Coffee Prices Reach All-Time High Amid Supply Concerns

The international commodity markets are witnessing unprecedented increases in coffee prices, with Arabica beans now exceeding $3.44 per pound, marking a staggering rise of more than 80% in just one year. This surge has raised alarms among coffee drinkers as future price hikes for popular coffee brands seem imminent. The current situation is primarily attributed to adverse weather conditions affecting the world’s top coffee-producing countries—Brazil and Vietnam—causing expectations of diminished crop yields.

Industry experts suggest that the popularization of coffee globally, particularly in emerging markets such as China, which has seen coffee consumption more than double in the past decade, is exacerbating the issue. The ongoing high demand for coffee worldwide is compounded by reduced inventories among producers and roasters.

Major coffee brands, including JDE Peet, Nestlé, and Lavazza, have previously absorbed rising raw material costs to sustain consumer loyalty and market presence. However, this strategy may no longer be feasible. Vinh Nguyen, CEO of Tuan Loc Commodities, indicated that companies are nearing a breaking point and contemplating price increases in early 2025. Lavazza acknowledged that despite its efforts to maintain competitive pricing, the relentless rise in coffee prices has mandated them to adjust prices in order to uphold the quality promise made to consumers.

Nestlé’s David Rennie confirmed during an investor event that the coffee industry is encountering significant challenges, recognizing the necessity to amend pricing structures and possibly reduce pack sizes.

Historically, the last record high in coffee prices occurred in 1977 due to severe weather conditions in Brazil. Presently, concerns surrounding the upcoming 2025 Brazilian coffee crop, which suffered from its worst drought in 70 years, followed by heavy rainfall, are central to price increases. Similar weather issues are affecting Robusta beans in Vietnam, signaling a dual supply crisis.

Overall, as coffee continues to be the second most traded commodity globally by volume—after crude oil—the trend of rising prices is not expected to reverse anytime soon, potentially altering consumer behavior and market dynamics in the coffee sector.