Coffee price surges to highest on record
Coffee drinkers may soon face higher prices for their morning brew, as the cost of coffee on global commodity markets has reached an all-time high.
On Tuesday, the price of Arabica beans, which make up the majority of global coffee production, exceeded $3.44 per pound (0.45kg), marking an increase of more than 80% this year. Meanwhile, the price of Robusta beans hit a new peak in September.
This surge comes as traders anticipate a decline in crop yields, following adverse weather conditions in the world’s two largest coffee-producing countries, Brazil and Vietnam, alongside the rising global demand for coffee.
An expert shared with the BBC that coffee brands are considering price hikes for the coming year.
While major coffee roasters have managed to absorb cost increases in recent years to retain customers and market share, this approach appears to be changing.
Vinh Nguyen, CEO of Tuan Loc Commodities, noted that companies like JDE Peet (owner of the Douwe Egberts brand) and Nestlé have previously absorbed higher raw material costs but are now approaching a breaking point. Many of them are contemplating price increases in supermarkets for early 2025.
Lavazza, the Italian coffee giant, explained that although it had worked hard to maintain its market share and shield customers from rising raw material costs, the dramatic rise in coffee prices has eventually compelled the company to raise prices. “Quality is paramount for us and has always been the cornerstone of our contract of trust with consumers,” the company stated.
“For us, this means continuing to tackle very high costs. So, we have been forced to adjust prices”.
At an event for investors in November, a top Nestlé executive said the coffee industry was facing “tough times”, admitting his company would have to adjust its prices and pack sizes.
“We are not immune to the price of coffee, far from it,” said David Rennie, Nestlé’s head of coffee brands.
The last record high for coffee was set in 1977 after unusual snowfall devastated plantations in Brazil.
“Concerns over the 2025 crop in Brazil are the main driver,” said Ole Hansen, head of commodity strategy at Saxo Bank.
“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.”
