R540 pain for coffee drinkers in South Africa

Over the past year, coffee prices in South Africa have soared, placing significant financial pressure on consumers, especially those who drink instant coffee.

Coffee prices rose faster than any other food or beverage category, with instant coffee leading in price increases, driven by both global supply issues and rising operational costs for producers.

In August 2024, instant coffee saw an extraordinary year-on-year price increase of 22.3%, significantly outpacing inflation levels for other staples like eggs.

The average price for a 250g package of instant coffee climbed from R52.71 in August 2023 to R67.37 in August 2024.

While ground coffee and whole beans rose more moderately at 13.6%, instant coffee drinkers have been hit especially hard, facing an overall price hike of 32.2% since 2022, adding around R540 to annual coffee expenses.

The primary factor behind these price spikes is declining coffee harvests in major producing countries affected by climate-related challenges and global conflicts.

Brazil, the world’s largest coffee producer, responsible for nearly 40% of global output, saw reduced yields in its 2023 harvest due to unusually heavy rainfall in the Minas Gerais region, which fostered pest and disease outbreaks that significantly impacted crop yields.

Vietnam, the leading producer of robusta coffee, which is essential for instant coffee, has grappled with prolonged drought and high temperatures for two consecutive years, resulting in consistently lower harvests.

Additionally, Indonesia faced pollination issues caused by excessive rainfall, while Colombia saw yield reductions due to similar climate disruptions during its 2021–2022 growing season.

Beyond these environmental challenges, global economic and political events have exacerbated the coffee price crisis.

The ongoing war in Ukraine disrupted the global fertilizer supply chain, making it difficult for coffee growers to secure this essential input, thus impacting coffee quality and yield.

Meanwhile, coffee roasters worldwide, including those in South Africa, faced rising energy costs, which are nearly impossible to avoid given the roasting process’s reliance on heat application.

Increased shipping costs, partly due to disruptions in Red Sea routes by the Houthi militia in Yemen, have further compounded the expenses, adding to the price hikes consumers face at retail.

Instant pain

Considering the massive increases in coffee prices, BusinessTech looked at the costs incurred by instant coffee drinkers, comparing the cost of Jacobs Instant Coffee 200g from Woolworths from October 2022 to 2024.

Looking at the invoices, the price for a 200g jar of Jacobs Instant Coffee increased from R139.99 in 2022 to R184.99 in October 2024, presenting a massive 32% increase.

According to Eighty20, approximately 20 million South African adults, or half of the adult population, consume coffee daily, with instant coffee being the most favoured type.

These consumers, who drink an average of 1.7 cups per day, use roughly 4g of coffee per cup.

This consumption pattern means an average instant coffee drinker goes through one 200g jar monthly.

Using the R45 difference in the price of the coffee in 2022 vs 2024 and the average drinker drinking 12 Jacob jars of instant coffee a year, it means the price increase has cost instant coffee drinkers an extra R540 per year.

This steep increase in coffee prices, especially for instant varieties, has placed coffee in a unique category. Inflationary pressures have outstripped general food inflation and overall consumer price index trends.

While the South African Reserve Bank’s efforts have brought national inflation below the 4.5% target, coffee prices have proven resilient to these changes, remaining high due to the complex global factors impacting production and distribution.

The ongoing price hikes highlight the vulnerabilities in the coffee supply chain, underscoring how climate change, geopolitical conflicts, and rising costs across production and shipping affect everyday goods on a global scale.

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