Trouble brewing in coffee world as bean prices skyrocket

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Trouble brewing in coffee world as bean prices skyrocket

Published: 04 Nov. 2024, 15:04 Updated: 04 Nov. 2024, 19:53

KIM JU-YEON
[email protected]

Dongseo Food's instant coffee products including its Maxim Kanu brand are displayed at a supermarket in Seoul on Nov. 1. [YONHAP]

Think it's just takeout coffee that’s expensive? Brewing a cup of joe at home or at the office has also become costlier with the prices of instant coffee products on the rise, mainly due to a global shortage in coffee bean supply.

Dongseo Food — a prominent coffee producer known for its Maxim coffee brands including Kanu and T.O.P — said it will increase the prices of its coffee beverages and instant coffee mixes by an average of 8.9 percent from Nov. 15.

A 2.16-kilogram (4.8-pound) box of Maxim Mocha Gold that contains 180 servings, for instance, will soon cost 25,950 won ($19), up 9.5 percent from the current 23,700 won. The sweet concoction of instant coffee granules, sugar and creamer is widely popular in Korea, with almost 90 percent of the market share in the country's instant coffee mix market.

A 100-packet box of Maxim Kanu Americano instant coffee will also become 9.5 percent pricier, from 17,260 won to 18,900 won. A 275-milliliter (9.3-ounce) bottle of Maxim T.O.P will rise from 1,290 won to 1,400 won, a 8.5 percent increase.

Dongseo Food’s price hike comes around two years since it last raised prices in December 2022.

The company said that it raised prices in 2022 after ingredient costs climbed following the Covid-19 pandemic, and this time, due to a rise in coffee bean prices and a weak local currency.

Coffee bean prices have skyrocketed globally as natural disasters in Brazil and Vietnam, the world’s top two coffee producers, affected crops.

The commodity futures price quotes for a ton of arabica coffee beans on the New York Board of Trade in October was $5,571.47, up 62.36 percent from the $3,431.46 recorded the same month last year. Robusta coffee — the cheap variety most often used in instant coffee — traded on the London International Financial Futures rose 91.92 percent on year, from $2,453.95 per ton in October last year to $4,687.65 per ton in 2024.

Global coffee prices rose by nearly 20 percent in the third quarter of 2024 to reach an almost-decade high, according to the International Coffee Organization.

Despite the increasing global appetite for coffee, the supply of coffee beans is only predicted to be further affected by climate change, driving up production costs even more. A 2022 study published in PLOS One showed that coffee was especially vulnerable to climate change as negative impacts affected all major producing regions.

Actor Park Bo-young in an advertisement for Dongseo Food's instant coffee mix product Maxim Mocha Gold. [SCREEN CAPTURE]

Domestic coffee manufacturers also grapple with a weaker won. According to Dongseo Food, the company imports around 300 billion won worth of coffee beans annually, along with other main commodities like sugar and palm oil.

“The currency that used to be in the 1,200 won range [against the dollar] has jumped to the 1,400 won range so large losses have occurred every year,” a spokesperson for the company told the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

The company had recorded operating profit in the 200 billion won range until 2021, which dropped to 151.9 billion won in 2022 and 164.9 billion won in 2023.

BY LEE SU-JEONG, KIM JU-YEON [[email protected]]