The price of coffee more and more tough

Emmanuelle Ducros 08:45, 06 June 2023

Coffee is one of the products that has soared the most on supermarket shelves, 13% over one year and even 15% increase over the first four months of 2024. Whatever the forms or qualities. And if inflation is calming down on many food products, for coffee, it's another matter.

Black, tight and bitter, this could be one way to describe the future of the coffee market for the next few years. We must expect to pay more and more for it. In a cup of coffee, there is a well-roasted concentrate of all the issues of the time and all the global geopolitics.

Coffee is a dozen large producers on the planet, led by Brazil, Vitenam, Colombia, Indonesia and Ethiopia, and a few smaller ones. It is a tropical product, which travels and which, with the covid crisis and the war in Ukraine has suffered the increase in the cost of transport, energy and packaging. But this is the common lot of the whole basket of the housewife. We add a currency effect, yes, gringo, coffee is traded in dollars, and dollars are better.

The surge in prices is mainly due to production difficulties.

Coffee prices have more than doubled in 2022, whether for Arabica or robusta. We are now at two years of half-empty cups. The harvest was poor in 2021 in Brazil, the world's largest producer. A drought and three extraordinary episodes of frost, a quarter of production lost. Very low world stocks at the end of the year. 2022: no better, the La Niña climate phenomenon has affected Central America and Colombia, too much rain, few flowers, a catastrophic harvest, the worst in ten years.

A foretaste of a full-bodied future.

Prices have stabilized, the short-term continuation will be directly dependent on the 2023 harvests, they are spread from November to March or from September to May depending on the production areas, we have no visibility. But it's especially after that it gets tough.

Coffee is not only a victim of extreme weather events, weather blows, but also global warming. It is an altitude shrub, it needs fresh air, 18/20 degrees. Very sensitive to temperature variations. By 2050, half of the current coffee acreage will probably have become too hot. Either we will have to go back to the crops, or give up.

Meanwhile, the demand for coffee is only growing.

Regularly and consistently. We consumed 9.9 million tons in 2021 worldwide. It will be 30% more by the end of the decade.

What is interesting is that coffee consumption is linked to development. The richer the countries, the more people drink. This is a sign of the evolution of prosperity. The regions where consumption is growing the most are China – which is obvious – and more surprisingly Africa. Population that grows, standard of living too.

How scarce supply and growing demand will meet, certainly with high prices. We do not read the future in coffee grounds, but for consumers, the blow on the coffee maker of recent months is probably only a taste.