Coffee prices surge 70%, signaling retail hike

Coffee prices surge 70%, signaling retail hike

Coffee beans became more than 70% expensive in 2024, reaching their highest price since April 1977: 229.34 US cents (287.74 euro cents) per pound. The cited triggers are a strong dollar and the Suez Canal blockade. This is not just any record; it is the price of a commodity that, according to analysis, is the most transported product on the planet after oil. When grain moves like this, the question shifts from what happens in the market to how much reaches the bar counter.

What peine with coffee prices in 2024

The increase exceeds 70% for the year, placing the pound at 229.34 US cents. The 1977 reference is not rhetorical; it is the last precedent of such a high quotation. Two factors are pointed out: the strong dollar and the Suez Canal blockade, though debate adds a third not in the headline: investment funds buying farmland before the pandemic, aiming for high returns and easy manipulation of the primary sector.

The transmission chain is not immediate. Raw material prices take time to reflect on shelves and menus. But traces are already visible in sibling products: cocoa rose over half a year ago and has been reflected in supermarkets for two months, with warnings that the initial jump was brutal and the pass-through is incomplete. Coffee is trinc the same path.

From bean to cup: how much can bar coffee rise?

The pass-through to consumers is the part no one signs off on. Some argue final prices won't rise much because industry will opt to fill products with synthetic chemicals rather than raise labels. It is an uncomfortable, unverified thesis, but it explains why consumers may notice less than the raw material's 70% suggests.

At the other extreme is the bar calculation. Some claim espresso is already €1.50 in some cities, with forecasts circulating that a cortado could reach €2 in industrial estate bars. Comparison with Portugal is recurrent: 80 cents for an espresso that, according to descriptions, seems Neapolitan. Same substance, prices that don't seem to be for the same product.

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Why talk about food speculation?

The argument with most weight isn't climatic, but financial. Funds have been buying vast amounts of farmland since before the pandemic. The attributed reason is double: high profitability and simple manipulation of the primary sector. Manufactured products would be harder to manipulate due to the number of actors involved: suppliers, energy, and manufacturing. Where speculation is possible, it will happen.

Historical reading reinforces suspicion. During the post-war period, food speculation was stronger because it was the most consumed and necessary, leading to black markets. The primary sector, except for oil, doesn't interest when secondary and tertiary sectors are more profitable. But when the tertiary sector is dry of debt, what remains is squeezed. Hence the attempt, it is argued, to annihilate private farms that could trade independently and dismiss current cooperatives.

Climate: the wildcard in all price hikes

Climate change is cited as a motive: excessive heat, rain, frosts, all happening when they hurt harvests most, plus supply chain complications, blocked routes, and port strikes. The skeptical response is immediate: again, the usual suspect blamed for rising costs of anything, food, taxes, or whatever. It's not part of a plan, say those who say so. The ironic tone doesn't hide that climate and financial explanations aren't mutually exclusive.

Coffee as luxury: chicory, smuggling, and other exits

Conversation drifts toward resignation and ingenuity. Chicory is recovered as a substitute, smuggling from Portugal is remembered, ginger infusion and even pennyroyal are mentioned. The most repeated conclusion is that coffee isn't necessary for humans and best left alone, perhaps only on Sundays. Whether anyone complies is another matter.

Chocolate enters the same equation. Some claim they bought a 70% dark chocolate bar for €2.90 and saw it at €4.95 since Christmas. Cocoa rise is already on shelves, and coffee trinc the same path. The remaining question is whether Spanish consumers will notice the difference, accustomed to torrefacto and a burnt taste that, according to harsher descriptions, makes good bean price irrelevant. In countries where normal coffee is drunk, the dismay will be different.

Analysis gets stuck there: whether pass-through to final price will be proportional, cosmetic, or directly invisible by substituting raw materials. With grains at 1977 highs and funds buying land, the answer isn't in the market.