The Thai coffee shop business is expected to grow 15-20% this year despite the closure of many cafes in the past year, according to the Specialty Coffee Association of Thailand (SCATH).
Coffee shops are expected to grow 15-20% this year. NATTAPOL LOVAKIJ
The growth this year will be driven by the country's economic improvement and higher demand from coffee drinkers, said Apicha Yaemkesorn, the SCATH president.
"Coffee shops can be easily opened on every corner of roads in Bangkok and major provinces and more will be seen as there are many new offices and condo buildings. The growth can also be expected to spread into small provinces and towns in the near future," he said.
The market has a lot of potential as less than 10% of the Thai population drinks coffee. Those who do drink about 1.2 cups a day on average, compared with three cups a day for American coffee drinkers.
Opening a coffee shop is not difficult because it requires only a small budget and coffee makers are inexpensive.
Mr Apicha said about 30-40% of coffee shops closed last year, while the number of new entrants increases every year.
"Coffee shop is an ideal business for many new entrepreneurs but many of them have insufficient knowledge about coffee and cafe management skills," he said.
This year the country is projected to have a 15% rise in arabica coffee planting areas in the North and a 5% increase in robusta planting areas in the South.
Rubber and palm growers in the South have turned to grow more coffee because rubber and palm oil prices are low.
According to the Office of Agricultural Economics, the harvest of coffee beans can be made from the third or fourth year after the initial planting and the full harvest will be seen in the sixth to eighth year.
Mr Apicha estimated the longer droughts will reduce the supply of local arabica coffee beans to 7,000 tonnes this year from 9,000 tonnes last year, while robusta coffee beans will total 15,000 tonnes, down from 17,800 tonnes last year.
Arabica coffee beans are priced at about 180 baht per kilogramme in Thailand and 80-90 baht/kg for robusta.
Volatile climate change and longer droughts are pushing Thai coffee bean prices higher than in Cambodia, Laos, Myanmar and Vietnam, which see prices around 95-105 baht/kg.