Coffee prices surge to the highest level on record
FILE PHOTO: Roasted coffee beans are seen in a lab at Lechuza Coffee Farm in Juayua, El Salvador on November 29, 2024. REUTERS/Jose Cabezas/File Photo
Coffee drinkers may soon face higher prices as the cost of coffee on international commodity markets has reached a record high.
On Tuesday, the price of Arabica beans, which make up most global production, surpassed $3.44 per pound (0.45 kg), marking an 80% increase this year. Robusta beans also hit a new high in September.
This price surge is driven by expectations of a shrinking crop yield, as Brazil and Vietnam, the world’s two largest coffee producers, have been impacted by adverse weather. Additionally, coffee’s growing popularity is putting further pressure on supply.
Experts predict that coffee brands may raise prices in 2025. Although major coffee roasters have absorbed price hikes in recent years to maintain customer loyalty, Vinh Nguyen, CEO of Tuan Loc Commodities, suggests this will soon change. He noted that companies like JDE Peet (owner of Douwe Egberts) and Nestlé, which have previously absorbed raw material price increases, are now considering price hikes in supermarkets for the first quarter of 2025.
Italian coffee brand Lavazza, which has worked to protect its market share and avoid passing on higher raw material costs, has ultimately been forced to adjust prices due to the soaring cost of coffee. “Quality is paramount for us,” the company stated, “but we have been forced to adjust prices.”
Nestlé also acknowledged the impact of rising coffee prices, with David Rennie, head of coffee brands, stating that the company would have to adjust both prices and pack sizes.
The previous record for coffee prices was set in 1977 after a rare snowfall devastated Brazil’s plantations. This year, concerns over Brazil’s 2025 crop, which was affected by its worst drought in 70 years followed by heavy rains, are a major factor driving up prices. Vietnam’s Robusta plantations have also suffered from similar weather conditions.
Coffee, the world’s second most traded commodity by volume after crude oil, continues to see growing demand, especially in countries like China, where consumption has more than doubled in the last decade. As inventories are reported to be low, experts predict that coffee prices will remain high for the foreseeable future.
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