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Shortly after the start of the new year, the international coffee market witnessed a significant surge in prices. According to a monthly report from the International Coffee Organization, the coffee price index has increased by .% compared to the same period last year, with the average composite indicator price for the month (-) being . cents per pound. On the day of the month, the price of Arabica coffee futures on the New York Intercontinental Exchange surpassed cents per pound, reaching a new high in years, with a staggering increase of .% over the past year. On the day of the month, statistical data released by the Center for Advanced Studies in Applied Economics at the Luiz de Queiroz College of Agriculture, University of São Paulo, Brazil, showed that the average price per bag of Arabica coffee, weighing kilograms net, reached . reais, setting a historical record since the institution began tracking this data in . This price storm, which began in , is profoundly altering the existing structure of the global coffee production and supply chain.

Extreme weather can be considered the primary culprit behind the current coffee bean price surge. Currently, % of the world's coffee beans are produced in five countries, including Brazil and Vietnam. However, extreme weather conditions in the main producing areas have led to a tight global coffee bean inventory, further driving up prices. It is understood that Brazil, the world's largest producer of Arabica coffee, has been hit by consecutive droughts and heavy rains, leading to a decline in both the yield and quality of coffee beans, with the / year inventory expected to drop to the lowest level in years; Vietnam, the main producer of Robusta coffee, has seen a % drop in production due to drought and typhoons.

Looking at the supply side, the significant supply gap has already triggered a chain reaction. The surge in coffee bean prices has forced many small and medium-sized coffee businesses and roasters to increase product prices to maintain profits. For example, coffee companies in countries like Japan and Italy have announced price increases ranging from % to %. Some companies are reducing costs by shrinking product sizes or adjusting product structures. For instance, a South Korean food and beverage company recently launched a "bean-free coffee" drink that uses other ingredients to replace coffee beans, alleviating the pressure from rising costs of key raw materials. Large chain coffee brands, with their large purchase volumes and strong bargaining power, have relatively less cost pressure in the short term, as some have pre-signed purchase agreements. Reporters have learned that some domestic coffee chain companies are reducing costs and stabilizing supply by strengthening supply chain integration, such as establishing their own cultivation bases and building long-term partnerships with suppliers.

On the consumer side, as coffee prices rise, price-sensitive consumers may reduce their purchase frequency or opt for lower-priced alternatives such as tea beverages, potentially leading to a certain level of suppression in overall coffee consumption demand. Changes in consumer demand, in turn, exacerbate market segmentation. A segment of consumers with higher demands for coffee quality and experience still presents growth opportunities for the high-end and specialty coffee markets. Meanwhile, to maintain profit levels, the low-priced coffee market may intensify efforts to improve quality to align more closely with the mid-range market.

Industry analysts have pointed out that coffee bean prices may remain volatile at high levels globally in the short term. According to the International Coffee Organization, the global supply gap for coffee beans is expected to reach millions of bags this year, and the La Niña phenomenon could further impact production in major producing regions. In the long term, if climatic conditions improve, coffee bean supply is expected to gradually return to normal after this year, but the extent of price declines may be quite limited.

The surge in coffee bean prices is the result of a combination of factors including climate change and supply-demand imbalances, which have significantly impacted the global industrial chain and even accelerated industry reshuffling. The dramatic rise in coffee bean prices not only highlights the supply crisis but also acts as a catalyst for industrial transformation, pushing coffee companies to explore more efficient supply chains and sustainable development paths under pressure. Whether it's precision farming aided by technology or cost optimization brought about by innovative extraction techniques, these will continue to inject new vitality into the coffee market. The resilience of the supply chain and the upgrading of consumer demand will be the core variables for future market development.

The humble coffee bean is enough to connect the world. This aromatic cup of coffee has long transcended its status as a mainstream beverage, offering an excellent perspective for us to understand the dynamics of global supply chains and the evolution of consumer culture, providing a vivid example.

Text/Liu Xu

Editor/Li Ning

Review/He Xiaoxi

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