Consumers have noticed increased coffee prices at their local cafe, restaurant chain, and/or supermarket. 

“I am at the Walmart in Rochester, Indiana. And I went to grab coffee… And was kinda shocked. The 38-ounce… Maxwell House, is $21.44,” said one customer on social media cited in an article by Distractify. 

“So I was curious, and I looked back,” continued the TikToker. “And in October of last year, almost a year ago, I paid $12 and some odd sense…” 

The social media user may have gotten a deal on that $12 coffee, as last year’s Walmart price for the item was tracked at ~$17, according to Aisle Gopher. Either way, grocery price spikes have seemingly been part of the daily news cycle for years now. So what? 

So, this social media user was convinced that the price hike had to be due to tariffs. Yet, international duties may only be part of the story. This year, much of the pricing pressure has come from US tariffs on producers like Brazil—where a new coffee harvest is currently finishing up. US tariffs on the country hit during a “low stock” situation. Now, certified stocks by international exchanges are being depleted. Prior to US 50% tariffs on Brazil, many US coffee buyers either didn’t have a chance to sure up their inventories or were hoping to see high contract prices drop. 

Looking back further, the run-up in coffee futures has been years in the making—due to supply constraints caused by weather issues in Brazil (and before that there were similar issues in Vietnam). Now, the confluence of tariff pressure along with years of expensive green coffee are coming to a head 

“Retail coffee prices have lagged raw material prices for some time now,” said Expana’s Coffee Analyst, Oliver Broster. “Retail price increases still have a long way to go to catch up to current raw material prices.”

On October 10, 2024, coffee futures on NY ICE were valued at 254.75 USc/lb, according to Expana’s platform (customer access only) which shows the value has gone up over 50% in one year, and over 100% in three years—with lots of volatility along the way. 

“Historically, increases in the raw materials have been short lived, as they are normally due to supply shocks. When supply shifts, roasters have been able to manage their supply chain so that customers are not directly and immediately exposed,” explained Broster. “Now, the complication is that the current trend has been in place since 2019/20 (depending on how you measure the trend). The lagging nature of retail price increases probably means they are unlikely to abate in the near term.” 

For the last five years, coffee prices have been volatile—making planning ahead more difficult for coffee brands whose leaders must buy in large quantities. So, the run in coffee prices has no solitary scapegoat. Having said that, tariffs on Brazil—the world’s biggest coffee producer—did not make the situation any easier to handle. For example, most coffee roasters agree: “You can’t avoid Brazil,” said one US cafe owner who is trying to source coffee from other locations like Mexico. 

Initially, supply was affected by weather issues in main producing regions like Brazil, reported Expana (customer access only). On top of that, the COVID era wreaked havoc on companies’ supply chains. And most recently, steep US tariffs have come at a time when the market is still feeling the effects of these other issues which were already pressuring the raw material price, according to Expana (customer access only). 

“The tariffs have exacerbated an already fragile situation,” said Broster. “Yes, they’ve given a reason for the price increases. But, supply chains have been fragile and under pressure since COVID.” 

Read more: “Coffee for Rent? Maxwell House Turns “Apartment” Amid High Coffee Prices.” (customer access only)

Image source: Adobe