You might have heard or read about the rising cost of raw (green) beans during 2024. The price of a pound of green coffee has doubled over the course of the year, from $1.76 in January to $3.49 by the end of December. This is a 45 year high.
How bad is that? It depends on the lens we are looking through.
For example, to many consumers coffee already feels expensive. But here is an unemotional perspective: When I started serving tables at my parent’s cafe in 1984 the price for a cup of coffee (6 ounces) was 2.20 German Marks or $.55 at that time’s exchange rate.
Inflation in both countries aside, a $4 price tag for a 12 oz drip coffee in 2024 describes a price increase of $.36 per 6 oz cup per decade.
So how can higher prices be a problem?
The short answer is: Today’s coffee industry is extremely complex and has many layers and players, all of which get a piece of the pie before the product reaches the consumer.
Naturally, everyone judges pricing depending on their position in the value chain. Emotions range from short term gold rush to fear of economic strain and bankruptcy.
But what does all this mean for you as a coffee lover in 2025 and beyond?
I've asked friends and colleagues in the Industry who are farmers, roasters and coffee shop owners about their expectations and plans for the new year and how consumers might be affected.
For background, I’ll explain first how coffee is traded and priced, the reasons behind the current price surge and its impact on various players along the coffee supply chain. Let’s dive in!
How Coffee Is Traded
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Futures Exchanges:
- Also called Forward Contracts. Futures trading involves speculating on the supply and demand of coffee harvests. Traders don’t deal with physical coffee but with contracts that represent future crops.
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Gains and losses in futures trading can be significant because of the inherent risks involved in dealing with a volatile product that can't be stored for long periods and is extremely dependent on environmental conditions.
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Physical Exchanges:
- Also called Spot Contracts. Physical coffee trading involves the actual product, including buying, selling, and delivering coffee beans. This is done via brokers who can be independent or work for large corporations.
- The profit margin of physical trade is relatively small but brokers move huge quantities. For context: Depending on market and type of coffee, a broker earns between $5 and $50 per Metric Ton of coffee. Every year an estimated 10 Million Metric Tons are moved worldwide, so it adds up. These coffees go mostly into retail, non-specialty coffee shops and chains, and into other products like pods and instant coffee.
- Coffee can be brokered with long-term commitments ahead of the actual harvest, somewhat similar to futures trading. This gives producers the security of an agreed-upon future price. However, it also exposes them to the risk of having to cover losses if they can't supply the agreed-upon amount, due to bad harvests. On the broker and importer side, high demand for coffee that can't be met puts even large companies in a challenging position, and can be devastating for smaller ones.
What the Two Exchanges Have in Common
Both deal primarily in c-market coffee, often referred to as “commodity coffee”.
C-market coffee represents lower-quality beans compared to specialty-grade coffee. It is grown in large quantities and sold at low prices for mass-market production.
The c-market coffee industry is dominated by six major global players:
Nestlé
JDE Peet’s (Jacobs Douwe Egberts)
Neumann Kaffee Gruppe (NKG)
Louis Dreyfus Company (LDC)
Olam International
Sucafina
These companies, called The Big Six, operate across various stages of the supply chain, from procurement and processing to distribution and retail, influencing global coffee pricing and availability. But even they can't control the climate change that they contribute to and that is one reason for the current pricing crisis.
Why Prices Fluctuated Heavily in 2024
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Climate Events:
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Major coffee-producing countries like Brazil and Vietnam faced extreme weather, disrupting harvests, and the 2025 forecast shows the same patterns.
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Political Interventions:
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Policies aimed at curbing deforestation lead to a surge in fear buys, raising prices and creating short supplies. There is little argument over the necessity of measures to protect the environment, however it is expected that they will impact farming practices that take time to adjust when dealing with a long term plant like coffee.
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Supply Chain Issues:
- Global supply chain disruptions due to geopolitical tensions and changes in import/export regulations caused delays and costs, impacting coffee availability.
All of the above happening together is creating the perfect storm.
Why Specialty Coffee Pricing is Affected
It is not uncommon that even roasters and coffee shop owners don’t know how the market and trading works if they primarily purchase specialty coffee. But even with a focus on high-quality, specialty-grade coffee, c-market pricing still impacts them and, by extension you, their end customer. Here is how.
1. Connection to Futures Market:
- Forward Contracts deal with a generic coffee baseline, not specialty grade beans. However, the upcharge for specialty grade beans is added onto the generic baseline, meaning if that baseline doubles, specialty prices go up accordingly. For example, a roaster who paid their grower $5 per lb of green beans in the past would have paid $3.75 over c-market baseline of $1.75. Currently their price would sit at $6.75 per lb unless they have secured fixed pricing with a partner farm for certain lots.
- Even though this is often implied or even advertised, most specialty coffee is not traded directly between farms and roasters. All importers operate under the same rules as the c-market and face the same costs and supply chain issues.
- Specialty coffee shops need affordable blends for house espresso or crowd-pleaser drip. Even though these blends often include beans that are on the lower end quality wise (specialty grading starts at 80 points out of 100) and lower in price than single-origin offerings, these too increase in price.
Additionally, few farmers produce exclusively high grade specialty coffee. The Specialty Coffee industry is still a niche in comparison to the c-market. A farm is a business and a farmer often has to rely on lower-grade coffee for somewhat stable financials. A micro-lot of high-grade beans might be wonderful, but can consist of just 65 bags per season, insufficient for sustaining a livelihood. When prices spike, focus automatically shifts to higher-yield, lower-quality coffee.
Round up: What The Players Along the Coffee Chain Expect
Farmers
- Short-term gain: Higher prices mean better returns.
- Long-term uncertainty: “This price hike might be great in the short term, but it doesn’t help with supply issues due to climate conditions and import/export regulation challenges” says Ben Weiner, CEO and Chief Farmer of Gold Mountain Coffee Growers in Nicaragua. His partner farms would much prefer a more predictable and stable price.
- Other Challenges: Ben adds: “Expensive certifications like Fair Trade that previously stood for higher pricing are obsolete at this moment so for small farmers who invested in these it’s a loss.”
- Future: Many big farms and investors weigh their options of roasting at origin and exporting a finished product instead of green beans, which keeps more money and pricing control in their own country. It also loosens the grip and dependency on international market pricing, as well as foreign government regulations for imported goods.
- Based on what I learned about coffee science in my courses at the University of Applied Sciences in Zurich I think that we can expect to see much accelerated experimentation with hybrids that are better suited at adapting to climate change. These efforts are ongoing to meet demand and might increase reliability for future harvests, which in turn could help stabilize prices. This will also give origins like China an advantage that were historically growing lesser quality but more resilient coffee in lower regions. As a third option we see efforts to revive ancient, so far non-commercial varieties like Liberica.
- Smaller independent farms and cooperatives however might face extinction or move to diversify their portfolio with growing cocoa, cash crops and/or working with Bees like Food for Farmers. Focus on coffee alone makes less and less sense for young people who want to remain in farming and continue long family traditions.
Importers
- Face increased costs and must balance relationships with farmers, traders, and roasters.
Traders
- In the moment: Futures traders manage risks by speculating on future price trends. This introduces volatility but also provides them with hedging opportunities right now.
- Speculators sell more (to roasters) when prices are low so they lose money at this point.
- Physical coffee brokers ensure the movement of actual coffee along the supply chain, negotiating contracts, ensuring quality, and managing logistics. Their role is critical for connecting farms, importers, and roasters so they have to try and level the playing field.
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Future: No one can reliably say where the market is headed, because the actual volatility is produced by different viewpoints of traders and their predictions, not a fixed and measurable reality.
To look at the past for predicting the future is to have hope and trust in the repetition of behavior that was learned and passed on, not based on unpredictable nature.
This is the greatest disconnect: A natural product and real humans working with it on one hand - and an invention we call market on the other.
Roasters
- Short-term: Larger operations may weather the storm better than small roasters, who might struggle with inventory and cash flow.
- Colleagues in the UK I spoke to report that their raw cost went up by 30% in 2024 and most large US roasters like Onyx expect to have to raise their prices by the end of the first quarter in 2025.
- Many struggle with sourcing beans for their blends that keep flavor profiles consistent year round.
- Whether they enter what is called an extreme scare market depends on how much stock a roaster has on hand in their warehouse. Roasters buy when prices are low so in 2024 many held off in hopes of a price decline. If someone still has a 50% full warehouse they can hold out longer, but for many small roasters that is not the reality. With a 5% full warehouse and demand continuing to outgrow supply they are facing what Analysts call a nightmare scenario.
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Strategies: Roasters can either sit it out, buy reactive at high prices, or do a combination of both. “It’s never a good strategy to do nothing. Freezing up increases the risk of being run over” says Ryan Delany from The Coffee Trading Academy, who helps roasters plan and navigate price risks.
- Pivot to and pushing of changing seasonal blends, marketed as reimagined or reinvented to offset problems with consistent flavor profiles.
- Greater use of Canephora (Robusta) beans, particularly in espresso blends. Prices for fine Robusta are also at an all time high, but are overall at a lower level than Arabica.
Cafés
- Increased product costs that are hard to fully pass on to customers.
- Potential inconsistencies in flavor profiles when roasters have to pivot with available green beans for their year round blends.
- Move towards more automation to cut staff and training costs.
- Opportunities for innovation in drink offerings and with flavor experimentation.
- Use of blends for pour overs instead of Single Origin beans.
The Big Six
- Will likely continue to look for ways to reduce coffee dose needed per cup.
- Extending shelf life further by processing coffee more heavily.
- Testing the limits of consumer acceptability as far as flavor goes.
This is not new and not a direct result of the current situation, as it all relates to higher profit margins. Research into creating climate resistant coffee varieties and new processing methods is ongoing and just becomes an even bigger factor now.
Consumers
What To Expect:
- Higher prices for café drinks, especially in areas with high labor and rent costs.
- Greater variation in flavor profiles and quality.
- More brewing gear innovations to hit the market.
- Increased home-barista enthusiasm.
- New coffee varieties and hybrids to try.
What To Remember:
- Support your local coffee shop when you can.
- Buy beans either locally from a shop or roaster.
- Up your home barista game, even the highest quality beans won't cost you more than $1.50 per cup made at home.
- If you buy online, check out the roaster's info on where and how they source. Some are very transparent about the pricing from the farmgate into their hands and on to cafes. One example I recently came across is Ilse Coffee who even print this info onto their packaging (not affiliated with them, I just found them at a local shop).
- Consume consciously, drink less at a higher quality. I know that this is a tough one for many people, especially those who are into coffee mainly for caffeine, but I have to add it because if you read the blog this far you are one of the people that get it.
Bottom Line
The price spikes of 2024 reflect deeper issues that have long been cute-y-fied, aka downplayed: climate change, unsustainable practices, and a market structure and marketing machine that prioritize short-term gains over long-term stability.
The essence of what seems like a complex problem is actually quite simple: You can’t build a tree, you can only watch it grow.
It takes time at the point of origin and a willingness to consume more consciously at the end point to gradually move towards regeneration.
As of now we are not (yet) heading towards a collective mindset shift, certainly not as far as global players in between the two points are concerned. We are focused on a numbers game and on fixing symptoms.
I'll never win a popularity contest with my take on this, but I'll keep pointing it out: Consumers and Growers ultimately have the most power. Everything in between is negotiable and we fall prey to the erroneous assumption that true value can be assigned across completely different realities, agendas and planes of existence.
Consumers and Growers are the two groups that are most eagerly manipulated into accepting less when it comes to fair farm pricing and into needing more when it comes to consumption. Maybe this crisis is also a wake up call.