Coffee drinkers hoping for some relief from rising prices will be disappointed as supply chain disruptions and rising labor costs are expected to make their cup of Joe even more expensive.
The price of arabica beans, the high-end crop preferred by Starbucks, rose to $2.32 per pound last month — a 64% increase compared to June 2020, when it cost just $1.41 per pound.
Robusta beans, which are usually found in instant coffee, were priced in June at $1.86 per pound — a whopping 187% jump from $0.65 per pound in the early days of the coronavirus pandemic.
Market observers say the inflationary trend is likely to continue thanks to severe drought conditions in Vietnam and Brazil — two countries known for exporting coffee beans.
Vietnam, one of the world’s leading growers of robusta beans, is on track to produce an estimated 24 million bags this season — the lowest in 13 years due to droughts that caused “irreversible damage” to coffee blossoms, according to global coffee trader Volcafe.
The adverse weather in Southeast Asia is a key factor in what experts anticipate will be a deficit of 4.6 million bags of robusta beans, according to Bloomberg News — the fourth consecutive year that farmers will fall short of their target yield.
Brazil, another leading coffee producer, has also seen less-than-anticipated rainfall in the crop-rich region of Minas Gerais, a hub of arabica production.
Coffee farmers in the South American country are reportedly hoarding beans in anticipation of higher prices.
Supplies are expected to be even tighter as countries look to export beans before new climate regulations imposed by the European Union come into effect.
The European Deforestation Regulation or EUDR will outlaw sales of products like coffee from Dec. 30, 2024, if companies can’t prove they are not linked with deforestation.
The new rules don’t just seek to reduce risks of illegal logging and its scope is wide.
It will apply to cocoa, coffee, soy, palm oil, wood, rubber, and cattle.
To sell those products in Europe big companies will have to provide evidence showing they come from land where forests haven’t been cut since 2020.
Smaller companies have till July 2025 to do so.
“Buyers are looking earlier than they usually would and in more quantities because they need to get that coffee to Europe now before EUDR kicks in,” Tomas Araujo, a trading associate at StoneX, told Bloomberg News.
“That’s making everything worse.”
American consumers are feeling the pinch.
Food and beverage giant JM Smucker, the maker of popular brands such as Folgers, Dunkin’ and Café Bustelo, boosted the prices of its coffee earlier this summer while UK-based Pret A Manger did away with its subscription service that allowed customers to drink as many as five cups per day.
Variety Coffee Roaster, the Manhattan-based retailer, boosted the price of its coffee by 5% this year — the first time it had hiked costs since 2019.