A global coffee price spike is about to drip into your mug
Climate impacts can increase the prevalence of diseases in coffee crops, reducing overall yields for farmers. Studies have shown that the arabica bean — which makes up roughly 60% of all coffee produced globally — is particularly vulnerable to climate change. And while U.S. coffee producers in Hawaii, Puerto Rico, California and elsewhere sell homegrown beans, their output is nowhere near enough to satisfy domestic demand, a reality shared by farmers of imported specialty crops from wasabi to goji berries.
'As the long-term climate changes, these weather conditions are far more likely to hit extremes and cause losses in coffee yields as well as volatility to coffee production,' said Jeffrey Sachs, a sustainable economist at Columbia University.
Retail coffee prices are expected to rise in a 'pronounced' way during the first quarter of this year, the Bank of America analysts wrote in a note to clients. They expect major food companies — such as J.M. Smucker, which sells coffee under multiple brands including Folgers, and Keurig Dr Pepper, which sells Lavazza coffee — to pass at least some of the cost increases on to consumers.
Neither company responded to requests for comment.
So far, higher coffee prices on commodity markets haven't fully percolated into consumers' mugs. Federal data released Wednesday showed the prices people paid for coffee, in all its forms, were roughly flat from December to January, though they were up 3.1% last month from 12 months earlier — just a little bit hotter than inflation overall. But instant coffee prices have been heating up, soaring 7.1% last month from a year earlier, and by 4.4% just from December to January.
The overall cost of drip coffee has risen every year since 2021, when it was $0.12 per cup, according to market researchers at NIQ. They estimated one cup of drip coffee cost $0.18 at the start of this year, while coffee pods like the ones that get popped into Keurig machines have also trended higher. Those, too, have risen steadily, from $0.50 per cup in 2021 to $0.55 at the start of 2025.
Major roasters such as Starbucks have sought to reassure investors about their strategies for handling global price spikes. 'Our year-over-year coffee price impact was minimal,' Starbucks CFO Rachel Ruggeri recently told shareholders.
Sachs said he expects coffee prices to remain high in the coming months — and that climate change is likely to bring more major blows to global food supplies over the next decade. The world must bring down greenhouse gas emissions much faster to reduce these accelerating risks and ramp up investments in agricultural resiliency systems, he and other climate researchers warn.
The global coffee shortage has driven U.S. imported coffee bean supplies to its lowest level since November, according to data from Intercontinental Exchange. Arabica coffee production in Brazil is set to decline this year by 12.4% from last year, according to the Brazilian ministry of agriculture. If that production forecast proves accurate, it would be the lowest level since 2022, analysts at ING said last week.
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