Surging International Bean Prices Drive Up Import Unit Costs
Weaker Won Spurs Sharp Rise in Import Value Even at Steady Volumes
Coffee Industry Enters a Structural 'High-Cost Era'
On the 22nd, participants are tasting coffee at the 10th Seoul Coffee and Tea Fair held at the aT Center in Seocho-gu, Seoul. Photo by Kang Jinhyung aymsdream@
This year, South Korea's coffee import value surpassed 2 trillion won for the first time ever. The sharp increase in import value was driven by a surge in international coffee bean prices and the impact of a weaker won, which amplified exchange rate effects. Alongside quantitative growth fueled by expanding consumption, there are growing warnings that the overall cost structure of the coffee industry is undergoing fundamental changes.
According to export-import trade statistics from the Korea Customs Service on the 23rd, the value of coffee bean imports as of November this year reached 1.57838 billion US dollars (approximately 2.34 trillion won), a 38.3% increase from the same period last year (1.14156 billion US dollars). While coffee import value has steadily increased over the years, this year's rise is significant because external factors such as international bean prices and exchange rates have fundamentally shifted the import structure. In reality, the volume of imported beans has not changed much compared to last year. The volume of coffee beans imported during the same period this year was 187,473 tons, a 0.08% decrease from the previous year's 187,631 tons.
The starting point for this year's sharp increase in coffee import value is the rise in international coffee bean prices. The global coffee market entered a phase of structural instability this year as climate risks manifested simultaneously. Brazil, the largest producer of Arabica coffee, faced growing uncertainty in crop yields due to repeated droughts, abnormal heat, and heavy rains. Major producers in Central and South America also faced plant diseases and rising production costs. Vietnam, the largest producer of Robusta coffee, saw its supply capacity constrained by the combined pressures of climate change and rising labor and logistics costs.
These production disruptions are being recognized as structural risk factors rather than short-term variables. As climate change becomes a constant, it has become difficult for coffee bean prices to return to normal levels as quickly as in the past. In fact, international coffee prices remained high throughout the year, directly driving up the domestic import price of coffee beans.
In addition, the effect of the exchange rate caused by the depreciation of the won further amplified the increase in import value. Coffee beans are a representative imported raw material traded mostly in US dollars, and with the won-dollar exchange rate remaining high this year, the import cost in won has risen significantly even for the same quantity of beans. The simultaneous rise in international bean prices and the exchange rate has resulted in a "double cost pressure" becoming a reality.
In fact, this year's increase in coffee import value was overwhelmingly driven by unit price and exchange rate effects rather than an increase in import volume. While the volume showed only a modest increase, the combined impact of rising bean prices and exchange rate pressures caused the import value in monetary terms to soar. This clearly demonstrates that the domestic coffee market is an industry directly exposed to international raw material and exchange rate environments.
The expansion of domestic coffee demand supports this interpretation. Coffee has become deeply embedded in everyday life, from specialty cafes and convenience stores to delivery, offices, and home consumption. It has established itself as a product with relatively stable demand even during economic fluctuations, resulting in a structure where import demand does not easily decrease despite upward price pressure. Additionally, the growing consumption of high-end beans such as specialty, single origin, and decaffeinated coffee has also contributed to raising the average import price.
For this reason, although the domestic coffee market appears to be growing in size, cost burdens are rapidly accumulating. The rise in international bean prices and exchange rates affects all businesses equally, but the ability to absorb these costs varies greatly. Unlike large franchises, small roasteries and independent cafes find it difficult to absorb exchange rate fluctuations and rising bean prices on their own, leading to greater pressure on profitability. In fact, industry voices are increasingly saying that price hikes are inevitable due to the combined burden of bean prices, exchange rates, and rising labor costs. However, since the cost of beans accounts for only a limited portion of the price of a cup of coffee, consumer resistance to price increases is also growing.
The bigger concern is that these changes in the cost structure are unlikely to be temporary. Production instability due to climate change and exchange rate volatility have become risks that are close to constants in the mid- to long-term. As a result, there are calls for more structural response strategies, such as expanding long-term contracts, diversifying sources of supply, and managing exchange rate risks, rather than simply passing on bean cost pressures to coffee prices.
An industry official said, "We have entered a stage where the ability to respond to variables such as international bean prices and exchange rates determines industrial competitiveness," adding, "To ensure stable growth, it is necessary to secure transparency in cost structures and to establish industry-level strategies to manage exchange rate and raw material risks."
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