Coffee lovers around the world may soon find their morning brew more expensive, as the price of coffee beans has reached an all-time high on international markets. On December 10th, the price of Arabica beans, which make up the majority of global production, soared to $3.44 per pound (0.45 kg), marking a staggering increase of over 80% this year alone. The cost of Robusta beans has also surged, with a new peak set in September, further tightening supply.
The primary cause of this sharp price increase is a combination of adverse weather conditions and growing demand. The two largest coffee producers Brazil and Vietnam have faced severe weather disruptions, with both countries experiencing droughts followed by heavy rainfall, leading to expectations of a reduced crop yield in 2025. This has left coffee traders worried about future supplies.
According to Vinh Nguyen, the CEO of Vinh Nguyen Tuan Loc Commodities, many coffee brands have so far absorbed the cost hikes in an effort to keep consumers happy. However, this strategy may no longer be sustainable as prices continue to rise. Major coffee companies like Nestlé and JDE Peet, which owns Douwe Egberts, are reportedly considering price increases as early as the first quarter of 2025. These companies have long been able to cushion the blow of rising raw material prices, but the current situation may force them to pass on the increased costs to consumers.
At a recent event for investors, David Rennie, head of coffee brands at Nestlé, acknowledged the difficult times the coffee industry is facing. He stated that price adjustments, both in terms of product cost and packaging sizes, would be necessary to cope with rising commodity prices.
The last time coffee prices reached such a high point was in 1977, following a disastrous snowstorm in Brazil that decimated plantations. This year’s price surge is mainly driven by concerns over Brazil’s 2025 crop, with severe drought conditions during August and September, followed by unexpected rains in October, raising fears that the country’s coffee harvest may fail. The situation has worsened for Robusta beans, as Vietnam’s coffee plantations, which mostly produce Robusta, have also been hit by erratic weather patterns.
Adding to the pressure on prices is the growing global demand for coffee. As markets in countries like China continue to expand, consumption has more than doubled over the past decade, further stressing the supply chain. With low inventories and limited production from key coffee-growing regions, analysts expect the upward trend in coffee prices to persist for the foreseeable future.
As coffee prices continue to rise, consumers may soon notice the impact in their daily cups. Whether it’s a slight increase in supermarket prices or a shift in product sizes, the cost of coffee may soon be more than just a jolt of caffeine.
