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Will The Energy Drink Boom Kill The Coffee Tree?
A recent boom of energy drinks on the market is proving to be too tough of a competitor to coffee. At a rate of 37.2%[1], the energy drink seems to be the fasted growing segment of the food and bevera
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A recent boom of energy drinks on the market is proving to be too tough of a competitor to coffee. At a rate of 37.2%[1], the energy drink seems to be the fasted growing segment of the food and beverage market in the United States, according the AC Nielsen data for Convenience store sales. This has prompted traditional coffee retailers like Starbucks to join the trend by offering canned instant coffee. What started as a niche market has now registered the presence of perennial beverage giants such as Coca Cola, PepsiCo and Nestle among others, which testifies of the importance of the segment in the future of the beverage market.
Coffee producing countries that have already gone through so many adversities are facing a new challenge that might put the industry closer to bankruptcy. After surviving the collapse of the International Coffee Agreements (ICA) and living through the steady decline in price on the international market, coffee producers, who historically earn very little if anything at all from the effort they put in its production should seriously consider getting rid of the coffee trees from their farms and diversify to the production of more profitable crops. Still suffering from the hardship of the after ICA, which they tried to resurrect so many times, the coffee producers now face same situation as the cocoa producers. When the European Union decided to adopt a directive (Directive 2000/36/EC) [2] that allows chocolate manufacturers to include cocoa butter equivalents (CBEs) in the manufacture of chocolate, the immediate consequence was the decline in the price of cocoa beans, which resulted from the fact that its supply was way greater that its demand. Today, the coffee sector must face a similar situation with the rise of energy drinks, which is chipping into other stimulants’ market especially coffee and tea.
Until 1997, energy drinks were not visible, even on the U.S. market. Energy drinks seem to be very convenient for all those in need of an instant energy boost, since it saves them time and well… energy. Instead of starting a coffee maker and waiting for an average of 2 to 10 minutes to have your coffee ready, or lining up in a coffee shop to have your coffee made for you, you just get some energy drink cans available in your refrigerator that you can have at any given time. A can of energy drink contains as much caffeine as a cup of coffee, but the caffeine contained in most energy drinks is an extract from a South American plant named Guarana. Unlike coffee, energy drinks contain a wider range of ingredients, including a wide range of vitamins (especially group B vitamins) and herbal supplements such as Gingko Biloba, Echinocea, Ginseng and St John’s Wort. Moreover, the popularity of energy drinks is due to the fact that their image is more adapted to today’s lifestyle, which can be judged by the name they support. Product names such as “SoBe: Adrenaline Rush”, “SoBe: No Fear”, Pimp Juice, “Roaring Lion”, “Xs”,”Red Bull” or Monster Energy” are chosen to generate particular stimuli on the targeted individuals.
The belief that energy drinks might have undesirable long term side effect has not been proven as of yet, and is more likely a non issue. Excess of energy drinks will probably have the same effect on people just as coffee does. One draw back energy drink might have is the medicine-like taste that most of those products have. This problem is being corrected by a recent reformulation of many products that is putting pressure on other companies that still produce drinks with harsh formulas and a bitter/medicinal finish. Another potentially alarming fact is that young kids, who normally would not consume coffee, can consume energy drinks since it is more difficult for parents to control their intake of these beverages.
Now, coffee producers do not have enough going for them to compete against energy drinks, and might rely on alternative uses of coffee to survive. According to a recent research, published on the website Positively Coffee, (http://www.positivelycoffe.org) the consumption of coffee presents some health benefit not associated with the presence of caffeine. Since caffeine can be extracted from other plants as well, if the trend continues, the coffee market will instead become a niche market. That will happen if only coffee enthusiasts are left to drink coffee, in which case most coffee producers will have no choice but cut down their coffee trees. Given the fact many developing nations’ economies are based on primary commodities such as coffee and cocoa, it is easy to imagine the kind of difficulties they will be facing in the future. A wise approach would be for the International Coffee Organization to initiate a more generic advertisement campaign to inform the public about the other benefits of coffee, similar the what is done in the U.S. (Example are Beef and Got Milk campaign). Another solution would be to prepare the farmers to end of the coffee era by encouraging them to diversify their crops instead of relying on the performance of a single crop like coffee.
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[1] Figure from the Beverage Network website, http://www.bevenet.com
[2] Directive 2000/36/EC allows the addition of up to 5% of vegetable facts butter or cocoa butter equivalents (CBEs) in Chocolate.
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