The rising cost of coffee

Translated by Andrea Solazzo

In early 2024, we talked about the price of cocoa, the cost of which had suddenly risen and had also made the cost of chocolate more expensive. This happened because of various adverse natural events that had affected its cultivation in Sub-Saharan Africa, as well as speculative events that had driven up its price on the market.

Now at risk of strong increases is another "food" much loved by Italians, coffee. Many estimates speak of a strong rise in the cost of coffee in a cup, a symbol of Made in Italy and a daily ritual shared by millions of Italians, but which is becoming a luxury due to cost increases. The average price of a cup has risen by an average of 14.9% from 2021 to 2024, so much so that in many Italian cities today the price of an espresso has exceeded one euro, with peaks of up to 1.50€ and 3.50€ at the Florian café in Piazza San Marco in Venice. But the price is set to rise, so much so that analysts say coffee is among the main commodities to see prices rise.

According to data provided by Eurostat, 44.2 million bags of coffee were imported into the European Union in 2023, of which approximately 23% of the total reached Italy (10.4 million bags), the continent's second largest importer after Germany (34%). Italy imports mainly from Brazil (31%), Vietnam (23%) and Uganda (15.2%).

It is precisely the cultivations in Brazil and Vietnam that are among the causes triggering the rise in coffee prices in Italy, but also in Europe.

In fact, as reported by Euronews, the drought in Brazil, the world's largest coffee producer, and severe typhoons in Vietnam, the second largest producer on an international scale, have significantly disrupted coffee supply chains globally, driving up production costs that are ultimately passed on to consumers.

Brazil, responsible for around 40% of the world's coffee production, has seen alternating sudden cold spells that have frozen coffee crops and reduced production, and severe droughts that have further reduced yields. Supplies of Arabica, the most widely produced quality, have therefore seen a sharp drop in current production, so much so that in the future it is estimated that it could fall further to one fifth of the tonnes produced pre-crisis.

Vietnam, the main exporter of Robusta, used in instant coffee, also suffered extreme weather events, such as drought and excessive rainfall, which compromised production. In addition, in September, the major producing regions in the central highlands were decimated by Typhoon Yagi, which killed at least 60 people, injured hundreds and significantly affected crops. The losses are significant, both to the current crop, but also to future production, with heavily damaged trees taking years to heal and return to full productivity.

While both the arabica and Robusta crops had already seen record increases in the first quarter, by 36% and 27% respectively, the situation did not improve even in the third quarter of 2024, when, according to the International Coffee Organisation (ICO), the intergovernmental body made up of coffee exporting and importing countries, the increase in the cost of coffee averaged 20%, making the current year the highest levels in almost a decade.

In addition to climate issues, global geopolitical tensions have also contributed to the rise in coffee prices, making the transport of goods much more expensive and complex. Due to the problems in the Middle East and the Red Sea in particular, the costs of maritime transport have risen, further driving up product prices.

Finally, the role of inflation is also not insignificant. In fact, the inflation that has characterised the financial prices of coffee has been transmitted to the physical prices of all origins, thus contributing to increasing the price of this highly valued raw material.

There have thus been numerous causes that have led to increases in the cost of the beloved coffee, a beverage dear to many Italians who, in the future, will unfortunately have to pay dearly for it due to the adverse global trends underway.

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