing practices, which add value for both consumers and producers alike.
The Future of Coffee
Looking ahead, the future of coffee depends on a diversified supply chain that embraces both large-scale and small-scale producers. Climate change will continue to pose a significant threat to coffee production, particularly in Brazil and Vietnam. By expanding sourcing efforts to smaller nations and focusing on sustainable practices, the industry can mitigate some of the risks associated with extreme weather events.
Moreover, consumer preferences are evolving in ways that support this diversification. Today’s coffee drinkers are more discerning than ever, seeking out high-quality beans with unique flavors and transparent sourcing. Specialty coffee is no longer a niche market—it’s becoming the new standard.
Companies like Illycaffe, Starbucks, Nespresso, and Lavazza are leading the way in promoting sustainability and supporting small producers. Their efforts to revitalize coffee production in countries like Cuba, Rwanda, and Uganda show that the industry is capable of adapting to the challenges posed by climate change and market consolidation.
However, it’s clear that higher prices along the entire supply chain are likely to stick around. If prices were to fall, small producers might abandon coffee farming altogether, leading to tighter supplies and driving prices back up again. In the long run, a higher price for coffee may be necessary to ensure the industry’s sustainability.
As consumers, our role is to support ethical sourcing practices and be willing to pay for quality coffee that benefits both the environment and the farmers who grow it. By doing so, we help ensure that coffee remains a viable industry for years to come.
