👉 Background: Almost every cup of coffee you drink comes from either Arabica or Robusta coffee beans. The majority of these coffee beans are produced in Brazil.

👉 What happened: Volcafe, one of the world’s biggest coffee traders, has dropped its coffee production forecast for 2025 significantly, from 45 million bags of beans to just 34 million bags of beans — or a 24% drop in forecasted beans.

👉 What else: This was due to the intense weather in Brazil that has ruined production of coffee beans. And not only that, drier conditions in Vietnam and then heavy downpours have hurt production there as well. As a result, the price of arabica coffee futures has increased by 80% so far this year. So you better believe this is gonna hurt the price of your morning coffee.

What's the key learning?

💡When the price of raw materials increases, eventually, consumers will need to bear the cost.

💡Cafes really have three options right now:

• Option 1: Keep the price of their coffee the same…and lose their profit margin.
  
• Option 2: Increase the price of coffee to cover their costs and maintain the same margin.
  
• Option 3: Choose to use cheaper quality coffee beans their costs and impact the quality of their brew.

💡Either way, this isn't a good outcome for consumers or cafes - especially since the majority of local cafes and chains (ie McDonalds & Starbucks) use Arabica beans.