Coffee Prices Hit Record Highs as Supply Struggles to Meet Global Demand

Coffee drinkers, brace yourselves: the price of your daily cup is set to rise as global coffee prices hit record highs. On Tuesday, Arabica beans—the most widely used coffee variety—reached $3.44 per pound, a jump of over 80% this year. Robusta beans, too, have seen prices soar, hitting new peaks in September.

This surge comes after severe weather battered Brazil and Vietnam, the world’s largest coffee producers. Brazil endured its worst drought in 70 years, followed by heavy rains, threatening next year’s Arabica crop. Meanwhile, Vietnam’s Robusta plantations faced similar challenges, with both drought and excessive rainfall curbing production.

Major coffee brands like Lavazza and Nestlé are feeling the strain. While these companies have historically absorbed rising raw material costs to maintain market share, the current price hikes are pushing them to the brink. “Brands are almost at a tipping point,” said Vinh Nguyen, CEO of Tuan Loc Commodities, adding that price increases could hit supermarkets by early 2025.

Coffee’s rising popularity, particularly in markets like China where consumption has doubled in a decade, is exacerbating the pressure on supply chains. With inventories running low and demand soaring, experts predict high coffee prices will persist.

The coffee industry, facing its toughest times in decades, may leave consumers paying more for their beloved brew in the months ahead.

THINK LIKE AN ECONOMIST!

Q1. Define the term “commodity”.

Q2. Explain one reason why weather conditions in Brazil and Vietnam have impacted global coffee prices.

Q3. Analyse how rising coffee prices might affect consumers and coffee producers differently.

Q4. Discuss whether price increases by coffee brands are a sustainable response to the current market challenges.

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TheCuriousEconomist

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