Bengaluru:  The impact of extreme climate events — such as unseasonal rains, wildfires and droughts across South Asia and Latin America — is driving coffee prices higher, according to industry experts.

These disruptions, combined with a growing preference for coffee among Indian consumers, are providing a boost to local coffee producers.

In India, demand for coffee has surged, creating a favourable market for farmers in Kodagu and other coffee-growing regions. The Indian Coffee Trade Association (ICTA) has said that there will be an increase in coffee powder prices by Rs. 100 per kilogram, making it inevitable for hotels and cafés to raise their coffee prices.

V. Viggnesh, a coffee industry consultant, noted that local markets are thriving due to this heightened demand. Most growers are successfully selling out their stock each   year and enjoying increased profits, eliminating concerns about unsold inventory and reliance on traders.

Indian coffee highly sought after

While global coffee demand continues to rise, production has declined due to various challenges. Indian coffee remains highly sought after and experts emphasise the need to meet this demand.

India produces over 3,50,000 Metric Tonnes (MT) of coffee annually, with 70 percent being Robusta. Of this production, around 1,00,000 MT is consumed domestically. Coffee prices have been on a steady incline since January, with Robusta prices soaring from Rs. 200 per kg to Rs. 420 per kg, and Arabica prices rising from Rs. 290 per kg to Rs. 465 per kg. Climate change has contributed to a 20 percent decline in coffee production.

Experts predict that the rise in coffee prices will continue in the foreseeable future, but caution that this trend may soon reach a tipping point. “Prices will likely plateau in the next two years. If they exceed a certain threshold, the entire value chain could become unaffordable,” Viggnesh added.

In 2024, coffee prices — especially for Arabica beans — hit a 13-year high due to ongoing supply disruptions. Prices surged by approximately 40 percent this year as shortages of Robusta, the more affordable coffee bean, led to increased demand for the premium Arabica variety, favoured by specialty coffee chains.

Prices for the cheaper robusta variety, which is also produced by Brazil have also jumped. This, in turn, has left companies and consumers paying for pricier coffee and  retailers have been scrambling to secure beans.

Karnataka leads Indian coffee production

India plays a significant role in the global coffee market, primarily producing two varieties: Arabica and Robusta. Arabica, known for its mild, aromatic flavour, is more sought after than Robusta.

Karnataka constitutes approximately 70 percent of the production of coffee in India. Then, comes the State of Kerala accounting for a share of 20 per cent in the production of coffee in India. Tamil                           Nadu comes third with a 5.7 percent share.

The country’s coffee industry has also witnessed export of coffee abroad as an important influence. In the 2023-24 season, India produced 374,200 MT of coffee, with Karnataka contributing 2,66,885 MT.