It’s going to be a little harder to justify splurging on that latte during your morning commute.
Driving the news: The price of coffee at grocery stores and cafes across North America is expected to go up by as much as 25% in the next few weeks as roasters and retailers start passing the higher costs of raw beans onto consumers.
- According to Reuters, brands like Lavazza, Illy, and Nestlé are currently in talks with retailers about hiking consumer prices to offset the higher costs of arabica beans.
- The chief financial officer of Starbucks said in January that the prices of its grocery store products, in particular, will be affected “in a more meaningful way.”
Why it’s happening: Prices for arabica beans, the most popular coffee bean, have climbed more than 20% this year after jumping 70% last year. Severe droughts in Brazil, which produces nearly half the world's arabica, have been the main culprit.
- Because of the much higher prices, buyers put off signing new long-term contracts. Now, they’re facing higher contract prices and dwindling supply.
Why it matters: So far, roasters, grocery stores, and coffee shops have mostly held off on price hikes, but as they run out of beans and are forced to pay market price, coffee drinkers are going to start footing at least part of the bill for those added costs.—LA