“This is unprecedented,” said Alexis Rubinstein, editor-in-chief of Coffee & Cocoa for commodity brokerage StoneX Group. “It’s never been this perfect storm before. This is usually a supply and demand scenario.
“We have never been faced with a supply and demand problem besides a logistics problem, in addition to manpower problems, in addition to a global pandemic.”
Why might retail prices go up?Although it is difficult to determine the extent of crop losses in Brazil, Mera said estimates vary between 2 million and 6 million fewer bags of coffee. This represents around 12% of the production of the world’s largest producer of Arabica, the bean used for most coffees sold around the world. Lower supplies almost always mean higher prices.
Grace Wood, industry analyst for market research firm IBISWorld, said if consumers don’t see coffee prices rising by the end of this year, they almost certainly will in 2022, because per capita demand is expected to increase.
“It will just contribute to increased demand which will further disrupt operations and make it more difficult for operators who are already experiencing supply problems,” said Wood.
Mera said people who buy coffee beans at the grocery store are likely to see a more noticeable price increase, as about half of the cost of that bag on the shelf comes from just the bean itself. However, in larger cafes, he added, the cost of the bean is only about 5% of your cup of hot coffee, so roasters “may not need to postpone increases. right now”.