Why are coffee prices rising in the U.S.?

CBS News

27-02-2025

It's not only the surging cost of eggs that is making breakfast pricier these days — the price of coffee is also spiking because of a confluence of factors.
The cost of wholesale arabica beans — the most popular on the planet — surpassed $4 a pound for the first time this month and have doubled over the past year, running up from less than two bucks a pound in January 2024 to a record $4.30 a pound on February 13, 2025, according to futures contracts traded in New York.
For consumers still grappling with high food costs, that means soaring prices in the grocery aisle. The retail price of ground coffee hit an all-time high of $7 a pound in January, up 75% from $4 in January 2020, government data shows.
Coffee drinkers are likely to see even steeper prices over the next three or four months, with Andrea Illy, chairman of Italian roaster and global retailer Illycaffè, recently predicting that bean prices could climb 25% this year.
Unlike some products, coffee is viewed as essential by many consumers, making them more willing to pay up for their java fixes. Without a direct substitute for coffee, retailers and suppliers generally have greater room to raise their prices.
"Coffee, as we all know, it's a pass-through category," J.M. Smucker CEO Mark Smucker said in an earnings call in November. "We've been very pleased with our performance in the quarter, despite the fact that we continue to see significant inflation," said the executive, whose company's brands include Folgers and Cafe Bustelo.
Cost of climate change
As with the cost of other global commodities, supply and demand are a large part of the equation. Getting caffeinated is likely to become an ever-costlier proposition because of rising temperatures, droughts and excessive rains striking Brazil and Vietnam, the world's two biggest producers.
The 2024 coffee growing season saw a drought followed by August frost in Brazil, and flooding in October came in the wake of a drought in Vietnam. Brazil's coffee exports during the month were down 7.4% year-over-year and Vietnam's December export fell nearly 40%, according to a January report from the International Coffee Organization.
"When the crop in Brazil does not produce as much coffee as expected in the year, that causes the prices to shoot up," Gregory Zomfotis, founder and CEO of Gregory's Coffee, told CBS News.
"Some of the major producers have really not seen the production levels that were expected and quite far from it, so that's caused a severe spike in the price of coffee," added Zomfotis, whose company operates more than 50 stores nationwide and expect to purchase up to 700,000 pounds of coffee this year.
Amid those supply constraints, global demand for coffee in growing. For example, consumption is up 150% over 10 years in China — the world's most populous country, according to the U.S. Department of Agriculture.
Other factors also are contributing to the pricing pressures, including politics. President Trump on Tuesday vowed to proceed next week with his previous threats of 25% tariffs on Canada and Mexico. A levy on Mexico, whose largest coffee export market is the U.S., would likely push prices up further.
Separately, a new European Union law that is now set to take effect in December prohibits the sale of products, including coffee, if companies can't show they are not linked to deforestation — a bid to lessen greenhouse gas emissions and biodiversity loss. That effort to address the climate crisis could further tighten supplies of coffee beans.
Geopolitical conflicts are also a factor in rising coffee costs. Fighting between Israel and Hamas has caused havoc in the Red Sea, which carries 30% of the world's container traffic, including coffee from Vietnam. Slowdowns in the Red Sea and the Suez Canal meant as many as 5 billion bags of coffee had not yet arrived in Europe, the International Coffee Organization reported in December.