Is an Era Coming When We Can't Even Enjoy Coffee Freely... Coffee Bean Prices Hit Highest in 16 Years

Severe Drought in Vietnam Causes Sharp Drop in Harvest... Supply Shortage Continues for 4 Years
Experts Express Concern Over Ongoing Impact of Abnormal Climate Conditions

As drought continues in Vietnam, the world's second-largest coffee producer, coffee bean prices are expected to surge for the time being.

On the 26th (local time), Bloomberg reported that the benchmark price of Robusta coffee beans, one of the two major coffee varieties traded on the London ICE Futures Exchange, has surged about 50% this year. This is the highest level in 16 years.

Robusta, along with Arabica, is one of the most popular coffee varieties, accounting for 30% of global coffee production. It is mainly used in instant coffee, espresso, and blended coffee products. Robusta produced in Vietnam accounts for one-third of the global supply.

Bloomberg reported that recently, farmers and intermediaries producing coffee beans in Vietnam have been stockpiling beans, leading to a record increase in contract defaults. Exporters have also increasingly failed to secure supply sources. This is due to the calculation that they can get higher prices if the bean supply shortage continues.

This stockpiling situation in Vietnam has occurred because coffee-growing farms are experiencing severe water shortages due to a serious drought that has swept across Southeast Asia. A representative of a coffee industry group in Dak Lak Province, central Vietnam, stated, "The lakes in the central highlands, a major coffee-producing area, have significantly decreased in water volume due to hot and dry weather, and groundwater has also dried up."

As a result, the coffee bean harvest in Dak Lak Province for the 2024?2025 season is expected to decrease by 15% compared to the previous year, and coffee bean prices are expected to rise from the current 130,000 VND per kilogram (about 7,060 KRW) to 150,000 VND (about 8,150 KRW). Bloomberg added, "As weather becomes more irregular and drier worldwide, the global trend of coffee bean supply shortages is expected to continue for the fourth consecutive year."

However, considering that coffee beans account for about 5% of the cost of a cup of franchise coffee, it is expected to take some time before the increase in coffee bean prices leads to higher coffee beverage prices. Bloomberg analyzed, "Arabica, which is mainly supplied to coffee chains such as Starbucks, is somewhat defending prices, easing the burden on consumers."

Nevertheless, experts are concerned that poor harvests like this year may continue due to frequent abnormal weather. The Australian Climate Institute forecasts that by 2050, about half of the coffee cultivation area will disappear, and wild coffee will become extinct by 2080. A research team at the Royal Botanic Gardens, Kew in the UK also predicted that coffee production will decrease by about 40?50% by 2038.