Coffee lovers face steep price hikes of up to 25% as roasters like Lavazza, Illy, Nestlé, and JDE Peet’s clash with retailers over passing on soaring arabica bean costs, triggering temporary stockouts and consumer rationing. A four-year global arabica deficit, worsened by Brazil’s historic droughts, has doubled raw bean prices since 2023, forcing supermarkets to renegotiate supply deals at sharply higher rates.
Key Developments:
Retail Standoffs: Dutch chain Albert Heijn temporarily pulled JDE Peet’s brands (e.g., Douwe Egberts) until March 20, restocking with absorbed price hikes to curb shopper backlash.
Brazil’s Crisis: Local coffee prices surged 40%+ in 2024 as the real’s slump amplified dollar-priced bean costs. Consumers now ration usage, per ABIC data.
Consumer Shift: Bargain hunters flock to private-label brands (e.g., Tesco’s in-house coffee), which grew to 23% of U.S. volumes (Circana data).
Market Impact:
Arabica Costs: Prices rose 70% in 2023 and 20% YTD 2024, with Brazil’s output (45% of global supply) crippled by drought.
Corporate Strain: JDE Peet’s warns of profit declines, while JM Smucker (Folgers, Dunkin’) anticipates lower volumes despite repeated price hikes.
Supply Chain Bottlenecks: U.S. coffee depots report 50% lower stocks as buyers minimize purchases amid retailer resistance.
Consumer Behavior:
North American and European sales volumes fell 3.8% in 2023 as prices rose 4.6%, per Nielsen. Steeper 2024 hikes could deepen declines.
Brazilian households cut waste, brewing smaller batches to stretch supplies.
Outlook:
Roasters face a lose-lose choice: absorb costs (eroding profits) or hike prices (driving consumers to cheaper alternatives). Even Starbucks, insulated by low bean cost per cup, faces margin pressures.