Global Coffee Prices Reach Unprecedented Levels

Consumers of coffee could soon face increased costs for their beverage, following a record high in coffee prices on global commodity exchanges. On Tuesday, Arabica beans, which constitute the majority of worldwide coffee output, exceeded $3.44 per pound (0.45kg), marking an increase of over 80% this year. Separately, the price of Robusta beans reached a new peak in September. This surge occurs amidst expectations from coffee traders of reduced crop yields, attributed to adverse weather conditions impacting Brazil and Vietnam, the world’s two primary coffee-producing nations, alongside sustained growth in coffee consumption. An expert informed the BBC that coffee brands are contemplating price increases starting in the new year. According to Vinh Nguyen, chief executive of Tuan Loc Commodities, major coffee roasters have historically absorbed price increases to retain customer satisfaction and market share, but this trend appears to be shifting. He stated, “Brands like JDE Peet (the owner of the Douwe Egberts brand), Nestlé and all that, have [previously] taken the hit from higher raw material prices to themselves,” adding, “But right now they are almost at a tipping point. A lot of them are mulling a price increase in supermarkets in [the first quarter] of 2025.” Lavazza, the prominent Italian coffee company, indicated that it had made significant efforts to safeguard its market share and avoid transferring increased raw material expenses to consumers, but escalating coffee prices ultimately necessitated a change in strategy. The company informed BBC News, “Quality is paramount for us and has always been the cornerstone of our contract of trust with consumers,” further explaining, “For us, this means continuing to tackle very high costs. So we have been forced to adjust prices.” During an investor event in November, a senior Nestlé executive acknowledged that the coffee sector was encountering “tough times,” conceding that his company would need to modify its pricing and package dimensions. David Rennie, Nestlé’s head of coffee brands, commented, “We are not immune to the price of coffee, far from it.” The previous record high for coffee prices occurred in 1977, following an atypical snowfall that severely damaged Brazilian plantations. Ole Hansen, head of commodity strategy at Saxo Bank, stated, “Concerns over the 2025 crop in Brazil are the main driver.” He added, “The country experienced its worst drought in 70 years during August and September, followed by heavy rains in October, raising fears that the flowering crop could fail.” Adverse weather conditions have not solely affected Brazilian coffee plantations, which primarily cultivate Arabica beans. Robusta supplies are also anticipated to decrease, as plantations in Vietnam, the leading producer of this type, have likewise experienced both drought and substantial rainfall. Coffee ranks as the world’s second most traded commodity by volume, trailing only crude oil, and its demand is on the rise. For instance, consumption in China has more than doubled over the past ten years. Fernanda Okada, a coffee pricing analyst at S&P Global Commodity Insights, noted, “Demand for the commodity remains high, while inventories held by producers and roasters are reported to be at low levels.” She further commented, “The upward trend in coffee prices is expected to persist for some time.”