Dry weather and supply bottlenecks pushed the price of coffee beans to new highs this year. Meanwhile, Asia is becoming a powerhouse in coffee production and consumption thanks to its fast-growing middle class and rapidly expanding coffee plantations. We look at alternative data tools for coffee investors, including emerging data sources from Asia that can capture important new dynamics in the industry.

SETTING THE SCENE

Coffee is one of the most actively traded commodities in the world. The US and Europe account for over 50% of the world’s green coffee imports, according to the USDA, while Asia is a rapidly growing market. In terms of production, the “coffee belt” stretches across Latin America, Africa and Asia, with major producing nations in each continent (i.e. Brazil, Ethiopia and Vietnam).

Two coffee varieties dominate the global market, with higher-quality arabica beans accounting for 57.4% of production and robusta comprising the remainder (ICO’s estimation for 2023/24). The principal futures trading venue for coffee is ICE, which is home to the benchmark contracts for both arabica and robusta. Investors can also trade coffee using exchange-traded vehicles (e.g. iPath Dow Jones-UBS Coffee Subindex Total Return ETN) and publicly traded equities (such as Starbucks, Luckin Coffee or Tim Horton’s owner Restaurant Brands International). The main market participants in coffee trading include producers, exporters, trading houses, importers and institutional and short-term investors.

We look at providers of the following data types:

• Market and flow data
• Coffee supply data
• Sentiment data
• Location and footfall data