illycaffè Chairman Andrea Illy discusses 2023 industry predictions

illycaffè Chairman Andrea Illy

In the short term, coffee production is expected to increase and prices to stabilise. Inflation in Europe and United States is not expected to significantly impact on consumption. So, what’s new in the coffee scenario? 

The focus is on sustainability, particularly with regenerative agriculture but also sustainable packaging, like recyclable or compostable portioned systems. Surging prices of fertilizers raised interest for sustainable agricultural practices based on soil organic carbon enrichment and biostimulants, with interesting results both in term of productivity and environmental impact.

The medium term expected trend continues to be de-commoditisation of the category, triggered by the shift of the coffee value proposition from functional product to experiential occasion.

On a longer-term perspective, talks resumed at the International Coffee Organization on the opportunity to create a ‘coffee resilience fund’ for increasing investments in adaptation to climate change. On top of the expectation of losing up to 50 per cent of the currently suitable land, new regulations, particularly in Europe, limit the usage of chemical defense agents and forbid importing coffee cultivated in land which has been deforested.

This makes it clear that the way ahead for ensuring coffee security is increasing productivity through agronomical practices improvements and plant renovation with enhanced varieties. Current expenditures for sustainability in the coffee plantations should therefore increase significantly, and this requires higher investments than the status quo. Upgrading plantations, increasing quality and productivity and de-risking coffee production would create attractive returns for blended finance funds raised from public private and philanthropical investors and, if necessary, collateralised by roasters, traders, and retailers from consuming countries.

This article was first published in the January/February 2023 edition of Global Coffee Report. To read the research paper, click HERE.

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