The Brazilian coffee beans were sold on July 15, 2025 at a coffee cellar from Portolico Import Co., Ltd. in New York City.
Adam Grey | Reuters
Caffeine levels aren’t the only ones that have skyrocketed for coffee drinkers these days.
Analysts say coffee prices have skyrocketed and are fueled by volatile weather, where crop harvests are reduced among major producers such as Brazil and Vietnam.
US ground roast coffee prices rose 33% from a year ago, according to data from the Bureau of Labor Statistics.
In February, global coffee prices reached nearly 50 years.
According to the Consumer Price Index, US prices for all coffee varieties (including roasted and instant coffee) rose 14.5% year-on-year in July.
Danilo Gargiuro, a senior research analyst at Bernstein, said price pressures “should be eased.”
However, according to an August report by the International Coffee Agency, the 50% tariffs the Trump administration has placed on Brazil threatened to put “upward pressure” on coffee prices.
“Pressure whiplash”
Like all products, coffee prices are a supply and demand function.
A Bernstein report published in March revealed that weather volatility is probably the “most important” short-term factor supporting coffee supply and prices, as coffee cultivation and yields are “very sensitive to the environment.”
A severe drought during Brazil’s summer season “devastated” the harvest, a Berstein analyst wrote.
Brazil is the world’s top coffee producer and supplies around 40% of the world’s volume, they write. The United States, the world’s largest coffee importer, said it sources a large portion (32%) of its supply from South American countries.
According to Bernstein, Vietnam, the world’s second largest supplier, suffered a drought, causing coffee production to fall by 20% in 2024.
It was followed by Mike Hoffman, professor emeritus at Cornell University, and lead author of “Our Change Menu: Climate Change and the Foods We Love and Need.”
Dynamic – “Pressure whiplash” reduces crop yields, he said.
“That’s not the case in your standard season,” Hoffman said. “Drought stresses the coffee plant, and then you can get too much water, which affects the quality and quantity of beans, berries.”
Furthermore, as coffee prices rose, companies like Starbucks have chosen to lower their existing coffee inventory instead of buying expensive beans in the open market, Gargiulo said.
Stock has “slightly below historical levels” over the past few years, written by a Bernstein analyst. If stocks are high, the market can be relatively poor, but if low levels are low, or there is a new demand or supply shock, it can lead to sharp price spikes, they write.
How prices affect coffee drinkers
Also, consumers may feel the higher coffee prices in different ways, depending on whether they shop for coffee to prepare at home at a grocery store or consume at home, restaurants or coffee chains.
The price of coffee in the grocery aisle tends to fluctuate more depending on the cost of the product. So he said it is generally more volatile. Grocery stores are quicker to raise store prices as coffee prices rise, and it could offer promotions to consumers when coffee prices drop.
But prices for food products like coffee generally move around cycles, and Ghagiro said it is likely ahead to improve weather and capital investments to raise low-productivity prices.
Additionally, Brazil’s tariff “shock” could be somewhat limited for consumers who purchase from larger coffee chains, Gargiulo said.
He estimates, for example, that Starbucks will need to raise prices at 0.5% or less to recover the full cost of Brazil’s tariffs.
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According to analysts, in the long run, consumers need to decorate at a higher than average price.
Extreme weather, which negatively affects coffee harvests, is expected to be more common, and coffee consumption around the world continues to increase and strengthen demand, they said.
“In my mind, prices will continue to rise,” Hoffman said.
“Climate change is not gone,” he said. “Droughts, floods, everything gets worse. It’s not just coffee. It’s the whole food supply.”
