Coffee Prices in South Africa Surge: Instant Coffee Costs Skyrocket

A few years ago, our C.E.O. Jo Stone decided to play a prank on our head debt counsellor, Nadia de Weerdt by swapping her normal coffee with decaf. Needless to say, she was frustratingly slow and dull for a week or two.

So when we saw that coffee prices skyrocketed, we immediately ran and bought any and every special available to avoid the same situation. 

Over the past year, food prices in South Africa have surged, creating substantial financial pressure on consumers, especially those who prefer instant coffee. Price increases in coffee have outpaced all other food and beverage categories, with instant coffee seeing the steepest rise due to global supply challenges and increasing operational costs.

In August 2024, instant coffee experienced a dramatic 22.3% year-on-year price increase, vastly exceeding inflation for other essentials like eggs. The average price of a 250g package of instant coffee rose from R52.71 in August 2023 to R67.37 in August 2024, impacting the average consumer’s grocery budget. And we are not talking about Jacobs or Nescafe Gold here- increases on these brands are even worse.

While ground coffee and whole beans rose by 13.6%, instant coffee drinkers felt the pinch more acutely. Since 2022, instant coffee prices have surged by 32.2%, adding approximately R540 to annual coffee expenses for frequent drinkers.

Declining coffee harvests in top-producing countries are a primary driver behind these soaring prices. Climate change and geopolitical issues have compounded these challenges. In Brazil, the world’s leading coffee producer responsible for nearly 40% of global supply, heavy rains in the Minas Gerais region in 2023 led to pest outbreaks and lower yields.

Vietnam, a top producer of Robusta beans (crucial for instant coffee), faced severe droughts and high temperatures, affecting two consecutive harvests. Indonesia and Colombia also reported yield reductions due to extreme weather and pollination issues.

Beyond environmental factors, global conflicts and economic disruptions have exacerbated the coffee price crisis. The ongoing conflict in Ukraine disrupted the global fertilizer supply chain, limiting essential inputs for coffee growers and impacting quality and yield.

Rising energy costs, particularly for roasters, have also contributed to higher coffee prices, as the roasting process relies heavily on energy-intensive heating.

Shipping costs have added another layer to the problem, with disruptions in Red Sea trade routes due to regional conflicts like those involving the Houthi militia in Yemen, further raising retail prices for consumers.

BusinessTech recently examined the impact of these price hikes on instant coffee drinkers. For instance, the cost of a 200g jar of Jacobs Instant Coffee at Woolworths climbed from R139.99 in October 2022 to R184.99 in October 2024—a steep 32% increase.

Data from Eighty20 shows that approximately 20 million South African adults, or half of the adult population, drink coffee daily, with instant coffee being the most popular choice.

These coffee lovers consume about 1.7 cups per day, using roughly 4g per cup. This means an average consumer goes through a 200g jar each month. With a R45 price increase per jar, the typical drinker now spends an additional R540 per year on coffee.

The rapid rise in coffee prices, particularly for instant coffee, has placed it in a unique inflationary category. While the South African Reserve Bank has managed to lower the national inflation rate below its 4.5% target, coffee prices remain high, driven by complex global factors.

This ongoing price surge underscores the vulnerability of the coffee supply chain to climate change, geopolitical events, and rising production and shipping costs.

As these global challenges persist, consumers may continue to face higher coffee prices, reflecting the far-reaching impacts of a volatile supply chain on everyday goods.

This breakdown reveals the enduring challenges facing coffee consumers in South Africa and highlights the far-reaching effects of a complex global supply chain on household staples.

South Africans are known for their humor, but this writer believes that when they try to take our coffee away by increasing the prices to unaffordable prices, the last bit of humor will disappear.

We drink coffee, most of us actually need it to function, and if you are feeling like you want to keep drinking coffee but have to dig too deep to afford your next cup, give Sandton Debt Counselling a call and let's see if we can help you save some money by reducing your interest rates and monthly debt instalments.