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A Brewing Storm - The State of the Coffee Industry

  • Writer: Jillian Rebello
    Jillian Rebello
  • 4 days ago
  • 2 min read

Over the past year, coffee lovers worldwide have faced a noticeable uptick in prices, transforming the once-affordable daily brew into a more costly indulgence. This surge is not merely a result of inflation but stems from a complex interplay of environmental, economic, and geopolitical factors reshaping the global coffee industry.

 

Climate Change: A Brewing Storm for Coffee Production


Climate change stands at the forefront of challenges affecting coffee cultivation. Brazil, the world's leading producer of Arabica beans, has grappled with severe droughts and unprecedented heatwaves, particularly in regions like Alta Mogiana. These extreme conditions have led to significant reductions in harvests, with some farmers reporting up to two-thirds loss in yield. Projections indicate that by the end of the century, up to 60% of Brazil's coffee-growing areas could become unsuitable for cultivation.

 

Similarly, Vietnam, the top producer of Robusta beans, has faced its own climate-related challenges. Prolonged droughts and delayed monsoon rains have disrupted the growing cycle, leading to a 50% drop in exports during the summer of 2024.

 

Supply Chain Disruptions: Navigating a Complex Web


Beyond the fields, the coffee supply chain has encountered significant hurdles. Geopolitical tensions have disrupted major maritime trade routes, such as the Red Sea and the Suez Canal, forcing shipments to take longer, more expensive paths. These detours have tripled shipping times and costs, further straining the supply chain.

 

Additionally, new European Union regulations aimed at preventing deforestation require comprehensive documentation proving that coffee imports are not linked to deforested land. While environmentally beneficial, these regulations pose challenges for small farmers who may lack the resources to comply, potentially limiting their access to European markets.

 

Economic Pressures and Market Speculation


The economic landscape has further complicated the situation. Rising production costs, including increased prices for fertilizers, labor, and fuel, have strained farmers' finances. Simultaneously, speculative trading in coffee futures has intensified, driving prices even higher. In early 2025, Arabica coffee prices peaked at $4.39 per pound, influenced by both genuine supply concerns and market speculation.

 

Moreover, the threat of tariffs, particularly from the U.S. on imports from major coffee-exporting countries, has added uncertainty to the market, prompting further price volatility.

  

Industry Responses and the Road Ahead


In response to these multifaceted challenges, stakeholders across the coffee industry are seeking solutions. Farmers in Brazil are investing in climate-resilient coffee varieties and relocating plantations to higher elevations with more favorable growing conditions. Meanwhile, international organizations and governments are initiating programs to support sustainable practices and provide financial assistance to affected producers.



 

At Chex we are actively collaborating with suppliers to navigate these challenges. Similar to what we have seen previously within the chocolate, and olive oil categories, prices on coffee will rise as we enter the second half of 2025. What will not change, is our commitment to delivering excellence. Chex is working closely with its partners to manage supply chain disruptions and mitigate the impact of rising costs. We will continue to communicate transparently with our retailers, ensuring that you are informed and supported as new information becomes available.

 

 

 
 
 

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