No matter how you drink it, coffee gets the day going like nothing else. However, that all-important morning pick-me-up might start hitting your wallet a little harder in the coming months. Coffee prices are at a 4-year high. As a result, consumers might be spending a little more at the supermarket or their local coffee shop. After all, someone has to make up the difference.
Earlier this year, several commodities skyrocketed in price. You’ll know this if you had a home improvement or other construction project. Lumber –especially plywood- was obscenely expensive. However, those prices are finally making their way back to normal. Coffee prices, though, are still on the rise.
Why Are Coffee Prices Rising?
A CNN report stated that robusta coffee, the beans that usually go into espresso, has jumped to a new high. Currently, robusta beans are sitting at just over $2,000 per ton. Prices of Arabica beans, which go into most home-brew coffee are also on the rise. The report points out that this spike in price is due to adverse conditions in the regions from which a large portion of the world’s coffee comes.
For instance, Brazil is the world’s largest producer of coffee beans. They’ve faced some horrible weather in the last year. They went through a drought. Then, they got hit with a frost. Alone, either of these things would have been bad for coffee harvests. Together, they were disastrous. As a result, fewer beans are coming out of Brazil. So, coffee prices are climbing. It’s a simple case of supply and demand.
At the same time, Vietnam produces a large portion of the world’s coffee. However, COVID-19 restrictions in that country are slowing production. This, too, has contributed to the rising price of coffee.
Additionally, oil prices are going up due to Hurricane Ida. Most oil production facilities in the Gulf of Mexico are shut down until the storm passes. This increases the cost of transporting and shipping all products. This includes a bump in coffee prices. So, consumers may find that their morning bean water is a little more expensive in the coming weeks.
What It Means for Consumers
There is some good news. CNN reports the java behemoth Starbucks buys their beans far in advance. That, coupled with other strategies allow them to lock their prices in. As a result, consumers who get their daily fixes at the chain coffee shop shouldn’t have to worry about the rising coffee prices.
However, other brands don’t have this kind of strategy in place. For instance, J.M. Smucker, the company that owns both Dunkin and Folgers doesn’t have a strategy in place. So, those who go to Dunkin in the morning to save a little money over Starbucks might find their own cost-reduction strategy failing in the coming months.
J.M. Smucker’s CFO, Tucker Marshall said that they are looking at “mid-single-digit cost inflation as a percent of our total cost of goods sold.” As a result, some consumers might feel a little deflation in their wallets as all aspects of production and shipping cause coffee prices to rise.