Coffee Prices Soaring: Climate and Durian Weigh on the Industry

A cup of coffee priced at five pounds in London or seven dollars in New York could soon become a reality. The cause is a "perfect storm" of economic and ecological factors in the leading coffee-producing countries. Analyst Judy Ganes explains that the costs for unroasted beans on the global markets are now at a "historically high level." She points to a mix of poor harvests, market forces, depleted inventories, and the world's stinkiest fruit as reasons. In 2021, an unexpected frost wiped out coffee crops in Brazil, the largest producer of Arabica beans. As a result, buyers turned to countries like Vietnam, the primary producer of Robusta beans. But there were problems here as well: The region suffered the worst drought in nearly a decade. Will Firth, a coffee consultant from Ho Chi Minh City, emphasizes the impact of climate change on the development of coffee plants and consequently on bean yields. Meanwhile, Vietnamese farmers have increasingly switched to the strongly odorous, yellow Durian. This fruit is very popular in China, leading many farmers to replace their coffee crops with Durian trees. Market dynamics resulted in Vietnam's Durian share in China nearly doubling between 2023 and 2024. Estimates suggest that the Durian harvest is five times more lucrative than that of coffee. Robusta exports from Vietnam fell by 50 percent in June compared to the previous year, and stocks are nearly exhausted, according to the International Coffee Organization. Exporting countries such as Colombia, Ethiopia, Peru, and Uganda have increased their production but couldn't ease the tight market. As the demand for Robusta rose, the world struggled to secure sufficient supplies. This has led Robusta and Arabica prices to near record highs on commodity markets. What does this mean for local coffee prices? According to Paul Armstrong, wholesaler and operator of Carrara Coffee Roasters, coffee drinkers may soon face "crazy" prices of over five pounds for their coffee. Armstrong has recently raised his prices, yet costs have continued to "intensify." As previous contracts expire soon, some cafés will have to decide whether to pass the higher costs on to customers. Will Firth adds that the market for instant and supermarket coffee, i.e., mass products, will be particularly affected by price fluctuations. While industry representatives point out that high market prices do not necessarily lead to higher end prices, Felipe Barretto Croce, CEO of FAFCoffees, argues that consumers may "feel the squeeze" due to general inflation-related cost increases like rent and wages. According to Allegra Strategies, beans account for less than 10 percent of coffee costs. Croce still sees opportunities: The increased prices for lower-quality beans could make high-quality coffee relatively more attractive. The harvest outlook in Brazil for the spring is crucial. If the rain comes early, the plants could be healthy and the bloom good. However, late rain could lead to lower yields and continued market pressure. In the long term, climate change poses serious challenges for the global coffee industry. A study from 2022 predicts that even with drastic reductions in greenhouse gas emissions, the most suitable growing areas for coffee could shrink by 50 percent by 2050. A "green premium" could help future-proof the industry by enabling farmers to invest in regenerative agriculture.