Global coffee prices soar as weather disrupts harvests
Coffee bean prices on global markets have surged by as much as 80 per cent, primarily due to unfavourable weather conditions. According to producers, consumers will begin to experience these price hikes as early as the start of next year.
For several months, coffee producers have been dealing with escalating production costs. However, these increases are so substantial that they will soon need to pass them on to consumers.
Coffee bean prices hit records
The portal interia.pl reports that arabica coffee prices have climbed by 80 per cent this year. On December 10, a kilogram of beans cost approximately $7.57 CAD. Other types of beans are seeing price increases as well.
At present, bean prices are higher than during the record year of 1977, when snowfall devastated plantations in Brazil. The BBC reports that the largest coffee traders from Brazil and Vietnam are concerned about potential poor harvests due to the weather.
- In August and September, the country (Brazil) went through the worst drought in 70 years, followed by heavy rains in October, leading to fears that the crops would not be harvested - said Ole Hansen, Head of Commodity Strategy at Saxo Bank, in an interview with the BBC.
Meanwhile, in Vietnam, robusta crops are threatened by both droughts and heavy rains.
At the same time, demand for coffee is steadily 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 anticipate coffee price increases at the start of 2025. This trend is likely to persist "for some time" due to low bean stocks and rising prices.
- Although in recent years the largest coffee roasters have managed to absorb price increases to keep customers satisfied and maintain market share, it appears this will soon change. Brands such as JDE Peet, Nestlé, and several others have previously shielded consumers from higher raw material costs," noted Vinh Nguyen, Chief Executive Officer of Tuan Loc Commodities, cited by the BBC.
According to producers, price rises 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, slated for early 2025. Back in November, the portal money.pl reported that Nestlé plans to raise coffee prices and reduce product weight to protect margins.
