Coffee: The majority of Americans (about 54%) can’t live without the stuff. And the good news is that in 2016, they definitely won’t have to.
According to a new report from Bloomberg News, coffee prices are set to drop yet again as Arabica coffee beans from Brazil, the world’s largest producer of the beans, flood the market. As a result, there will be more supply — possibly 58 million bags worth of supply — than demand, and your average cup of joe should drop in price accordingly.
After a dismal 2014, Brazil experienced a much rainier 2015 and there’s nothing Coffea plants love more than water. Factor in the recent fall in gas prices and the strength of U.S. currency, and you’ve got all the makings of a stellar year for coffee buyers, like Starbucks and J.M. Smucker Co. (the company behind Folgers), who now will be able to buy coffee at about $1.20 per pound. If all goes as planned, they’ll pass those savings down to coffee drinkers everywhere.
But before you run to your local café to celebrate, there are a few caveats to take note of. One, the cost of premium coffee, like the kind you might get from a fancy coffee shop, will probably not change. After all, people who only drink premium coffee are always willing to pay a little extra for it even if the overall price of coffee goes down. What’s more, fair trade growers do not benefit from a drop in the price of coffee. Coffee is coffee, regardless of how it’s grown, and especially when prices are this low.
And secondly, this coffee surplus won’t last forever. As Smithsonian Magazine points out, climate change continues to pose a remarkable threat to global agriculture and in the likely event of a drought in Brazil or anywhere else coffee is grown, the coffee surplus could easily dwindle, driving prices up again.
So, celebrate your newly cheap coffee while you can — or consider weaning yourself off the stuff before your wallet takes a serious hit.
Image courtesy of Warner Bros.