iStockphoto / Iuliia Chetvertkova/Nerthuz
Due to extreme weather conditions across the globe, particularly in Brazil and Vietnam, global coffee prices are soaring to record levels. For a while now, elevated coffee prices have been eaten by the purveyors but experts believe the switch is about to get flipped and coffee drinkers are about to start feeling the pain of the record prices.
Approximately 70% of all the coffee in the world comes from Arabica beans. Those prices have soared 80% this year alone to a record-setting $3.44/pound.
Coffee consumption increases globally year over year and the supply is driven in large part by two countries that have been hit by devastating weather: Brazil and Vietnam. Brazil alone accounts for nearly 40% of the entire global coffee supply. Vietnam is the second largest coffee producer in the world with 17% of the global supply. Together they mark well over half of all the coffee beans produced on planet earth.
In a new report from BBC News, the chief executive of Tuan Loc Commodities, Vinh Nguyen, suggests the record-setting prices will be passed onto the consumer for the first time. He told The Beeb “Brands like JDE Peet (the owner of the Douwe Egberts brand), Nestlé and all that, have [previously] taken the hit from higher raw material prices to themselves. But right now they are almost at a tipping point. A lot of them are mulling a price increase in supermarkets in [the first quarter] of 2025.”
David Rennie is the head of Nestlé’s coffee brands, Nestlé produces approximately 22% of the global coffee supply, and he told the BBC “we are not immune to the price of coffee, far from it.”
This looming coffee crises and spike in prices is driven by Brazil experiencing its worst drought in 70+ years over the past year. And in Vietnam, catastrophic flooding.
Two weather phenomenons on opposite ends of the spectrum with the same result: reduced global supply of coffee. According to the BBC News, coffee is the #2 most traded commodity on earth and only trails oil. Obviously, America runs on Dunkin but the rest of the world is consuming record amounts of coffee as well.
As the calendar flips to 2025, it will be interesting to see if Nestlé decides to hike coffee prices which gets passed along to the consumer. I won’t at all be surprised to see a hike in coffee prices across the board. But I’m loyal to my Cometeer Coffee and am girding my loins for any price increase as I’ll never leave Cometeer, they’re simply the best.