There has been a lot of buzz in the press about coffee prices in recent times. CNN declared that "Coffee is becoming a luxury" and other media outlets broke out in panic at the idea of coffee soon becoming unaffordable.
There has been a lot of buzz in the press about coffee prices in recent times. CNN declared that “Coffee is becoming a luxury” and other media outlets broke out in panic at the idea of coffee soon becoming unaffordable.
On the surface, such headlines only show one thing: we still don’t understand that coffee has always been a luxury item. Firstly because it doesn’t grow everywhere. What’s more, it has to be skilfully cared for, harvested, processed and roasted.
Put simply, asking the question, “Why is coffee so expensive?” was always misguided because it has never been expensive enough.
The fact that we can buy supermarket coffee at ridiculously low prices is not due to the product itself or its producers, but rather to the market power of traders and speculators. They have conditioned us to see coffee as a staple food.
However, that may actually be over now. The price of green coffee has shot up by more than 70 percent within a year, and that upward trend wasn’t reversing as 2024 ticked over into 2025.
What does this mean for coffee prices for end consumers? What does this mean for our Coffeeness coffee beans? And what are the reasons for the price explosion?Â
In order to answer those questions, I spoke to Niklas from our partner Ocafi in Brazil, and also conducted some of my own research. Oh, and don’t worry – you won’t find any headline scaremongering in this article!
How Does the Coffee Trade Work?
If we think of the trade in products, the chain works like this: Someone produces something, sells it to a retailer, who in turn sells it to us. With foodstuffs like coffee (or cocoa, wheat, etc.) it works the other way round:
Producers and buyers make their deals before each year’s harvest. As a perishable natural product, the goods must be processed and sold immediately after the harvest. Otherwise, they are lost.
This is even more important in coffee production because the beans do not grow on your doorstep and the cherries must go through intensive coffee processing before export.Â
Coffee has to be shipped all over the world from countries like Brazil, Guatemala, Ethiopia and Vietnam. Plus, it has to go through an extended “refining process” beforehand.
Only a small proportion of the deals between producers and buyers are currently made using the direct trade model. Most coffee is traded in futures on the stock exchanges. This, in turn, attracts speculators.
The 2024 Harvest Year: Climate Change at Work
On paper, the 2024 harvest seems to have gone quite well. Niklas, Luis and their entire crew at Ocafi harvested 54.8 million bags of coffee. Compared to the previous year, this represents a slight decrease of 0.4 percent.
Still, even this slight decline is a problem. Ocafi is working hard to increase the yield per plant, using modern cultivation techniques. And by doing so it has had great success in recent years. According to Ocafi’s forecasts, there should have been around ten million more bags.
But climate change in Brazil (and the whole world) is increasingly putting a damper on their plans. For starters, there’s the issue of rainfall.
In the Brazilian spring from September to November, a lot of rain is needed to make the coffee trees bloom and thus produce coffee cherries. During the Brazilian summer, the cherries need a lot of rain to grow and develop complexity.
In 2024, Brazil experienced its hottest spring and summer since 1949. The average temperature was 80 degrees Fahrenheit (26.7 degrees Celsius), which is around 30 degrees higher than normal.
In addition, there was less rainfall than ever before: August was the driest month in 36 years, and July was the driest month in 73 years. The 70-year record was broken as early as November 2023 (all figures from country data). In October there were several bouts of heavy rain with flooding.
A Harsh Reality
This has not only reduced the overall quantity of coffee, but also the quality. In fact, only about 20 percent of the harvest on the Ocafi farms met the requirements for specialty coffee – normally it is up to 40 percent.
Brazil, the world’s largest producer, isn’t the only country to have experienced such problems. Vietnam, the largest exporter of Robusta coffee, has been faced with similar weather.
But why did coffee prices for Arabica beans rise by 70 percent in 2024, while even the supposedly “inferior” Robusta bean rose by more than 60 percent? It’s quite simple:
The 2024 harvest initially served contracts from previous years. And the drought of 2024 will have its greatest impact on the 2025 harvest. Where there is no rain, there will be no cherry growth in the next cycle.
Is the Coffee Market Going Crazy?
Everyone knows that prices are determined by supply and demand. While the supply of coffee is decreasing, more and more people want to make and drink coffee. In Germany alone, demand grew again by around 0.6 percent in 2024. Worldwide, domestic sales alone are expected to increase by around 0.2 percent.
In addition, our Brazilian farmers in particular had to contend with supply chain and regulatory issues in 2024.
According to Niklas, around two million bags are stuck in Brazilian ports due to shipping delays. On top of that, the so-called EU Deforestation Regulation (EUDR) is costing farmers more money.
According to this regulation, importers to Europe must prove that their products did not result from recent deforestation. This drives up the so-called compliance costs.
Although the implementation of the regulation has been postponed by a year, the companies affected have already taken action – because nobody knew that the postponement was coming.
And as if that wasn’t enough, coffee is also simply an object of speculation. Coffee prices have risen continuously in recent years, which is why stock market speculators have bought more coffee futures, thereby further driving up prices.
Although Ocafi does not sell its specialty coffee beans on the stock exchange, it’s not the case that 100 percent of a harvest is made for direct trade with roasters. Farmers and exporters have not been able to avoid trading on the stock exchange in order to survive.
Ocafi is very concerned about the (near) future. That’s why they have written a very informative blog post about the current price situation. If you want to further understand the stock market background, I recommend taking a look at Brazilian Coffee Market and Its Influence on Prices.
Coffee Prices in 2025: What Now?!
There’s just no getting around it: The price of our coffee beans will also rise. With diminished supply, rising costs throughout the supply chain and higher demand from consumers, there is no other option.
However, it’s safe to assume that these price increases will remain within reasonable limits. That’s because you benefit from our direct partnership with Ocafi.
As we do without middlemen and Ocafi also offers more flexibility in terms of contract design than faceless giant import companies, we can at least extinguish some price flashpoints directly.
We still don’t know what the 2025 harvest will bring. We also don’t know whether and how global political developments will continue to influence supply chains. All we know is that we will not compromise on coffee quality or the transparency of our offerings.
We will keep you updated and explain any changes to our pricing in detail. Do you already have questions? Leave us a comment!
Coffee Prices FAQ
Arabica coffee prices as well as the prices for Robusta coffee beans are soaring due to climate-related shortages in production.
The average price of coffee in the United States depends on your location. Still, some experts predict that the average cost for a cup of coffee could rise to $12 in 2025.
There can be little doubt that coffee is going to become more expensive, due to many factors including reduced production and increased demand.