That morning cup-a-joe burning a hole in your pocket? You’re not the only one.
The average price of ground roast coffee hit a peak last month, topping $7.50 per pound, representing a nearly 25% increase year-over-year, according to the Federal Reserve Bank of St. Louis (FRED).
The cost of coffee is impacting the cost of both a bag of beans at the store as well as foodservice prices. Regular coffee prices rose over 16% in the last two years, according to data from point-of-service provider Toast.
What’s behind all the increases? If you guessed supply issues, you are right. Climate change-related weather patterns are directly impacting green coffee bean supply and, as demand continues to rise for a steaming cup of java, prices tick up.
This isn’t necessarily news – some of the largest coffee-growing regions have been experiencing lower yields due to disease and bad weather over the past few years. Brazil, one of the top-growing countries, has been hit particularly hard, causing Arabica bean futures to rise significantly since November.
But the impact has begun to reach some of the largest coffee suppliers. Beverage giant Keurig Dr Pepper’s recent Q1 earnings revealed that coffee sales were down 3.7%. Black Rifle Coffee Company also commented on the impact on its core business during its Q1 report last week, attributing part of its gross margin decline to higher green coffee prices.
Both KDP and Black Rifle Coffee said they are exploring strategies to offset revenue declines in the segment by raising prices for consumers. Paired with this morning’s Consumer Price Index report, showing food inflation has risen 2.8% in the last 12 months, and we’re left with a bitter aftertaste.
The CPI Bright Side: On a month-over-month outlook, food inflation was down 0.1% between March and April, and the Food At-Home category saw prices drop 0.4%.