Coffee Prices Surge as Arabica Beans Hit Record Highs

The cost of your morning cup of coffee could soon rise, as arabica bean prices have reached record levels on international markets. On Tuesday, arabica beans surpassed $3.44 per pound, marking an 80% increase since the beginning of the year. Robusta beans, typically cheaper and more bitter, have also seen sharp price increases, hitting fresh highs this autumn.

This surge in prices comes amid severe weather conditions in Brazil and Vietnam, the world’s largest coffee producers. Brazil, the top supplier of arabica beans, is grappling with its worst drought in 70 years, followed by heavy rains that threaten the flowering of this season’s crop. Vietnam, the leading producer of robusta beans, has also experienced extreme weather, which is expected to reduce future yields.

The supply concerns coincide with steady global demand for coffee. In countries like China, coffee consumption has more than doubled over the past decade. Meanwhile, roasters and traders report that inventories of coffee beans are critically low, exacerbating the supply shortage.

For years, major coffee brands such as JDE Peet’s (which owns Douwe Egberts) and Nestlé managed to absorb higher raw material costs without passing them on to consumers, in an effort to maintain their competitive edge. However, industry insiders warn that this strategy is no longer sustainable. With soaring bean prices squeezing profit margins, brands are preparing to raise prices in the first quarter of 2025.

Lavazza, the Italian coffee giant, which had been shielding customers from rising costs, confirmed it is now forced to adjust its prices. Similarly, Nestlé’s head of coffee brands, David Rennie, acknowledged that the company will need to raise prices and may even adjust package sizes. Rennie described the situation as “tough times” for the entire industry.

Commodity analysts predict that the upward trend in coffee prices is likely to continue, given the ongoing impact of extreme weather on supply and consistently strong consumer demand. As a result, coffee lovers can expect to feel the effects in their wallets for the foreseeable future, with prices expected to remain high throughout 2025.