LONDON/NEW YORK CITY: A cup of coffee could soon cost you a lot more. Roasters worldwide are warning of double-digit price hikes as they grapple with soaring arabica bean costs, strained supply chains, and pushback from retailers.

Roasters, including Lavazza, Illy, Nestle, and Douwe Egberts maker JDE Peet's, are negotiating with retailers to pass on the sharp rise in raw coffee prices—up nearly 100 percent over the past year—industry sources told Reuters.

"JDE's purchase prices have increased significantly. We will absorb part of this price increase to keep the products affordable," said a spokesperson for Dutch supermarket chain Albert Heijn. The chain briefly ran out of JDE Peet's products, such as Douwe Egberts and Senseo, before restocking them at higher prices on March 20.

JDE Peet's, which has warned of a profit drop this year due to higher input costs, confirmed that pricing disputes had led to supply disruptions in the Netherlands and Germany. It said it has now concluded 90 percent of its global pricing negotiations.

Arabica bean prices have jumped over 20 percent this year after a 70 percent surge in 2023, driven by Brazil's worst drought in years. Brazil accounts for nearly half of the world's arabica supply.

Raw beans account for approximately 40 percent of the cost of a bag of roasted and ground coffee. Reg Watson, director of equity research at ING, said, "If last year's raw bean price jump was passed through in full, it would equate to a 28 percent price rise to the consumer." He expects prices to rise by 15 percent to 25 percent in most markets.

In Brazil, where the local currency has weakened, prices are climbing even faster. Roaster 3 Coracoes raised prices by 14.3 percent on March 1, after two previous hikes. Brazilian supermarket coffee prices have already surged 40 percent, according to the roasters' association ABIC.

"People are already rationing, changing their habits," said ABIC President Pavel Cardoso.

As prices rise, many consumers are opting for cheaper supermarket brands. In the U.S., the market share of private-label coffee rose from 20.5 percent in 2021 to 23.1 percent in 2024, according to Circana.

Roasters now face a dilemma: absorb the cost or pass it on, risking the loss of customers. Even major chains like Starbucks, which are less exposed to raw bean costs, aren't immune.

Meanwhile, coffee stockpiles at U.S. ports are reportedly half their usual levels, as traders hold back on purchases amid pricing uncertainty.