Coffee: A Hot Commodity For The Next 5 Years

The International Coffee Organization released a report showing that it sees international demand for coffee rising by nearly 25 percent over the next five years, despite sagging production.

A drought in Brazil combined with a fungus affecting Central American output has reduced estimates for this year’s production to 141 million bags versus 146.7 million bags in 2014.

Currency Fluctuations Keep Prices Constant

Despite the falling supply, coffee prices haven’t seen a major spike, as currency issues have kept prices relatively stable.

The Brazilian real has had a volatile year, losing much of its value to trade at a near 10 year low against the dollar.

Western Culture Spurs On Demand

However, demand for the beans is expected to rise to 175.8 million bags by 2020, as more and more people turn to the caffeinated beverage. Western culture spreading to India, China and Latin America has been largely responsible for the increase in popularity as the beverage becomes a staple in places where tea initially dominated.

Related Link: Starbucks Grinds Forward, Introduces 'Flat White' Coffee

Investment In The Sector Rising

Big name companies are taking note of the coffee trend and jumping on board. Starbucks Corporation (NASDAQ: SBUX) has seen 8 percent growth in its store sales in the China-Asia Pacific region and is planning to increase the number of locations to 10,000.

The Coca-Cola Co (NYSE: KO) has also taken an interest in the sector; the beverage giant increased its stake in single-serve coffee machine maker Keurig Green Mountain Inc (NASDAQ: GMCR) from 12 percent to 16 percent earlier this month.

The share purchases have reignited rumors that Coca-Cola may be interested in taking Keurig over in the future.