Understanding the recent fluctuations in coffee prices reveals significant challenges and opportunities for both consumers and specialty coffee roasters. The global coffee market has seen prices soar due to supply shortages from major producers like Brazil and Vietnam. Although prices have recently stabilized below US $3/lb, the effects of previous high prices will soon reach consumers, particularly affecting those who buy cheaper commercial-grade coffee.
• A UN FAO report indicates that up to 80% of price increases will hit EU consumers within 11 months and US consumers in eight months.
• Major brands are raising retail prices, causing some retailers to push back against further hikes.
• Specialty coffee, while operating outside the C market, is still influenced by these price trends, with its prices approaching those of commercial coffee.
• As consumers face higher prices, they may switch to cheaper alternatives or reduce their coffee consumption.
This situation is crucial as it could reshape consumer habits and market dynamics. Specialty coffee roasters have a chance to attract customers seeking quality, but they must navigate the challenge of rising costs while maintaining their unique value proposition. The outcome will depend on how consumers react to sustained price increases and whether they prioritize quality over cost.
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