DENVER — Coffee prices are expected to continue rising as a result of persistent supply chain issues and higher import costs.
Coffee imports, which account for more than 99% of coffee consumed by US consumers, experienced a dramatic rise in price between 2021 to 2023, according to a recent CoBank research brief analyzing trends within the global coffee market. Import prices rose 65% during the period, driven by production and supply difficulties.
In Brazil, a key market for arabica coffee, producers have lost up to one-fifth of their growing areas due to fires and frost, and lower-than-average rainfall has resulted in significant droughts. Severe weather also has harmed export levels in Vietnam, along with workforce challenges, and Colombian crops are continuously declining in yield from reduced use of high-cost fertilizers.
These factors, which aren’t expected to improve in the near future, have led US coffee prices to swell. Per-pound ground coffee prices rose nearly 21% in the last year, and ground decaffeinated coffee prices grew 17% per unit, according to Circana data from April. Whole coffee bean, instant coffee and instant decaffeinated coffee prices also jumped by double digits over the same period, increasing 16%, 13% and 12%, respectively. The coffee concentrate market was the only segment to avoid considerable price increases at a 6% uptick.
“Existing stockpiles of coffee reserves offset the price impact of lower imports,” said Billy Roberts, senior food and beverage economist at CoBank. “However, that changed in September 2021, as reservesdropped, worldwide demand for coffee accelerated, and prices spiked.
“(Year-over-year) price increases have slowed, but they have yet to close the considerable double-digit percentage increases seen from 2021 and into 2022.”
Despite higher prices, consumption of coffee remains at an all-time high. The National Coffee Association (NCA) said the number of daily coffee drinkers in the United States has risen 37% in the last 20 years, with more than 75% of American adults consuming coffee at least once a week. A survey by the NCA showed weekly specialty coffee consumption has grown 7.5% year-over-year, and 57% of respondents said they had specialty coffee during the past week.
At-home coffee consumption in particular has been on an upward trajectory following the pandemic, as 70% of all coffee drinking occasions occur at home. Continued price increases may further compound the trend toward at-home consumption as consumers seek cheaper alternatives to higher-cost foodservice products, Roberts said.
“Nearly all of the coffee consumed in the US is imported, so higher prices are likely until the production challenges subside,” he said. “While it’s highly unlikely US consumers are going to significantly curb their consumption due to high prices, they may get creative with at-home coffee drinks and lean on store-bought flavorings to replace more expensive specialty drinks from coffee shops.”
