Are coffee prices heading down? Don't hold your breath
Photo:
Public domain
Global coffee prices might have fallen but there's a warning that it might not mean you pay any less in your local cafe.
RaboResearch data shows arabica coffee prices dropped 17 percent in the last three months and robusta, often used to make instant coffee, dropped 30 percent.
It said this was due to improved production forecasts and diminishing demand.
Global coffee demand is expected to drop 0.5 percent in 2025.
A surplus of 1.4 million bags is projected for the 2025/26 year, primarily in arabicas. RaboResearch then also forecasts a much bigger surplus the following year, particularly if Brazilian weather is normal.
Photo:
Unsplash
Infometrics chief executive Brad Olsen said the price declines were encouraging but did not necessarily mean New Zealanders would see coffee prices fall.
"Given
the full increase in global coffee prices
hasn't fully hit Kiwis' morning caffeine hit yet there might not be real relief for New Zealand coffee prices."
He said while World Bank data showed arabica coffee prices were down 3.1 percent in May from the peak in February they were still 2.3 times the May 2019 price.
Robusta was down 9.8 percent from the peak but the same margin up on 2019.
"Stats NZ data shows that instant coffee prices in May 2025 were 14 percent higher than a year ago, and only 36 percent higher than in 2019 - so less than a tenth of global coffee price pressure has hit directly. With not as much of the original hit from coffee prices hitting local prices, we might not see a lot of relief. If anything, forward ordering of coffee means we might still see further price increases trickle through as beans are imported after being ordered before recent price falls.
"Café operators have clearly been trying to absorb as much of coffee price rises as they can to limit how many people might stop buying at higher prices. Stats NZ data also shows takeaway coffee prices are up just 3.8 percent per year in May, despite the large increases in both coffee and dairy prices, suggesting cafes are taking the hit on their margins rather than pass price increases on as much."
Café and roastery owner Richard Corney, of Flight Coffee and The Hangar, has been warning that retail coffee prices are unsustainably low.
He said if prices had kept up with the increase in café costs in recent years,
a flat white would be selling for $7
.
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