The cost of your morning cup of coffee could soon rise, after the price of Arabica beans – the most widely produced type – rose to a record high on international commodity markets.
On Tuesday, the price of Arabica surpassed $3.44 per pound, reflecting an increase of more than 80% since the beginning of the year. Prices of Robusta beans, which are cheaper and more bitter, have also risen sharply, reaching new highs this fall.
The price hike comes in the wake of difficult weather conditions in the world’s largest coffee producers, Brazil and Vietnam. Brazil, the largest producer of Arabica beans, has suffered its worst drought in 70 years, followed by unusually heavy rains that threaten this season’s flowering crops. Vietnam, the largest supplier of Robusta, has also experienced extreme weather events that are expected to limit future revenues.
These supply concerns emerge at a time of steady global demand for coffee. Consumption in countries such as China has doubled over the past decade, while roasters and traders report that grain stocks are very low.
For several years, major coffee brands, including JDE Peet’s (owner of Douwe Egberts) and Nestlé, have been able to absorb rising raw material costs, shielding consumers from rising prices to maintain their market positions. However, industry insiders say this strategy has reached its limit. With rising bean prices putting severe pressure on profit margins, brands are now preparing to pass costs on to customers in the first quarter of 2025.
Italian coffee giant Lavazza, which until recently tried to protect shoppers from rising costs, confirmed that it was eventually forced to adjust its prices. David Rennie, Nestlé’s head of coffee brands, also admitted that the company would need to raise prices and possibly adjust pack sizes, describing the situation as “difficult times” for the entire industry.
Commodity analysts expect the upward trend in coffee prices to continue for some time, with extreme weather impacting supply – and consistently strong consumer demand – making it likely that coffee lovers will feel the pinch in their wallets well into next year.