Brazil drought in 2021 causes price increase to coffee in USA and Italy

In 2021, Brazil witnessed the worst drought in a century which has had a terrible impact on coffee production. The subsequent rise in price has generated different responses in the global market. Brazil exports most of its green beans to the United States, Germany and Italy where demand and price elasticity in 2022 generates different reactions among buyers. In United States we observe a shift toward the imports of Robusta beans, a substitute of Arabica beans, highly resistant to hotter temperature, while Italian consumer buying habits are more resilient to change. Despite the increase in price due to poor weather conditions and rise in logistics price, demand for Arabica in Italy remains inelastic. As a result, breakfast is becoming increasingly expensive for Italians who have experienced a surge in expresso price of 37.5%. If the intense and smoother taste of Arabica blend espresso was sold on a national average of USD 0.87 per cup in bars in the south of the country, it reached a record peak in the past 2 months at USD 1.20 per cup.