For those monitoring the market, instant coffee prices have recently hit a one-year low, encapsulating some of the most extreme turbulence seen in the global coffee market. The decline was prompted by a confluence of factors. There’s an oversupply of coffee beans, demand is unpredictable, and major coffee-producing countries are recalibrating their economies.
The price of instant coffee has made a significant drop of 20% in six-month time span. Analysts predict that this trend is the result of higher profusion in key coffee-producing countries like Brazil and Vietnam. These countries are catching some big lucky breaks on weather. So now they’re having record harvests and a big influx of coffee beans flooding into the market. When production increases, prices usually go down or at least level off because there’s more product available.
In addition to having produced too much, evolving consumer tastes have played a role in weakening demand for instant coffee. Second, a rising popularity of specialty coffee and sustainably-sourced beans has made consumers less interested in instant options. Today’s consumers demand better, fresh-brewed experiences and that consumer preference has definitely been reflected in instant coffee sales. The coffee landscape is shifting quickly and dramatically. Simultaneously, the boom of home brewing devices has created convenience factors that allow consumers to make the drinks they love right in their own kitchens.
Deeply rooted economic conditions in major producing countries cannot be overstated concerning their role in today’s price crash. Inflationary pressures and devaluation of the Pesos have severely affected local economies. In order to compete in the new global market, producers were forced to sell their products for less and less. Together, these economic conditions have led to an environment where the prices on instant coffee have been able to fall.
Experts predict that while the current dip in prices may offer short-term benefits for consumers, it could have long-term implications for coffee farmers and producers. It’s simple math — lower prices eat into farmers’ profits. This can limit their capacity to invest in environmentally sustainable farming practices or improve the quality of the crops.