(qlmbusinessnews.com . Wedth Dec, 2024) London, UK —
Coffee Prices Soar to Record High Amid Supply Concerns.
Coffee lovers may soon feel the pinch as global coffee prices reach an all-time high, driven by bad weather in key producing countries and increasing global demand.
On Tuesday, the price of Arabica coffee beans, which dominate global production, climbed to a record $3.44 per pound, an 80% increase this year alone. Meanwhile, Robusta coffee, often used in instant blends, saw its price reach a peak in September.
The sharp rise is attributed to poor weather conditions in Brazil and Vietnam—the world's two largest coffee producers. Brazil faced its worst drought in seven decades, followed by intense rains that threatened the flowering coffee crop. Similarly, Vietnam’s plantations suffered from a combination of drought and heavy rainfall.
These supply challenges come as coffee consumption continues to grow worldwide, particularly in regions like China, where demand has more than doubled in the past decade.
Brands Prepare Price Hikes.
Major coffee brands, including Nestlé and JDE Peet, are warning of potential price increases for consumers in 2025. While companies have historically absorbed rising costs to retain market share, they now face what some describe as a “tipping point.”
Vinh Nguyen, CEO of Tuan Loc Commodities, explained that brands may no longer be able to shield consumers from rising prices. “In the first quarter of 2025, we could see price hikes in supermarkets,” he said.
Nestlé, a leading player in the coffee market, has signalled similar challenges. David Rennie, head of Nestlé’s coffee brands, described the situation as “tough times” and hinted at upcoming changes in prices and pack sizes to manage the crisis.
Demand and Low Inventories.
Coffee’s popularity continues to surge globally, making it the second-most traded commodity by volume after crude oil. However, inventories held by producers and roasters are reportedly low, further fuelling the upward trend in prices.
“With demand still high and stock levels at a low, coffee prices are expected to remain elevated for the foreseeable future,” said Fernanda Okada, a pricing analyst at S&P Global Commodity Insights.
The last time coffee prices hit such heights was in 1977, when unusual snowfall devastated Brazilian plantations. Today’s challenges, combined with climate volatility and growing global demand, are putting unprecedented pressure on the industry.
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