High coffee prices, the price race for arabica and robusta does not slow down
Increases of up to 36% (especially in imports from Vietnam) and forecasts of further increases that will drive up the cost of espresso, which has already risen by 15% for a turnover of over 7 billion
4' min read
4' min read
There is no end to the alarms about rising coffee prices, following the alarm raised by entrepreneurs at the end of August, which was echoed by consumer associations. Assoutenti, for example, estimated a 68% increase in raw material compared to last year for the robusta variety. According to the association, in Italy, where espresso drunk at the bar alone generates a turnover of EUR 7 billion a year, the cost of the cup has risen by 15% since 2021, with peaks in some cities in particular. And the situation shows no sign of stabilising: according to analysts, coffee is among the main commodities to see prices rise.
The EU is the leading global importer of green coffee with about 34% of the total (source: Usda). According to Eurostat data, the EU imported 44.2 million bags of coffee in 2023. 63.8% of imported coffee is of the arabica variety, 35.6% of the robusta variety. Italy is the second largest importer in the EU, with approximately 23% of the total (10.4 million bags in 2023), while the largest importer is Germany with 34%. Italy imports mainly from Brazil (31%), Vietnam (23%) and Uganda (15.2%).
So what has happened to the raw material? According to calculations provided byAreté, an international agrifood intelligence company, on the financial marketplace The Ice, the first maturity of the robust variety, since mid-March, has risen by 27%, reaching a new record high at over USD 4,200/tonne. During the same period, the price of the arabica variety has also risen by 36%, reaching its highest level in two years. Moreover, the rises are fuelled by fears that the weather will negatively impact developments in the upcoming 2024-25 harvests. The uptrends are further amplified by uncertainty over the effects of EU anti-deforestation regulations and container costs buoyed by geopolitical tensions over the Red Sea. However, the inflationary trend is also strongly fuelled by speculative movements.
More in detail, the inflation that characterised the financial price of coffee was transmitted to the physical prices of all origins. On average in 2024 there were critical issues especially for robusta coffee imported from Vietnam, which had differentials (the premium or discount demanded by suppliers compared to the financial price) averaging around USD 280/mt compared to an average of USD 22/mt over the last five years. In particular, Vietnam was able to 'benefit' from the exit from the market in 2023 of Indonesia, the second largest producer of robusta globally, which experienced a production collapse of more than 20%, but what weighed heavily was that production in the country was essentially flat compared to dynamic demand. Although, in recent months, record Brazilian exports of robusta have reduced Vietnam's competitive advantage, with differentials even turning negative in August.
The return to an equilibrium situation will, however, take longer," says Filippo Roda, senior analyst at Areté. "This does not mean that there will not be some declines compared to the peaks seen in recent days, but we will certainly not return to the prices of 2021-22. Supply shortages, due to unfavourable weather events, have been eroding stocks for a couple of years now, resulting in higher prices. In the last month, however, the spikes are more related to speculation, i.e. expectations for the next harvest, which has already been compromised by the weather in recent weeks'.
