The Cost of Coffee – Key Factors in Global Price Increases
In 2025, global coffee prices soared to record highs, shaking the beverage industry and consumers worldwide. Arabica beans, the most commonly consumed coffee type, recently exceeded $4.40 per pound—a level not seen in more than a decade. Multiple converging factors are fueling this unprecedented surge, from climate impacts and geopolitical tensions to supply chain disruptions and rising demand. This has impacted spinning Custom Roasted back up in significant ways. My ability to source beans in a price range that doesn’t force me to sell coffee at outlandish prices is difficult, and ultimately, the premise for this article. I get asked a LOT about what will happen to coffee when so many other crazy things in the world impact it. For those, here is a fairly good drill-down on the key factors.
1. Climate Change and Unpredictable Weather Patterns
One of the most significant contributors to the coffee price surge in 2025 is climate change. Coffee crops are extremely sensitive to changes in temperature, rainfall, and altitude. Brazil, the world’s largest coffee producer, has suffered repeated bouts of drought and unseasonal frosts that have severely damaged coffee plantations.
Poor weather significantly impacted the 2023-2024 harvests, leading to reduced yields and lower-quality beans. Meanwhile, regions like Vietnam and Colombia have also experienced shifting rain patterns and soil degradation, making coffee cultivation more challenging and less predictable.
Sourcing coffee from impacted regions has become so difficult that even my brokers are sourcing alternatives now rather than offering a premium price. This is the rub: We’re talking about unavailability, not high pricing. Robusta is now surging to premium arabica pricing when it used to be the cheapest and easiest bean to source.
2. Supply Chain Disruptions and Transportation Costs
The lingering effects of the COVID-19 pandemic and geopolitical unrest continue to strain global supply chains. Ports in Latin America and Southeast Asia are experiencing delays, with container shortages and inflated shipping costs making it more expensive to transport green coffee beans.
Freight costs have surged, particularly from export hubs in Brazil, Honduras, and Ethiopia to major consumption markets like the United States and Europe. Roasters and wholesalers are forced to absorb these higher costs or pass them on to consumers.
In speaking with my primary broker, who buys by the container, not by the bag, I learned that the cost of shipping is getting unreasonable, and is directly affecting retail pricing, where there used to be enough of a gap between the cost to source and retail pricing expectations. Again, this forces everyone in the business to adjust or fail.
3. Geopolitical Tensions and Tariff Policies
Trade tensions and the imposition of tariffs have further intensified the coffee price surge. In early 2025, new U.S. tariffs on imported agricultural products, including green coffee, have driven up costs for American roasters and distributors. Paramount Coffee Company and other major U.S. brands have announced price increases to offset the new duties.
Political instability in key coffee-exporting nations has also contributed to market uncertainty. Unrest in Ethiopia and economic instability in parts of Central America have disrupted exports and led to speculative price hikes on coffee futures markets.
Unfortunately, Custom Roasted is also in the same boat. Prices will have to go up to accommodate for all the changes and instability.
4. Rising Global Demand and Changing Consumer Preferences
The global appetite for coffee continues to grow. Consumption is expanding rapidly in emerging markets, particularly across Asia and the Middle East, where café culture is gaining momentum. Simultaneously, established markets like the U.S. and Europe are seeing an uptick in at-home coffee consumption.
This increased demand is stretching an already tight supply. Moreover, the rising popularity of specialty coffee, sustainable sourcing, and organic options is driving up production costs. Farmers are incentivized to adopt new techniques and certifications, which are often more expensive to implement and maintain.
More people are drinking coffee as mass marketing and distribution is enabling coffee companies to get their product in front of virtually everyone on the planet. The big trend and variety of options is allowing every home to have their own preference of coffee as well as their own preference in brewing it, meaning the demand is going to probably rise even more. The impact on continued increased demand is almost certainly going to reinforce the pricing increases we see. The primary beans I source for blends have increased in price by almost 60%, meaning the cost to get the bag in your hands is going up regardless of who is producing it.
5. Labor Shortages and Production Costs
Coffee farming remains labor-intensive, and many producing countries are experiencing labor shortages. Factors such as urban migration, aging farming populations, and lack of incentives have left plantations understaffed during critical harvest periods.
In addition to labor shortages, the cost of inputs such as fertilizers, water, and energy has risen sharply. These cost pressures are being transferred throughout the supply chain, from farmers to exporters to retailers.
Regarding the farmers, I am going to say something that a lot of people will get riled up for – I do not believe Fair Trade is improving the industry, I kindof equate them with an HOA(homeowners association), except it’s basically inserted itself into the entire industry that gets to say, without a lot of justification, what is best for farmers to produce coffee, with little if any thought towards the costs of production. Coffee isn’t grown in Irish plantations like corn in Kansas. 90% of coffee is farmed in places where electricity isn’t even guaranteed. What fair trade doesn’t advertise is that the financial burden of producing fair trade coffee increases the cost of operation in farms by more than 50%.I might write about the details in this more later, but with all the other factors and craziness in the industry, I think Fair Trade is probably one of the first supply chain factors that needs some serious re-evaluation. I have linked them in this article in case you want to form your own opinion.
6. Currency Fluctuations and Inflation Pressures
Fluctuating currency exchange rates have compounded the issue. The depreciation of local currencies in major coffee-producing countries like Colombia and Indonesia makes exports more profitable in theory, but also exposes local markets to inflationary pressures.
Simultaneously, inflation in importing countries erodes purchasing power, making it more difficult for businesses and consumers to absorb higher prices. This dynamic has resulted in tighter margins and increased volatility in coffee pricing.
7. Speculation and Futures Market Volatility
The coffee futures market has become more volatile in recent years, driven in part by investor speculation. With traditional investments underperforming due to global uncertainty, commodities like coffee have become an attractive option for short-term gains.
As more investors enter the market, futures prices rise, regardless of the underlying supply-demand balance. This speculative activity adds further pressure to real-world coffee prices, affecting contracts and long-term planning for producers and buyers.
What It Means for the Industry and Consumers
For producers, the high prices offer both opportunities and risks. While many farmers are seeing higher revenues, the volatility and rising costs of production make long-term planning difficult. Smallholder farmers, who produce most of the world’s coffee, are especially vulnerable to price shocks and market instability.
For roasters and retailers, price increases necessitate difficult decisions. Passing costs onto consumers risks alienating price-sensitive buyers, while absorbing costs can shrink already thin profit margins. Many are turning to contract renegotiations and exploring alternative sourcing strategies to hedge against future disruptions.
For consumers, the impact is direct and noticeable. From a morning cup at the local café to a bag of beans at the grocery store, prices have increased across the board. Specialty coffee drinkers may feel the pinch the most, as premium offerings carry even higher markups.
Outlook: Is Relief on the Horizon?
Industry analysts suggest that while the current surge is unlikely to last forever, coffee prices will remain elevated for the foreseeable future. Stabilization depends on a range of unpredictable factors, including climate normalization, resolution of trade conflicts, and investments in sustainable production.
Emerging technologies such as AI-driven agriculture, precision irrigation, and improved supply chain logistics may help offset some challenges in the long run. For now, stakeholders across the coffee ecosystem must brace for continued volatility and adapt strategies accordingly.
Conclusion
The 2025 coffee price surge is the result of a perfect storm of environmental, economic, political, and market-driven forces. As these dynamics continue to evolve, stakeholders at every level—from farmers to café owners to daily drinkers—must stay informed and proactive. Understanding the root causes of this complex issue is the first step toward building a more resilient and sustainable global coffee industry.
