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| Coffee doesn't taste the same anymore. Even though the price of coffee is rising | Photo: Pexels |
Bad news for coffee lovers, coffee prices may soon increase. Due to bad weather, coffee prices in the international market have reached a record high.
The price of Arabica beans topped $3.44 per pound (0.45 kg) on Tuesday, marking a rise of more than 80 percent this year. Robusta beans also hit a new record in September. BBC News
Coffee traders say the reason for the price increase is that this year, on the one hand, coffee production is decreasing due to bad weather in Brazil and Vietnam, the world's two largest coffee producing countries, while on the other hand, coffee's popularity is increasing.
Brazil, the world's largest coffee producer, has been hit by extreme weather conditions this year, including drought and snowstorms, which have affected coffee production. Meanwhile, Vietnam, a major supplier of Robusta coffee, has seen its production decline due to excessive rain and weather-related problems.
An expert told the BBC that coffee brands are planning to raise prices from the beginning of next year.
In recent years, big coffee companies have managed to keep prices low, aiming to keep customers happy and maintain their market position. But market insiders say that could soon change. JDE Pitas, Nestle and other brands have endured high pricing pressure for so long. They did this to maintain market share. However, in the current situation, due to rising raw material costs and supply shortages, many of them are planning to increase the price of coffee in supermarkets in the first quarter of 2025.
Italian coffee company Lavazza told BBC News: "Ensuring quality is our top priority; it is the foundation of our relationship with our customers."
They have tried for a long time to maintain customer satisfaction and market confidence. But the price of raw materials has increased so much that they are unable to bear the additional costs; now the only option is to increase prices.
"If the price of coffee goes up, it won't affect us, it's not supposed to," said David Rennie, head of Nestle's coffee brand division. "It will have a huge impact on us." He added that Nestle will have to increase the price of coffee and change the packaging.
In other words, due to the rising cost of coffee raw materials and market pressure, large coffee companies are having to change their business strategies. In addition to raising prices, they can also take steps such as reducing the size of the package, which is an option to control costs.
Drought and heavy rain
The last record price increase for coffee occurred in 1977, when unusual snowfalls caused extensive damage to coffee plantations in Brazil.
Ole Hansen, head of product strategy at Saxo Bank, said the current price increase is due to concerns about what Brazil's coffee production will be like in 2025.
Ole Hansen also said that Brazil experienced its worst drought in 70 years in August and September. Then, heavy rains in October, which could damage coffee plants during the flowering stage, raised fears of crop failure.
Robusta bean supplies are also likely to be tight. Vietnam, the largest producer of this variety of coffee, has also experienced drought and excessive rainfall. This extreme weather has had a major negative impact on coffee production.
Coffee is the second most traded commodity in the world, second only to crude oil in terms of volume. Coffee's popularity is also growing. For example, coffee consumption in China has more than doubled in the past decade.
Coffee demand remains high, even though producers and manufacturers have low inventories, said Ferrand Okada, coffee price analyst at S&P Global Commodity Insights. He added that this trend of rising coffee prices is expected to continue for some time.