Coffee Prices Soar to Record Highs Due to Global Factors

The rising cost of living has become a pervasive issue, with breakfast staples like eggs and coffee experiencing significant price increases. While the surging cost of eggs has been widely reported, the price of coffee is also on the rise due to a confluence of factors.

Wholesale arabica beans, the most popular type of coffee worldwide, have reached record highs. According to futures contracts traded in New York, the cost of wholesale arabica beans surpassed $4 a pound for the first time this month, doubling from less than two dollars a pound in January 2024 to a record $4.30 a pound on February 13, 2025. This surge in bean prices has directly impacted consumers, with the retail price of ground coffee hitting an all-time high of $7 a pound in January, a 75% increase from $4 in January 2020, according to government data.

The Impact on Consumers and Businesses

Coffee drinkers are likely to face even steeper prices in the next three or four months. Andrea Illy, chairman of Italian roaster and global retailer Illycaffè, recently predicted that bean prices could climb 25% this year. This price increase reflects the essential nature of coffee for many consumers, who are more willing to pay a premium for their daily caffeine fix. The lack of a direct substitute for coffee gives retailers and suppliers greater leeway in raising 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," added Smucker, whose company's brands include Folgers and Cafe Bustelo.

Climate Change and its Role in Rising Prices

Like many global commodities, the cost of coffee is influenced by supply and demand. Rising temperatures, droughts, and excessive rains are impacting Brazil and Vietnam, the world's two largest coffee producers, making it more expensive to grow coffee beans. 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 December 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 expects to purchase up to 700,000 pounds of coffee this year.

Global Demand and Political Factors

Compounding these supply constraints is the growing global demand for coffee. Consumption has surged by 150% over the past decade in China, the world's most populous country, according to the U.S. Department of Agriculture. Other factors contributing to pricing pressures include politics. President Trump's threats of 25% tariffs on Canada and Mexico could push prices even higher, as Mexico is a major coffee exporter to the U.S.

Furthermore, a new European Union law set to take effect in December prohibits the sale of products, including coffee, if companies cannot demonstrate their non-linkage to deforestation. This effort to address climate change and biodiversity loss could further tighten coffee bean supplies.

Geopolitical Conflicts

Geopolitical conflicts also play a role in rising coffee costs. Fighting between Israel and Hamas has disrupted 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 have resulted in as many as 5 billion bags of coffee not yet arriving in Europe, according to the International Coffee Organization reported in December.

In conclusion, the rising cost of coffee is a complex issue driven by a combination of factors, including climate change, global demand, political tensions, and geopolitical conflicts. These factors have created a perfect storm that has pushed coffee prices to record highs, impacting both consumers and businesses worldwide.