Falling retail coffee prices are boosting consumption in Brazil, the world’s largest producer of the commodity, according to the Brazilian Coffee Industry Association, known as Abic.
Consumption rose 4.65% from May through August compared with the same period in 2025, Abic said Tuesday. Every month in the period posted year-on-year growth, led by a 13.94% increase in July.
The gains put domestic demand on track to recover after a 2.2% decline in 2025. Consumption had already risen 2.44% in the first four months of this year.
Based on the performance through August, Abic President Pavel Cardoso expects Brazilian coffee consumption to increase about 2.5% in 2026. The projection is Cardoso’s own estimate, rather than an official forecast from the association.
That would add roughly 500,000 60-kilogram bags to last year’s total and bring domestic consumption to 21.9 million bags in 2026.
“But this is an expectation,” Cardoso said. “Everything depends on El Niño, on industry prices remaining relatively stable and on retailers continuing to offer coffee on promotion or at attractive prices.”
Retail Coffee Deflation
The main driver of higher consumption this year has been the decline in retail coffee prices, Abic Executive Director Celírio Inácio said.
Coffee prices for Brazilian consumers fell 17.2% in the 12 months through August, according to IBGE, Brazil’s national statistics agency.
The decline extended across all categories tracked by Abic. Prices for traditional and extra-strong coffee fell 21.22%, while capsules posted the smallest decrease, at 1.39%. Specialty coffee prices dropped 10.34%, and instant coffee fell 19.31%.
Inácio said the declines reflect lower prices paid by processors for green coffee, which in turn have followed international commodity prices.
“A nationwide survey we conducted showed a direct relationship between the price of raw coffee offered to processors and the price offered to supermarkets, allowing retailers to run promotions and stimulating the market,” he said.
Data from Cepea/Esalq, the University of São Paulo’s agricultural economics research center, support that trend. Comparing the final trading day of August 2025 with the same point in 2026, domestic arabica prices — a benchmark for processors — fell 32.8%, while robusta prices declined 50%.
Cardoso said the volatility seen in coffee markets in recent years has prompted companies to hold smaller inventories. That can push prices higher at some points, but it also allows processors to adjust more quickly when raw-material costs decline.
Five or six years ago, companies typically held eight to 12 weeks of inventories, Cardoso said. Since the 2021 frost and the subsequent increase in price volatility, that coverage has been reduced as finance executives sought to limit the cost of tying up cash in stocks.
The current level cannot be measured precisely because purchasing and inventory strategies differ by company, he said, but there are indications that coverage has fallen to about four to seven weeks.
El Niño Risk, Cold Coffee Opportunity
One uncertainty for Brazilian consumption is the potential impact of El Niño on coffee availability and, consequently, on prices paid by processors.
The industry is particularly concerned that high temperatures and dry weather could damage key stages of development in the next crop, Cardoso said.
“The industry is watching this closely because those conditions tend to be bad for the plants,” he said, pointing to November and December, when young coffee fruit is setting, and January and February, when fruit development and filling help determine crop size.
At the same time, processors see growth opportunities from new coffee-based products and cold beverages, trends that have gained traction in the US and other markets including Europe, Japan and China.
Those products include ready-to-drink beverages, cold brew and coffee used as an ingredient in products such as protein bars.
“In a tropical country with high temperatures, we will very soon see our shelves filling with these cold coffee products, offsetting somewhat lower consumption of hot coffee during the summer,” Cardoso said. “This is already part of out-of-home consumer behavior, and bringing it into the home will help drive volumes.”
More Robusta in 2027
Abic also expects the blend used in coffee sold at Brazilian retailers to shift further toward canephora varieties, including robusta and conilon, in 2027, extending a trend seen in recent years.
Brazil harvested a strong arabica crop this year, while conilon production came in somewhat below expectations, Cardoso said. The outlook is likely to reverse next year because of coffee’s biennial production cycle, with a smaller arabica crop expected while conilon production remains strong.
“Some market participants believe Brazil already has enough planted area to surpass Vietnam’s production volume by 2030, and they estimate that this is already being priced in,” Cardoso said. “Naturally, that would mean less price pressure for conilon.”
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
