The cost of your morning cup of coffee could soon rise after the price of arabica beans – the most widely produced variety – 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. Robusta beans, which are cheaper and more bitter, have also surged, reaching new highs this fall.
The price increase follows challenging 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 booming harvest. Vietnam, Robusta’s top supplier, has also experienced extreme weather conditions that are expected to limit future yields.
These supply concerns arise at a time of stable global demand for coffee. Consumption in countries like China has more than doubled in the past decade, while coffee roasters and traders report that bean supplies are critically low.
For years, major coffee brands, including JDE Peet’s (the owner of Douwe Egberts) and Nestlé, have managed to absorb higher raw material costs, protecting consumers from price increases to maintain their market position. However, industry insiders say this strategy is reaching its limits. 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 it was eventually forced to adjust its prices. David Rennie, head of coffee brands at Nestlé, has also admitted that the company will have to increase prices and possibly adjust pack sizes. He describes the situation as “difficult times” for the entire sector.
Commodity analysts expect the upward trend in coffee prices to continue for some time, with the impact of extreme weather on supply – and continued strong consumer demand – making it likely that coffee lovers will feel the squeeze on their wallets well into the coming year.