Brazil: Global coffee prices have surged to historic levels, leaving coffee drinkers bracing for potential price hikes in the new year. Arabica beans, which dominate global production, skyrocketed to $3.44 per pound—their highest record price—marking an 80 percent increase this year. Robusta beans also reached new highs in September.
The dramatic price surge comes as coffee traders forecast shrinking supplies. Brazil and Vietnam, the world’s top two coffee producers, have suffered intense weather, including severe droughts and heavy rains. Major coffee brands like Nestle, Lavazza, and JDE Peet are considering passing on higher costs to consumers in early 2025. Industry experts warn that coffee roasters, who have long gripped price increases to maintain market share, may no longer be able to shield customers from soaring costs.
Vinh Nguyen, CEO of Tuan Loc Commodities stated that, “Brands have taken the hit from more elevated raw material prices, but now they are at a tipping point.” Lavazza confirmed that it has already revised prices to address the rising costs of quality raw materials.
At a recent investor event, Nestle’s head of coffee brands, David Rennie, acknowledged the challenges forward. David Rennie stated that, “We are not immune to the price of coffee,” hinting at modifications in pricing and packaging to manage the crisis.
Brazil, the largest producer of Arabica beans, encountered its worst drought in 70 years during August and September, followed by heavy rains that disrupted flowering crops. The situation reflects the devastating 1977 snowfall that caused coffee prices to spike.
Vietnam, the leading Robusta producer, met similar challenges with drought and heavy rainfall damaging crops. Adding to the strain, coffee demand persists to rise globally. Consumption in China, for instance, has more than folded over the past decade.
With inventories at low levels and demand showing no signs of slowing, analysts predict coffee prices will remain high for the foreseeable future. Fernanda Okada, a coffee pricing analyst at S&P Global Commodity Insights stated that, “The upward trend in coffee prices is expected to persist.” For coffee lovers, the morning ritual may soon reach a steeper price tag.
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