Brace yourself—your next bag of beans could cost 25% more. Coffee giants like Nestlé (NSRGF), Lavazza, Illy, and JDE Peet’s (DE:JDE) are all pushing to raise prices as arabica bean costs have nearly doubled over the past year. That spike is the result of four years of poor harvests, mostly in Brazil, the world’s top producer.
Retailers Push Back as Shelves Start to Empty
Roasters are stuck in tense negotiations with supermarkets, many of which are stalling on new deals. In the Netherlands, Albert Heijn briefly ran out of Douwe Egberts and Senseo coffee before agreeing to new terms. “We will absorb part of this price increase to keep products affordable,” a spokesperson told Reuters.
Consumers Cut Back as Coffee Prices Climb Higher
In Brazil, some households are rationing coffee, ditching their old habit of brewing full thermoses. “Now they cut the waste,” said ABIC president Pavel Cardoso. U.S. and European shoppers are also trading down, shifting toward cheaper private-label supermarket brands.
It seems even our morning cup isn’t safe from inflation, given that global arabica prices are up more than 20% this year and roasters are absorbing the pain. The bitter truth? It’s going to cost a whole lot more to stay caffeinated.
Nestlé Stock Feels Pressure amid Coffee Crunch
For Nestlé, the world’s largest food company and owner of brands like Nescafé and Nespresso, this coffee crisis comes at a tricky time. The company already warned of weaker growth this year as price hikes begin to weigh on demand. Now, with bean costs spiking and supermarkets pushing back, Nestlé is caught between rising input costs and cautious consumers. While its scale gives it some cushion, pressure on margins is growing. If shoppers keep tightening their budgets, Nestlé’s premium coffee play may be due for a rethink.
Is Nestlé a Buy, Sell, or Hold?
Analysts remain cautiously optimistic about Nestlé’s U.S.-listed stock, NSRGF, with a Moderate Buy consensus rating based on five Buys, nine Holds, and one Sell. In addition, NSRGF has slipped around 5% over the past year, as inflation and volume declines chip away at sentiment. The average NSRGF price target of $99.01 implies a downside potential of 1% from current levels.
