US end-market analysis for Kenyan speciality coffee

Author
East Africa Trade and Investment Hub
Organisation
USAID
Publication Date
06 December 2017

The United States of America (U.S.) is the largest market for coffee in the world. Within the U.S. coffee sector, the specialty coffee industry imports almost 750 million kilograms (kg) of green, specialty-grade coffee from around the world each year, often paying double the commodity price. Specialty-grade coffees are identified by their high-quality, unique taste characteristics and countries of origin. They are roasted by one of 1,400 U.S. roasters and distributed to hundreds of thousands of coffeehouses, supermarkets, restaurants, and specialty stores. Whether prepared by retailers or sold in bulk packages for self-preparation at home or in the workplace, 35 million Americans drink specialty-grade traditional coffee on a daily basis.

As geographic origin plays a major role in the taste and body characteristics of specialty coffee, it can be broadly distinguished by growing region – Latin America, Asia/Pacific or Africa. East Africa currently contributes about 4 percent to the volume of annual U.S. green Arabica imports, the predominant species of specialty-grade coffee. Imports from Kenya alone account for about 6 percent. While Kenya could improve issues related to the price and volume of quality production, the country has historically had a reputation for quality and continues to compare favorably with other countries. In fact, Kenyan AA1 was the first single-origin coffee widely identified by its origin name in the early days of the U.S. specialty coffee movement. As a coffeehouse staple, it was often the only African coffee represented.

However, in 2016, Kenya was ranked third among U.S. green Arabica imports from East Africa, a drop from the previous year, placing it behind Ethiopia and Uganda. With Kenya’s shift in producer demographics toward a higher proportion of smallholder farmers, weak extension support has led to reduced coffee quality and production levels five times lower than those of estate farmers. Despite Kenya being well regarded for its transparent and professional coffee systems, some regulatory costs and fees may be higher than the value they create. This diminished competitiveness is especially concerning with Kenyan prices being 38 percent higher than those of regional neighbors. Smallholder cooperative societies are plagued by inefficiency and mis-management. This undermines the capacity of smallholder farmers to increase yields of high-quality coffee and reduce production and processing costs. Kenyan specialty coffee is offered by almost all major U.S. specialty coffee importers. However, Kenya needs to establish a focused communications and marketing strategy to engage buyers directly and market itself actively to all industry stakeholders.

If Kenya wants to enhance its participation in the U.S. specialty coffee industry and bolster its reputation as a global specialty coffee leader, it needs to achieve certain objectives. It could improve extension services and support to smallholder farmers, enhance price competitiveness, strengthen existing U.S. trade linkages, and reinvigorate U.S. industry appreciation for Kenyan specialty coffee. By achieving these objectives, Kenya can regain its role as the most well-known and identifiable African specialty coffee in the U.S. specialty coffee industry.

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