Analysis Food & Drink Middle Eastern coffee market expected to hit $11bn By Gavin Gibbon January 26, 2025, 8:47 AM Getty Images/Unsplash+ Supply chain issues and other factors including climate change are likely to have an impact on prices for coffee consumers Value likely to rise by a fifth Supply chain under pressure Impact of climate change The price of your half-caff, soya milk, extra hot with a pump of vanilla and a sprinkle of cinnamon is likely to go up this year, as the cost of coffee is set to increase by as much as one fifth. The Middle Eastern coffee market alone is projected to reach $11.5 billion in 2025, according to industry experts. The impact of climate change, increasing production costs and a supply chain that is in desperate need of innovation are all combining to push up prices. Shouq Bin Redha, exhibition director of World of Coffee Dubai, which is due to be held next month, says: “We are entering an unprecedented time in the coffee industry and everyone will be impacted, from farmers to baristas to consumers drinking their morning coffee – the value of coffee will soar.” Prices of arabica, one of the market’s most traded and available coffee varieties, have been volatile over the past 12 months. The commodity showed a price range of $1.70 per pound to a high of $3.47 per pound. The overall annual volatility figure for 2024, which measures how much a stock price varies over one year, was in the 44 percent range, one of the highest witnessed over the past two decades and significantly higher than the average mean of the 28 percent to 30 percent range seen over the same duration, according to Vijay Valecha, chief investment officer at Century Financial. Alamy via Reuters ConnectPrices of Arabica have been very volatile over the last 12 months Coffee remains a market predominantly traded by large and leveraged hedge funds and traders having a commercial reason to get involved. “Coffee is not a sound investment in the sense that private individuals should get involved,” says Ole Hansen, head of commodity strategy, Saxo Bank. Kim Thompson, founder and managing director of Dubai-based Raw Coffee Company, says the supply chain issues, which currently include slow shipping, labour shortages and rising transportation costs, were an ongoing concern, but stressed there was “no intention” to pass the financial burden onto customers. Raw Coffee Company’s profits increased 18 percent last year and it forecasts another 15 percent hike in demand in 2025, despite Thompson saying the Dubai market is “saturated”. She says pre-Covid there were about 75 UAE coffee roasters registered with the economic development department. This has since increased to more than 400. “It’s exciting at the moment,” she says. Growing brands Aaron Marshall, general manager of Dubai’s ROR Coffee Solutions, says: “By streamlining our operations, leveraging sustainable practices and fostering direct relationships with coffee farmers, we aim to absorb as much of these rising costs as possible.” The branded coffee shop market in the region grew by 11 percent last year, led by Saudi Arabia, which accounts for 46 percent of all outlets, according to research from World Coffee Portal. It forecasts the total Mena branded coffee shop market will exceed 12,160 outlets by November this year and 16,460 stores by November 2029, representing five-year growth of 8 percent. Saudi Arabia unveils next-gen coffee farm $16m pumped into coffee farms as Riyadh chases lofty target Food exports from UAE climb 20% in six months While Saudi Arabia is expected to lead outlet growth, Morocco is forecast to be the fastest-growing market at 19.2 percent compound annual growth rate. Lee Safar, founder of The Daily Coffee Pro Podcast by Map it Forward and a strategic business adviser in the coffee industry, says: “What’s happening is you’ve got people that are opening businesses that don’t understand the supply chain at a time when the supply chain is in utter chaos.” She says the solution to stabilise the price is for coffee traders to buy coffee that has been grown either with regenerative agriculture, where producers become self-sufficient, or with agroforestry, which enhances biodiversity, soil health and water retention. “If that doesn’t happen, you’re going to dream of the day a coffee was $13,” she says. “Coffee will unequivocally become a luxury product.”