The Demand for Coffee

       Demand in economics is defined as the desire to purchase, along with the ability to do so. The demand for coffee is usually determined by its price and availability of substitute drinks and consumer's tastes. When coffee prices rise, people do not reduce their coffee consumption proportionately and when the prices fall, consumers demand for coffee don't neccessarily increase that much. However, when coffee prices show a huge increase, the consumers tend to reduce their consumption proportionately. In 1976-1977, in the US, there was a huge cutback for coffee consumption, but recent studies show that the long-term decline for coffee has more to do with consumers tastes and preference as opposed to the price. Some people even say that the changing lifestyle of society has allowed soft drinks to compete with coffee as a social drink.
 
       The demand for coffee in china will most likely increase, since studies show that the coffee demand rises as literacy rate in a country grows. There is a huge correlation between the two, and since China is becoming more educated and literate, this is leading to a higher demand for coffee. Experts say that coffee prices will rise due to the decline production in Brazil and Colombia, since dry weather hurts harvests. These countries are two of the worlds largest coffee bean exporters. Starbucks says that the rising coffee prices will most likely decrease the price of milk, which has to do with the price of related goods.  Although China's demand for coffee will increase in the long-run, in the short- run, coffee demand is unlikely to rise because it is still very expensive and people are starting to prefer other more affordable drinks.

Dry coffee harvests in Brazil


Starbuck coffee in China