2025 will be a year of bad news for coffee lovers. It is the second most consumed drink in the world behind water and the market has been warning for a few months: coffee will follow in the footsteps of the cocoa inflationary crisis. This increase in the Price of cocoa is already being noticed in nougats and chocolates, and very soon coffee will also experience a price increase.
The largest sellers say they have tried to keep the rising costs from falling on consumers, but they have given up: the exorbitant increase has forced them to take action, and that means a price increase.
Problems on all four sides. The industry has been warning for months: there was a perfect storm that was forcing sellers to Buy coffee at a higher price. One of those responsible is El Niño, a climate phenomenon related to the warming of the Pacific Ocean that is associated with heavy rains in Brazil (the largest producer of Arabica coffee) and droughts in India. It also has influences in areas such as Vietnam, which is the largest producer of robusta coffee.
Droughts (Brazil is suffering the worst drought in 70 years) have caused a decrease in the production of coffee trees, but the climate is not the only thing that is influencing the price of coffee. The Red Sea crisis forced ships coming from India or Vietnam to take a longer route, which also increased costs. And the new European Union regulations also come into play by which the import of products from deforested areas will be combated (although this has been postponed for a few months)
80% increase this year. The sum of all these factors has caused, as we read on the BBC, recently the price of a pound of Arabica coffee (about 450 grams) to reach $3.44. Robusta beans already peaked in September, but the rise in Arabica prices implies an increase of more than 80% this year. Worst? That the situation is not close to improving, since we have not yet seen the fruits of the harvests of recent weeks.
Low minimum inventories. Traders expect harvests in both Brazil and Vietnam to be reduced, which will imply another increase in coffee prices by 2025. Speaking to the BBC, coffee price analyst Fernanda Okada says that “the demand for raw material remains high, while producers and roasters report that stock in their inventories is low. This rising demand comes from the popularization of specialty coffee, but also from the taste that a giant like China is acquiring for the drink.
They can’t take any more hits. Tuan Loc Commodities is a Vietnamese company dedicated to coffee exports and Vinh Nguyen, its CEO, says that until now, big brands were absorbing the blow to keep customers happy and maintain their market share. but that “is about to change.” He ends by commenting that “they are at a critical point and many of them are considering a price increase in supermarkets for the first quarter of 2025.”
Measurements. Lavazza was already alarmed by the price of grain, but now faces a situation in which they will have to raise the price. In statements to the British media, they comment that “quality is essential for us and has always been the cornerstone of our contract of trust with consumers. That means continuing to face very high costs and, therefore, we have been forced to adjust prices”.
They have the same speech from Nestlé. David Rennie is the company’s head of coffee brands and has commented that they are not immune to the price of coffee: “far from it.”
It won’t be a matter of a few days. The bad thing is that, as we say, this upward trend is far from over, since we must wait to see the consequences of the harvests of this second half of 2024. Okada considers that “the upward trend in coffee prices will persist for some time “and it is only a matter of time to see what happens not with this year’s crops, but with next year’s.
In the end, this whole series of situations implied a jump in the price of specialty coffee, but the fact that brands like Lavazza or Nestlé have spoken out about the increase in prices only leads to a scenario in which 2025 will not be a good year for the consumer’s pocket.
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