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  • 2.9.1-THE MARKETS FOR COFFEE-INCOME

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  • Income

     
     
    Income is an important factor affecting the demand for coffee. In many ways this is not surprising especially as coffee is still perceived by many to be a luxury item, especially in low income countries. There is clear evidence that consumption is highly dependent not only on absolute income levels but also, and probably more importantly, on changes in real income levels.

    In countries that have a history of drinking coffee, there seems to be a direct correlation between the level of income and the level of consumption. For example, high per capita consumption is found in Scandinavia (by far the highest in fact), and other European countries as Germany,  Switzerland, the Netherlands and Austria. All these countries have a history of drinking coffee and also enjoy relatively high personal incomes. Clearly habit and tradition play a significant role in determining the overall level of consumption in a country, but it is noticeable that countries that also have a tradition of drinking coffee but have lower personal incomes, such as Spain, Portugal and Greece, have a considerably lower rate of consumption.

    Given that coffee is still considered to be a luxury item in many consuming countries, it is not surprising that, as a general rule, changes in real incomes have a greater effect on consumption in low income countries than they do in high income countries. For example, Spain has witnessed a relatively fast rate of growth in the consumption of coffee per head in recent years and has also experienced a fairly impressive rate of growth in its overall level of real disposable income per head, whereas in many Scandinavian countries consumption has either remained static or fallen although real income levels have continued to rise.