Stress is being felt throughout the industry, from producers to retailers
of ConsumerAffairsKey takeaways
- Producer-level strain signals future price hikes: While retail coffee prices have only risen modestly (5% YoY), much of that increase came in just the last month, signaling acceleration. At the producer level, arabica bean prices have doubled in a year, putting significant pressure on growers and retailers, suggesting that higher retail prices are imminent.
- Climate and supply chain disruptions: Adverse weather in Brazil and Vietnam key coffee producers has lowered yields, while rising shipping costs and a new 10% U.S. import tariff are compounding pressures on the supply chain, contributing to the upward momentum in prices.
- Economic impact already visible: Financial stress is showing with major exporters like Montesanto Tavares filing for bankruptcy, coffee shop closures (including Starbucks locations), and smaller chains seeking Chapter 11 protection, all indicating systemic strain across the coffee ecosystem.
Most of the consumer angst about grocery prices has been focused on eggs, but the price of coffee could be the next item to put a dent in shoppers food budgets.
Retail prices are just beginning to rise
So far, the effect on retail grocery prices has not been that great. According to the March ConsumerAffairs Datasembly Shopping Cart Index, the price of a 12-oz. package of whole bean coffee has risen 5% year-over-year. However, two-thirds of the increase occurred between February and March.
However, at the producer level, costs are surging, placing intense financial pressure on growers, exporters, and even coffee shops. The price of arabica coffee beans doubled from January 2024 to January 2025, with much of that increase occurring at the beginning of this year.
Starbucks, which operates 17,000 locations, has quietly closed about a dozen shops since the start of 2025, according to The Street. Two smaller coffee shop chains have filed for Chapter 11 bankruptcy protection since 2023.
One of Brazil's largest coffee exporters Montesant o Taveras Group, has also filed for bankruptcy, blaming a number of factors, including rising coffee prices. Brazil has faced prolonged droughts and higher-than-normal temperatures, which have reduced coffee crop yields and raised prices.
Vietnam, known for Robusta coffee, is also experiencing climate issues that have resulted in smaller harvests.
If that wasnt enough of a challenge, coffee suppliers have faced higher shipping costs, which are quickly adding to the retail price of coffee. And another price hike could quickly be felt.
The U.S. imports all of its coffee and those imports now face a 10% tariff. While importers and retailers may absorb some of the increase, consumers can expect to pay more for coffee in the weeks ahead.
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Posted: 2025-04-16 14:31:42
