Why coffee is more than 25 per cent more expensive than last year

Coffee prices in Canada have skyrocketed.

A recent report from RBC shows coffee prices went up by almost 28 per cent between 2024 and last month. Food inflation overall was just 4.2 per cent year-over-year.

“Dry weather in Brazil and Vietnam curbed coffee production and exports to the world,” the RBC report says.

Statistics Canada reported that “by type, the increase was sharper for roasted or ground coffee (35.2 per cent), but less so for instant and other coffee (19.7 per cent).”

The average household expenditure on coffee has risen from $64 to $169 since 2010, StatCan reported.

According to   Remitly , 72 per cent of Canadians drink coffee every day, making Canada the frontrunner in   per-capita coffee consumption outside Europe.

Most of the world’s coffee is grown in the “bean belt,” the area around the equator. In this limited area, Colombia and Brazil are two of the largest coffee producers.

Sylvain Charlebois, senior director of Dalhousie University’s Agri-Food Analytics Lab, said the price that farmers ask for their coffee, before retail, also known as the “farmgate price,” has gone up 266 per cent in five years.

Charlebois said he had visited both Brazil and Colombia in recent months and noticed a significant lack of production due to a lack of sun and early frost. Coffee needs a predictable climate and constant weather patterns, both of which have not happened recently. Brazil and Colombia have also faced intense droughts, rising temperatures, and volatile weather conditions. This has led to reduced yields and difficulties while harvesting. The reduced yields have led to tighter global supply chains, causing higher prices.

Charlebois also attributed the rise in coffee prices to a significant increase in demand for coffee in Asia, with many middle-class families making coffee their drink of choice, rather than tea. According to Coffee Intelligence , coffee consumption in Asia has gone up almost 15 per cent since 2018. The site also reports that China’s coffee consumption has gone up by nearly 150 per cent in the past decade.

Another factor driving up the price of coffee is the trade war with the U.S.. The United States slapped tariffs on coffee and Canada followed suit. However, Canada dropped its coffee tariffs in September and the U.S. dropped theirs in November.

Charlebois said Canadians shouldn’t expect coffee prices to drop any time soon.

“I think we’re going to be facing some production headwinds for a while,” he said.

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