Coffee drinkers face price rises as costs on global markets hit record high

Your morning caffeine hit could become even pricier in the new year after the cost of coffee beans on international commodity markets soared to a record high.

On Tuesday, the price for arabica beans, the world’s most popular variety, topped $3.44 (£2.70) a pound, having risen more than 80% this year. Meanwhile, the cost of cheaper robusta beans, used in instant coffee, has almost doubled this year, with the price touching $5,694 a metric tonne in late November.

The price pressure follows predictions of smaller harvests this year after the world’s largest producers, Brazil and Vietnam, were hit by bad weather. The squeeze comes at a time when consumer demand for cups of coffee continues to grow.

Last month Nestlé, which owns leading brands including Nescafé and Nespresso, said it would continue to increase prices and shrink pack sizes in an attempt to offset higher bean prices. The price of Nescafé Original instant coffee is up 15% year on year in UK supermarkets, according to the key value items price tracker in the trade magazine the Grocer.

“Like every manufacturer, we have seen significant increases in the cost of coffee, making it much more expensive to manufacture our products,” Nestlé said at the time. “We continue to be more efficient and absorb increasing costs where possible.”

In the summer the Italian coffee company Lavazza warned the price of coffee would remain “very high” and was unlikely to drop until the middle of 2025 amid intense pressure on supply chains.

“We have never seen such a spike in price as the trend right now,” said Giuseppe Lavazza, who chairs the company. “The coffee supply chain is dramatically under pressure.”

The last record high for coffee was set in 1977 after snowfall devastated plantations in Brazil. This time the world’s biggest arabica producer suffered its worst drought in 70 years in August and September, followed by heavy rains in October. This has led to concerns the flowering crop will wither.

It is not only Brazilian coffee plantations that have been hurt by bad weather. The supply of robusta is also set to shrink after plantations in Vietnam, the largest producer of this variety, faced drought and heavy rainfall.

However, Will Corby, a director of the subscription company Pact Coffee, countered that coffee beans had been “sold for far too cheap from its countries of origin to the west for far too long. Huge coffee companies might say that these market highs are bad news, but, in reality, farmers are finally being paid enough to live on,” he told the Grocer.