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Forecast: Coffee Prices Set to Surge, Impacting Major US Brands and Consumers

As we approach the second half of 2024, the global coffee market is facing significant challenges that are expected to have a profound impact on consumers and businesses alike. The soaring prices of Arabica and robusta coffee beans, driven by supply crunches in major producing countries, are putting pressure on US food brands to raise prices at the supermarket.

J.M. Smucker Co., the owner of popular coffee brands such as Folgers, Dunkin', and Café Bustelo, has recently announced that it will be implementing a list price increase across parts of its portfolio in early June. This move is a direct response to the higher green coffee costs the company anticipates incurring during the first quarter of the fiscal year.

The coffee category has been experiencing substantial commodity volatility and overall meaningful inflation, with robusta prices on the ICE exchange skyrocketing to near half-century highs. This situation is particularly concerning for consumers, as it is expected to lead to a noticeable increase in food inflation.

As J.M. Smucker Co. attempts to strike a balance between recovering inflationary input costs and providing consumers with attractive options, it is clear that the era of affordable coffee may be coming to an end. Unless we experience a severe recession or depression, food inflation is likely to remain elevated for years to come, becoming the new normal for consumers.

While some politicians may attribute this trend to corporate "greedflation," the reality is that global supply chain disruptions and climate-related challenges in coffee-producing regions are the primary drivers behind the rising costs. As we move forward, it will be crucial for businesses and policymakers to address these issues and develop strategies to mitigate the impact on consumers.