Summarised by Centrist
The cost of coffee has surged to its highest level ever. On Tuesday, Arabica beans—the most widely produced variety—reached USD$3.44 per pound, an 80% increase this year.
Robusta beans, commonly used in instant coffee, also saw record highs in September. Experts blame bad weather in Brazil and Vietnam, the world’s largest coffee producers, coupled with rising global demand.
Brazil, the leading Arabica producer, endured its worst drought in 70 years, followed by heavy rain, raising fears of a failed 2025 crop. “Concerns over Brazil’s crop are the main driver,” said Ole Hansen of Saxo Bank. Vietnam’s Robusta plantations faced similar weather challenges, further tightening supply.
Major brands like Nestlé and Douwe Egberts, which previously absorbed rising costs, are now considering price hikes in early 2025. Vinh Nguyen, CEO of Tuan Loc Commodities, noted, “Brands are almost at a tipping point… many are mulling supermarket price increases.”
Nestlé’s coffee head David Rennie admitted tough times ahead, warning that price adjustments and smaller pack sizes are inevitable.
Inventories held by producers and roasters are reported to be low. “The upward trend in coffee prices is expected to persist,” said Fernanda Okada of S&P Global.
This latest price spike recalls the record set in 1977, when rare snowfall devastated Brazilian crops. With coffee now the second most traded commodity by volume after crude oil, rising demand—especially in markets like China, where consumption has more than doubled in a decade—could keep prices elevated for the foreseeable future.
