Coffee prices hit all-time record high
Coffee prices on international commodity markets have reached their highest levels on record, signaling potential cost increases for consumers. On Tuesday, the price of Arabica beans, which account for the majority of global coffee production, soared to $3.44 per pound (0.45 kg), representing an 80% increase since the start of the year. Meanwhile, Robusta bean prices also hit fresh highs in September, exacerbating concerns across the industry.
The price surge comes as the world’s top coffee producers, Brazil and Vietnam, grapple with the devastating effects of extreme weather. Brazil, which predominantly grows Arabica beans, experienced its worst drought in 70 years during August and September, followed by heavy rainfall in October. These conditions have raised fears that the 2025 coffee crop could fail. Similarly, Vietnam, the largest producer of Robusta beans, has faced alternating droughts and heavy rains, threatening its production capacity.
The growing demand for coffee, particularly in emerging markets like China, where consumption has more than doubled over the past decade, has further strained supply. With inventories at historically low levels, traders expect upward pressure on prices to persist for the foreseeable future.
Major coffee brands and roasters are now signaling that consumers may soon bear the brunt of these price hikes. Historically, companies like Nestlé, Lavazza, and JDE Peet (owner of Douwe Egberts) have absorbed higher raw material costs to maintain customer loyalty and market share. However, industry insiders suggest this strategy may no longer be sustainable.
Italian coffee giant Lavazza, known for prioritizing quality, acknowledged that the surge in coffee prices has forced it to adjust its pricing. At a recent investor event, a senior Nestlé executive admitted that the coffee industry is facing “tough times,” and the company may need to raise prices and reduce pack sizes to offset rising costs.
The last time coffee prices hit record highs was in 1977, following unusual snowfall that devastated Brazilian plantations. Experts believe the current surge could have similarly far-reaching effects. Ole Hansen, head of commodity strategy at Saxo Bank, pointed to concerns over Brazil’s crop as a key driver of the price spike.
“Concerns about the flowering crop in Brazil failing are significant,” Hansen noted, reflecting widespread fears about long-term supply issues.
The challenges are not limited to producers. Analysts warn that the impact will ripple through the entire supply chain, ultimately reaching consumers. Fernanda Okada, a pricing analyst at S&P Global Commodity Insights, stated that demand for coffee remains robust even as supplies dwindle. With roasters and producers holding limited inventories, the upward trend in coffee prices is likely to persist, pushing retail prices higher.
For coffee drinkers worldwide, the combination of surging demand, climate-induced production challenges, and low inventories spells uncertainty. As roasters and brands reconsider their pricing strategies, consumers may soon see the cost of their morning cup of coffee rise significantly, reflecting the volatile dynamics of the global coffee market.