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SEOUL - South Korea’s coffee industry is facing a perfect storm as skyrocketing international coffee bean prices, combined with a new government-mandated "Cup Pricing Label" policy, put immense pressure on both small cafes and major franchises. Concerns are mounting that a fresh wave of price hikes for consumers may be inevitable.

According to industry sources on Wednesday, the cost of raw materials has reached critical levels. Data from the Korea Agro-Fisheries & Food Trade Corp (aT) shows that as of January 5, the international price for Arabica beans hit $7,922.23 per ton, a 6.8% increase from the $7,414.73 recorded a year ago.

This surge is exacerbated by a "triple threat" of unfavorable exchange rates, rising logistics costs, and persistent climate risks in major coffee-producing regions. Furthermore, the internal cost structures of businesses are deteriorating rapidly due to rising labor costs and higher rents.

Adding to these woes is the government’s proposed "Cup Pricing Labeling System." Designed to encourage the use of reusable tumblers by disclosing the cost of disposable cups separately, the move is being met with skepticism. Industry experts warn that consumers may perceive this transparent breakdown not as an environmental initiative, but as a de facto price hike.

The impact is already reflected in official statistics. According to the Korean Statistical Information Service (KOSIS), the Consumer Price Index (CPI) for coffee reached 143.98 last month (base year 2020 = 100), marking a 7.8% jump compared to the same period in 2024. This index encompasses a wide range of products, including instant coffee, canned drinks, and pouch coffee sold at convenience stores.

The industry leader in this latest round of adjustments is The Coffee Bean & Tea Leaf, which raised the prices of its decaf options and certain drip coffee menus by 200 to 300 won starting January 5. The company cited the combined weight of international bean costs and fixed operational expenses as the reason for the adjustment.

"The rise in bean prices is no longer a temporary fluctuation but a chronic issue driven by climate change and global market volatility," an industry official stated. "With the added burden of new regulatory measures, the pressure to raise menu prices is becoming unbearable for everyone from independent shop owners to large-scale franchises."

As raw material costs show no signs of stabilizing, market analysts predict that more brands will follow suit in adjusting their pricing strategies throughout the first half of 2026.

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