Rising Coffee Prices Spark Tensions between Supermarkets and Suppliers
February 23 - 2025
Coffee Geography Magazine
Coffee prices have surged significantly in recent months, leading to a conflict between Dutch supermarkets and JDE Peet's, the parent company of the popular coffee brand Douwe Egberts. As negotiations over cost allocation stall, many supermarkets have stopped stocking JDE Peet's products. The global market price for a kilogram of arabica beans has risen to approximately 8.50 euros, more than doubling over the past year. However, consumers have yet to feel the full impact, as supermarkets are still selling coffee purchased at last year's lower prices.
The price increase is driven by several factors. Brazil, a major coffee producer, has faced severe weather conditions linked to climate change, resulting in a significant drop in crop yields. Simultaneously, global demand for coffee has grown, particularly in Asia, where coffee consumption has risen dramatically. For example, Starbucks has expanded rapidly in China, opening around 800 new stores annually, with over a third of its locations now in major cities like Beijing and Shanghai.
Negotiations between JDE Peet's and Dutch supermarkets focus on setting coffee prices for the coming year. Coffee is a staple in Dutch households, and retailers are hesitant to pass significant price hikes on to consumers. Michiel Muller, founder of online supermarket Picnic, emphasized the need for price increases to be justifiable, noting that proposals for 20 to 30 percent hikes are unacceptable. Other supermarkets have also reported empty coffee shelves, indicating a lack of agreement with JDE Peet's.
JDE Peet's has provided limited information on the negotiations, stating that annual discussions with retailers are complex and involve multiple factors beyond pricing. The company acknowledged that it is unfortunate many coffee drinkers cannot find their favorite products in some supermarkets.
The coffee supply chain involves various stakeholders, including farmers, processors, and intermediaries, raising questions about where additional costs ultimately land.