Impact of Climate Change, Supply Chain Disruptions, and More

Arabica Coffee Bean Prices Double

Global Coffee Companies Discussing Price Hikes

Expected to Increase by Up to 25% Soon

Due to climate change, tariffs, and supply chain disruptions, coffee bean prices are surging, leading to forecasts that coffee prices may rise by as much as 25% soon.

On the 27th (local time), coffee bean futures on the New York International Commodity Exchange (ICE) closed at 378.8 cents per pound.

This is an increase of about 100.6% compared to the 188.85 cents recorded on March 29 last year. Although the upward trend has slowed somewhat since peaking in February, as roasters sign contracts with retailers, consumer price hikes are expected to continue.

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Reuters, citing eight industry sources, reported that coffee roasters such as Lavazza, Illy, Nestle, and JDE Peet's are in discussions with retailers about the costs incurred as Arabica coffee prices have nearly doubled over the past year.

Climate change is making coffee cultivation more difficult, causing Arabica bean prices to soar. As coffee roasters demand price increases, grocery stores and supermarkets have delayed signing new supply contracts. As a result, major coffees like Douwe Egberts and Senseo were sold out at Albert Heijn, the largest supermarket chain in the Netherlands. Ultimately, after negotiations with JDE Peet's, Albert Heijn began selling coffee at higher prices starting on the 20th. An Albert Heijn spokesperson stated, "The purchase price from JDE has increased significantly," adding, "We will absorb part of this price increase to keep products affordable."

Yonhap News

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JDE Peet's announced last month that due to abnormal weather patterns, supply chain disruptions, macroeconomic factors, and geopolitical issues, green coffee bean prices more than doubled last year, signaling further coffee price increases. The company said that about 90% of global price negotiations have now been completed.

The global price of Arabica beans surged by 70% last year and has risen by more than 20% this year. This is because Brazil, which produces half of the world's Arabica coffee, experienced record-breaking drought. On average, the price of green beans accounts for about 40% of the wholesale price of a bag of coffee.

Reg Watson, Equity Research Director at Dutch bank ING, said that if last year's increase in bean prices is fully reflected this year, consumer coffee prices could rise by about 28%. He expects coffee prices to rise by about 15-25% this year and believes that in some markets, consumers may feel the price hike all at once.

In September last year, a farmer was inspecting a coffee bean farm scorched by wildfires in a rural area of Caconde, S?o Paulo state, Brazil. Brazil, which produces half of the world's Arabica coffee, experienced a record drought last year. Photo by AP Yonhap News

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According to market research firm Nielsen, the volume of coffee sold in major consumption regions such as North America and Europe decreased by 3.8% last year, but prices rose by 4.6%. Brazil, the largest producer of Arabica beans and the world's second-largest coffee-consuming country, saw coffee prices rise even more sharply as its currency depreciated against the dollar. Three Hearts, a major Brazilian roasting company, raised prices for roasted and ground coffee by 10% in December last year, 11% in January this year, and another 14.3% starting March 1. The Brazilian Coffee Industry Association (ABIC) explained that the price surge has been steep because raw bean prices in Brazil rose by 170% last year. As a result, coffee prices at Brazilian stores soared by 40%.

Reuters predicted that as price hikes are expected to be much steeper this year, the decline in sales volume will also be greater.

As coffee prices rise, cost-conscious consumers are switching to cheaper products or supermarket private brands (PB), putting more pressure on roasters. If roasters absorb the increased bean costs to keep prices low, profitability declines; if they raise prices to maintain profitability, consumers close their wallets. According to market research firm Circana, the market share of PB coffee in the US by sales volume increased from 20.51% in 2021 to 23.12% in 2024.