Major coffee roasters are reportedly preparing to up their prices in Brazil following a period of bad weather which has negatively hit crop outlook and pushed prices high.
Reports from Reuters yesterday (12 December) indicate Dutch coffee major JDE Peet’s plans to up prices in Brazil by around 30% in 2025.
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Two traders confirmed the news to the publication on Wednesday (10 December), referring to documents sent to JDE Peet’s clients.
The Douwe Egberts owner reportedly told clients that “climate issues” were behind the increase in prices which would impact a range of products including roasted and ground coffee beans, instant coffee and capsules.
JDE Peet’s could not be reached by Just Drinks at the time of writing.
Brazilian roaster 3 Corações, a joint venture between local holding company São Miguel and Israel’s Strauss was also said to be upping prices 11% on 1 January next year, according to documents sent to clients viewed by Reuters.
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By GlobalDataGerman coffee giant Melitta has also reportedly pushed up prices 25% as of 3 December.
Both businesses also blamed the climate for rising coffee costs. 3 Corações also mentioned a hike in demand and economic volatility. It also told Reuters that the continuing rise of green coffee prices meant it had to slowly offload the cost onto consumers.
Just Drinks has asked Melitta and 3 Corações for further comment.
In a note to analysts earlier this week, Barclays analysts said that as the company aims “to protect profitability”, escalating prices of Arabica and Robusta “could weigh further on volumes” in Europe.
Barclays has predicted the company will achieve 2% organic sales growth, a 3.5% hike in pricing and a 1.5% slump in volumes in the second half of fiscal 2024
For JDE Peet’s LARMEA market Barclays said it “would expect pricing to come in higher” around H2 2024. Brazil and Russia make up approximately 85% of sales in the market.
The analysts predicted JDE Peet’s to book 16.5% organic sales growth in the LARMEA region, a 16% increase in pricing, and a 0.5% hike in volume, “as we expect volumes to be relatively resilient”.
The company’s APAC region, is also “under pressure” with price increases in Australia and New Zealand hitting volumes, Barclays said.
Coffee prices rose to new record levels this week, with the price of Arabica coffee beans, the most commonly consumed coffee variety, hitting $3.34 per pound on Tuesday (10 December) on the Intercontinental Exchange (ICE).
The price has since dropped to $3.21 as of 12:56 GMT today (13 December).
Robusta beans had also surged to an unprecedented level at the end of November to touch $5,565 per metric tonne, but have since retreated to trade at $5,192.
Kepler Cheuvreux analyst Jon Cox told Just Drinks that: “Given the move in green coffee costs, coffee manufacturers need to increase prices and depending on the type of coffee the move is likely to be at double-digit levels.”
Potential price increases come at a time when consumers have already taken a major hit from inflation, meaning any future hikes on coffee prices won’t be a welcomed sight.
“Again, depending on the type of coffee – particularly commoditized roast and ground but also instant coffee — there will be a negative impact on volumes,” Cox added, which could result in consumers “trading out of the category, as well as downtrading to cheaper forms of coffee or to private label.”
