Coffee consumers face rising costs as severe weather disrupts coffee production in major producing countries.
Coffee enthusiasts might soon experience higher prices for their daily cup as global coffee prices have soared to unprecedented levels. The cost of Arabica beans, which make up the majority of global production, peaked at $3.44 a pound recently, marking over an 80% increase this year. Additionally, the price of Robusta beans reached new heights in September. This surge in prices is attributed to the anticipated reduction in crop yields from the world’s top producers, Brazil and Vietnam, following adverse weather conditions and the ever-growing demand for coffee.
A leading industry expert indicated that many coffee brands are contemplating raising prices at the beginning of next year. According to Vinh Nguyen, CEO of a commodity firm, “Brands like JDE Peet and Nestlé have previously absorbed higher raw material costs, but they are nearing a tipping point. Numerous brands are considering a price hike in supermarkets by the first quarter of 2025.” Industry insiders expressed concerns about future pricing shifts, with David Rennie from Nestlé acknowledging the tough times faced by the coffee sector and their inevitable pricing adjustments.
The last time coffee prices hit such heights was in 1977, due to unexpected snowfall devastating Brazilian plantations. Currently, concerns over Brazil’s 2025 crop are chiefly responsible for the price hike. The country recently endured its worst drought in seventy years, followed by heavy rains, posing a threat to the flowering crops. Brazil’s challenges also extend to Vietnam, the leading producer of Robusta beans, where both drought and excessive rainfall are likely to shrink supplies.
Coffee remains the world’s second most traded commodity by volume, following crude oil, with its popularity on the rise. For instance, China has witnessed a significant increase in coffee consumption in the past decade. Despite high demand, inventories held by producers and roasters remain low, as noted by Fernanda Okada, a coffee pricing analyst. She expects the upward trend in coffee prices to persist. Low stock levels coupled with continuous consumption growth contribute to this sustained rise in prices.
In conclusion, the coffee industry is facing significant challenges due to climatic disruptions in key production areas. As a result, consumers may expect higher prices at the retail level as producers and brands adjust to these new market realities.
Source: Bbc
