Global (Commonwealth) _ The cost of coffee has reached its highest level ever on global commodity markets; coffee consumers may soon have to pay extra for their morning delight.
The price of Arabica beans, which make up the majority of the world’s production, increased by more than 80% this year and reached $3.44 a pound (0.45 kg) on Tuesday. In contrast, the price of Robusta beans reached a new peak in September.
It occurs as the drink’s popularity continues to rise and coffee dealers anticipate crop shrinkage following severe weather in Brazil and Vietnam, the world’s two major producers. According to an analyst, coffee companies are thinking of raising their pricing in the coming year.
Vinh Nguyen, the CEO of Tuan Loc Commodities, says that although large coffee roasters have managed to withstand price increases in previous years in order to satisfy consumers and hold onto market share, that appears to be about to change.
Companies like Nestlé, JDE Peet (owner of the Douwe Egberts brand), and others have already suffered from rising raw material costs, he claimed.
However, they are currently approaching a pivotal moment. Many of them are considering raising supermarket prices in [the first quarter] of 2025.
The massive Italian coffee company Lavazza claimed to have taken extreme measures to preserve its market dominance and avoid raising the price of its raw materials for consumers, despite rising coffee
However, the company’s decision was ultimately compelled by the rising costs of coffee. The company informed BBC News that quality is essential to them and has always been the foundation of their trust agreement with customers.
During a November investor event, a senior Nestlé official acknowledged that his business would need to modify its pack sizes and prices due to the “tough times” the coffee market was going through. David Rennie, head of coffee brands at Nestlé, “we are not immune to the price of coffee, far from it.”
Heavy rains and drought
Unexpected snowfall in 1977 damaged Brazilian farms, setting the last record high for coffee.
The primary motivator, according to Ole Hansen, head of commodity strategy at Saxo Bank, is worries about Brazil’s 2025 harvest.
There were concerns that the blossoming crop may fail after the nation saw its worst drought in 70 years in August and September, followed by intense rains in October.
Bad weather has harmed more than just Brazilian coffee fields, which mostly grow Arabica beans. Plantations in Vietnam, the largest producer of that species, have experienced both drought and severe rainfall, leading to a decline in robusta supplies.
After crude oil, coffee is the second most traded commodity globally in terms of volume, and its appeal is growing. For instance, over the past ten years, China’s consumption has more than doubled.
A coffee pricing analyst at S&P Global Commodity, Fernanda Okada Insights, stated that, although stocks held by roasters and manufacturers are reportedly at low levels, demand for the commodity is still robust. Fernanda Okada Insights anticipates that the rising trend in coffee costs will persist for some time.
Coffee, which is dark, bitter, and slightly acidic, stimulates people mostly because of its caffeine content. In the global market for hot beverages, it has the greatest sales.
Separating the seeds of the coffee cherries, the fruits of the Coffea plant, is the first step in making unroasted green coffee beans. Once roasted, we grind the beans into small pieces.
To make coffee, we usually soak ground roasted beans in hot water before filtering them. People often serve coffee hot, but they also occasionally serve it cold or iced.
C. arabica and C. robusta are the two most widely produced varieties of coffee beans. Seventy nations grow coffee, mostly in the equatorial regions of Africa, Southeast Asia, the Indian subcontinent, and the Americas. Like any other agricultural product, we trade unroasted green coffee.
The global coffee market has a valuation of $495.50 billion as of 2023. Brazil was the world’s top producer of coffee beans that year, accounting for 35% of global production, subsequent to Vietnam and Colombia. Coffee producers are disproportionately impoverished, despite the fact that coffee sales generate billions of dollars worldwide each year.