Brazil’s leading coffee roasters, including JDE Peet’s, one of the world’s largest coffee companies, are expected to increase their prices on the domestic market from early next year after adverse weather conditions caused a spike in bean prices. green.
Global coffee prices hit record levels this week and are up about 80% this year as adverse weather in Brazil and Vietnam, the world’s biggest coffee producers, has affected harvest prospects, and international consumers are likely to feel the impact at the end of March.
JDE Peet’s, manufacturer of brands such as Jacobs, L’Or, Tassimo and Douwe Egbertswill increase prices in Brazil by an average of 30% next year, two traders told Reuters on Wednesday (11), citing documents sent to the company’s customers.
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JDE Peet’s was not immediately available for comment.
Brazil is the second largest coffee consuming country in the world, after the United States. However, traders said coffee multinationals will also look to raise prices in other markets, many of them later this month or early next year when their long-term contracts with retailers expire.
“I think everyone will raise prices next year,” said a trader in Europe.
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Another large Brazilian roaster, 3Heartswill increase prices by 11% in January, after increasing them by 10% in December, while the Melitaalso a large company in Brazil, increased by 25% this month, after a “recent” increase of 12%, according to documents sent to clients and seen by Reuters.
Retail price should increase
JDE Peet’s referred to “climate issues” in a message to customers that said it would be increasing prices for roast and ground coffee, whole beans, instant coffee, capsules and cappuccino, according to traders who saw the confidential document.
Melitta said it continues to face rising coffee costs due to the “climatic situation”, while 3Corações, a joint venture between the Brazilian São Miguel and the Israeli Strauss, cited the climate, increased demand and economic instability.
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Both Brazil and Vietnam have suffered from drought this year, and the weather has been erratic in recent years.
Melitta and 3 Corações were not immediately available for comment.
In the last five weeks alone, green coffee prices have risen by around 30% on international commodity markets.
“Some large roasters in Europe were already planning a 10% increase for late December or early January before this recent change,” said a European-based coffee trader. He added that supermarket shoppers could notice price increases by the end of March.
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Although coffee consumption is generally inelastic, consumers, especially those in developing countries, could eventually respond to rising prices by drinking less, he said.
Experts say demand growth from roasters is likely to slow more significantly because, unlike buyers, coffee companies can react to high prices by, for example, reducing inventories.
Either way, coffee companies, especially those selling to supermarkets, have struggled this year to pass on price increases as consumers increasingly look for cheaper drinks amid a cost-of-living crisis. .
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The head of Nestlé, the world’s biggest coffee company, was fired earlier this year after management became unhappy with weak sales growth and loss of market share due to price increases.
Nestlé did not immediately respond to queries for comment on its pricing plans.
Shares of Nestlé and JDE Peet’s have fallen more than 20% this year amid a squeeze on margins as consumers reject their price increases. In contrast, global share prices rose almost 20%.
