Towards a More Sustainable Coffee and Tea Industry

April 2021

Both coffee and tea face major sustainability challenges in the years ahead. Producers will need to reduce the environmental impact of their products throughout their lifespans, as well as prepare mitigation measures, as climate change threatens the stability of supply chains.

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Key findings

Sustainability touches on all levels of coffee and tea’s lifespans

Every step, from farm to disposal of used biomass, has associated social and environmental impacts. Credible sustainability strategies will need to focus on making improvements throughout the entire life cycle, including highly visible consumer-facing changes, as well as harder to see supply chain interventions.

Gaps exist between what consumers are looking for and what they are being offered

Consumer interest in sustainably produced products is not reflected in the number of SKUs on the market that address such interests. Demand gaps are especially large in the developing world, where many consumers are concerned about the environment, but few coffee and tea products carry environmental claims.

Sustainability is not just about consumer demand

While willingness to pay more for sustainable products remains low, especially in more price sensitive markets, this is not a reason for businesses not to invest in sustainability. Companies not taking the issue seriously will find themselves at a disadvantage with investors and potential customers, and in their supply chains.

Coffee needs to prepare for major challenges to its supply chains

Shrinking growing areas, climate change and rising demand will put coffee supplies under pressure in the long term. A collective response from all major coffee players is required to make coffee more climate-resilient and to prepare back-up options in times when supplies struggle to keep up with demand.

Tea’s unique challenges include a fragmented industry, removing plastics from bags and ensuring product quality

Tea is a much more fragmented industry than coffee, which makes centralised action on sustainability more challenging. Mitigation measures need to be taken at national or local levels. With climate change threatening the unique tastes and health benefits of tea, both of which are cornerstones of the industry’s long-term growth goals, there is a strong incentive for tea companies to invest in mitigation measures to maintain the quality of their products.

Scope of the Report

Scope
Key findings

Sustainability Through The Life Cycle

Sustainability needs to be addressed at all levels of the supply chain
Ethical challenges at origin and sustainability are intricately linked
Labels are becoming less universal and more in-house
Packaging attributes, not packaging types, are what matter
Packaging must be thought of in terms of its end
The to-go cup dilemma
Cups are only the visible portion of a wider foodservice discussion
Waste needs to be viewed as an opportunity
Many consumers still need convincing on paying more for sustainability
The “why” of sustainability is about more than just consumers
Conclusions: More sustainable directions for coffee and tea

Hot Drinks Sustainability Index

Introducing the Hot Drinks Sustainability Index
The complete index
Gaps between demand and availability are large in many countries
The largest demand gaps exist in Asia and Latin America
Case study: Three claims dominate in Canadian hot drinks
Sustainable claims are associated with higher prices globally

Challenges Specific to Coffee

Investment now is needed to ensure stability of supply chains
Substitute products may be necessary to cover production gaps
The complements to coffee can be major sources of carbon emissions
Can pods ever solve their packaging dilemma?
Viewing waste as an opportunity: Coffee

Challenges Specific to Tea

Defending tea quality will need to be a priority
Mitigation efforts will be more complex for tea
Better bags provide sustainability benefits and stronger health position
Viewing waste as an opportunity: tea

Conclusions

Conclusions: The importance of sustainability for coffee and tea
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