Coffee bean supplies are plummeting as worldwide demand increases, leading to record prices that are being passed on to the consumer.
Crops have been decimated in key supply markets due to adverse weather conditions, including sweltering temperatures in Brazil and record-breaking droughts in Vietnam.
Additionally, an increase in container shipping rates and other supply chain issues, such as the Red Sea conflict in the Middle East, have greatly exacerbated the issue.
This has affected robusta beans, which are a common ingredient in instant coffee, as well as higher-quality arabica beans.
Prices continue to soar as the shortage enters its fourth consecutive year, with robusta beans nearly twice as expensive as they were a year ago.
According to Trading Economics, coffee beans have increased by 34.11 percent since the start of 2024, with arabica beans trading at around US $2.6 per pound at the end of August – their highest closing level since mid-2011.
Professor Vinh Thai, logistics and supply chain management at RMIT University, says roasters may need to pass these costs on to cafes and customers, who in turn may do the same.
“This will likely add further pressure and negatively affect the lifestyle of customers who are already dealing with the cost of living,” he said.
“If customers choose to change their coffee habits, this might threaten the Australian coffee industry, which employs almost 70,000 people as of 2023.
“In the meantime, coffee importers and roasters could look to alternative markets to alleviate cost pressures. They could also increase their purchasing power and bulk-buy coffee, by working with peak bodies such as the Australian Coffee Traders Association.”
New data from YouGov reveals 66 percent of Australians drink coffee on a daily basis and Australian coffee rituals adapt to price hikes. Three in five said they have noticed a price increase over the past few months.
Unsurprisingly, 12 percent have stopped drinking coffee altogether due to increasing costs, 24 percent have considered reducing their consumption and 22 percent have made the switch to cheaper coffee beans or grounds.
PASA recently reported on the ongoing cocoa supply crisis, which has seen Cadbury Australia raise the price of two iconic chocolate bars for the first time in more than a decade.
