A Terrible Year for Coffee Just Got Worse

COVID-related restrictions in 2nd-biggest grower, Vietnam, add to supply problems
By John Johnson,  Newser Staff
Posted Aug 30, 2021 9:21 AM CDT
A Terrible Year for Coffee Just Got Worse

This has been a worrisome year for those in the coffee business because of a double whammy—first drought, then frost—in Brazil, the world's biggest grower. That has put more pressure on the world's second-biggest grower, Vietnam, to pick up the slack, but now Bloomberg reports on serious supply problems there as well. This trouble is related to COVID, not the weather, as Vietnam has imposed a strict lockdown on the exporting hub of Ho Chi Minh, as well as restrictions in key growing areas. All of which means exporters are struggling to get their beans out of the country. Worse, this is only adding to already existing problems such as a shortage of shipping containers and sky-high shipping rates related to the pandemic.

The upshot is that coffee prices—at least in the bulk shipping sense—are at their highest in four years (about $2 per ton), reports CNN. So far, chains such as Starbucks have been able to avoid jacking prices too much because they buy in advance and can hedge against these spikes. But that can't last forever. JM Smucker, which owns the brands Dunkin' and Folgers, warned last week that consumer prices might have to rise in the near future, and JDE Peet's (Peet's Coffee and Stumptown) have said much the same previously. (Also: Your morning cup of coffee may have an unpleasant origin story.)

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