A Global Coffee Price Spike Is About To Drip Into Your Mug
- Peacemaker Coffee Company
- Mar 1
- 3 min read
Updated: Apr 22
All Credit By Steve Kopack and Nidhi Sharma
The Impact of Climate Change on Coffee Prices
Disruptive weather linked to climate change has impacted coffee bean supplies. Industry experts warn that this could soon leave a bitter taste in consumers’ mouths.
Rising Coffee Prices
Bad news at the breakfast table: Your morning cup of coffee may soon become more expensive. The benchmark global price for arabica coffee has more than doubled over the past year. Notably, 25% of that surge occurred since the start of 2025. For the first time, one pound of arabica now costs over $5 on commodity markets.
Bank of America analysts have cautioned, “Expect retail coffee prices to keep grinding higher,” especially since “consumers are showing signs of price fatigue.”
The price increase is driven largely by climate-change-related weather patterns disrupting agricultural production worldwide. Similar to coffee, chocolate prices are also surging this year due to increased temperatures and rainfall levels, negatively affecting cacao yields in West Africa.
Regional Challenges
In crucial coffee-growing regions across South and Central America, Southeast Asia, and East Africa, climate fluctuations are a growing concern. Average temperatures are rising. Precipitation patterns are changing. Drought conditions are intensifying in some areas while flooding becomes more common in others.
For instance, Brazil is grappling with its most severe drought in 70 years, leading to water shortages and crop failures. Meanwhile, Vietnam experienced a prolonged drought followed by severe flooding during Typhoon Yagi, exacerbated by climate issues. Together, Brazil and Vietnam account for an impressive 56% of global coffee supplies.
The Vulnerable Arabica Bean
Climate change also increases the risk of diseases affecting coffee crops, reducing yields for farmers. Studies indicate that the arabica bean — responsible for about 60% of global coffee production — is particularly susceptible to these changes. While U.S. coffee producers in Hawaii, Puerto Rico, and California grow coffee, their output is not enough to meet domestic demand. This reality reflects the struggles of growers of imported specialty crops as well.
“As the long-term climate changes, these conditions are far more likely to hit extremes and cause losses in coffee yields along with volatility to coffee production,” noted Jeffrey Sachs, a sustainable economist at Columbia University.
Rising Retail Prices
Retail coffee prices are expected to rise significantly during the first quarter of this year. Analysts at Bank of America warned that major food companies, like J.M. Smucker — which owns brands such as Folgers, Dunkin' Donuts, and Cafe Bustelo — will likely pass some of these costs to consumers.
So far, higher coffee prices on commodity markets haven't completely reached consumers. Recent federal data showed that prices people paid for coffee remained roughly flat from December to January. However, they were up 3.1% from the previous year — slightly outpacing inflation.
Interestingly, instant coffee prices have seen a substantial increase. They soared by 7.1% last month compared to the same time last year. Furthermore, there was a 4.4% rise just from December to January.
Analysis of Coffee Cost Trends
The overall cost of drip coffee has risen yearly since 2021. Back then, it was $0.12 per cup. Market researchers at NIQ estimated that one cup of drip coffee costs $0.18 at the beginning of this year. Additionally, coffee pods for Keurig machines have also seen a steady increase, rising from $0.50 per cup in 2021 to $0.55 at the start of 2025.
Future Outlook on Coffee Supply
The forecasts suggest that coffee prices will remain high in the coming months. Climate change is expected to deliver more significant blows to global food supplies over the next decade. Experts advocate for a swift decrease in greenhouse gas emissions to mitigate these risks. There's also an urgent need for increasing investments in agricultural resilience systems.
Currently, the global coffee shortage has pushed U.S. imported coffee bean supplies to their lowest levels since November. According to data from the Intercontinental Exchange, arabica coffee production in Brazil is projected to decline by 12.4% this year, according to the Brazilian Ministry of Agriculture. If this production forecast is accurate, it would represent the lowest production level since 2022.
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