Global coffee trade grinding to a halt, hit hard by brutal price hikes
Global coffee trade grinding to a halt, hit hard by brutal price hikes
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The coffee price hikes have stemmed from lower production in important coffee growing regions, particularly in top grower Brazil, reducing the availability of beans.
That's the closest I could find in the article as to a reason. It'd be nice to know if it was just a bad year or if this is going to be a permanent challenge going forward due to climate change or some other factors.
Coffee is quite sensitive to environmental factors and only grows in certain specific regions as a result. Those factors are being upended by climate change. Coffee is going to very rapidly become a luxury product.
Billionaires don't care. Twenty dollars or two dollars for a cup is effectively the same price to them; insignificant. It's the rest of us that get fucked.
Except we are nowhere near a situation like that. Articles like this don't tell the actual prices because they are so small people might start questioning why they pay so much for coffee.
The poll had a median forecast for arabica prices at the end of 2025 of $2.95 per pound, a drop of 30% from Wednesday's close and a loss of 6% from end-2024.
$3 per pound - $6 per kilo. Or to put it in another way, 4.8 cents per shot of espresso, two of which go in a 16 oz Starbucks latte that costs you $5.75, which would be enough money to buy 120 shots worth of bulk arabica.
If that goes up by 7% or 70% or 700%, the cost of that latte should hardly change.
Logistics cost money
Shucking and processing the beans costs money
Roasting the beans costs money
Exactly. And all of those stay the exact same price even if raw coffee price increases, meaning the price of a ready made cup of coffee hardly changes as the actual raw bulk coffee is only 1/60th of the total price of a starbucks latte.
How about this explanation:
There is a reduced supply of coffee beans. Let's say 30%. This requires that 30% of customers have to be priced out of the market.
If the coffee shop owners only increase the price by several cents then the demand stays the same. They have to fight for coffee beans which drives up their costs step by step.
However, if they increase the price in advance, and far more than necessary right from the start, then the reduced demand matches the available supply and the value of the coffee beans roughly remains the same which allows them to profit from most of the price hike.
There is a reduced supply of coffee beans. Let’s say 30%. This requires that 30% of customers have to be priced out of the market.
this is fiction writing. you are literally making that up
What do you mean? There are globally less coffee beans available. Or do you mean the 30%? That's just an arbitrary number, as I tried to make clear by writing "Let's say ...".
the price doesn't need to change at all. if it does, it is a decision someone makes.
Then you have more demand than supply because there is not enough coffee for everybody. This leads to people queueing and some people leaving without coffee.
maybe. but you're making up the story so you can tell any story you want.
You'd be right in theory - the cost of logistics should scale with weight or volume, not price - but we've already seen from the price shocks over the last few years that in reality corporations will always take the opportunity to price gouge on any upstream change, even when it has no impact on their costs.
But even putting aside the fact that capitalism will take it's cut, you're citing the potential impact of 700% price increases, but I'm not ruling out the possibility of 7,000% increases or higher. With the potential scale of impact that we could see from climate change, and how it affects delicate ecosystems like those in which coffee grows well, that's not outside the realm of possibility.
Oh yeah, even a tiny increase in bulk price is a fantastic excuse to bump the profit margins for corporations, I'm not even pretending that wouldn't happen in real life. Just look at the US egg prices and the massively increased profits of the companies selling them.
As for what's the upper limit on the price increase in the long run, that's quite hard to estimate, because the more expensive coffee becomes, the more options there will be for growing it in sub-optimal conditions. At some point, somewhere, growing coffee in a greenhouse becomes profitable to do.
Is that at $10/kg, $30/kg? $100? Over 9000? I don't have a clue.But for quite a lot of people the coffee they currently drink is so ridiculously overpriced that even an absolutely massive increase wouldn't have to mean they actually need to stop drinking coffee - to make a latte at home that was expensive as the one from Starbucks, the coffee itself could cost $350/kg - 15 grams of it would be $5.25, plus the milk. It would just completely kill coffee shops as a concept.
Coffee can be a pain to grow. As someone else mentioned, you have to have the right environment (rain, sunshine, soil, etc).
Adding to this is that it’s easier to grow other things that are in just as much demand. Vietnam has switched to growing durian fruit — less fussy and makes them just as much money.
Coffee is also quite carbon intensive.
From what I've heard this is largely due to bad weather due to climate change, as I understand it, we should not expect coffee prices to ever go back to where they were.
For the past 4-5 years it seems prices have only gone up here. It's more than triple now of what it used to be before Covid, and that's only 5 years!But I'm not an expert, this is just what I've been seeing as a heavy coffee drinker in the supermarket, and what I've gathered from short news tid-bits.
Pretty much. I watched my favorite coffee hut (literally a hut that you drive up to) go from $3 large like 5 years ago to $4, then within a year hit $5. At that point, I stopped going, although funny enough, i did go there today since it was convenient and it's now $5.50... I laughed and said yeah I'm definitely done now. As much as I like coffee, it's now a high-end luxury item that I can no longer afford even occasionally due to everything else raising as well.
My ground coffee has gone up about 20-30% over the past 2 years. This is just based on memory and not an exact calculation. It’s possible, I’ve misremembered the old price slightly, but either way it has gone up.
Here (Denmark) a pack of coffee 500g could be had for as low as $3 before Covid, now it's very rare to see below $7. But most brands have decreased the size of their packs to hide it.
Also there are many that use capsules and other ways to make coffee, where the price isn't as much dependent on the actual coffee, but more the markup of the brand.
It's also due to very bad weather/floods in the second largest producer, Vietnam.
And since extreme weather events are increasing in intensity and frequency, it's not going to get better (as a trend at least).