Coffee prices in South Korea have been rising steadily since the beginning of the year because of shortages caused by extreme weather and growing global demand.
Compose Coffee, one of Korea’s three major low-cost coffee chains alongside Mega MGC Coffee and Paik’s Coffee, said on Jan. 4 that it would raise the price of a single cup of its iced Americano from 1,500 won to 1,800 won and its decaf iced Americano from 2,500 won to 2,800 won starting Feb. 13. Starbucks, Hollys, and Paul Bassett also increased the prices of their Americanos and lattes by 200 to 400 won.
The price hikes extend beyond Korea. The J.M. Smucker Company, an American food and beverage giant that owns brands such as Dunkin’, has also recently announced price increases.
Experts say these price hikes reflect soaring coffee bean prices, which have doubled over the past year. Most of the coffee people consume comes from arabica and robusta beans. The price of arabica and robusta beans, which each stood at $4,152 and $3,134 per metric ton in February 2023, surged to $8,397 and $5,534 this month, marking a 102% and 77% increase. With coffee bean prices showing no sign of stabilizing, cafés are now adjusting them to cover rising costs.
Analysts warn that coffee prices could continue to rise over the next few years. Brazil and Vietnam, the world’s largest coffee producers, suffered heavy rains and droughts last year, significantly reducing global supply. Coffee crops take two to three years to recover, meaning shortages will likely persist. Global demand for coffee is also surging, especially in China, further driving up bean prices.
Large cafe chains like Starbucks have led price hikes in Korea, with budget brands following suit. Compose Coffee, which had maintained its single up of Americano price at 1,500 won since its launch in 2014, is raising prices for the first time in a decade. The company cited soaring bean prices, rising raw material costs, and ongoing economic conditions such as high inflation, high interest rates, and unfavorable exchange rates as reasons for the price adjustment.
Convenience stores are also raising prices, with E-Mart 24 increasing its private-brand (PB) coffee product from 1,300 won to 1,400 won this month. Last month, 7-Eleven also increased the price of PB coffee products by 100 won.
Although coffee is one of the most consumed beverages in the world, it can be grown under specific conditions. Vietnam is the largest coffee bean producer in the Northern Hemisphere, while Brazil dominates production in the Southern Hemisphere. Last year, extreme weather conditions in both countries severely impacted global production.
Growing demand for coffee is also pushing up prices. Once a predominantly tea-drinking nation, China has seen a sharp rise in coffee consumption, particularly among younger generations. China’s coffee consumption is expected to grow from 268,800 tons in 2020 to 378,000 tons in 2024—an increase equivalent to half of South Korea’s annual coffee consumption last year, according to the U.S. Department of Agriculture. Even if production stabilizes, shortages will likely persist as supply may struggle to keep up with surging demand.
