Global coffee crisis: Soaring prices set to hit consumers
Coffee bean prices on global markets have risen by as much as 80 per cent due to unfavourable weather conditions. According to producers, consumers will feel the price increases as early as the beginning of next year.
For several months, coffee producers have been absorbing the rising production costs. However, the increases are so severe that they will soon have to pass them on to consumers.
Coffee bean prices hit records
Arabica coffee prices have risen by 80 per cent this year. On 10 December, a kilogram of beans cost approximately £2.50. Other types of beans are also experiencing price increases.
Bean prices are currently higher than in the record year of 1977 when snowfall destroyed plantations in Brazil. The BBC reports that the largest coffee traders from Brazil and Vietnam fear worse harvests due to the weather.
- 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 - said Ole Hansen, Head of Commodity Strategy at Saxo Bank, in an interview with the BBC.
Meanwhile, in Vietnam, robusta crops are threatened by droughts and heavy rains.
At the same time, demand for coffee is constantly increasing. The portal notes that coffee is the second most-traded commodity after oil. In China alone, coffee consumption has doubled in the last 10 years.
Coffee price increases at the beginning of 2025
According to experts cited by the BBC, consumers can expect coffee price increases at the beginning of 2025. This trend is expected to continue "for some time" due to low bean stocks and rising prices.
- While in recent years major coffee roasters have been able to absorb price hikes to keep customers happy and maintain market share, it looks like that's about to change. 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 - noted Vinh Nguyen, Chief Executive Officer of Tuan Loc Commodities, cited by the BBC.
According to producers, price increases are necessary to ensure quality. - We are not immune to the price of coffee; quite the opposite - admitted David Rennie, head of Nestlé's coffee brands.
Companies are currently preparing for contract negotiations, which are set to take place at the beginning of 2025. Already in November, we reported that Nestlé plans to raise coffee prices and reduce product weight to protect margins.
