Getty Images
Coffee drinkers could soon see their morning treat become more expensive, as the price of coffee on international commodity markets has reached its highest level on record.
On Tuesday, the price of Arabica beans, which account for the bulk of global production, surpassed $3.45 per pound (0.45 kg), after jumping more than 80% this year. The price of Robusta grains, meanwhile, reached a new high in September.
It comes as coffee traders expect a decline in harvests after the world's two biggest producers, Brazil and Vietnam, were hit by bad weather and as the popularity of the drink continues to grow.
An expert has told the BBC that coffee brands are considering raising prices in the new year.
While in recent years major roasters have managed to absorb price increases to satisfy their customers and maintain market share, it appears that this is about to change, according to Vinh Nguyen, general manager of Vinh Nguyen Tuan Loc Commodities.
“Brands like JDE Peet (owner of the Douwe Egberts brand), Nestlé and all the rest, have (previously) borne the shock of rising raw material prices on themselves,” he said.
“But right now they are almost at a tipping point. Many of them are looking at price increases in supermarkets during (the first quarter) of 2025.”
At an investor event in November, a top Nestlé executive said the coffee industry was facing “difficult times”, admitting his company would have to adjust its pricing and package sizes.
“We are not immune to the price of coffee, far from it,” said David Rennie, head of coffee brands at Nestlé.
Drought and heavy rain
The last record for coffee was set in 1977 after unusual snowfall devastated Brazil's plantations.
“Concerns about the 2025 harvest in Brazil are the main driver,” said Ole Hansen, head of commodities strategy at Saxo Bank.
“The country experienced its worst drought in 70 years in August and September, followed by heavy rains in October, raising fears of flowering failure.”
Brazilian coffee plantations, which mainly produce Arabica beans, are not the only ones to have been affected by the bad weather.
Robusta supplies are also expected to decline after plantations in Vietnam, the largest producer of the variety, also faced drought and heavy rains.
Coffee is the second most traded commodity by volume, after crude oil, and its popularity continues to grow. For example, consumption in China has more than doubled over the past decade.
“Demand for this product remains high, while inventories held by producers and roasters are reportedly at low levels,” said Fernanda Okada, coffee price analyst at S&P Global Commodity Insights.
“The upward trend in coffee prices is expected to persist for some time,” she added.
