The rising prices of eggs and coffee have been making headlines in the United States. According to a report by CBS News, wholesale prices of the most popular Arabica coffee beans traded on the New York futures contract exceeded $4 per pound for the first time this month, doubling from less than $2 per pound in January 2024 to a record $4.30 per pound on February 13, 2025.
Government data shows that in January, the retail price of ground coffee hit a historic high of $7 per pound, a 75% increase from $4 per pound in January 2020.
Over the next three to four months, coffee lovers may see further price hikes. Andrea Illy, Chairman of Italian coffee roaster and global retailer Illycaffè, recently predicted a potential 25% increase in coffee bean prices this year.
Unlike some other products, many consumers consider coffee a necessity and are willing to pay for it. With no direct substitutes for coffee, retailers and suppliers often have greater flexibility in raising prices.
Mark Smucker, CEO of J.M. Smucker, which owns brands like Folgers and Cafe Bustelo, expressed satisfaction with the company’s performance despite severe inflation during a financial conference call in November 2024.
Like other global commodities, prices are determined by supply and demand. Weather conditions like rising temperatures, droughts, and excessive rainfall have impacted the world’s two largest coffee-producing countries, Brazil and Vietnam, making coffee consumption more expensive.
In the 2024 coffee growing season, Brazil faced a drought followed by frost in August, while Vietnam experienced floods in October after a period of dryness. According to a report by the International Coffee Organization in January, Brazilian coffee exports in the same month dropped by 7.4% year-on-year, while Vietnam saw a nearly 40% decline in December exports.
Gregory Zomfotis, founder and CEO of Gregorys Coffee, stated that when Brazil’s coffee production falls short of expectations, prices soar. His company operates over fifty coffee shops nationwide and plans to purchase up to 700,000 pounds of coffee this year.
Moreover, a new EU law set to take effect in December requires companies to prove that products like coffee are not linked to deforestation. Failure to comply could result in sales bans, aiming to reduce greenhouse gas emissions and biodiversity loss but potentially tightening the supply of coffee beans.
Geopolitical conflicts are also a factor in the rise of coffee prices. The battles between Israel and Hamas have severely disrupted the Red Sea, which carries 30% of global container shipping, including coffee from Vietnam. A report by the International Coffee Organization in December noted that slowdowns in Red Sea and Suez Canal shipments meant up to five billion bags of coffee had not yet reached Europe.