Coffee Prices Increase

COVID-19, bad weather contribute to production snarls in coffee producing countries.

September 17, 2021

Piles of Coffee Beans

ALEXANDRIA, Va.—Vietnam is on a COVID-19 lockdown, which is constraining the global coffee supply, reports CNBC. Dealing with its worst COVID-19 breakout, the world’s second-largest producer of coffee is experiencing delays in Ho Chi Minh City, Vietnam’s exporting hub. According to Fitch Solutions, coffee prices should remain “relatively high” through 2022.

Coffee exports from Vietnam fell 8.7% from July, according to Reuters, while the country’s exports were 6.4% lower between January and August 2021 year over year. Additionally, Brazil, which is the world’s largest coffee producer, experienced crop damage due to frost and drought. Columbia also experienced crop damage due to weather, and the mu variant of the coronavirus also affected production.

Due to production issues, benchmark arabica coffee futures increased 45.8% this year, and robusta futures increased 52.2%, according to Refinitiv data. Fitch Solutions predicts that the average price of arabica coffee in 2021 will be $1.60 per pound, an increase from its original 2021 forecast of $1.35 per pound. It also raised 2022 projections from $1.25 per pound to $1.50 per pound.

However, Fitch Solutions believes the coffee price inflation will not last long, as Brazil’s production will return to normal “fairly quickly,” it says. The global coffee supply should return by the 2022/2023 season, with the average annual price for arabica declining to $1.20 per pound in 2023, projected Fitch Solutions.

Looking for a way to boost your coffee sales? Providing c-store customers with craft coffees like the pumpkin spice latte is a traffic driver to c-stores. It’s not easy to replicate a PSL at home, and convenience retailers can benefit from offering these types of specialty coffees. NACS Magazine covered craft coffee in the September 2021 issue.

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