Slowdown in coffee bean prices may be short-lived due to Middle East conflict

The recent easing in coffee bean prices may prove short-lived, as inflationary pressures linked to the Middle East conflict continue to drive up production costs.

Coffee bean prices hit historical highs two years ago due to climate change. The world’s two biggest coffee bean producers, Brazil and Vietnam, experienced major climate disasters that have disrupted production. The spike in coffee beans impacted the local market as South Africa is a net importer of coffee beans.

However, recent trends in global coffee prices show a continued downturn in prices on the back of a relatively robust supply outlook, particularly from Brazil which has experienced favourable production conditions, said Paul Makube, senior agricultural economist at FNB Commercial.

“A potential global coffee supply surplus for the 2025/2026 season also weighed heavily on the market,” he said.

According to the International Coffee Organisation’s (ICO) composite indicator price (I-CIP), coffee averaged 267.57 US cents/lb in February 2026, a 9.9% decrease from January 2026. The key drivers behind the decline were improved supply outlooks, including strong production forecasts for Brazil, with expectations of a global supply surplus for coffee year 2025/26. It plunged by 24.5% y/y at US 267.57c/lb.

Prices of the two coffee variants saw sharp declines with arabica falling by 12% month on month and 22% y/y at US$7.08/kg, and robusta coffee plummeting by 32% y/y and 7% m/m at US$3.96, according to the World Bank data.

Makube said South Africa is a net importer of coffee and lower international prices in a stronger exchange rate environment should have provided a relief for consumers. However, average consumer prices of instant coffee were quite elevated in January 2026 relative to the last year. Though falling by 2.6% (-R2.03) m/m, the consumer price of instant coffee (250g) was 8.1% (+R5.72) higher y/y at R75.96. The price of a 750g instant coffee rose by 0.4% (+R0.71) m/m and 9.6% (+R14.63) y/y at R167.26.

While bean prices are dropping, the Middle East conflict has created huge uncertainty on global markets which saw shipping rates, fuel and fertiliser prices increasing thus raising costs across the coffee value chain. These coupled with a renewed currency weakness as the rand drifts back towards the R17/US$ level “do not bode well for coffee lovers”, said Makube.

“Additionally, upside inflation risks induced by a sustained international Brent crude oil price above US$90/ barrel and the resultant delay or potential hike in interest rates may further dampen the mood for coffee lovers.”

Darren Levy, CEO of Vida e Caffè said despite higher commodity prices “we have maintained competitive and affordable retail prices by implementing conservative annual price increases, as can be seen from the following most popular caffe products in our stores. For the past two years, our in-store coffee prices have increased on average between R2 and R3. For example, our Flat White currently sells for R39 and has increased by R2 since 2024, and our Mucho (Large) Cappuccino currently sells for R43 and has increased by R3 since 2024.”

Commenting on trends, Domaine Rautenbach, senior brand manager for Jacobs, said South Africa’s coffee market is undergoing its most significant transformation in decades. What was once a category defined by necessity and routine is now being reshaped by premiumisation, personalisation and purpose.

The local coffee market is projected to exceed $500bn by 2030, driven largely by younger consumers seeking experience, authenticity and value beyond caffeine alone.

“Locally, industry data shows that specialty and premium coffee segments in South Africa are growing at more than double the rate of traditional instant coffee, while sugar usage in hot beverages continues to decline year-on-year,” she said.

She said the expansion of independent roasteries and specialty cafés across major metros such as Johannesburg, Cape Town and Durban reflects a structural shift in demand, one that is influencing retail strategy, pricing models and shelf allocation across the FMCG landscape. “Even within a price-sensitive environment, consumers are increasingly willing to trade up when the value proposition feels credible, differentiated and experiential.”