No one wants to hear about higher prices in January when there is so much stress on people returning to work and sending kids to school. But we can expect South African coffee prices to increase soon. Brazil and Vietnam are major producers of coffee beans. We import from both, and both have serious weather challenges – drought and heavy rains in the case of Vietnam, which have affected production.
If one looks at South Africa’s coffee imports by volume, we imported, on average, about 23 921 tonnes per annum in the past five years. Brazil and Vietnam accounted for 54% of South Africa’s coffee imports. Other suppliers of coffee to South Africa include Uganda (8% of SA’s imports), Tanzania (7%), Colombia (4%), Guatemala (4%), Ethiopia (3%), and Honduras (3%). Trade Map data shows these countries make up 84% of South Africa’s coffee imports.
While other countries have relatively stable production, the largest producers, Brazil and Vietnam, have had bad seasons. The consequence is the lower global production, which has increased coffee prices globally.
More worrying is that the coffee bean production forecasts for 2025 are not looking good either. The production challenge may persist in Brazil and Vietnam, thus keeping coffee prices elevated for some time.
Others have asked if Brazil and Vietnam have these coffee production challenges, why don’t South Africa import more from other African coffee producers? This is a fair question. But there are two things to consider.
First, coffee is a globally traded commodity (like maize or wheat), and its prices are interlinked globally. So, the difference in where South Africa decides to import coffee would be the coffee variety and distance costs. Still, the broad price direction would be the same.
Second, it is difficult to emphasize Brazil’s and Vietnam’s prominence and influence on the global coffee market. Brazil accounts for 39% of global coffee production, Vietnam 16%, and Colombia 8%. Thus, these three countries account for two-thirds of global coffee production, which explains their impact on global coffee prices.
Only Ethiopia (5% of global production) and Uganda (4%) are African countries featured in the top ten global coffee producers. To be clear, I am using the 2023-24 production season data here, but the numbers do not change much, even considering the past few seasons.
Therefore, regardless of where South Africa imports coffee, we will not escape the current upside cost pressures that coffee shops will soon pass on to consumers.
So, we are not only facing the coffee production constraints. Another critical factor in the increase in coffee prices is the growing demand for coffee in China. In its recent report, the United States Department of Agriculture states that China’s coffee consumption surged almost 150% in the last 10 years and is forecast to reach 6.3 million bags (60 kilograms) in 2024/25. So, this increase in China’s coffee demand at a time when global production is under pressure will also further add to the upside price pressures.
Importing countries like South Africa must contend with these increasing prices in the coming months.
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