Coffee prices retreat but your morning cup isn't getting cheaper anytime soon

Mint

2 days ago

NEW DELHI
:
Cocoa bean prices have retreated from their peak, but that is unlikely to make coffee cheaper anytime soon as uncertainty persists and some packaged goods makers are saddled with costlier inventory.
'While global coffee prices have softened, we are still in a wait-and-watch mode due to mixed feedback from the market and news of potential frost-climatic disturbances in Brazil's crop," said Praveen Jaipuriar, CEO, CCL Products (India) Ltd, which makes and exports instant coffee.
CCL increased the prices of its in-house coffee brands and bulk supplies to other businesses by around 30-35% on average in FY25. The company procures green coffee beans from major producing regions worldwide.
'Although probable, there is still uncertainty in the potential stabilization of coffee prices this year," Jaipuriar said. 'While demand has not been heavily impacted, had the prices been lower, the demand acceleration in developing economies would perhaps have been better owing to coffee acceptance."
Arabica and Robusta bean prices have been volatile since the beginning of 2025. Arabica remains roughly 45–50% higher than last year, though it's showing signs of moderation. Robusta has pulled back modestly year-on-year, and is down roughly 4% despite recent futures strength still reflecting in elevated historic levels.
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'Coffee prices have come down recently, but that doesn't have an impact on those in the specialty coffee business, because we book all of our coffee during the harvest period. Rates get locked anywhere from December through March. We've already bought inventory for this upcoming year," said Matt Chitharanjan, chief executive officer and co-founder, Blue Tokai Coffee Roasters.
'If these lower rates stay through to the next harvest, then we'd definitely be in a position to lower rates, but we don't have to raise prices any further," said Chitharanjan.
Blue Tokai, which primarily uses Arabica, raised prices of its retail packets in July by about 10-20%, along with a 'small" increase in its cafe prices in April. While the coffee chain raises prices at its cafes almost annually, the prices of its packaged coffee are usually revised every other year, except this time.
'Coffee prices this year went up by 60% (starting January this year) compared to the previous year—we cannot pass on the entire increase. So we have absorbed more than half of it and passed on the rest," Chitharanjan said.
Hope from Vietnam
While India is largely a tea-drinking market, coffee consumption is rising both at home and outside. A rise in international prices directly translates to higher costs for local roasters and retailers.
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Last week, Nestlé India said it expects coffee prices to remain range-bound at the current low levels as the upcoming Vietnamese crop appears to be normal. In the June quarter, the company's coffee portfolio (Nescafé) grew in double digits,
Tata Consumer Products Ltd said the ongoing volatility warrants close monitoring. The company has a packaged coffee business in the US; an extractions business, along with plantations; and a branded coffee business in India under Tata Coffee Grand.
'The biggest impacts for us is in the US market where coffee prices have been coming down," Sunil D'Souza, managing director and CEO at Tata Consumer, said in an interview with Mint. "We've taken pricing in line with coffee prices…In June quarter, we grew 33% in volumes (coffee) and 67% value growth in India."
Tariff threat
Price hikes have not hurt demand. 'Coffee is too small in the scheme of things today and playing with the social-economic group, which can afford it," said D'Souza. 'Out-of-home coffee consumption has recovered, and in-home consumption will continue to grow," he said.
However, impending tariffs have added another layer of uncertainty to the global coffee market.
There are reports of a potential 50% tariff by the US on imports from Brazil, the world's largest coffee producer, effective 1 August. Such a move could significantly impact supply chains and further elevate prices for consumers.
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D'Souza said globally, coffee prices will be dictated by what will happen in Brazil and Vietnam. 'In Brazil, especially if the 50% tariffs kick in, then the whole scenario is different. We've drawn up two or three different playbooks to … react to the situation," he said. 'I'm not in a position to forecast what is going to happen on coffee. The trend is downwards, but this tariff trigger could change the trajectory."