In March 2021 Genuine Origin conducted a Coffee Roasting Business Confidence Survey to assess the effects of COVID-19 on coffee roasters. The study recorded pre- and mid-pandemic revenue and staffing impact, as well as thoughts on the overall coffee roasting landscape, to gauge the confidence of roasters moving forward. Although COVID-19 triggered a global economic crisis, the majority of the roasters surveyed withstood the worst of the impact and are poised to bounce back stronger than ever.
Over 180 wholesale roasters, coffee shops, and retail and online roasters in the US participated in the survey via email and social platforms, and, despite significant hurdles, more than 1/3 of respondents reported an increase in revenue since the start of the pandemic. Another 1/3 of respondents said that revenue was flat.
“The catering side of our business took a serious hit due to restrictions over the last 12 months, and individual sales seemed to slow as well. Even so, we just gained a new contract with a new coffee house, so that has been keeping us busy. We’re thankful for that!” says Maury McCown, Roast Master at Grounded Roasterie.
Throughout the past year, the team at Genuine Origin worked closely with roasters to find new solutions for green coffee in uncertain times. “When COVID lockdowns started, shops and roasteries had to close. Initially, there was some panic, but roasters quickly re-grouped and pivoted. They went headlong into grocery, curbside pickup, online subscriptions, and worked through new regulations to keep themselves, their employees, and their customers safe,” says Rob Sulkow, Digital Marketing Manager at Genuine Origin.
“Businesses have varied greatly in their performance through COVID,” says Jen Hurd, West Coast Sales Manager at Genuine Origin. “The year was more difficult for roasters who focused on brick and mortar retail, like cafes, restaurants, and lodging. I’ve seen a lot of roasters turn to Genuine Origin because they don’t want to get stuck in contracts with the uncertainty they’re still feeling.”
In May 2020, digital payment platform Square and the Specialty Coffee Association partnered to survey the specialty coffee industry during COVID-19. The study recorded a flood in demand for curbside pickup and delivery sales, with a 109% pivot in subscription coffee sales. As the world changed, coffee retail quickly adapted, and the transformation was rewarded with unique customer loyalty infrequently seen across other industries.
As coffee brands integrate digital tools to a greater extent to stay relevant during social distancing, 35% of coffee roasters believe new technology will positively impact their business. At the same time, half gather that innovation would have no effect. But maintaining a connection between brand and consumer is difficult in any business landscape, and an increasing reliance on technology can be both a blessing and curse for retailers.
“There’s just so much noise in social media, and the platforms are making it more and more challenging to get noticed,” shares McCown. By the end of 2020, the number of worldwide Instagram users exploded to one billion, a few years earlier than predicted by researcher firm Insider Intelligence.
“Digital marketing is powerful, but with more businesses — not just roasters — moving their business online, social channels and email are getting noisy,” says Sulkow. “We’ve seen a lot of coffee subscription aggregators growing quickly and businesses are trying to start solo projects. It’s getting easier and easier to make noise with your business by having beautiful posts on Instagram, e-commerce sites, and email campaigns, but that means it’s tougher to cut through the noise.”
Despite the challenges of adapting to constant changes in digital marketing, leveraging a strong online presence towards e-commerce provided a safety net for many coffee businesses. “Roasters with well-established online and grocery offerings seemed more stable through COVID,” says Hurd, “and online subscriptions helped some smaller roasters achieve growth.”
With the second quarter of 2021 underway, respondents are experiencing a mix of stability and growth in the current conditions for coffee roasting businesses. About 39% of businesses are middling, but almost as many see strong growth and a bright future.
In January, Reuters reported that consumer spending was at its worst since 1932, dropping 3.9% and affecting more than two-thirds of the US economy. The 3.5% decrease in GDP in 2020 was the most significant drop in 75 years, and the economy ended nearly $500 billion smaller than the start of 2020, pre-pandemic. But with such a steep plunge comes even greater potential for record-breaking growth as vaccines and additional stimulus efforts roll out.
Coffee roasters are similarly optimistic about the remainder of 2021. Over 80% of respondents expect their business revenue to increase in the next 12 months, drawing parallels with a survey conducted by McKinsey & Company that revealed over 86% of respondents expect economic conditions to improve in North America in the upcoming half year.
“The impact of cities and states opening up is real and roasters are confident. We’re seeing a lot more forward booking and we are gearing up for a busy cold brew season,” says Sulkow.
The optimism is palpable, especially for new experiences in coffee, whether it’s brewed in-store or at home. “Roasters have been looking forward to a variety of coffees,” Hurd explains. “Customers have been going for higher-end microlots, but budget-friendly, cozy coffees still build the base of most operations.”
There’s still a long way to go for recovery, though. Reuters reports only 12.4 million of the 22.2 million jobs lost at the beginning of the pandemic have been recovered. Service-industry businesses like coffee shops were some of the most highly impacted. Over half of roasters surveyed do not see growth requiring more staff. Still, around one-quarter anticipate staff numbers to increase, and less than 2% foresee a decrease in staffing.
With growth on the horizon for coffee roasting businesses, the remainder of 2021 offers vast potential for the industry to transform yet again, this time for the better. The majority of Genuine Origin’s roasting partners have weathered the COVID-19 storm and are emerging more robust than ever, and GO is always ready with green coffee sourcing solutions to help roasters succeed.
Find out more about Genuine Origin on our website — https://www.genuineorigin.com/