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International coffee prices have reached an all-time high record following a sharp increase. Arabica coffee prices surged to over $3.44 per pound on Tuesday, an 80% increase this year alone, marking a fresh high for global coffee production. Robusta prices also hit a record high in September.
It comes as coffee traders expect crops to shrink after the world's two largest producers, Brazil and Vietnam, were hit by bad weather and the drink's popularity continues to grow. While in recent years major coffee roasters have been able to absorb price hikes to keep customers happy and maintain market share, it looks like that's about to change, according to Vinh Nguyen, the chief executive of Tuan Loc Commodities.
"Brands like JDE Peet (the owner of the Douwe Egberts brand), Nestlé and all that, have previously taken the hit from higher raw material prices to themselves," he said.
"But right now they are almost at a tipping point. A lot of them are mulling a price increase in supermarkets in [the first quarter] of 2025."
Italian coffee giant Lavazza said it had gone to great lengths to protect its market share and not pass on higher raw material costs to customers, but soaring coffee prices had eventually forced its hand.
"Quality is paramount for us and has always been the cornerstone of our contract of trust with consumers," the company said.
"For us, this means continuing to tackle very high costs. So, we have been forced to adjust prices".
At an event for investors in November, a top Nestlé executive said the coffee industry was facing "tough times", admitting his company would have to adjust its prices and pack sizes.
"We are not immune to the price of coffee, far from it," said David Rennie, Nestlé's head of coffee brands.
The last record high for coffee was set in 1977 after unusual snowfall devastated plantations in Brazil. Robusta supplies are set to shrink after plantations in Vietnam, the largest producer of that variety, also faced both drought and heavy rainfall.
Coffee, after crude oil, is the world's second most traded commodity by volume.
