Coffee drinkers may soon face higher prices for their morning cups as coffee costs on international commodity markets have surged to record highs. On Tuesday, the price of Arabica beans, which account for the majority of global production, surpassed $3.44 per pound (0.45kg), marking an increase of over 80% this year. Meanwhile, Robusta beans, another major type of coffee, hit a new high in September.
This price surge is driven by a combination of factors, including adverse weather conditions that have affected coffee crops in Brazil and Vietnam, the world’s two largest coffee producers. Experts predict that the global supply of coffee will continue to shrink, even as demand for the beverage rises worldwide.
With these higher costs, coffee brands are increasingly considering raising prices. Vinh Nguyen, CEO of Tuan Loc Commodities, told the BBC that coffee roasters, who have absorbed rising raw material costs in recent years to keep prices stable, may no longer be able to do so. Brands like JDE Peet (which owns Douwe Egberts), Nestlé, and others have previously taken the hit from higher raw material prices, Nguyen explained. "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.
At a November event for investors, Nestlé’s head, David Rennie, acknowledged the challenges facing the coffee industry. We are not immune to the price of coffee, far from it, he said. He revealed that the company would need to adjust both its prices and packaging sizes to address the rising costs of raw materials.
The rise in coffee prices could have broader implications for consumers, who may soon see higher prices at grocery stores and coffee shops. For years, companies have managed to absorb the increases in raw material costs without passing them on to customers. However, with costs continuing to climb, it seems increasingly likely that price hikes will become a reality in the near future.
As the coffee industry grapples with these challenges, consumers are bracing for the impact. With coffee's popularity continuing to grow globally, the combination of supply issues and higher production costs suggests that price increases may be inevitable, and could be felt across the coffee market in 2025.
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