Morning coffee rituals could soon become more costly, as the price of coffee beans on international markets reaches record-breaking levels.
This week, the cost of Arabica beans—accounting for most of the world’s coffee production—surpassed $3.44 per pound (0.45kg), an extraordinary 80% increase over the past year. Robusta beans, commonly used in instant coffee, have also surged, hitting new highs in September.
Coffee Shortages Loom
The steep rise in prices stems from mounting concerns over reduced crop yields. Adverse weather conditions have struck Brazil and Vietnam, the top two coffee-producing nations, while global demand for coffee continues to grow.
Coffee traders warn that limited harvests are on the horizon, creating uncertainty in the market. As a result, some coffee brands are already considering price hikes to offset rising production costs.
Higher Prices on the Horizon
British media reports that price adjustments may come as early as 2025. While coffee producers have historically absorbed increases in raw material costs, this strategy may no longer be sustainable.
Vinh Nguyen, CEO of Tuan Loc Commodities, described the current situation as a turning point. “Major brands like JDE Peet and Nestlé have shielded consumers from these costs in the past,” he said. “But now, they are evaluating the possibility of raising supermarket prices in the first quarter of next year.”
Lavazza Faces Tough Decisions
Even Lavazza, the Italian coffee giant known for its dedication to quality, has had to confront the harsh realities of rising prices. For years, the company avoided passing higher costs onto customers, but that strategy is no longer viable.
“Quality is the foundation of our trust with consumers,” a Lavazza representative said. “We have worked tirelessly to manage skyrocketing costs, but adjusting prices has become unavoidable.”
Nestlé echoed similar sentiments, with its head of coffee brands, David Rennie, confirming that price increases and potential changes to packaging sizes are on the table. “The rising cost of coffee has put the entire industry under pressure,” he said during a recent investor meeting.
Nature’s Impact on Coffee Supply
The challenges facing coffee producers today echo a crisis in 1977, when unexpected snowfall devastated Brazilian plantations. This time, Brazil has suffered its worst drought in 70 years, followed by intense rainfall, threatening the viability of the 2025 crop.
Ole Hansen, head of commodity strategy at Saxo Bank, highlighted the impact of these weather events. “Brazil’s erratic weather is the main driver behind the supply concerns,” he said. “The combination of drought and heavy rain has raised fears of crop failure during the critical flowering stage.”
What It Means for Coffee Drinkers
With coffee prices showing no signs of stabilizing, consumers may need to prepare for pricier cups of their favorite brew. Whether it’s at supermarkets or coffee shops, the impact of these rising costs is likely to be felt in the near future.
