The price of coffee in the U.S. has seen a significant increase. Retail coffee prices have surged nearly 21% in August compared to the same month last year, marking the largest annual jump since October 1997.
Coffee Prices Jump 4% Monthly Amid Global Supply Crisis
On a monthly basis, coffee prices surged by 4%, the highest in 14 years, as per the latest Consumer Price Index, released on Thursday. Global coffee prices are currently near a 50-year high, reached in February, while Arabica “C price” exceeded $4 per pound for the first time ever in February 2025.
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Unstable weather conditions, leading to reduced crop harvests in major coffee-producing countries like Brazil and Vietnam, have been a significant factor in the soaring prices. CNBC cited a Bernstein report from March that highlights weather volatility as a “most critical” short-term factor affecting coffee supply and prices.
A severe drought last summer in Brazil “devastated” the harvest, while Vietnam, the world’s second-largest supplier, saw a 20% fall in coffee production in 2024 due to drought and heavy rainstorms.
Trump's Tariffs Push Prices Higher For Buyers
Moreover, the Trump administration’s tariffs have also added to the price pressure. A 10% tariff was imposed on green coffee beans, while a 50% tariff on imports from Brazil is expected to exert “upward pressure” on coffee prices, according to an August report by the International Coffee Organization.
After the Trump tariffs on Brazilian coffees came into effect, green coffee buyers have been forced to either absorb the higher costs, pass them on to consumers, or seek comparable supplies from other producing countries like Colombia, Peru, or Mexico.
Bernstein Sees Short-Term Price Relief; Long-Term Rise Ahead
Despite the current surge, Bernstein’s senior research analyst, Danilo Gargiulo, suggests that price pressures “should be easing off” in the near term. Improving weather conditions and capital investments to boost productivity are expected to lead to lower prices, reported CNBC.
However, consumers should prepare for higher-than-average prices in the long term, as extreme weather events are projected to become more frequent, and global coffee consumption continues to rise. Mike Hoffmann, professor emeritus at Cornell University, told the publication, "The prices will continue to go up, in my mind…Climate change isn't going away.”
Analyst Predicts Price Hike For Starbucks’ Offerings
In January, it was reported that Arabica coffee futures had already soared past $3.35 per pound, nearing multi-decade highs. Bank of America analyst Sara Senatore had then predicted that average coffee price inflation for Q1 2025 would be 75.5%. This prediction has now materialized with the recent surge in coffee prices.
Despite the surge in coffee prices, coffee giant Starbucks (NASDAQ:SBUX) has been relatively stable. In a recent announcement, the company unveiled a new flagship store at Madrid’s Santiago Bernabéu Stadium, a move that could potentially impact its stock performance. However, Analyst Gargiulo estimates that the coffee giant would need to increase prices by no more than 0.5% to fully offset the cost of Brazil tariffs.
Price Action: Some of the other stocks in focus, Dutch Bros Inc. (NYSE:BROS) surged 10.28% year-to-date, while Keurig Dr Pepper Inc. (NASDAQ:KDP) and J.M. Smucker Co. (NYSE:SJM) slumped 15.77%, 8.20% during the same period, as per data from Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
