In previous years, coffee prices usually peaked in April and then cooled down as the major coffee-producing countries entered their harvest season. This year, however, it’s already the end of September, and the price of Robusta coffee in the world market remains at a historical high, surpassing 5,500 USD/ton, while domestic coffee prices range from 120,000 to 125,000 VND/kg. Compared to two years ago, the price of raw coffee beans has nearly tripled.
Rising Coffee Prices
Mr. Tran Minh, a ride-sharing driver residing in District 12, Ho Chi Minh City, shared that he usually buys coffee from street vendors, where a cup typically costs only 12,000-15,000 VND. Recently, he noticed that the average price of a cup of street coffee has increased to 15,000-22,000 VND, and when inquiring about this change, many shop owners attributed it to the rising coffee bean prices.
Ms. Nguyen Ngoc Khuong, a resident of Binh Thanh District in Ho Chi Minh City, also noticed significant price increases in instant coffee, ground coffee, and phin coffee bags at supermarkets. For example, the price of pure instant coffee has nearly doubled compared to 1-2 years ago, leading to an overall increase in living expenses for her family.
Since the end of September 2024, Lucky Cafe on Vu Tong Phan Street in Thu Duc City, Ho Chi Minh City, has posted a notice adjusting the prices of some products, asking for customers’ understanding and sharing the burden in this “storm of price increases.”
According to Mr. Nguyen Duc Hung, Director of Napoli Coffee Production, Trading, and Export-Import Joint Stock Company, the surge in coffee prices has brought significant profits to farmers but has created challenges for businesses in the industry. His company has also lost quite a few customers due to the rapid increase in coffee prices over the past year. “Before, we could franchise 30-40 cafes per month, but now it’s down to only 3-4 cafes per month. Export orders have decreased as customers switch to using coffee from Indonesia, Laos, and Myanmar, which offer lower prices. Some domestic retail chains have also stopped doing business with us as they cannot accept the new prices,” Mr. Hung explained.
Mr. Hung calculated that compared to two years ago, the price of raw coffee beans has increased by 316%, leading to a corresponding increase in production costs, especially for businesses producing and trading pure coffee. “There is a phenomenon of mixing or increasing the proportion of corn and soybeans in coffee to reduce the selling price. Therefore, relevant authorities need to strengthen the control of adulterated coffee to ensure fair competition in the market,” Mr. Hung suggested.
Rising coffee prices since the beginning of the crop year have impacted the business performance of cafes.
Considerations for Price Increases
Mr. Nguyen Duc Thanh, the founder of the AM Café chain, shared that due to reduced consumer demand, their system had to close four branches, leaving only two branches currently in operation. AM Café has also increased retail prices by 3,000-5,000 VND/cup, bringing the price to 25,000-30,000 VND/cup. However, to execute their plan of opening new outlets, Mr. Thanh mentioned that they must be more selective about the locations to attract customers and ensure business efficiency. The chain also intends to maintain the current coffee prices until the end of the year by locking in quarterly prices with their suppliers.
On the other hand, Mr. Nguyen Minh The, the founder of the Guta coffee chain, jokingly said that selling coffee at this time is more of a “passion project” due to the slow consumption rate, making it challenging to increase prices. The chain is currently offering a monthly coffee package for 339,000 VND, including 22 cups to be used within 30 days, which is a significant reduction from the original price of 638,000 VND/month.
Mr. Do Duy Thanh, Director of FnB Director – Horeca Business School, forecasts that coffee bean prices will continue to fluctuate at high levels due to unfavorable weather conditions affecting the yield and quality of the crop. He advises that any price increases should be carefully considered to match the characteristics of the customer base for each business model, ensuring no long-term impact on revenue and customer experience.
Additionally, Mr. Thanh suggests that for kiosk or street-side coffee shop models, a price increase of 1,000-2,000 VND/cup may be implemented to compensate for the higher cost of raw materials. However, it is essential to consider that customers in this segment are very price-sensitive. For the office coffee segment, a price increase of 3,000-5,000 VND/cup is feasible, as customers are less price-sensitive and more focused on service quality. Nevertheless, office coffee prices are generally already high, so increasing prices may not be a popular choice.
Will Prices Continue to Rise?
Mr. Trinh Duc Minh, Chairman of the Buon Ma Thuot Coffee Association in Dak Lak Province, predicts that coffee prices may peak next year, reaching approximately 6,000 USD/ton due to escalating supply shortages, especially for Robusta coffee.
In Vietnam, the world’s leading coffee producer, the output in previous years consistently reached 30-31 million bags (each bag weighing 60 kg), but the latest crop year only yielded 27.5 million bags. It is anticipated that production will continue to decline as farmers shift to more economically viable crops, such as durian. “The coffee shortage is real, and the involvement of speculators has driven prices higher. Coffee prices often do not follow the usual laws of supply and demand,” Mr. Minh commented.
Mr. Nguyen Huu Long, Director of VCA Vietnam Café Academy, a company involved in coffee planting, trading, and processing, revealed that their integrated model helps them stay proactive and mitigate significant risks arising from volatile price fluctuations. “Selling often involves predicting prices, and if you guess wrong, you could face substantial losses. In the latest coffee crop year, numerous coffee traders went bankrupt and had to sell their houses due to purchasing coffee at high prices for previously signed low-price contracts,” Mr. Long illustrated.
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