Coming to a store near you: double-digit coffee price hikes

Popular coffee brands are negotiating price hikes with retailers due to a sharp rise in arabica costs, with some supermarket shelves running out of stock. Prices may increase by up to 25% as companies grapple with supply chain pressures.

If your go-to coffee beans are missing from stores, don’t worry—they’ll be back soon, though at higher prices. Some brands could see price increases of up to 25% as major roasters, including Lavazza, Illy, Nestlé, and JDE Peet’s, negotiate price adjustments with retailers, according to industry sources.

The surge in coffee prices is linked to four consecutive years of supply deficits caused by adverse weather, making it harder to meet demand for arabica beans. As roasters push for higher prices, supermarkets are delaying agreements, leading to temporary shortages in some stores.

Dutch supermarket chain Albert Heijn, for example, recently ran out of Douwe Egberts and Senseo products but restocked them on March 20 at higher prices after finalizing talks with JDE Peet’s. A spokesperson for the retailer stated that while the company absorbed part of the cost increase, higher prices were unavoidable.

JDE Peet’s, one of the world’s largest coffee roasters, has faced similar supply tensions in Germany and the Netherlands but reported that 90% of its global price negotiations are now complete.

Arabica prices have surged more than 20% this year following a 70% spike last year, driven by severe droughts in Brazil, the world’s largest arabica producer. Since raw beans account for roughly 40% of wholesale coffee costs, last year’s price surge could translate into a 28% retail price hike if fully passed on, according to Reg Watson, an analyst at Dutch bank ING. He expects increases of 15%-25%, with some markets experiencing sharp, immediate price jumps.

Rationing and Changing Habits

Countries with weaker currencies are experiencing even steeper price hikes. In Brazil, both a top producer and the second-largest coffee consumer, local coffee prices surged 40% last year, and further increases are expected soon.

According to documents sent to clients and seen by Reuters, Brazilian coffee company 3 Coracoes raised roast and ground coffee prices by 14.3% on March 1, following hikes of 11% in January and 10% in December. The company did not respond to requests for comment.

Pavel Cardoso, president of the Brazilian Coffee Roasters Association (ABIC), noted that consumers are already rationing their coffee. “People used to make large thermoses for their families, often wasting leftovers. Now, they’re being more careful,” he said, according to Reuters.

In North America and Europe, where coffee consumption is highest, sales volumes dropped 3.8% last year as prices rose 4.6%, according to data from market research firm Nielsen. With even sharper price hikes expected this year, further declines in sales are likely.

J.M. Smucker, which produces Folgers, Dunkin’, and Café Bustelo coffee, has already raised prices twice and expects another increase in its next fiscal year. Its chief financial officer, Tucker Marshall, recently told investors that price hikes will likely lead to lower sales volumes.

Consumers Turning to Cheaper Alternatives

As prices climb, many consumers are opting for budget-friendly supermarket brands, known as private-label products. According to data from Chicago-based Circana, private-label coffee’s market share in the U.S. grew from 20.5% in 2021 to 23.1% in 2024.

Roasters now face a dilemma: absorb higher costs and risk lower profits or raise prices and potentially lose customers. Even coffee chains like Starbucks, which are less affected by raw bean costs, are feeling the squeeze.

Meanwhile, coffee traders and suppliers are purchasing minimal stock as they struggle to pass costs onto supermarkets. An executive from a major storage firm noted that U.S. coffee warehouses near ports are currently operating at half their usual capacity.

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