Business Maverick: Coffee prices will keep rising into 2025, roaster Lavazza warns

Expectations of another production shortfall in Vietnam, the world’s top producer of robusta, is fueling a surge in prices for the bean variety used in blends and espressos, Giuseppe Lavazza, chairman of coffee roaster Luigi Lavazza SpA, said in an interview.

This year’s poor harvest has seen roasters pay as much as $1,000 above futures prices for Vietnam’s beans, he added. 

“We’ve never seen something like that in the history of our industry,” Lavazza said. “And what is very special is the long lasting effect of this.”

The futures for the variety have surged about 60% this year, touching a fresh high of $4,667 per ton on Tuesday. Concerns about the next harvest are adding to supply fears after hot and dry weather in parts of Vietnam damaged coffee trees earlier this year.

Brazil’s top growing regions have also faced the brunt of harsh weather, pushing up arabica prices. On Tuesday, futures were trading at a two-year high. Forecasts there have been lowered as some farmers pick smaller-than-usual beans following droughts in late 2023 that hurt crop development.

The higher prices, combined with rising shipping costs due to disruptions in the Suez Canal and a stronger dollar, have seen the Italian roaster’s costs jump more than €800-million ($865-million) in the past two years, Lavazza added.

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With the European Union Deforestation Regulation or EUDR kicking in by the end of the year “a lot of players are buying coffee a little bit earlier,” Lavazza said, looking to bypass the requirement to prove their supply chains aren’t linked to land that was deforested after 2020.

“No doubt that the coffee that European roasters are going to buy will cost much more,” he added. “Companies in the coffee industry are facing very strong headwinds.”