What is Going On With the Price of Coffee!?
What is Going On With the Price of Coffee!
The global coffee industry has experienced significant fluctuations recently, influenced by factors such as climate change, disease, supply chain disruptions, and economic conditions and it does not appear that these issues and concerns are going to let up anytime soon. The coffee industry has numerous issues that is pressuring the cost of beans and ultimately is going to impact the retail prices of coffee even more so than it did in 2024.
What we would love to share with you is an overview of the current state of the coffee market, notable events from 2024, projections for 2025, and anticipated pricing trends that we will all experience in the coming months.
Current Global Coffee Market Overview
As of early 2025, the coffee industry is grappling with challenges that have led to increased prices and concerns about future supply. Climate change has adversely affected major coffee-producing regions, resulting in poor harvests and reduced bean availability. Additionally, global supply chain disruptions and rising operational costs have further strained the market. Atop that, the demand for coffee is not holding back. Consumers want their coffee.
Key Events in 2024
Climate Impact on Production: Erratic weather patterns, including droughts and higher temperatures in key coffee-growing areas like Brazil (drought and frost) and Vietnam (heat and drought), led to significant declines in coffee bean production. This reduction in supply contributed to a surge in prices.
According to the U.S. Department of Agriculture, around 57% of the world’s coffee production last year came from arabica beans, and Brazil is the largest exporter. But a severe drought there this summer devastated the harvest, which typically runs from May to September, and it could threaten next year’s crop as well which in turn is not going to give us relief from further price increases.
In Vietnam, a severe drought followed by heavy rains harmed the world’s largest reserves of robusta, which is the second-most-popular variety globally and is commonly used in instant coffee blends and in many espresso blends.
Price Increases: Coffee prices have been on a constant rise since September 2023. The cost of Arabica coffee beans alone has risen by over 80% during 2024, reaching their highest levels in almost 50 years.
This increase was driven by never ending demand, supply shortages and heightened shipping costs. A July interview posted in the Financial Times with Guiseppe Lavazza (Owner of Lavazza) clearly stated that there is no reprieve coming for the coffee industry with respect to prices coming down, and in fact, pricing has not reached it’s ceiling yet... Industry leaders and experts are anticipating 10-20% increases in 2025 alone.
Consumer Behavior: Despite rising prices, coffee consumption remained robust. In the United States, for instance, spending at coffee shops increased, indicating that consumers continued to prioritize their daily coffee rituals.
Projections for 2025
Further Price Increases: Industry experts warn that coffee prices may continue to rise throughout 2025. In Australia (January 2025 article in News.Com.Au), for example, the cost of a single cup of coffee is expected to reach between $8 and $12 by year's end, due to ongoing supply challenges and increased operational expenses.
Consumer Adaptation: As prices rise, consumers may adjust their coffee consumption habits ((January 2025 article in News.Com.Au). Some may opt for home brewing to mitigate costs, while others might reduce their frequency of purchasing coffee from cafes. However, given the ingrained nature of coffee in daily routines, significant changes in consumption patterns are uncertain. Canada, like Australia and most other coffee drinking countries are going to changes in how we consumer our favourite daily starter…
Pricing Trends
The coffee market is inherently volatile, with prices influenced by a complex interplay of environmental, economic, and social factors. The current trend points towards increasing prices due to supply constraints and rising costs. Future pricing will largely depend on the industry's ability to adapt to challenges such as climate change, supply chain disruptions, and evolving consumer preferences.
CDCC Pricing
We at the Commercial Drive Coffee Company are doing our best to try and keep our coffee prices as low as possible. We, as well as every other coffee brand is going to feel immense pressure on our Brands. We are all single ingredient products, and our single ingredient is showing no signs that the rising prices will be slowing down anytime soon.
We at CDCC are not immune or insulated from these increases. We are doing our best to keep us affordable, and we are not willing to compromise the quality of our beans. Using inferior beans in order to keep our costs down is not a recipe for success. We assure that we will not do that.
We pride ourselves on giving you the best cup of coffee that we can. A cup that we also want to drink. If that means we pay more and make a little less so that we can all enjoy the high standards that we have enjoyed with CDCC over the years, then that is what it means.