Another Price Increase: Why Your Next Cup Of Coffee Will Cost You More

A cup of joe is about to get even more expensive as a severe Brazilian frost compounded by surging freight costs could push the price of coffee beans even higher in the coming weeks.

According to Reuters, the worst frost to hit Brazil – the world’s largest coffee producer - since 1994 has sent the price of green coffee beans to the highest level seen in almost seven years, which will cause consumers to feel the pinch when they purchase roasted beans or ground coffee in supermarkets.

The damage was so severe that farmers may need to replant trees that could take up to three years to begin production.

The Brazilian government’s food supply agency Conab has estimated that the July 20 frost affected 150,000 to 200,000 hectares or about 11% of Brazil’s total Arabica crop, the New York Post reported.

Coffee prices were already on the rise after the worst drought seen in Brazil seen in 91 years.

Add to this the increasing shipping expenses that several industries are experiencing as freight container shortages continue during the pandemic, which means the cost of transporting coffee beans to North America and Europe becomes a major challenge as well.

Carlos Santana, coffee head trader for Eisa Interagricola, a unit of ECOM Trading, told Reuters about the challenges of shipping coffee in the Americas.

"It is almost not economical to use this route right now. The ports in the U.S. are full, shipping companies do not want to take more cargoes to there, so they charge more. Prices are more than three times higher than they were before the pandemic," he said.

The added coffee bean costs are expected to be passed on to consumers in supermarkets, but traders believe that some coffee chains may not increase their prices in the near term, Reuters said.

“Roast and ground (coffee in supermarkets) has only coffee and a bit of packaging. Your coffee at Starbucks might not go up (as much) cause you pay more for the shop, the wifi, the experience," one trader told the news outlet.

The Bureau of Labor Statistics indicated that the average ground coffee prices peaked at $4.75 per pound in April, up 8.1% from the previous year, according to Reuters. This is the highest level the coffee price has been at since July 2012 as the dry spell hit Brazil’s crops.

Some coffee companies have already announced price increases, according to a letter from Brazil’s coffee industry group Abic to associated roasters obtained by Reuters.

The letter suggested that JDE Peet’s, which includes the brands Douwe Egberts, Kenco, and Peet's, has seen increases in ingredients, freight, and other costs over the last 12 months, and it expects the precedent to continue.