Coffee prices set to rise further, Rabobank analysts warn
The cost of coffee is expected to keep climbing, with supermarket prices set to rise significantly in the coming months, according to Rabobank analysts. Consumers are already cutting back on coffee purchases, and some businesses are reportedly turning to cheaper alternatives such as instant coffee and lower-quality beans.
"Although we expect a drop in coffee bean prices for the next harvest year, supermarket prices will continue to rise due to the delayed effect of raw material costs," said Rabobank analyst Sebastiaan Schreijen.
The global coffee market has seen prices nearly double in less than a year due to poor harvests, supply chain disruptions, and stockpiling. While supermarket coffee prices have increased by about 8 percent, analysts warn that this does not yet fully reflect the sharp rise in bean prices.
"It takes time for wholesale bean prices to be reflected on supermarket shelves," said Rabobank analyst Francois Sonneville. "This delay is due to supply contracts and negotiations between coffee roasters and retailers. Eventually, the higher costs will be passed on to consumers."
At the start of 2024, supermarket coffee prices averaged around 15 euros per kilogram. Analysts now predict this could soon reach 20 euros, and possibly 25 euros, as additional costs such as transportation, storage, and labor add further pressure.
The soaring coffee prices have already led to tensions between supermarkets and manufacturers, sometimes resulting in empty shelves. Businesses are also adapting to the rising costs. George Schoof of coffee supplier MAAS, which serves around 2,500 organizations, said many customers are looking for alternatives.
"We’re seeing businesses reduce the number of coffee machines, switch to cheaper beans, replace fresh milk with powdered milk, or opt for instant coffee," Schoof said. "It’s understandable—companies have budgets to manage, and rising prices force them to make adjustments."
Despite the rising costs, eliminating coffee entirely is not an option for most workplaces. "In the Netherlands, coffee is a basic necessity at work," Schoof said. "Unlike Southern Europe, where employees often buy coffee outside the office, Dutch workplaces rely heavily on in-house coffee."
Rabobank analysts noted that the extent of future price hikes will depend on consumer behavior. "A drop in demand could help stabilize prices," Sonneville said. Over the past two years, global coffee consumption has already declined by about 5 percent due to rising costs. "Coffee is addictive, but consumers won’t buy it at any price."
