Global coffee futures prices continued their upward trajectory in 2025, with both Arabica and Robusta coffee poised to reach multi-year highs, significantly impacting the US market as grocery store coffee retail prices soared accordingly. According to US Bureau of Labor Statistics data, US coffee prices rose 20.9% year-over-year in August, with both roasted coffee and instant coffee categories showing substantial increases.
This round of price increases is driven by multiple factors: ongoing drought in Brazil causing crop reductions, poor coffee growth in Vietnam exacerbating global supply shortages, while strong market demand and currency fluctuations further pushed up costs. Additionally, weather uncertainty facing Brazil's 2025-26 harvest has had profound impacts on coffee commodity trading. The US imposition of new tariffs on Brazilian coffee has further caused import costs to surge, with supply chain transition costs proving expensive.
As the largest coffee supplier to the US, Brazil has observed American buyers reducing new contract signings and seeking alternative markets, though low-cost purchasing options remain extremely limited. Industry analysis indicates that since tariffs on Brazilian coffee implemented during the Trump era took effect, green coffee buyers face the dilemma of either absorbing costs themselves, passing them on to consumers, or turning to other production regions such as Colombia, Peru, and Mexico for procurement.
The J.M. Smucker Company (SJM.US) explicitly stated in its earnings conference call that to alleviate rising green coffee cost pressures, the company has adjusted consumer prices twice in May and August through modified procurement strategies, optimized supply chains, and implemented responsible pricing measures. The company emphasized that due to rising green coffee costs and price transmission effects in coffee categories, demand price elasticity after the May price increase performed as expected, validating the competitiveness of its product portfolio and the resilience of the home coffee category.
Looking ahead, KPMG Chief Economist Diane Swonk warned that as the full impact of the 50% Brazilian coffee tariff gradually manifests at the retail level, coffee prices could easily break through historical highs. Although coffee-related companies typically hedge against cost volatility, the current increased market volatility and heightened uncertainty may still impact them.
TD Cowen analysis indicates that if tariff policies remain unchanged, restaurant companies including Starbucks (SBUX.US), Dutch Bros (BROS.US), and First Watch Restaurant (FWRG.US) will face downward pressure on adjusted EBITDA. Other companies that may be affected by coffee pricing pressures include Coffee Holding (JVA.US), Dunkin' Brands, J.M. Smucker, Starbucks, McDonald's (MCD.US), Costa Coffee, Tim Hortons, Luckin Coffee, Nestle, Keurig Dr Pepper (KDP.US), Kraft Heinz (KHC.US), and Krispy Kreme (DNUT.US).