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They are not easy times. That is the summary when we have some Eggs in full price escalationthe triggered cocoa Due to illegal gold mining And a coffee that has achieved historical values. In the case of coffee we have been anticipating the storm for months, with a product that was Marking maximums in the stock market and with brands absorbing the coup until have stopped doing it.
And, in the middle of that uncertain panorama on the price of coffee, the United Nations arrives to tell us that the worst has not yet been.
What about coffee? A set of factors, actually. To the difficulties of transporting raw coffee, aggravated by the increase in freight due to conflicts such as the Red Sea, these last crops are added. Vietnam and Brazil are two great coffee producers worldwidebut the climatic phenomena known as the boy and the girl have affected coffee spots -coffee plants.
Both phenomena affected similar forms to countries so remote, causing the same in both: higher temperatures and droughts in some producing areas, as well as an alteration of the rainy season that fall torrentially in a short period of time. As a result, the harvest is poorer and quality can also be seen injured.
Maximums. That the two largest coffee producers reduce their production is something that affects the rest of the industry. On the one hand, Arabica coffee is the most coveted among specialty coffee producers and is usually more expensive, with Astronomical examples such as Geisha Café. On the other, although the robust is usually cheaper, specialty coffee is already being created with this variety and something more important: it is the basis of something as consumed as instant coffee.
As a result, in the New York ICE bag, the Arabica increase 70% in 2024 and an additional 25% in the first months of this 2025. In the case of the robust, the record is got On January 31 with $ 5,840 per ton in the London Stock Exchange, with increases of up to 6% in a single day.
Prices also increase for producers and exporters. As we read in Reutersall the main territories experienced increases in 2024 compared to the levels of 2023. And not small:
- Ethiopia 17.8%.
- Kenya 12.3%.
- Brazil 13.6%.
- Colombia 11.7%.
- Indonesia 15.9%.
- Vietnam 5.8%.
Bit with delay. The problem is that the price does not rise for producers, toaster and exporters while for the customer. For example, prices achieved In the bag a few days ago they are those of the cargo that will be delivered in May of this year, and it will be from there when the ‘domestic’ price will continue to increase.
And it will not be the last climb. In his last report About the state of coffee, the United Nations Food and Agriculture Organization -Fao- estimates that coffee prices increased 3.8% in December 2024 in Europe at a retail level, 6.6% in the United States. The dynamic is that a 1% increase in international coffee prices cause an increase of 0.24% at a retail level after 19 months, with 80% of the accumulated impact transmitted in the following 11 months.
In the case of the United States, this 1% increase in the international price translates into an increase in the retail price of 0.20% after 13 months. In the case of the US, 80% of the accumulated impact is transmitted in eight months.
“Inelastic”. This word is interesting, but it is simple to understand: it is the one that defines goods that do not have substitutes and that, therefore, no matter how the price increases, consumers will continue to buy them. Well, in its report, FAO ensures that “given the inelastic nature of coffee demand, it is unlikely that consumption decreases significantly in both markets” -American and European.
That is, as there are no alternatives to coffee, no matter how much prices upload us, consumers will continue to acquire this product. Nor is there anything to intervene because, as FAO herself concludes, coffee consumption represents less than 1% of the annual household spending. From the US National Coffee Association they do not share this, affirming that “the great price increase eaten the liquidity of the customers. They do not have all the money to buy what they need” and ensure that they have sold 30% less of the production when, at this point, they would no longer have reservations.
It all depends on three countries. Until now, we have talked about the increase in coffee price for wholesalers, but if we are going to the price that consumers pay, FAO estimates that, in December 2024, a coffee was 6.6% more expensive than in December 2023 in the United States. In the case of the European Union, the increase was 3.75%. Therefore, and taking into account that delayed coup of the price increase in coffee, it seems that the worst is yet to come.
From FAO they see this as an opportunity for greater research in technology, research and development of the coffee sector and, above all, to increase the climate resilience of coffee. Although there are many coffee, Vietnam, Indonesia and Brazil producers are the authentic monsters of the great market, but climate change is leaving us two lessons.
One is the one that is causing the scarcity and increase of current prices: more unpredictable climatic events on dates that unravel coffee cultivation, therefore affecting crops. On the other hand, it is also an opportunity. We are already seeing that there are those who insist on growing coffee outside Coffee beltwith coffee trees growing wildly in Sicily and Plantations in Andalusia or Catalonia They are testing the viability of growing coffee in such unavailable conditions.
Final of the tunnel in sight? What is clear is that the world is thirst for coffee and, with a China increasingly passionate For this drink, it is urgent to have a much more stable stage. In Reuters We read that there are also those who take the opposite to FAO in their forecasts, hoping that the price of Arabica coffee falls 30% for the end of this 2025.
They ensure that the demand will stagnate in response to very high prices, and although it does not sound bad because it will allow the price to lower, the problem is that it is the result of a survey of the medium itself. It will really be in a few months when we see if that forecast of the FAO is fulfilled and, above all, you will have to have an eye on The boy, the girl And how they want to play with the climatology of Vietnam, Brazil or Indonesia.
This will be what marks that price variation not already by the end of next year, but by 2026 …
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