Coffee Prices Hit 48-Year High in 2025...What's Going On?
On January 29, 2025, many sources reported that coffee prices hit an "all time high" or "record highs" at $3.60 a pound. As of the final proofing of this blog on February, 19, 2025, coffee reached a daily high of $4.24 per pound and closed at $4.13. There was even a day where the price soared up to $4.40! Coffee prices haven't been this high for about 48 years (since 1977)—which means most current roasters, producers, and importers/exporters are in uncharted territory.
This sudden and rapid surge in coffee prices is a new global challenge. Perhaps you've read about it or heard a recent news report. Globally, coffee is traded on what is known as the C-Market, and the per pound price in dollars that is set by the C-Market is the global price for conventional or commodity grade coffee—think Folgers and Maxwell House. From that baseline price, many other coffee prices are then fixed based on what we call quality differentials, which are a premium that is added to the C-Market price to account for a coffee’s quality being higher than what is considered conventional grade. The higher the quality, the higher the differential premium that is added to the base price. (Want to obsessively watch the C-Market fluctuate along with us?)
In a system like this, supply and demand (and sometimes speculation) are constantly moving the market up and down, with many forces impacting those changes. In this recent surge, the impetus was bad weather events in Brazil and Vietnam (the world’s two largest coffee-producing nations) that led to a decline in coffee supply. Demand for coffee is at an all-time high. As importers saw supply dropping, they began buying as much as they could to stabilize their inventories, shooting the price up.
At the same time, the European Union put a sustainability measure in place, stating that all coffee coming into the EU must be certified as “sustainable” by January 1, 2025. Though this has been temporarily suspended, it led to further panic-buying across Europe as very little coffee in the world carries these certifications (and the certifications tend to benefit the certification companies more than the farmer/producer).
Then come the threats of tariffs on countries like Colombia and Mexico, and the fear of such tariffs from the USA being placed on other coffee-producing countries. More panic buying, and now a new historic high for coffee prices. Finally, a prediction of further decline in Brazil’s coffee production in 2025, and we are now flying off the rails.
Historically, nearly 100% of all coffee has been traded based on the coffee price on the C-Market. In the past few decades, some importers and roasters began to engage producers directly about price, seeking to find pricing that is actually based on cost of production and where all parties in the supply chain win financially. We are part of that movement. During the past 10 years we have succeeded in moving 50% of our coffee purchases to this model. The other 50% is still highly subject to market fluctuations.
As mentioned, coffee is currently trading at $4.21 per lb and has been over $4 for about 10 days. It may not sound like a lot, but it was at $2.30 six months ago and $1.94 a year ago. That’s nearly a 100% increase in just one year! Remember, this is the price for the “Folgers” of coffee. Such an increase does not happen in a vacuum, and it has put a lot of strain and pressure on our entire supply chain and the relationships we have with producers. When prices shoot up like this, it means a farmer who was taking great care to produce quality coffee to earn a higher price can suddenly cut out all the steps necessary for quality and deliver low quality to the market at a great price. It is very difficult for people to resist this temptation to cash in on the surge, and many do.
So how will this impact us all? Glad you asked.
We have been able to lock in pricing for about 50% of our needs through May–October of 2026 at price increases between 16-36%. This is actually amazing and speaks to the stability of the relationships we have cultivated in our supply chain, where we have historically overpaid (on purpose). We will be able to make sense out of those increases without dramatic changes in retail pricing, but for the other 50% of the coffees we buy—many of the unique micro lots from producers we do not work with directly—we are likely going to see some pronounced price increases and will need to strategize how we handle those.
Are higher prices for coffee coming? Yes.
But the folks who will be impacted the most will be those who are buying from the supermarket or buying lower quality coffees where the pricing is wholly dependent on what the market is doing. For us, there will be a more delayed impact on the price of our blends as we have prices with the producers locked in for a while now, but perhaps the micro lots may be impacted more in the short-term. We honestly do not know where this is all headed.
In all of this, I (Justin) am certain of a few things: 1) Relationships matter. Developing them, cultivating them, and staying true to them at every level—this will pay big dividends as the challenges unfold. 2) Proactive planning is crucial. Knowing our costs, knowing our margins, and making choices that put our business in the best place to absorb the realities of these increases is vital. 3) As people of faith, we are not left alone to face these challenges. Our God is not bound by time and is already in the future (including in the US Coffee C Futures) leading us. We can trust in his guidance and his faithfulness. Though we may suffer for a time and have to adjust our lives to absorb what is coming at us, we believe he will bring us through it with a testimony of his goodness.
