Coffee prices have surged to historic highs, with Arabica beans reaching $3.44 per pound on international markets on Tuesday, the highest on record. Robusta prices also hit fresh highs earlier this year, driven by bad weather in Brazil and Vietnam—two of the world’s largest coffee producers.
Industry experts warn that coffee lovers may soon face higher costs for their morning brews. Major coffee brands like Nestlé and JDE Peet are reportedly considering price increases in early 2025 as they struggle to absorb the rising costs of raw materials.
Weather Woes Fuel Price Spike
Brazil, the largest producer of Arabica coffee, faced its worst drought in 70 years during August and September, followed by heavy rains in October, damaging flowering crops and threatening the 2025 harvest. Vietnam, the leading producer of Robusta beans, also experienced severe weather, compounding global supply concerns.
The last record high for coffee prices occurred in 1977 after unusual snowfall devastated Brazilian plantations. Current conditions have drawn comparisons, with analysts predicting a prolonged upward trend in coffee prices.
Industry and Consumer Impact
Nestlé’s coffee division head David Rennie acknowledged the tough times ahead, indicating that adjustments to prices and packaging are inevitable. Experts like Vinh Nguyen, CEO of Tuan Loc Commodities, noted that leading coffee brands are nearing a tipping point, unable to continue absorbing cost increases without passing them on to consumers.
Global demand for coffee remains robust, with consumption more than doubling in emerging markets like China over the past decade. However, low inventory levels among producers and roasters add to the pressure, suggesting price hikes are likely to persist.
Long-Term Outlook
The rising cost of coffee underscores the vulnerability of the global supply chain to climate change and extreme weather events. Analysts like Fernanda Okada from S&P Global Commodity Insights anticipate sustained high prices as producers grapple with dwindling inventories and ongoing environmental challenges.
The future of coffee pricing remains uncertain, but one thing is clear: consumers worldwide may need to brace for higher costs as the coffee industry navigates an increasingly volatile landscape.
