Coffee prices have surged to record highs, with Arabica beans reaching $3.44 per pound--an 80% increase in 2024.
As of Tuesday, YCharts values Arabica coffee at roughly $6.72 per two pounds (2.2 kilograms).
Robusta prices also hit new peaks, driven by severe weather in Brazil and Vietnam, the world's top coffee producers, reported the BBC.
Brazil experienced its worst drought in 70 years, followed by heavy rains and flooding which threatened crop production, while Vietnam faced similar challenges.
Rising demand, including a doubling of coffee consumption in China over the past decade, has further strained supplies. The demand pushed Starbucks to explore selling shares in China amid the Seattle-based company's growth plans.
Coffee brands like Nestlé and JDE Peet are nearing a "tipping point," with plans to raise prices in early 2025 after years of absorbing higher costs.
They've "taken the hit from higher raw material prices to themselves," Vinh Nguyen, the chief executive of Tuan Loc Commodities said in a BBC interview. "But right now they are almost at a tipping point. A lot of them are mulling a price increase in supermarkets in [the first quarter] of 2025."
Nestlé's coffee head, David Rennie, acknowledged "tough times" ahead, citing low inventories. "We are not immune to the price of coffee, far from it," said David Rennie, speaking to the BBC, at an investors event in November.
Analysts predict the price of coffee to continue rising, making price increases inevitable for shoppers.
The current surge echoes the 1977 record high of 337.50 cents ($3.38 per pound), which was also driven by adverse weather in Brazil.
In September, Kevin O'Leary, prominent venture capitalist and host of Shark Tank, famously chastised employees for splurging on $5 cups of coffee, asking: "What are you, an idiot?"
In an effort to mitigate the effects of climate change on coffee production, Starbucks opened two innovation farms in Costa Rica and Guatemala to protect coffee supplies.
