Arabica Coffee Prices Soar: Impact on Major Brands

Arabica Coffee Prices Soar: Impact on Major Brands

Lina Al-Farsi
2 min read

Arabica Coffee Hits Two-Year High Due to Supply Shortages and Weather Challenges

Arabica coffee futures have surged to nearly a two-year high, reaching $2.465 per pound, driven by robusta shortages and supply concerns. This spike, up 30% in 2024, has impacted major brands like Starbucks and Nestle's Nespresso. The drop in robusta production in countries such as Vietnam and Indonesia, along with a weaker-than-expected harvest in Brazil, has contributed to the global supply strain. Market volatility has soared, with roasters paying high premiums for Vietnamese beans. Additionally, the European Union Deforestation Regulation is pushing up costs as companies brace for new supply chain rules. Giuseppe Lavazza, chairman of Luigi Lavazza SpA, anticipates that arabica prices will remain high due to these factors.

Key Takeaways

  • Arabica coffee futures hit a two-year high at $2.465 per pound due to robusta shortages.
  • Prices for arabica have risen by 30% in 2024, impacting major brands like Starbucks and Nestle's Nespresso.
  • Weak harvests in Brazil and production drops in Vietnam and Indonesia have heightened supply concerns.
  • Market volatility and high premiums for Vietnamese beans are reshaping the industry.
  • The European Union Deforestation Regulation is adding to the pressure on coffee costs.


The surge in Arabica coffee prices is attributed to robusta shortages and unfavorable weather in key producing countries like Brazil. This escalation has influenced major brands, leading to increased operational costs and potential impacts on retail prices and consumer demand. In the long term, companies might consider diversifying supply chains or investing in sustainable farming practices to mitigate future risks. Financial markets are highly responsive to supply updates, underscoring the commodity's volatility. Furthermore, compliance with EU deforestation regulations could potentially reshape global coffee trade dynamics, adding to industry pressures.

Did You Know?

  • Arabica Coffee Futures: Arabica coffee futures are contracts allowing buyers to purchase arabica coffee at a predetermined price and date in the future. These futures, traded on commodity exchanges, are utilized by coffee producers, roasters, and investors to hedge against price fluctuations. The recent spike to a two-year high indicates a significant market shift driven by supply shortages and heightened demand.
  • European Union Deforestation Regulation: This set of rules aims to ensure that products sold in the EU do not contribute to deforestation and forest degradation. Compliance involves additional costs for traceability and sustainability measures, potentially leading to increased coffee product prices.
  • Market Volatility: In the context of coffee trading, market volatility refers to significant and unpredictable price changes in coffee futures. Various factors contribute to this volatility, including weather conditions, geopolitical events, and regulatory changes. The current market sensitivity to supply disruptions or demand changes is leading to rapid price fluctuations, impacting the profitability of coffee businesses.

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