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A great friend of mine, Doug Graf, recently reminded me of a phrase that perfectly captures the state of trading practices:
One of the choices is pointless, and another doesn’t even exist.
Can we have a product that is both cheap and fast? In the green coffee business, that’s no longer an option. Logistics have been a nightmare for at least 4.5 years now.
What about fast and good? That means it won’t be cheap. Yet, even fast and good is difficult to obtain, with current conversion rates ($1.43 CAD to $1 USD today), rising coffee production costs, and looming tariffs on Canadian businesses. I really want to believe that the country of origin will be considered when moving green coffee throughout the U.S., so we won’t have to face an additional 25% tariff on top of the already steep 40% + currency exchange, but that remains to be seen.
But here’s the hopeful part: there is great potential for better systems to be put in place. The industry doesn’t have to remain this way. The question is—will we seize the opportunity to create a more stable and equitable trading environment?
For weeks now, the rising cost of coffee has been a major concern across the industry. Will prices continue to climb dramatically? Is the future of specialty coffee at risk, or could this situation create new opportunities for the segment? Will our coffee preferences need to evolve?
The coffee market is experiencing one of the most volatile periods in recent history, driven by supply constraints, extreme weather conditions, rising global costs, financial speculation, and geopolitical uncertainty. The industry has seen price spikes before, but the convergence of these factors makes the current situation particularly complex.
I aim to break down each key factor contributing to rising coffee prices, explore the impact on different market players, and offer predictions for the near and long-term future of coffee pricing. It’s a long read so I appreciate you staying with me for the ~15 minutes it’ll take.
No, there is no single reason for rising coffee prices, which makes stabilization even more challenging. The stock market reflects the mood of the industry, and coffee prices have reached record highs due to soaring demand and increasingly limited supply. Coffee remains one of the most sought-after commodities worldwide, yet it is becoming harder to obtain.
This isn’t due to producers holding back stock but rather because there isn’t enough coffee to hold onto in the first place. Climate change has intensified across coffee-growing regions, particularly in Brazil, the world’s largest coffee producer, which sets the global benchmark price. Severe weather conditions have also created a cascade of complications for production. Brazil and Vietnam, which together produce more than half of the world’s coffee supply, are both facing serious production challenges. In addition to that, other coffee-producing regions have been similarly affected. Here are some facts:
We are currently in a commodity super cycle, which means that not just coffee, but many essential goods, are experiencing price increases due to macroeconomic factors. Extreme rainfall followed by prolonged droughts has disrupted traditional growing seasons. The timing of rain and dry periods no longer occurs as expected, leading to misaligned harvest cycles and reduced quality and quantity.
Coffee producers now hesitate to sign supply contracts because they cannot accurately predict their harvest volumes or quality. This creates uncertainty at every stage of the supply chain.
On top of this, global shipping issues remain unresolved. The disruptions caused by COVID-19 have not fully stabilized and ocean freight remains unreliable. Unbooked shipping containers are redirected elsewhere, causing delays and complications for coffee shipments. Last year’s reduced water levels at the Panama Canal further exacerbated delays resulting in major supply chain bottlenecks.
Additionally, climate-driven droughts and resource shortages in various regions are forcing ships to take longer, more expensive routes, further driving up transportation costs.
Supply Chain Constraints will persist:
Supply shortages and high demand are forcing a shift in quality preferences. While customers seek alternative origins and varieties, there’s a fundamental challenge, Brazil’s sensory profile is unique and remains unmatched by other regions. Consumers around the world are accustomed to its flavour profile, making it difficult to find replacements. This has created a paradox: some high-quality coffees from other origins are now cheaper than Brazilian coffees.
While the specialty coffee sector and small to mid-sized roasters account for only a fraction of the market, the majority of coffee supply goes to well-known global brands. These companies cannot easily adjust their quality benchmarks, making it a slow process to adapt to changing sourcing conditions.
Access to coffee and financial stability have become the biggest challenges for importers and roasters. The increasing cost of green coffee means that each shipment is now a much larger financial commitment. Some clients are struggling to pass on these costs to consumers, leading to cash flow issues and financial strain. At the same time, stock market volatility is adding further instability. Coffee futures are highly susceptible to speculation, leading to sudden spikes and rapid drops in prices.
Because of these uncertainties, importers are limiting their stockpiles, resulting in reduced availability of coffee. This problem is especially pronounced in the commercial segment, while specialty coffee remains available only in limited quantities once per harvest season.
Most roasters are signing short-term contracts (or no contracts at all), hoping for a price drop. Since importers also haven’t been making large purchases, warehouse stocks remain low. This has created a situation where prices for the few available coffees keep increasing, as buyers compete for a shrinking supply. Meanwhile, shipments from origin countries via ocean freight can take up to three months, assuming green coffee is even available.
Larger roasters are unable to pass these price increases on to consumers, as major retail chains will not accept the price hikes. The result? A cycle of financial losses, operational difficulties and closures for coffee businesses.
A return to stable or lower coffee prices is probably not going to happen in the short term. Any price correction will require a period of global overproduction, which, given the current climate challenges, seems improbable and will take years to stabilize.
North American and European consumers are very price-sensitive, meaning that many will accept lower quality over higher prices or will accept further lower margins over more profit. However, markets in Asia prioritize quality over price, making them more likely to absorb price increases without sacrificing standards. We can certainly learn from that.
The following reasons might also affect the upcoming cycle:
Despite the challenges, there is an opportunity to explore new coffee origins and profiles. This could help break the industry’s over-reliance on Brazilian coffees and encourage experimenting with high-quality alternatives from South America, Africa, China, India or Vietnam.
An increased demand for coffee from historically niche-producing countries could drive investment in infrastructure and quality improvements. While this uncertainty is concerning for European buyers, more money staying within coffee-producing countries could benefit long-term development.
The entire industry—from green coffee buyers to roasters and cafés—must embrace transparency. Consumers need to understand that rising coffee prices reflect real production costs and ethical sourcing.
The current crisis is not a temporary issue—it marks a fundamental shift in the coffee industry. If the price difference between commercial and specialty coffee continues to shrink, more consumers may be willing to invest in better quality. At the heart of this shift, producers must be compensated fairly. The current pricing model, dictated by speculation and the financial market, does not benefit coffee producers.
For roasters, adaptation is crucial. Strategies such as:
… will be essential for navigating this uncertain landscape.
For consumers, understanding the real cost of coffee is more important than ever. Ethical sourcing, sustainable practices, and transparency in trade will play a key role in shaping the future of specialty coffee.
While higher coffee prices create serious challenges, they also present an opportunity to reshape the industry—to ensure that more of the profits go to the people who actually grow and process the coffee. If approached wisely, this moment in coffee history could lead to a more sustainable and equitable industry in the long run. The key question is: will the industry take this opportunity to evolve, or will it continue to prioritize short-term financial gains over long-term sustainability?
This is a defining moment for coffee. How we respond will shape the future of the industry for years to come.
Damian Durda
