Coffee prices reached their highest levels on record this week as markets continue to struggle with supply.
The international commodity price for arabica beans hit $3.44 (£2.70) a pound on Tuesday, reaching levels not seen since 1977. This means arabica prices have increased 109% over the past 12 months and a whopping 145% in the past five years.
Meanwhile, prices for the cheaper robusta beans, typically used in instant coffee, broke all-time records when they hit $5,694 per tonne at end of November.
Robusta prices have stayed high since the Houthi-induced Red Sea disruptions last December. According to Rabobank analysts, they have risen 92% in the past year and an astronomical 237% over the past five years.
The continued rally is largely due to shrunken production outlooks for both Brazil and Vietnam, the world’s two largest producers, which have been badly hit by unfavourable weather conditions.
Read more: Coffee prices rally on weather concerns in Brazil and Vietnam
Commodity analysts expect the wholesale price increases to continue filtering through to consumers in 2025.
Coffee makers have already been forced to push retail prices in recent months. The price of Nescafé Original Instant Coffee in UK supermarkets is up 15% year on year, according to The Grocer’s Key Value Items tracker.
Own-label instant coffee (100g-200g) is also up 3% compared with last year.
“Like every manufacturer, we have seen significant increases in the cost of coffee, making it much more expensive to manufacture our products,” a Nestlé spokesperson said. “As always, we continue to be more efficient and absorb increasing costs where possible whilst maintaining the same high quality and delicious taste that consumers know and love.”
Meanwhile, data from the Office for National Statistics shows a cup of coffee at a restaurant or café is currently £3.24, an increase in price of 5% over the past year, and more than double the official rate of inflation.
Specialty wholesaler Grind said the average price of its green beans had gone up “by approximately 30%-40% in the last six months, and more than 50% if you compare to one year ago”.
Grind’s head of coffee, Howard Gill, told The Grocer: “In the higher end of speciality we’re still a long way off from not having coffee due to lack of supply – despite Brazil’s poor harvest our farmer partners were comfortably able to meet our needs – and we’ve always had a longer-term approach to this side of things.
“There have been bumper crops and low ones before and there will be again. However, the impact of climate change is clearly making things less predictable.”
Read more: Record coffee prices mean farmers are finally earning enough to live, says Pact Coffee
The supply squeeze also comes at a time when consumer demand for coffee continues to grow, both at-home and outside.
In 2024, Grind became the fastest-growing ground coffee brand out of the top 30, as per NIQ data [NIQ 52 w/e 7 September 2024]. Other brands such as L’Or, Union, and Lavazza all saw volume growth this year.
“Our bean and ground sales online have seen a huge growth this year, even relative to other channels, but what’s really exciting is that our coffee sales on the high street have also remained really strong,” said Gill.
“We’re not taking our own customers away from the high street with those bean and ground sales, but instead maybe we’re helping create a more quality-focused UK home coffee market as well.”
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