Coffee prices to keep rising for at least another year, beverage giant warns

Coffee prices reached an all-time high of 4,300 US dollars (£3,356) a tonne

Tim Martin slashing the price of Lavazza coffee with free refills in 880 pubs

Consumers will see soaring coffee prices continuing for another year, a top coffee supplier has warned.

Price won’t drop until the middle of next year at the earliest as “very challenging headwinds” continue to batter the industry, Lavazza said.

The Italian coffee giant’s vice chairman, Giuseppe Lavazza, admitted “I was wrong” after predicting last year that prices would begin to fall this year.

Poor harvests, particularly in the major production areas of Brazil and Vietnam, geopolitical conflict and supply chain disruption have all contributed to prices reaching record 15-year highs, he said.

On Monday, prices reached an all-time high of 4,300 US dollars (£3,356) a tonne, with Mr Lavazza saying: “We have never seen such a spike in price as the trend right now.”

Blockages in the Suez Canal have seen shipping costs alone hit four times the average.

For UK consumers, this has meant the price of a 1kg bag of beans rising by 15% in a year, and Mr Lavazza said could increase by 20% to 25% over the coming year.

Meanwhile, a flat white at the firm’s flagship cafe off Regent Street in central London now costs £3.50 to take away or £5.50 to have in, reflecting current costs.

UK consumers will not see soaring coffee prices drop until the middle of next year at the earliest as ‘very challenging headwinds’ continue to batter the industry, Lavazza has warned (Lavazza/PA)

Mr Lavazza said: “We have faced very, very strong headwinds. I don’t see any reason why coffee prices will go down.”

However, this has not dented the “strong trend” of UK consumers turning to beans to make fresh coffee at home, which began when the pandemic closed cafes but has showed no sign of slowing even now.

Mr Lavazza said: “People love it so much. And we think there’s an environmental element too, of people wanting to move away from using pods.”

The UK retail coffee market is worth £1.3 billion, growing by 3.9% year on year, according to Nielsen figures, driven by price inflation of 3.8%.

Lavazza said sales volumes were up 2.9% in 2023 compared with the year before, or the equivalent of 32 million more cups of Lavazza coffee on two years ago.

Retailers have come under criticism amid mounting evidence of profiteering in some areas of the sector and that they are not passing on wholesale cost reductions fast enough to consumers.