From Starbucks to indie brands, soaring bean prices are squeezing the coffee industry

It was the second significant cost increase Hart had faced in less than a year. Just a few months earlier, Couple’s Coffee had axed its social media manager, even though Hart knew it would hurt the brand’s visibility, to keep prices stable for customers. Now, with another cost hike on the horizon, there wasn’t much fat left to trim. 

“We’re kind of cornered,” she said. “This time, we have no choice but to raise prices.”

What’s more, Hart’s roaster warned of not just higher bean prices, but also widespread strain across the coffee supply chain, including bankruptcies, defaults and the possibility that Trump’s sweeping tariffs would further hit the industry hard. 

Prices of arabica beans, a staple of major coffee chains like Starbucks, have surged over the past year, with arabica futures hitting an all-time high above $4.30 per pound in February. Prices for robusta beans, a cheaper variety typically used for instant coffee, have also spiked. It’s all because of droughts in major producing countries like Brazil and Vietnam, which have tightened supply while demand remains strong.

As coffee prices soar, small and mid-sized coffee companies are scrambling to adapt. In addition to supply disruptions in key producers, the specter of tariffs is also adding another layer of uncertainty for coffee companies. For brands already stretched thin, the cost crunch is forcing hard choices: raise prices, eat the losses or scale back operations.

Coffee’s price reckoning 

This year is shaping up to be a reckoning for the industry, according to Brandon Fishman, founder of San Diego-based VitaCup, a vitamin-infused coffee brand. That’s because many larger retailers are only now reaching the end of their long-term futures contracts, which had shielded them from the worst of the increases. For instance, Starbucks locks in its coffee prices through futures contracts 12-18 months in advance, according to company filings.

Traditionally, coffee companies invest in the futures market to lock in prices for coffee they will purchase in the future, mitigating the risk of sudden price increases. But supply shortages have persisted, keeping prices high, meaning that coffee companies who hedged their bets in the futures markets are feeling the pinch now, too, and are poised to pass the price off to customers, who are already paying more for coffee than ever. In February 2025, the average price of ground roast coffee climbed to a record high of $7.25 a pound, according to the federal data.

VitaCup, which is sold online and wholesale through major retailers like Walmart, purchased coffee futures, locking in prices at below $3 a pound. But now, those contracts are expiring, and the brand will have to pay around $4 a pound moving forward. 

Samuel Klein, green coffee buyer at New York-based Partners Coffee, said that looking back about five years ago, much of the conversation within the coffee industry was actually about prices being unsustainably low. That’s because coffee can often be unprofitable to grow, and yield is dependent on weather patterns or disease. But just in the past year alone, Klein said, the rate of upward trend has been rapid. “Coffee is about twice as expensive now,” he said. 

“I don’t think people understand the scale of what’s coming. I’m not talking about 10% price increases. It could be 50% or more, especially on private-label brands at big-box stores,” Fishman said. “Come April or May, a lot of those contracts expire, and that’s when the market will really feel it.”

Indeed, Starbucks CFO Rachel Ruggeri told investors in January that rising coffee costs are squeezing profits. The impact is even greater in the company’s packaged goods division, where price volatility is hitting “in a more meaningful way,” she said.

VitaCup increased its prices twice in the last six months, a dollar each time. Fishman expects more hikes to come. “We’re also cutting software, anything we can,” he said. 

Tariff pressure

For coffee brands, the uncertainty around tariffs adds another layer of stress. 

“What I’m more concerned about is decaf coffee, because the overwhelming majority of it is processed in either Canada or Mexico,” said Partners Coffee’s Klein. 

Craig Leslie, founder of The Bean Coffee Company, is also feeling the squeeze on decaf coffee. “Swiss water decaf, in particular, has gotten very expensive,” he said. “We’ve raised prices three times on Amazon and twice on our website.”

For now, 25% tariffs on many imports from Mexico and some imports from Canada have been delayed until April 2. However, brands still don’t have clear insight into exactly what tariffs will take effect on April 2, as Trump has gone back and forth on his trade policies since he took office.

Terminology around importing policy is currently vague, complicating matters further, according to Klein. For instance, it’s not always clear whether coffee should be classified by the country where it was grown or where it was processed, such as beans grown in Brazil but decaffeinated in Mexico.

“Decaf coffee is already expensive to produce and transport,” he said, as it’s often transported across complex supply chains across North America and the European Union.

The family-owned Cafe Aroma, which has been in business since 1961, has recently been buying coffee opportunistically when the market dips or avoiding committing to longer-term futures contracts in case prices come down, the company’s vp Bernadette Gerrity told Modern Retail. 

Similarly, Klein’s buying strategy has been focused on meticulous planning and not over-ordering coffee to bring into the U.S. “But obviously the margin for me to make a mistake is a lot smaller than it was a year ago,” he said. 

Changing consumer behavior

As coffee prices remain elevated, Leslie expects consumers to shift more of their habits home. “I think people are going to stop spending $4 or $5 at a coffee shop and brew more at home,” he said.

That shift is already playing out on a larger scale. J.M. Smucker, which owns brands like Folgers and Café Bustelo, hiked its prices last summer, and again in October. But instead of seeing a drop in demand, the company saw its net sales in the U.S. coffee side of the business rise 2% in the most recent quarter, driven by higher prices and steady demand. 

“Overall, at-home coffee remains a strong and resilient category that provides value to consumers in all economic environments,” Mark Smucker, the company’s CEO, told investors on an earnings call last month.  

All told, coffee companies are bracing for more volatility and trying to plan ahead, even amid the uncertainty.

As Klein put it, “I need to pay closer attention to the market circumstances and have a good understanding of what the next six months or a year could look like.”