Coffee Prices To Continue Rising Over The Next Two Years – CoffeeTalk
Extreme climate events, including untimely rains, fires, and droughts across South Asia and Latin America, have fueled concerns for the already surging coffee prices. However, Indian consumers’ rising preference towards coffee as a beverage has proven beneficial for producers, as local markets are thriving with the growing demand. Coffee prices, mainly Arabica beans, have reached their highest prices in 13 years due to persistent supply disruptions. Prices are up roughly 40% in 2024 as shortages of the cheaper robusta beans have evoked demand for the arabica variety favoured by specialty chains.
The rally in coffee prices has been gathering pace due to erratic climate in top producer Brazil, which has hurt the South American nation’s production. Prices for the cheaper robusta variety, also produced by Brazil, have also jumped, leaving companies and consumers paying for pricier coffee, and retailers have been scrambling to secure beans. Vietnam, the second largest producer of coffee, is also facing excess rain coupled with farmers shifting to the production of Durian, a fruit widely popular in south Asia which is turning out to be more profitable than coffee.
India’s coffee market was valued at $478 million in 2022 and is expected to reach $1.2 billion by 2032 at a compound annual growth rate (CAGR) of 9.87% during the forecast period 2024-2033. However, several challenges cloud the optimistic future of coffee producers, such as a shortage of labour. Nearly 65 per cent of the total cost on an estate is labour cost, which has increased steadily over the past few years. Climate change has been another headwind for coffee producers, with sudden rain spells damaging coffee crops or contributing to low quality.
Some industry insiders say the impact is minimal for now, but data by the Coffee Board of India shows a marginal decline in coffee production in India. India produced 3,74,200 metric tonnes (MTs) in 2023-24 against 3,52,000 MT in 2022-23. As the middle class is growing and disposable income is increasing, India will become one of the biggest consumers of coffee in the next 3-5 years, and the transition can already be seen.
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Source: Coffee Talk