The price of instant and ready-to-drink coffee is set to increase starting February 1, impacting both producers and consumers, according to the Thai Wholesale and Retail Trade Association. The association’s honorary adviser, Somchai Pornratanacharoen, highlighted that coffee manufacturers are raising prices due to escalating production, transport, and labor costs.
Somchai noted that this price adjustment could influence consumer behavior, potentially leading them to seek more affordable options or cut back on consumption. In response, cafe and coffee shop owners are expected to adjust their prices to maintain profit margins. Specifically, the retail price of instant coffee will see a 5% increase, with ready-to-drink coffee prices going up by an average of 2 baht per unit.
These changes in coffee prices are not isolated and can impact the cost of living, particularly for lower-income individuals who may face a heavier financial burden. To mitigate the impact on profits, coffee manufacturers are likely to implement gradual price increases and potentially reduce package sizes.
Despite a drop in paddy prices, the cost of rice bags is anticipated to remain stable or even rise as manufacturers adjust prices accordingly. This aligns with broader trends in the market, such as the recent surge in Arabica and Robusta bean prices, with the former experiencing an over 80% increase in December and the latter reaching a new peak in September.
Global coffee traders are closely monitoring crop forecasts, anticipating a decrease in production following adverse weather conditions in major coffee-producing countries like Brazil and Vietnam. These challenges come at a time when coffee consumption continues to rise, posing further complexities for the industry.
As the coffee industry navigates these shifts, experts emphasize the need for strategic pricing strategies and operational adjustments to sustain profitability. The evolving landscape of consumer preferences and market dynamics underscores the importance of adaptability and innovation within the coffee sector.
Ultimately, the impending price hikes in the coffee market serve as a reflection of broader economic trends and supply chain challenges that are reshaping the industry. Stakeholders across the coffee value chain must remain agile in their responses to ensure long-term sustainability and resilience in the face of dynamic market forces.
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