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Coffee price increase in 2025? Here are the main drivers for the change in the cost of the favorite drink
2024-12-10 17:33:42 / BOTA
Coffee consumers could see the price of their favorite drink rise in 2025 according to the BBC.
Today, December 10, 2024, the price for Arabica coffee beans, which make up the majority of global production, topped $3.44 per pound (0.45 kg), up more than 80% this year. The cost of Robusta beans, meanwhile, hit a new high in September.
All this comes as coffee traders expect harvests to shrink as the world's two biggest producers, Brazil and Vietnam, were hit by bad weather and demand for coffee continues to rise.
Based on these, an economic expert has told the BBC that in 2025 there is expected to be a significant increase in the price of coffee in the world.
"Brands like JDE Peet (owner of the Douwe Egberts brand), Nestlé and all these, have previously taken the hit from higher raw material prices for themselves. But now they are almost at a tipping point. Many of them are thinking about a price increase in supermarkets in the first quarter of 2025," said Vinh Nguyem, CEO of Tuan Loc Commodities.
At an investor event in November, a senior Nestlé executive said the coffee industry was facing "difficult times", admitting his company would have to adjust prices and pack sizes.
"We are not immune to the price of coffee," said David Rennie, head of coffee brands at Nestlé.
The last record high for coffee was set in 1977 after unusual snowfalls devastated plantations in Brazil.
"Concerns about the 2025 crop 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 during August and September, followed by heavy rains in October, raising fears that crop growth could fail," Hansen said.
It is not only Brazilian coffee plantations, which produce mainly Arabica beans, that have been damaged by the bad weather, but also robusta ones, whose plantations have shrunk in Vietnam as they also faced drought and heavy rains.
Coffee is the world's second most traded commodity by volume, after crude oil, and its popularity is growing. For example, consumption in China has doubled in the last decade.
"Demand for the commodity remains high, while inventories held by producers and roasters are reported to be at low levels," said Fernanda Okada, a coffee price analyst at S&P Global Commodity Insights.
"The upward trend in coffee prices is expected to continue for some time," she added.
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